Document and Entity Information
Document and Entity Information - USD ($) | 12 Months Ended | ||
Dec. 31, 2016 | Mar. 07, 2017 | Jun. 30, 2016 | |
Document and Entity Information | |||
Entity Registrant Name | PENNYMAC FINANCIAL SERVICES, INC. | ||
Entity Central Index Key | 1,568,669 | ||
Document Type | 10-K | ||
Document Period End Date | Dec. 31, 2016 | ||
Amendment Flag | false | ||
Current Fiscal Year End Date | --12-31 | ||
Entity Well-known Seasoned Issuer | No | ||
Entity Voluntary Filers | No | ||
Entity Current Reporting Status | Yes | ||
Entity Filer Category | Accelerated Filer | ||
Entity Public Float | $ 237,657,297 | ||
Entity Common Stock, Shares Outstanding | 22,738,618 | ||
Document Fiscal Year Focus | 2,016 | ||
Document Fiscal Period Focus | FY |
CONSOLIDATED BALANCE SHEETS
CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands | Dec. 31, 2016 | Dec. 31, 2015 |
ASSETS | ||
Cash (includes $91,788 and $93,757 pledged to creditors) | $ 99,367 | $ 105,472 |
Short-term investments at fair value | 85,964 | 46,319 |
Mortgage loans held for sale at fair value (includes $2,125,174 and $1,079,489 pledged to creditors) | 2,172,815 | 1,101,204 |
Derivative assets | 82,905 | 50,280 |
Servicing advances, net (includes valuation allowance of $45,425 and $33,458; $81,306 and $68,507 pledged to creditors) | 348,306 | 299,354 |
Carried Interest due from Investment Funds pledged to creditors | 70,906 | 69,926 |
Investment in PennyMac Mortgage Investment Trust at fair value | 1,228 | 1,145 |
Mortgage servicing rights (includes $515,925 and $660,247 at fair value; $1,617,671 and $803,560 pledged to creditors) | 1,627,672 | 1,411,935 |
Real estate acquired in settlement of loans | 1,418 | |
Furniture, fixtures, equipment and building improvements, net (includes $25,134 and $14,034 pledged to creditors) | 31,321 | 16,311 |
Capitalized software, net (includes $515 and $783 pledged to creditors) | 11,205 | 3,025 |
Deferred tax asset | 18,378 | |
Mortgage loans eligible for repurchase | 382,268 | 166,070 |
Other | 50,892 | 45,594 |
Total assets | 5,133,902 | 3,505,294 |
LIABILITIES | ||
Assets sold under agreements to repurchase | 1,735,114 | 1,166,731 |
Mortgage Loan Participation and Sale Agreement | 671,426 | 234,872 |
Note payable | 150,942 | 61,136 |
Obligations under capital lease | 23,424 | 13,579 |
Excess servicing spread financing payable to PennyMac Mortgage Investment Trust at fair value | 288,669 | 412,425 |
Derivative liabilities | 22,362 | 9,083 |
Accounts payable and accrued expenses | 134,611 | 89,915 |
Mortgage servicing liabilities at fair value | 15,192 | 1,399 |
Income taxes payable | 25,088 | |
Liability for loans eligible for repurchase | 382,268 | 166,070 |
Liability for losses under representations and warranties | 19,067 | 20,611 |
Total liabilities | 3,734,546 | 2,442,944 |
Commitments and contingencies | ||
STOCKHOLDERS' EQUITY | ||
Additional paid-in capital | 182,772 | 172,354 |
Retained earnings | 164,549 | 98,470 |
Total stockholders' equity attributable to PennyMac Financial Services, Inc. common stockholders | 347,323 | 270,826 |
Noncontrolling interest in Private National Mortgage Acceptance Company, LLC | 1,052,033 | 791,524 |
Total stockholders' equity | 1,399,356 | 1,062,350 |
Total liabilities and stockholders' equity | 5,133,902 | 3,505,294 |
Class A Common Stock | ||
STOCKHOLDERS' EQUITY | ||
Common stock | 2 | 2 |
Total stockholders' equity | 2 | 2 |
Class B Common Stock | ||
STOCKHOLDERS' EQUITY | ||
Common stock | ||
Investment Funds | ||
ASSETS | ||
Carried Interest due from Investment Funds pledged to creditors | 70,906 | 69,926 |
Receivable, from affiliates | 1,219 | 1,316 |
LIABILITIES | ||
Payable to affiliates | 20,393 | 30,429 |
PMT | ||
ASSETS | ||
Investment in PennyMac Mortgage Investment Trust at fair value | 1,228 | 1,145 |
Financings receivable from PennyMac Mortgage Investment Trust (pledged to creditors at December 31, 2016) | 150,000 | 150,000 |
Receivable, from affiliates | 16,416 | 18,965 |
LIABILITIES | ||
Excess servicing spread financing payable to PennyMac Mortgage Investment Trust at fair value | 288,669 | 412,425 |
Payable to affiliates | 170,036 | 162,379 |
Private National Mortgage Acceptance Company, LLC | ||
LIABILITIES | ||
Payable to exchanged Private National Mortgage Acceptance Company, LLC unitholders under tax receivable agreement | $ 75,954 | $ 74,315 |
CONSOLIDATED BALANCE SHEETS (Pa
CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($) $ in Thousands | Dec. 31, 2016 | Dec. 31, 2015 |
Cash pledged to creditors | $ 91,788 | $ 93,757 |
Mortgage loans held for sale, pledged to creditors | 2,125,174 | 1,079,489 |
Servicing advances, net, valuation allowance | 45,425 | 33,458 |
Servicing advances pledged to creditors | 81,306 | 68,507 |
Mortgage servicing rights, at fair value | 515,925 | 660,247 |
Mortgage servicing rights pledged to creditors | 1,617,671 | 803,560 |
Furniture, fixtures, equipment and building improvements pledged to creditors | 25,134 | 14,034 |
Capitalized software pledged to creditors | $ 515 | $ 783 |
Class A Common Stock | ||
Common stock, shares authorized | 200,000,000 | 200,000,000 |
Common stock, par value (in dollars per share) | $ 0.0001 | $ 0.0001 |
Common stock, shares issued | 22,426,779 | 21,990,831 |
Common stock, shares outstanding | 22,426,779 | 21,990,831 |
Class B Common Stock | ||
Common stock, shares authorized | 1,000 | 1,000 |
Common stock, par value (in dollars per share) | $ 0.0001 | $ 0.0001 |
Common stock, shares issued | 49 | 51 |
Common stock, shares outstanding | 49 | 51 |
CONSOLIDATED STATEMENTS OF INCO
CONSOLIDATED STATEMENTS OF INCOME - USD ($) shares in Thousands, $ in Thousands | 12 Months Ended | ||
Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | |
Net gains (losses) on mortgage loans held for sale at fair value: | |||
From non-affiliates | $ 539,872 | $ 328,551 | $ 174,861 |
Net gains (losses) on mortgage loans held for sale at fair value | 531,780 | 320,715 | 167,024 |
Mortgage loan origination fees | 125,534 | 91,520 | 41,576 |
Fulfillment fees from PennyMac Mortgage Investment Trust | 86,465 | 58,607 | 48,719 |
Mortgage loan servicing fees | |||
From non-affiliates and affiliates | 385,633 | 290,474 | 173,005 |
Ancillary and other fees | 46,910 | 43,139 | 26,469 |
Net servicing fees | 485,741 | 382,672 | 258,421 |
Amortization, impairment and change in fair value of mortgage servicing rights | (324,198) | (156,939) | (70,165) |
Change in fair value of excess servicing spread payable to PennyMac Mortgage Investment Trust | (300,275) | (153,129) | (41,502) |
Net mortgage loan servicing fees | 185,466 | 229,543 | 216,919 |
Management fees: | |||
Management fees | 22,746 | 28,237 | 42,508 |
Carried Interest from Investment Funds | 980 | 2,628 | 6,156 |
Interest income: | |||
From non-affiliates | 73,297 | 45,812 | 27,771 |
Interest income | 81,127 | 49,155 | 27,771 |
Interest expense: | |||
To non-affiliates | 83,605 | 43,172 | 23,965 |
Interest expense | 106,206 | 68,537 | 37,257 |
Net interest expense: | (25,079) | (19,382) | (9,486) |
Result of real estate acquired in settlement of loans | (82) | ||
Other | 3,853 | 1,472 | 4,867 |
Total net revenue | 931,887 | 713,110 | 518,277 |
Expenses | |||
Compensation | 342,153 | 274,262 | 190,707 |
Servicing | 85,857 | 68,085 | 48,430 |
Technology | 35,322 | 25,164 | 15,439 |
Professional services | 18,078 | 15,473 | 11,108 |
Loan origination | 22,528 | 17,396 | 9,554 |
Other | 44,866 | 33,537 | 20,006 |
Total expenses | 548,804 | 433,917 | 295,244 |
Income before provision for income taxes | 383,083 | 279,193 | 223,033 |
Provision for income taxes | 46,103 | 31,635 | 26,722 |
Net income | 336,980 | 247,558 | 196,311 |
Less: Net income attributable to noncontrolling interest | 270,901 | 200,330 | 159,469 |
Net income attributable to PennyMac Financial Services, Inc. common stockholders | $ 66,079 | $ 47,228 | $ 36,842 |
Earnings per common share | |||
Basic (in dollars per share) | $ 2.98 | $ 2.17 | $ 1.73 |
Diluted (in dollars per share) | $ 2.94 | $ 2.17 | $ 1.73 |
Weighted-average common shares outstanding | |||
Basic (in shares) | 22,161 | 21,755 | 21,250 |
Diluted (in shares) | 76,629 | 76,104 | 75,955 |
PMT | |||
Net gains (losses) on mortgage loans held for sale at fair value: | |||
Recapture payable to PennyMac Mortgage Investment Trust | $ (8,092) | $ (7,836) | $ (7,837) |
Fulfillment fees from PennyMac Mortgage Investment Trust | 86,465 | 58,607 | 48,719 |
Mortgage loan servicing fees | |||
From non-affiliates and affiliates | 50,615 | 46,423 | 52,522 |
Change in fair value of excess servicing spread payable to PennyMac Mortgage Investment Trust | 23,923 | 3,810 | 28,663 |
Management fees: | |||
Management fees | 20,657 | 24,194 | 35,035 |
Interest income: | |||
From PennyMac Mortgage Investment Trust | 7,830 | 3,343 | |
Interest expense: | |||
To PennyMac Mortgage Investment Trust | 22,601 | 25,365 | 13,292 |
Change in fair value of investment in and dividends received from affiliate | 224 | (230) | (6) |
Investment Funds | |||
Mortgage loan servicing fees | |||
From non-affiliates and affiliates | 2,583 | 2,636 | 6,425 |
Management fees: | |||
Management fees | 2,089 | 4,043 | 7,473 |
Carried Interest from Investment Funds | $ 980 | $ 2,628 | $ 6,156 |
CONSOLIDATED STATEMENTS OF CHAN
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY - USD ($) shares in Thousands, $ in Thousands | Additional paid-in capital | Retained earnings | Noncontrolling interest | Class A Common Stock | Total |
Balance (Private National Mortgage Acceptance Company, LLC) at Dec. 31, 2013 | $ 153,000 | $ 14,400 | $ 461,802 | $ 2 | $ 629,204 |
Balance (in shares) (Private National Mortgage Acceptance Company, LLC) at Dec. 31, 2013 | 20,813 | ||||
Changes in stockholders' equity | |||||
Net income | Private National Mortgage Acceptance Company, LLC | 36,842 | 159,469 | 196,311 | ||
Net income | 196,311 | ||||
Distributions | Private National Mortgage Acceptance Company, LLC | (28,298) | (28,298) | |||
Stock and unit-based compensation | 2,895 | 7,436 | 10,331 | ||
Stock and unit-based compensation (in shares) | 33 | ||||
Issuance of common stock in settlement of director fees | Private National Mortgage Acceptance Company, LLC | 222 | 222 | |||
Issuance of common stock in settlement of director fees | 222 | ||||
Issuance of common stock in settlement of directors' fees (in shares) | Private National Mortgage Acceptance Company, LLC | 14 | ||||
Exchange of Class A units of Private National Mortgage Acceptance Company, LLC to Class A stock of PennyMac Financial Services, Inc. | Private National Mortgage Acceptance Company, LLC | 7,107 | (7,107) | |||
Exchange of Class A units of Private National Mortgage Acceptance Company, LLC to Class A stock of PennyMac Financial Services, Inc. | $ 7,107 | ||||
Exchange of Class A units of Private National Mortgage Acceptance Company, LLC to Class A stock of PennyMac Financial Services, Inc. (in shares) | Private National Mortgage Acceptance Company, LLC | 718 | ||||
Exchange of Class A units of Private National Mortgage Acceptance Company, LLC to Class A stock of PennyMac Financial Services, Inc. (in shares) | 718 | ||||
Tax effect of exchange of Class A units of Private National Mortgage Acceptance Company, LLC to Class A stock of PennyMac Financial Services, Inc. | (504) | $ (504) | |||
Balance at Dec. 31, 2014 | 162,720 | 51,242 | 593,302 | $ 2 | 807,266 |
Balance (in shares) at Dec. 31, 2014 | 21,578 | ||||
Changes in stockholders' equity | |||||
Net income | 47,124 | ||||
Balance at Mar. 31, 2015 | 852,836 | ||||
Balance at Dec. 31, 2014 | 162,720 | 51,242 | 593,302 | $ 2 | 807,266 |
Balance (in shares) at Dec. 31, 2014 | 21,578 | ||||
Changes in stockholders' equity | |||||
Net income | 47,228 | 200,330 | 247,558 | ||
Distributions | (9,630) | (9,630) | |||
Stock and unit-based compensation | 5,017 | 12,504 | 17,521 | ||
Stock and unit-based compensation (in shares) | 77 | ||||
Issuance of common stock in settlement of director fees | 297 | 297 | |||
Issuance of common stock in settlement of directors' fees (in shares) | 17 | ||||
Exchange of Class A units of Private National Mortgage Acceptance Company, LLC to Class A stock of PennyMac Financial Services, Inc. | 4,982 | (4,982) | $ 4,982 | ||
Exchange of Class A units of Private National Mortgage Acceptance Company, LLC to Class A stock of PennyMac Financial Services, Inc. (in shares) | 319 | 319 | |||
Tax effect of exchange of Class A units of Private National Mortgage Acceptance Company, LLC to Class A stock of PennyMac Financial Services, Inc. | (662) | $ (662) | |||
Balance at Dec. 31, 2015 | 172,354 | 98,470 | 791,524 | $ 2 | 1,062,350 |
Balance (in shares) at Dec. 31, 2015 | 21,991 | ||||
Balance at Mar. 31, 2015 | 852,836 | ||||
Changes in stockholders' equity | |||||
Net income | 66,180 | ||||
Balance at Jun. 30, 2015 | 919,473 | ||||
Changes in stockholders' equity | |||||
Net income | 65,348 | ||||
Balance at Sep. 30, 2015 | 989,307 | ||||
Changes in stockholders' equity | |||||
Net income | 68,906 | ||||
Balance at Dec. 31, 2015 | 172,354 | 98,470 | 791,524 | $ 2 | 1,062,350 |
Balance (in shares) at Dec. 31, 2015 | 21,991 | ||||
Changes in stockholders' equity | |||||
Net income | 26,543 | ||||
Balance at Mar. 31, 2016 | 1,093,213 | ||||
Balance at Dec. 31, 2015 | 172,354 | 98,470 | 791,524 | $ 2 | 1,062,350 |
Balance (in shares) at Dec. 31, 2015 | 21,991 | ||||
Changes in stockholders' equity | |||||
Net income | 66,079 | 270,901 | 336,980 | ||
Distributions | (15,216) | (15,216) | |||
Stock and unit-based compensation | 4,646 | 11,701 | 16,347 | ||
Stock and unit-based compensation (in shares) | 111 | ||||
Issuance of common stock in settlement of director fees | 313 | 313 | |||
Issuance of common stock in settlement of directors' fees (in shares) | 24 | ||||
Exchange of Class A units of Private National Mortgage Acceptance Company, LLC to Class A stock of PennyMac Financial Services, Inc. | 6,877 | (6,877) | $ 6,877 | ||
Exchange of Class A units of Private National Mortgage Acceptance Company, LLC to Class A stock of PennyMac Financial Services, Inc. (in shares) | 301 | 301 | |||
Tax effect of exchange of Class A units of Private National Mortgage Acceptance Company, LLC to Class A stock of PennyMac Financial Services, Inc. | (1,418) | $ (1,418) | |||
Balance at Dec. 31, 2016 | 182,772 | 164,549 | 1,052,033 | $ 2 | 1,399,356 |
Balance (in shares) at Dec. 31, 2016 | 22,427 | ||||
Balance at Mar. 31, 2016 | 1,093,213 | ||||
Changes in stockholders' equity | |||||
Net income | 74,295 | ||||
Balance at Jun. 30, 2016 | 1,170,853 | ||||
Changes in stockholders' equity | |||||
Net income | 122,302 | ||||
Balance at Sep. 30, 2016 | 1,290,404 | ||||
Changes in stockholders' equity | |||||
Net income | 113,840 | ||||
Balance at Dec. 31, 2016 | $ 182,772 | $ 164,549 | $ 1,052,033 | $ 2 | $ 1,399,356 |
Balance (in shares) at Dec. 31, 2016 | 22,427 |
CONSOLIDATED STATEMENTS OF CASH
CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | |
Cash flow from operating activities | |||
Net income | $ 336,980 | $ 247,558 | $ 196,311 |
Adjustments to reconcile net income to net cash (used in) provided by operating activities: | |||
Net gains on mortgage loans held for sale at fair value | (531,780) | (320,715) | (167,024) |
Accrual of servicing rebate to Investment Funds | 306 | 1,269 | 2,206 |
Amortization, impairment and change in fair value of mortgage servicing rights and excess servicing spread | 300,275 | 153,129 | 41,502 |
Carried Interest from Investment Funds | (980) | (2,628) | (6,156) |
Capitalization of interest on mortgage loans held for sale at fair value | (29,234) | (16,875) | |
Amortization of debt issuance costs and commitment fees relating to financing facilities | 22,601 | 25,365 | 13,292 |
Accrual of interest on excess servicing spread financing | 11,052 | 7,775 | 5,989 |
Change in fair value of investment in common shares of PennyMac Mortgage Investment Trust | (83) | 437 | 140 |
Results of real estate acquired in settlement of loans | 82 | ||
Stock and unit-based compensation expense | 16,198 | 17,521 | 10,331 |
Provision for servicing advance losses | 35,503 | 29,782 | 18,686 |
Depreciation and amortization | 5,849 | 2,423 | 1,365 |
Revaluation of Payable to exchanged Private National Mortgage Acceptance Company, LLC unitholders under tax receivable agreement | (551) | 1,695 | (1,378) |
Purchase of mortgage loans held for sale from PennyMac Mortgage Investment Trust | (42,051,505) | (31,490,920) | (16,431,338) |
Originations of mortgage loans held for sale | (6,491,107) | (4,143,240) | (1,951,070) |
Purchase of mortgage loans from Ginnie Mae securities and early buyout investors for modification and subsequent sale | (2,168,685) | (1,116,700) | (1,049,838) |
Sale and principal payments of mortgage loans held for sale | 49,633,909 | 36,679,638 | 18,785,683 |
Repurchase of mortgage loans subject to representations and warranties | (19,248) | (22,601) | (4,089) |
Increase in servicing advances | (85,955) | (100,506) | (98,401) |
Decrease in deferred tax asset | 18,668 | 29,726 | 21,922 |
Payments to exchanged Private National Mortgage Acceptance Company, LLC unitholders under tax receivable agreement | (5,132) | ||
Increase in other assets | (19,282) | (18,100) | (31,921) |
Increase in accounts payable and accrued expenses | 33,041 | 26,307 | 16,437 |
Increase in income tax payable | 25,570 | ||
Net cash (used in) provided by operating activities | (938,522) | 53,144 | (578,954) |
Cash flow from investing activities | |||
(Increase) decrease in short-term investments | (39,645) | (24,632) | 120,895 |
Advance on note receivable from PennyMac Mortgage Investment Trust | (168,546) | ||
Repayment of note receivable from PennyMac Mortgage Investment Trust | 18,546 | ||
Purchase of mortgage servicing rights | (146) | (382,824) | (135,480) |
Sale of mortgage servicing rights | 10,916 | ||
Net settlement of derivative financial instruments used for hedging | (27,315) | 2,033 | 18,620 |
Purchase of furniture, fixtures, equipment and leasehold improvements | (21,852) | (9,122) | (4,613) |
Acquisition of capitalized software | (8,537) | (2,782) | (123) |
(Increase) decrease in margin deposits and restricted cash | 62,756 | 4,185 | (3,463) |
Net cash (used in) provided by investing activities | (34,739) | (563,142) | 6,752 |
Cash flow from financing activities | |||
Sale of assetss under agreements to repurchase | 45,925,047 | 33,125,237 | 17,217,767 |
Repurchase of assets sold under agreements to repurchase | (45,355,531) | (33,187,830) | (16,866,738) |
Sale of mortgage loan participation certificates | 32,336,793 | 17,722,964 | 2,817,616 |
Repayment of mortgage loan participation certificates | (31,900,130) | (17,631,704) | (2,673,978) |
Advances on notes payable | 122,920 | 352,243 | 274,636 |
Repayments of notes payable | (33,661) | (29,411) | (179,935) |
Issuance of excess servicing spread | 271,554 | 95,892 | |
Repayment of excess servicing spread financing | (69,992) | (78,578) | (39,256) |
Settlement of excess servicing spread financing | (59,045) | ||
Advances of obligations under capital lease | 16,952 | 13,579 | |
Repayments of obligations under capital lease | (7,107) | ||
Payment of debt issuance costs | (11,747) | (9,210) | |
Assumption of mortgage servicing liability | 10,139 | ||
Proceeds from Stock Options Exercised | 149 | ||
Distributions to Private National Mortgage Acceptance Company, LLC members | (7,631) | (9,630) | (28,185) |
Net cash provided by financing activities | 967,156 | 539,214 | 617,819 |
Net decrease in cash | (6,105) | 29,216 | 45,617 |
Cash at beginning of year | 105,472 | 76,256 | 30,639 |
Cash at end of year | 99,367 | 105,472 | 76,256 |
Investment Funds | |||
Adjustments to reconcile net income to net cash (used in) provided by operating activities: | |||
Carried Interest from Investment Funds | (980) | (2,628) | (6,156) |
(Increase) decrease in receivable from affiliates | (209) | (294) | (1,582) |
(Decrease) increase in payable to affiliate | (10,036) | (5,479) | (1,029) |
PMT | |||
Adjustments to reconcile net income to net cash (used in) provided by operating activities: | |||
Amortization, impairment and change in fair value of mortgage servicing rights and excess servicing spread | (23,923) | (3,810) | (28,663) |
Sale of mortgage loans held for sale to Penny Mac Mortgage Investment Trust | 21,541 | 28,445 | 8,081 |
(Increase) decrease in receivable from affiliates | 2,969 | 7,637 | 1,280 |
(Decrease) increase in payable to affiliate | $ 5,589 | $ 37,627 | $ 41,647 |
Organization
Organization | 12 Months Ended |
Dec. 31, 2016 | |
Organization | |
Organization | Note 1—Organization PennyMac Financial Services, Inc. (“PFSI” or the “Company”) was formed as a Delaware corporation on December 31, 2012. Pursuant to a reorganization, the Company became a holding corporation and its primary asset is an equity interest in Private National Mortgage Acceptance Company, LLC (“PennyMac”). The Company is the managing member of PennyMac, and it operates and controls all of the businesses and affairs of PennyMac, subject to the consent rights of other members under certain circumstances, and consolidates the financial results of PennyMac and its subsidiaries. PennyMac is a Delaware limited liability company which, through its subsidiaries, engages in mortgage banking and investment management activities. PennyMac’s mortgage banking activities consist of residential mortgage loan production and mortgage loan servicing. PennyMac’s investment management activities and a portion of its mortgage loan servicing activities are conducted on behalf of investment vehicles that invest in residential mortgage loans and related assets. PennyMac’s primary wholly owned subsidiaries are: · PNMAC Capital Management, LLC (“PCM”) —a Delaware limited liability company registered with the Securities and Exchange Commission (“SEC”) as an investment adviser under the Investment Advisers Act of 1940, as amended. PCM enters into investment management agreements with entities that invest in residential mortgage loans and related assets. Presently, PCM has management agreements with PNMAC Mortgage Opportunity Fund, LLC and PNMAC Mortgage Opportunity Fund, L.P., (the “Master Fund”), both registered under the Investment Company Act of 1940, as amended, an affiliate of these registered funds, PNMAC Mortgage Opportunity Fund Investors, LLC (collectively, the “Investment Funds”), and PennyMac Mortgage Investment Trust (“PMT”), a publicly held real estate investment trust (“REIT”). Together, the Investment Funds and PMT are referred to as the “Advised Entities.” · PennyMac Loan Services, LLC (“PLS”) —a Delaware limited liability company that services portfolios of residential mortgage loans on behalf of non-affiliates and the Advised Entities, purchases, originates and sells new prime credit quality residential mortgage loans and engages in other mortgage banking activities for its own account and the account of PMT . PLS is approved as a seller/servicer of mortgage loans by the Federal National Mortgage Association (“Fannie Mae”) and the Federal Home Loan Mortgage Corporation (“Freddie Mac”) and as an issuer of securities guaranteed by the Government National Mortgage Association (“Ginnie Mae”). PLS is a licensed Federal Housing Administration Nonsupervised Title II Lender with the U.S. Department of Housing and Urban Development (“HUD”) and a lender/servicer with the Veterans Administration (“VA”) and U.S. Department of Agriculture (“USDA”) (each an “Agency” and collectively the “Agencies”). · PNMAC Opportunity Fund Associates, LLC (“PMOFA”) —a Delaware limited liability company and the general partner of the Master Fund. PMOFA is entitled to incentive fees representing allocations of profits (“Carried Interest”) from the Master Fund . |
Concentration of Risk
Concentration of Risk | 12 Months Ended |
Dec. 31, 2016 | |
Concentration of Risk | |
Concentration of Risk | Note 2—Concentration of Risk A substantial portion of the Company’s activities relate to the Advised Entities. Revenues generated from these entities (generally comprised of management fees, mortgage loan servicing fees, Carried Interest and fulfillment fees) totaled 18%, 16% and 32% of total net revenues for the years ended December 31, 2016, 2015 and 2014, respectively. |
Significant Accounting Policies
Significant Accounting Policies | 12 Months Ended |
Dec. 31, 2016 | |
Significant Accounting Policies | |
Significant Accounting Policies | Note 3—Significant Accounting Policies A description of the Company’s significant accounting policies applied in the preparation of the accompanying consolidated financial statements follows. Basis of Presentation The Company’s consolidated financial statements have been prepared in compliance with accounting principles generally accepted in the United States (“GAAP”) as codified in the Financial Accounting Standards Board’s (“FASB”) Accounting Standards Codification (the “ASC” or the “Codification”). Principles of Consolidation The consolidated financial statements include the accounts of PFSI, PennyMac and all of its wholly‑owned subsidiaries. Intercompany accounts and transactions have been eliminated. Use of Estimates The preparation of financial statements in conformity with GAAP requires management to make judgments and estimates that affect the reported amounts of assets and liabilities and 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. Actual results will likely differ from those estimates. Fair Value The Company groups its assets and liabilities at fair value in three levels, based on the markets in which the assets and liabilities are traded and the observability of the inputs used to determine fair value. These levels are: · Level 1—Quoted prices in active markets for identical assets or liabilities. · Level 2—Prices determined or determinable using other significant observable inputs. Observable inputs are inputs that other market participants would use in pricing an asset or liability and are developed based on market data obtained from sources independent of the Company. These may include quoted prices for similar assets and liabilities, interest rates, prepayment speeds, credit risk and other inputs. · Level 3—Prices determined using significant unobservable inputs. In situations where observable inputs are unavailable, unobservable inputs may be used. Unobservable inputs reflect the Company’s own judgments about the factors that market participants use in pricing an asset or liability, and are based on the best information available in the circumstances. As a result of the difficulty in observing certain significant valuation inputs affecting “Level 3” fair value assets and liabilities, the Company is required to make judgments regarding their fair values. Different persons in possession of the same facts may reasonably arrive at different conclusions as to the inputs to be applied in valuing these assets and liabilities and their fair values. Likewise, due to the general illiquidity of some of these assets and liabilities, subsequent transactions may be at values significantly different from those reported. Short‑Term Investments Short‑term investments, which represent investments in accounts with a depository institution, are carried at fair value. Changes in fair value are recognized in current period income. The Company classifies its short‑term investments as “Level 1” fair value assets. Mortgage Loans Held for Sale at Fair Value Management has elected to account for mortgage loans held for sale at fair value, with changes in fair value recognized in current period income, to more timely reflect the Company’s performance. All changes in fair value, including changes arising from the passage of time, are recognized as a component of Net gains on mortgage loans held for sale at fair value . The Company classifies most of the mortgage loans held for sale at fair value as “Level 2” fair value assets. Certain of the Company’s mortgage loans held for sale may not be readily saleable due to identified defects or delinquency. Such mortgage loans are classified as “Level 3” fair value assets. Sale Recognition The Company recognizes transfers of mortgage loans as sales when it surrenders control over the mortgage loans. Control over transferred mortgage loans is deemed to be surrendered when (i) the mortgage loans have been isolated from the Company, (ii) the transferee has the right (free of conditions that constrain it from taking advantage of that right) to pledge or exchange the transferred mortgage loans, and (iii) the Company does not maintain effective control over the transferred mortgage loans through either (a) an agreement that entitles and obligates the Company to repurchase or redeem them before their maturity or (b) the ability to unilaterally cause the holder to return the specific mortgage loans. Interest Income Recognition Interest income on mortgage loans held for sale at fair value is recognized over the life of the mortgage loans using their contractual interest rates. Income recognition is suspended and the unpaid interest receivable is reversed against interest income when mortgage loans become 90 days delinquent, or when, in management’s opinion, a full recovery of interest and principal becomes doubtful. Income recognition is resumed when the mortgage loan becomes contractually current. Derivative Financial Instruments The Company is exposed to price risk relative to its mortgage loans held for sale as well as to the commitments it makes to loan applicants to originate or to PMT to acquire mortgage loans at specified interest rates (“interest rate lock commitments” or “IRLCs”). The Company bears price risk from the time a commitment to fund a mortgage loan is made to a borrower or to purchase a mortgage loan from PMT, to the time the mortgage loan is sold. During this period, the Company is exposed to losses if mortgage market interest rates increase, because the fair value of the purchase commitment or prospective mortgage loan decreases. The Company also is exposed to risk relative to the fair value of its mortgage servicing rights (“MSRs”). The Company is exposed to loss in fair value of its MSRs when interest rates decrease. The Company engages in interest rate risk management activities in an effort to reduce the variability of earnings caused by changes in market interest rates. To manage this fair value risk resulting from interest rate risk, the Company uses derivative financial instruments acquired with the intention of reducing the risk that changes in market interest rates will result in unfavorable changes in the fair value of the Company’s IRLCs, inventory of mortgage loans held for sale and MSRs. IRLCs are accounted for as derivative financial instruments. The Company manages the risk created by IRLCs relating to mortgage loans held for sale by entering into forward sale agreements to sell the mortgage loans and by the purchase and sale of mortgage‑backed securities (“MBS”) options and futures. Such agreements are also accounted for as derivative financial instruments. These instruments and other interest-rate derivatives are also used to manage the risk created by changes in prepayment speeds on certain of the MSRs the Company holds. The Company classifies its IRLCs as “Level 3” fair value assets and liabilities and the derivative financial instruments it acquires to manage the risks created by IRLCs, mortgage loans held for sale and MSRs as “Level 1” or “Level 2” fair value assets and liabilities. The Company does not use derivative financial instruments for purposes other than in support of its risk management activities. The Company accounts for its derivative financial instruments as free‑standing derivatives. The Company does not designate its derivative financial instruments for hedge accounting. All derivative financial instruments are recognized on the consolidated balance sheet at fair value with changes in the fair values being reported in current period income. Changes in fair value of derivative financial instruments hedging IRLCs, mortgage loans held for sale at fair value and MSRs are included in Net gains on mortgage loans held for sale at fair value or in Amortization, impairment and change in fair value of mortgage servicing rights and mortgage servicing liabilities, as applicable, in the Company’s consolidated statements of income. When the Company has multiple derivative financial instruments with the same counterparty under a master netting arrangement, it offsets the amounts recorded as assets and liabilities and amounts recognized for the right to reclaim cash collateral it has deposited with the counterparty or the obligation to return cash collateral it has collected from the counterparty arising from that master netting arrangement. Such offset amounts are presented as either a net asset or liability by counterparty on the Company’s consolidated balance sheets. Servicing Advances Servicing advances represent advances made on behalf of borrowers and the mortgage loans’ investors to fund delinquent balances for property taxes and insurance premiums and out-of-pocket collection costs (e.g., preservation and restoration of mortgaged or real estate owned property, legal fees, and appraisals). Servicing advances are made in accordance with the Company’s servicing agreements and, when made, are deemed recoverable. The Company periodically reviews servicing advances for collectability and provides a valuation allowance for amounts estimated to be uncollectable. Servicing advances are written off when they are deemed uncollectable. Carried Interest Due from Investment Funds Carried Interest, in general terms, is the share of any profits in excess of specified levels that the general partners receive as compensation. The Company has a general partnership interest or other Carried Interest arrangement with the Investment Funds, and earns Carried Interest thereunder. The amount of Carried Interest to be recorded each period is based on the cash flows that would be realized by all partners assuming liquidation of the Investment Funds’ remaining investments as of the measurement date. Investment in PennyMac Mortgage Investment Trust at Fair Value Common shares of beneficial interest in PMT are carried at their fair value with changes in fair value recognized in current period income. Fair value for purposes of the Company’s holdings in PMT is based on the published closing price of the shares as of period end. The Company classifies its investment in common shares of PMT as a “Level 1” fair value asset. Mortgage Servicing Rights and Mortgage Servicing Liabilities MSRs and MSLs arise from contractual agreements between the Company and investors (or their agents) in mortgage securities and mortgage loans. Under these contracts, the Company performs mortgage loan servicing functions in exchange for fees and other remuneration. The servicing functions typically performed include, among other responsibilities, collecting and remitting loan payments; responding to borrower inquiries; accounting for principal and interest; holding custodial (impound) funds for payment of property taxes and insurance premiums; counseling delinquent mortgagors; supervising the acquisition of real estate in settlement of loans (“REO”) and property disposition. REO represents real estate that collateralized the mortgage loans before the properties were acquired in settlement of loans. The fair value of MSRs and MSLs is derived from the net positive or negative, respectively, cash flows associated with the servicing contracts. The Company receives a servicing fee ranging generally from 0.19% to 0.57% annually, net of related guarantee fees, on the remaining outstanding principal balances of the mortgage loans subject to the servicing contracts. The servicing fees are collected from the monthly payments made by the mortgagors. The Company is contractually entitled to receive other remuneration including rights to various mortgagor‑contracted fees such as late charges and collateral reconveyance charges, and the Company is generally entitled to retain the interest earned on funds held pending remittance related to its collection of mortgagor payments. The Company also generally has the right to solicit the mortgagors for other products and services as well as for new mortgages for those considering refinancing or purchasing a new home. The Company recognizes MSRs and MSLs initially at fair value, either as proceeds from or liabilities incurred in, sales of mortgage loans where the Company assumes the obligation to service the mortgage loan in the sale transaction, or from the purchase of MSRs or receipt of cash for acceptance of the MSLs. The Company’s subsequent accounting for MSRs and MSLs is based on the class of MSR or MSL. The Company has identified three classes of MSRs: originated MSRs backed by mortgage loans with initial interest rates of less than or equal to 4.5%; MSRs backed by mortgage loans with initial interest rates of more than 4.5%; and purchased MSRs financed in part through the transfer of the right to receive excess servicing spread (“ESS”) cash flows. Originated MSRs backed by mortgage loans with initial interest rates of less than or equal to 4.5% are accounted for using the amortization method. Originated MSRs backed by loans with initial interest rates of more than 4.5% and purchased MSRs financed in part by ESS are accounted for at fair value with changes in fair value recorded in current period income. MSLs are carried at fair value with changes in fair value recorded in current period income. The fair value of MSRs and MSLs is difficult to determine because MSRs and MSLs are not actively traded in observable stand‑alone markets. Considerable judgment is required to estimate the fair values of MSRs and MSLs and the exercise of such judgment can significantly affect the Company’s income. Therefore, the Company classifies its MSRs and MSLs as “Level 3” fair value assets and liabilities. MSRs and MSLs are generally subject to reduction in fair value when mortgage interest rates decrease. Decreasing mortgage interest rates normally encourage increased mortgage refinancing activity. Increased refinancing activity reduces the expected life of the mortgage loans underlying the MSRs and MSLs, thereby reducing their fair value. Reductions in the fair value of MSRs and MSLs affect earnings primarily through change in fair value and impairment charges. For MSRs backed by mortgage loans with historically low mortgage interest rates, factors other than interest rates (such as housing price changes) take on increasing influence on prepayment behavior of the underlying mortgage loans. MSRs Accounted for Using the Amortization Method The Company amortizes MSRs that are accounted for using the amortization method. MSR amortization is determined by applying the ratio of the net MSR cash flows projected for the current period to the estimated total remaining projected net MSR cash flows. The estimated total net MSR cash flows are determined at the beginning of each month using prepayment inputs applicable at that time. MSRs accounted for using the amortization method are periodically evaluated for impairment. Impairment occurs when the current fair value of the MSRs decreases below the asset’s amortized cost. If MSRs are impaired, the impairment is recognized in current‑period income and the carrying value (carrying value is the MSR’s amortized cost reduced by any related valuation allowance) of the MSRs is adjusted through a valuation allowance. If the fair value of impaired MSRs subsequently increases, the increase in fair value is recognized in current‑period income. When an increase in fair value of MSR is recognized, the valuation allowance is adjusted to increase the carrying value of the MSRs only to the extent of the valuation allowance. For impairment evaluation purposes, the Company stratifies its MSRs by predominant risk characteristic when evaluating for impairment. For purposes of performing its MSR impairment evaluation, the Company stratifies its servicing portfolio on the basis of certain risk characteristics including mortgage loan type (fixed‑rate or adjustable‑rate) and note interest rate. Fixed‑rate mortgage loans are stratified into note rate pools of 50 basis points for note rates between 3.0% and 4.5% and a single pool for note rates of less than or equal to 3.0%. If the fair value of MSRs in any of the note interest rate pools is below the carrying value of the MSRs for that pool, impairment is recognized to the extent of the difference between the estimated fair value and the carrying value of that pool. Management periodically reviews the various impairment strata to determine whether the fair value of the impaired MSRs in a given stratum is likely to recover. When management deems recovery of the fair value to be unlikely in the foreseeable future, a write‑down of the cost of the MSRs for that stratum to its estimated recoverable value is charged to the valuation allowance. Both amortization and changes in the amount of the MSR valuation allowance are recorded in current period income in Amortization, impairment and change in fair value of mortgage servicing rights and mortgage servicing liabilities in the consolidated statements of income. MSRs and MSLs Accounted for at Fair Value Changes in fair value of MSLs and MSRs accounted for at fair value are recognized in current period income in Amortization, impairment and change in fair value of mortgage servicing rights in the consolidated statements of income. Furniture, Fixtures, Equipment and Building Improvements Furniture, fixtures, equipment and building improvements are stated at historical cost less accumulated depreciation and amortization. Depreciation and amortization are computed using the straight‑line method over the estimated useful lives of the various classes of assets, which range from five to seven years for furniture and equipment and the lesser of the asset’s estimated useful life or the remaining lease term for fixtures and building improvements. Capitalized Software The Company capitalizes certain consulting, payroll, and payroll‑related costs related to computer software developed for internal use. Once development is complete and the software is placed in service, the Company amortizes the capitalized costs over five years using the straight‑line method. The Company also periodically assesses capitalized software for recoverability when events or changes in circumstances indicate that their carrying amount may not be recoverable. If management identifies an indicator of impairment, it assesses recoverability by comparing the carrying amount of the asset to the sum of the undiscounted cash flows expected to result from the use and the eventual disposal of the asset. An impairment loss is recognized when the carrying amount is not recoverable and is measured as the excess of carrying value over fair value. No such impairment was recorded during the three years ended December 31, 2016. Mortgage Loans Eligible for Repurchase The terms of the Ginnie Mae MBS program allow, but do not require, the Company to repurchase mortgage loans when the borrower has made no payments for three consecutive months. As a result of this right, the Company recognizes the mortgage loans in Mortgage loans eligible for repurchase at their unpaid principal balances and records a corresponding liability in Liability for mortgage loans eligible for repurchase on its consolidated balance sheets. Margin Deposits Margin deposits represents deposits that serve as collateral for various agreements the Company has entered into, such as derivative contracts and certain repurchase agreements. Margin deposits are included in Other assets in the Company’s consolidated balance sheets. Borrowings The carrying value of borrowings other than ESS are based on the accrued cost of the agreements. The costs of creating the facilities underlying the agreements are included in the carrying value of the agreements and are amortized to Interest expense over the terms of the respective borrowing facilities. Excess Servicing Spread Financing at Fair Value The Company finances certain of its purchases of Agency MSRs through the sale to PMT of the right to receive the excess of the servicing fee rate over a specified rate of the underlying MSRs. This excess is referred to as the ESS. ESS is carried at its fair value. Changes in fair value are recognized in current period income in Change in fair value of excess servicing spread payable to PennyMac Mortgage Investment Trust . Interest expense for ESS is accrued using the interest method based upon the expected cash flows from the ESS through the expected life of the underlying mortgage loans. Liability for Losses Under Representations and Warranties The Company provides for its estimate of the losses that it expects to incur in the future as a result of its breach of the representations and warranties that it provides to the purchasers and insurers of the mortgage loans it has sold. The Company’s agreements with the Agencies and other investors include representations and warranties related to the mortgage loans the Company sells to the Agencies and other investors. The representations and warranties require adherence to Agency and other investor origination and underwriting guidelines, including but not limited to the validity of the lien securing the mortgage loan, property eligibility, borrower credit, income and asset requirements, and compliance with applicable federal, state and local law. In the event of a breach of its representations and warranties, the Company may be required to either repurchase the mortgage loans with the identified defects or indemnify the investor or insurer. In such cases, the Company bears any subsequent credit loss on the mortgage loans. The Company’s credit loss may be reduced by any recourse it may realize from correspondent mortgage loan sellers that, in turn, had sold such mortgage loans to PMT and breached similar or other representations and warranties. In such event, the Company has the right to seek a recovery of related repurchase losses from that correspondent mortgage loan sellers, through PMT. The Company records a provision for losses relating to representations and warranties as part of its mortgage loan sale transactions. The method used to estimate the liability for representations and warranties is a function of the representations and warranties given and considers a combination of factors, including, but not limited to, estimated future defaults and mortgage loan repurchase rates, the estimated severity of loss in the event of default and the probability of reimbursement by the correspondent mortgage loan seller. The Company establishes a liability at the time mortgage loans are sold and periodically updates its liability estimate. The level of the liability for representations and warranties is reviewed and approved by the Company’s management credit committee. The level of the liability for representations and warranties is difficult to estimate and requires considerable management judgment. The level of mortgage loan repurchase losses is dependent on economic factors, investor repurchase demand or insurer claim denial strategies, and other external conditions that may change over the lives of the underlying mortgage loans. The Company’s representations and warranties are generally not subject to stated limits of exposure. However, the Company believes that the current unpaid principal balance of mortgage loans sold to date represents the maximum exposure to repurchases related to representations and warranties. The Company believes the range of reasonably possible losses in relation to the recorded liability is not material to its financial condition or income. Mortgage Loan Servicing Fees Mortgage loan servicing fees and other remuneration are received by the Company for servicing residential mortgage loans. Mortgage loan servicing fees are recorded net of Agency guarantee fees paid by the Company. Mortgage loan servicing fees are recognized as earned over the life of the mortgage loans in the servicing portfolio. Stock‑Based Compensation The Company’s 2013 Equity Incentive Plan provides for awards of nonstatutory and incentive stock options, time‑based restricted stock units, performance‑based restricted stock units, stock appreciation rights, performance units and stock grants. The Company establishes the cost of its share-based awards at the awards’ fair values at the grant date of the awards. The Company estimates the fair value of time‑based restricted stock units and performance‑based restricted stock units awarded with reference to the fair value of its underlying common stock on the date of the award. The Company estimates the fair value of its stock option awards with reference to the expected volatility of its shares of common stock and risk-free interest rate for the period that exercisable stock options are expected to be outstanding. Compensation costs are fixed, except for performance‑based restricted stock units, as of the award date as all grantees are employees of PennyMac or directors of the Company. The cost of performance share units is adjusted in each reporting period after the grant for changes in expected performance attainment until the performance share units vest. The Company amortizes the cost of stock based awards to compensation expense over the vesting period using the graded vesting method. Expense relating to awards is included in Compensation expense in the consolidated statements of income. Income Taxes The Company is subject to federal and state income taxes. Income taxes are provided using the asset and liability method. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using the enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred taxes of a change in tax rates is recognized in income in the period in which the change occurs. A valuation allowance is established if, in management’s judgment, it is not more likely than not that a deferred tax asset will be realized. The Company recognizes tax benefits relating to its tax positions only if, in the opinion of management, it is more likely than not that the tax position will be sustained upon examination by the appropriate taxing authority. A tax position that meets this standard is recognized as the largest amount that is greater than 50% likely to be realized upon ultimate settlement with the appropriate taxing authority. The Company will classify any penalties and interest as a component of provision for income taxes. As a result of the PennyMac recapitalization and reorganization, the Company expects to benefit from amortization and other tax deductions due to increases in the tax basis of PennyMac’s assets from the exchange of PennyMac Class A units. Those deductions will be allocated to the Company and will be taken into account in reporting the Company’s taxable income. The Company has entered into an agreement with the unitholders of PennyMac that will provide for the additional payment by the Company to exchanging unitholders of PennyMac equal to 85% of the amount of cash savings, if any, in U.S. federal, state and local income tax that PFSI realizes due to (i) increases in tax basis resulting from exchanges of the then‑existing unitholders and (ii) certain other tax benefits related to PFSI entering into the tax receivable agreement, including tax benefits attributable to payments under the tax receivable agreement. Variable Interest Held in Unconsolidated Variable Interest Entities A Variable Interest Entity (“VIE”) is an entity having either a total equity investment that is insufficient to finance its activities without additional subordinated financial support or equity investors at risk that lack the ability to control the entity’s activities. Variable interests are investments or other interests that will absorb portions of a VIE’s expected losses or receive portions of the VIE’s expected residual returns. PFSI consolidates the assets and liabilities of VIEs of which the Company is the primary beneficiary. The primary beneficiary is the party that has both the power to direct the activities that most significantly impact the VIE and holds a variable interest that could potentially be significant to the VIE. To determine whether a variable interest the Company holds could potentially be significant to the VIE, the Company considers both quantitative and qualitative factors regarding the nature, size and form of its involvement with the VIE. The Company assesses whether it is the primary beneficiary of a VIE on an ongoing basis. PMOFA is the general partner of the Master Fund. The Master Fund wholly owns PennyMac Mortgage Co. Funding, LLC (“Funding, LLC”) and PennyMac Mortgage Co., LLC. Funding LLC is the majority interest holder in PennyMac Loan Trust 2015‑NPL1 (the “Trust”), which holds the mortgage loans for Funding LLC. PLS provides mortgage loan servicing for the mortgage loans held by the Trust as well as for mortgage loans held by the Mortgage Co. The related party group constituting the Company and its affiliates (including PMOFA) has an equity interest in the Master Fund, the ultimate parent of the Trust, Mortgage Co and Funding, LLC. The direct equity holders in the Trust, Mortgage Co and Funding, LLC, however, do not have power to direct the activities of the respective entities and as such, both the Trust and Mortgage Co are considered to be VIEs as defined in the Consolidations topic of the Codification. The Company is not the primary beneficiary in these VIEs, given it does not represent the enterprise within the related party group that is most closely associated with these VIEs and, as such, the Company does not consolidate these VIEs. Exposure to loss of the related party group from the unconsolidated VIEs is limited to the contributed capital of the related party group in the Master Fund totaling $2,000 which represents the general partnership interest held by PMOFA in the Master Fund. |
Transactions with Affiliates
Transactions with Affiliates | 12 Months Ended |
Dec. 31, 2016 | |
Transactions with Affiliates | |
Transactions with Affiliates | Note 4—Transactions with Affiliates Transactions with PMT Operating Activities Mortgage Loan Production Activities and MSR Recapture Before September 12, 2016, the Company was entitled to a fulfillment fee based on the type of mortgage loan that PMT acquires and equal to a percentage of the UPB of such mortgage loan. The applicable fulfillment fee percentages were (i) 0.50% for conventional mortgage loans, (ii) 0.88% for loans sold in accordance with the Ginnie Mae Mortgage‑Backed Securities Guide, and (iii) 0.50% for all other mortgage loans not contemplated above; provided, however, that the Company was permitted, in its sole discretion, to reduce the amount of the applicable fulfillment fee and credit the amount of such reduction to the reimbursement otherwise due as described below. This reduction was only credited to the reimbursement applicable to the month in which the related mortgage loan was funded. Effective September 12, 2016, the applicable fulfillment fee percentages are (i) 0.35% for mortgage loans sold or delivered to Fannie Mae or Freddie Mac, and (ii) 0.85% for all other mortgage loans; provided however, that no fulfillment fee shall be due or payable to the Company with respect to any Ginnie Mae mortgage loans. PMT does not hold the Ginnie Mae approval required to issue Ginnie Mae MBS and act as a servicer. Accordingly, under the MBS agreement, the Company currently purchases mortgage loans underwritten in accordance with the Ginnie Mae Mortgage-Backed Securities Guide “as is” and without recourse of any kind from PMT at PMT’s cost less an administrative fee plus accrued interest and a sourcing fee ranging from two to three and one-half basis points, generally based on the average number of calendar days mortgage loans are held by PMT prior to purchase by the Company. In consideration for the mortgage banking services provided by the Company with respect to PMT’s acquisition of mortgage loans under the Company’s early purchase program, The Company is entitled to fees accruing (i) at a rate equal to $1,500 per year per early purchase facility administered by the Company, and (ii) in the amount of $35 for each mortgage loan that PMT acquires thereunder. Pursuant to the terms of an amended and restated MSR recapture agreement, effective September 12, 2016, if the Company refinances through its consumer direct lending business mortgage loans for which PMT previously held the MSRs, the Company is generally required to transfer and convey to one of PMT’s wholly‑owned subsidiaries without cost to PMT, the MSRs with respect to new mortgage loans originated in those refinancings (or, under certain circumstances, other mortgage loans) that have an aggregate UPB that is not less than 30% of the aggregate UPB of all the mortgage loans so originated. Where the fair value of the aggregate MSRs to be transferred for the applicable month is less than $200,000, the Company may, at its option, pay cash to PMT in an amount equal to such fair value instead of transferring such MSRs. The MSR recapture agreement expires, unless terminated earlier in accordance with the agreement, on September 12, 2020, subject to automatic renewal for additional 18-month periods, unless terminated earlier in accordance with the terms of the agreement. Following is a summary of loan production activities and MSR recapture between the Company and PMT: Year ended December 31, 2016 2015 2014 (in thousands) Mortgage servicing rights and excess servicing spread recapture incurred included in Net gains on mortgage loans for sale at fair value $ $ $ Fulfillment fee revenue $ $ $ Unpaid principal balance of mortgage loans fulfilled for PMT $ $ $ Sourcing fees paid to PMT $ $ $ Unpaid principal balance of mortgage loans purchased from PMT $ $ $ Proceeds from sale of mortgage loans held for sale to PMT $ $ $ Tax service fees received from PMT included in Mortgage loan origination fees $ $ $ Early purchase program fees earned from PMT included in Mortgage loan servicing fees $ $ — $ — Mortgage Loan Servicing The Company has a loan servicing agreement with PMT. The servicing agreement provides for servicing fees of per‑loan monthly amounts based on the delinquency, bankruptcy and/or foreclosure status of the serviced mortgage loan or the REO. The Company also remains entitled to customary ancillary income and market-based fees and charges, including boarding and deboarding fees, liquidation and disposition fees, assumption, modification and origination fees and late charges relating to mortgage loans it services for the PMT. The servicing agreement was amended and restated as of September 12, 2016; however, the fee structure was not amended in any material respect. · The base servicing fee rates for distressed whole mortgage loans range from $30 per month for current loans up to $100 per month for loans where the borrower has declared bankruptcy. The base servicing fee rate for REO is $75 per month. To the extent the Company facilitates rentals of PMT's REO under its REO rental program, the Company collects an REO rental fee of $30 per month per REO, an REO property lease renewal fee of $100 per lease renewal, and a property management fee in an amount equal to the Company’s cost if property management services and/or any related software costs are outsourced to a third-party property management firm or 9% of gross rental income if the Company provides property management services directly. The Company is also entitled to retain any tenant paid application fees and late rent fees and seek reimbursement for certain third-party vendor fees. · The base servicing fees for non-distressed mortgage loans are calculated through a monthly per-loan dollar amount, with the actual dollar amount for each loan based on whether the mortgage loan is a fixed-rate or adjustable-rate loan. The base servicing fee rates are $7.50 per month and $8.50 per month for fixed-rate loans and adjustable-rate loans, respectively. · The Company is also entitled to certain activity-based fees for distressed whole mortgage loans that are charged based on the achievement of certain events. These fees range from 0.50% for a streamline modification to 1.50% for a liquidation and $500 for a deed-in-lieu of foreclosure. The Company is not entitled to earn more than one liquidation fee, reperformance fee or modification fee in any 18-month period. · Because PMT has limited employees and infrastructure, the Company is required to provide a range of services and activities significantly greater in scope than the services provided in connection with a customary servicing arrangement. For these services, the Company receives a supplemental servicing fee of $25 per month for each distressed whole mortgage loan. The Company is entitled to reimbursement for all customary, good faith reasonable and necessary out-of-pocket expenses incurred by the Company in performance of its servicing obligations. · Except as otherwise provided in the MSR recapture agreement, when the Company effects a refinancing of a mortgage loan on behalf of PMT and not through a third-party lender and the resulting mortgage loan is readily saleable, or the Company originates a loan to facilitate the disposition of the real estate acquired by PMT in settlement of a mortgage loan, the Company is entitled to receive from PMT market-based fees and compensation consistent with pricing and terms the Company offers unaffiliated parties on a retail basis. · The Company is entitled to retain any incentive payments made to it and to which it is entitled under HAMP; provided, however, that with respect to any such incentive payments paid to the Company in connection with a mortgage loan modification for which PMT previously paid the Company a modification fee, the Company is required to reimburse PMT an amount equal to the incentive payments. The servicing agreement expires on September 12, 2020, subject to automatic renewal for additional 18-month periods, unless terminated earlier in accordance with the terms of the agreement. Following is a summary of mortgage loan servicing fees earned from PMT: Year ended December 31, 2016 2015 2014 (in thousands) Mortgage loans acquired for sale at fair value: Base and supplemental $ $ $ Activity-based Mortgage loans at fair value: Base and supplemental Activity-based Mortgage servicing rights: Base and supplemental Activity-based $ $ $ Investment Management Activities The Company has a management agreement with PMT. The management agreement provides that: · The base management fee is calculated quarterly and is equal to the sum of (i) 1.5% per year of PMT’s average shareholders’ equity up to $2 billion, (ii) 1.375% per year of PMT’s average shareholders’ equity in excess of $2 billion and up to $5 billion, and (iii) 1.25% per year of PMT’s average shareholders’ equity in excess of $5 billion. · The performance incentive fee is calculated at a defined annualized percentage of the amount by which PMT’s “net income,” on a rolling four‑quarter basis and before deducting the incentive fee, exceeds certain levels of return on “equity.” The performance incentive fee is calculated quarterly and is equal to the sum of: (a) 10% of the amount by which PMT’s net income for the quarter exceeds (i) an 8% return on equity plus the “high watermark,” up to (ii) a 12% return on PMT’s equity; plus (b) 15% of the amount by which PMT’s net income for the quarter exceeds (i) a 12% return on PMT’s equity plus the “high watermark,” up to (ii) a 16% return on PMT’s equity; plus (c) 20% of the amount by which PMT’s net income for the quarter exceeds a 16% return on equity plus the “high watermark.” For the purpose of determining the amount of the performance incentive fee: “Net income” is defined as net income or loss computed in accordance with GAAP adjusted for certain other non‑cash charges determined after discussions between the Company and PMT’s independent trustees and approval by a majority of PMT’s independent trustees. “Equity” is the weighted average of the issue price per common share of all of PMT’s public offerings, multiplied by the weighted average number of common shares outstanding (including restricted share units) in the rolling four‑quarter period. The “high watermark” starts at zero and is adjusted quarterly. The quarterly adjustment reflects the amount by which the net income (stated as a percentage of return on equity) in that quarter exceeds or falls short of the lesser of 8% and the average Fannie Mae 30‑year MBS yield (the “Target Yield”) for the four quarters then ended. If the net income is lower than the Target Yield, the high watermark is increased by the difference. If the net income is higher than the Target Yield, the high watermark is reduced by the difference. Each time a performance incentive fee is earned, the high watermark returns to zero. As a result, the threshold amounts required for the Company to earn a performance incentive fee are adjusted cumulatively based on the performance of PMT’s net income over (or under) the Target Yield, until the net income in excess of the Target Yield exceeds the then‑current cumulative high watermark amount, and a performance incentive fee is earned. The base management fee and the performance incentive fee are both receivable quarterly in arrears. The performance incentive fee may be paid in cash or a combination of cash and PMT’s common shares (subject to a limit of no more than 50% paid in common shares), at PMT’s option. The management agreement expires on September 12, 2020, subject to automatic renewal for additional 18-month periods, unless terminated earlier in accordance with the terms of the agreement. In the event of termination of the management agreement between PMT and the Company, the Company may be entitled to a termination fee in certain circumstances. The termination fee is equal to three times the sum of (a) the average annual base management fee, and (b) the average annual performance incentive fee earned by the Company, in each case during the 24-month period immediately preceding the date of termination. Following is a summary of the base management and performance incentive fees earned from PMT: Year ended December 31, 2016 2015 2014 (in thousands) Base management $ $ $ Performance incentive — $ $ $ Expense Reimbursement Under the management agreement, PMT reimburses the Company for its organizational and operating expenses, including third-party expenses, incurred on PMT’s behalf, it being understood that the Company and its affiliates shall allocate a portion of their personnel’s time to provide certain legal, tax and investor relations services for the direct benefit of PMT. With respect to the allocation of the Company’s and its affiliates personnel, from and after September 12, 2016, the Company shall be reimbursed $120,000 per fiscal quarter, such amount to be reviewed annually and not preclude reimbursement for any other services performed by the Company or its affiliates. PMT is also required to pay its pro rata portion of rent, telephone, utilities, office furniture, equipment, machinery and other office, internal and overhead expenses of the Company and its affiliates required for PMT’s and its subsidiaries’ operations. These expenses will be allocated based on the ratio of PMT’s proportion of gross assets compared to all remaining gross assets managed by the Company as calculated at each fiscal quarter end. The Company received reimbursements from PMT for expenses as follows: Year ended December 31, 2016 2015 2014 (in thousands) Reimbursement of: Common overhead incurred by the Company $ $ $ Expenses incurred on (the Company's) PMT's behalf, net $ $ $ Payments and settlements during the period (1) $ $ $ (1) Payments and settlements include payments for management fees and correspondent production activities itemized in the preceding tables and netting settlements made pursuant to master netting agreements between the Company and PMT. Conditional Reimbursement of Underwriting Fees In connection with the IPO of PMT’s common shares on August 4, 2009, the Company entered into an agreement with PMT pursuant to which PMT agreed to reimburse the Company for the $2.9 million payment that it made to the underwriters in such offering if PMT satisfied certain performance measures over a specified period (the “Conditional Reimbursement”). Effective February 1, 2013, the parties amended the terms of the reimbursement agreement to provide for the reimbursement to the Company of the Conditional Reimbursement if PMT is required to pay the Company performance incentive fees under the management agreement at a rate of $10 in reimbursement for every $100 of performance incentive fees earned. The reimbursement of the Conditional Reimbursement is subject to a maximum reimbursement in any particular 12 month period of $1.0 million and the maximum amount that may be reimbursed under the agreement is $2.9 million. The Company received Conditional Reimbursements totaling $0, $237,000 and $651,000 during the years ended December 31, 2016, 2015 and 2014, respectively. In the event a termination fee is payable to the Company under the management agreement, and the Company has not received the full amount of the reimbursements and payments under the reimbursement agreement, such amount will be paid in full. The term of the reimbursement agreement expires on February 1, 2019. Amounts due from and payable to PMT are summarized below: December 31, 2016 2015 (in thousands) Receivable from PMT: Servicing fees $ $ Management fees Correspondent production fees Fulfillment fees Allocated expenses and expenses incurred on PMT's behalf Conditional Reimbursement Interest on financing receivable $ $ Payable to PMT: Deposits made by PMT to fund servicing advances $ $ Mortgage servicing rights recapture payable Other $ $ Investing Activities Financing Receivable from PMT On December 19, 2016, the Company, through PLS, entered into a master repurchase agreement with one of PMT’s wholly-owned subsidiaries, PennyMac Holdings, LLC (“PMH”) (the “PMH Repurchase Agreement”), pursuant to which PMH may borrow from the Company for the purpose of financing PMH’s participation certificates representing beneficial ownership in ESS. PLS then re-pledges such participation certificates to PNMAC GMSR ISSUER TRUST (the “Issuer Trust”) under a master repurchase agreement by and among PLS, the Issuer Trust and PennyMac, as guarantor (the “PC Repurchase Agreement”). The Issuer Trust was formed for the purpose of allowing PLS to finance MSRs and ESS relating to such MSRs (the “GNMA MSR Facility”). In connection with the GNMA MSR Facility, PLS pledges and/or sells to the Issuer Trust participation certificates representing beneficial interests in MSRs and ESS pursuant to the terms of the PC Repurchase Agreement. In return, the Issuer Trust (a) has issued to PLS, pursuant to the terms of an indenture, the Series 2016-MSRVF1 Variable Funding Note, dated December 19, 2016, known as the “PNMAC GMSR ISSUER TRUST MSR Collateralized Notes, Series 2016-MSRVF1” (the “VFN”), and (b) may, from time to time pursuant to the terms of any supplemental indenture, issue to institutional investors additional term notes (“Term Notes”), in each case secured on a pari passu basis by the participation certificates relating to the MSRs and ESS. The maximum principal balance of the VFN is $1,000,000,000. The principal amount paid by PLS for the participation certificates under the PMH Repurchase Agreement is based upon a percentage of the market value of the underlying ESS. Upon PMH’s repurchase of the participation certificates, PMH is required to repay PLS the principal amount relating thereto plus accrued interest (at a rate reflective of the current market and consistent with the weighted average note rate of the VFN and any outstanding Term Notes) to the date of such repurchase. PLS is then required to repay the Issuer Trust the corresponding amount under the PC Repurchase Agreement. Prior to the Company’s entry into the PMH Repurchase Agreement and PC Repurchase Agreement in connection with the GNMA MSR facility, the Company was a party to a repurchase agreement with Credit Suisse First Boston Mortgage Capital LLC (“CSFB”) (the “MSR Repo”), pursuant to which it financed Ginnie Mae MSRs and servicing advance receivables and pledged to CSFB all of its rights and interests in any Ginnie Mae MSRs it owned or acquired, and a separate acknowledgement agreement with respect thereto, by and among Ginnie Mae, CSFB and the Company. In connection with the MSR Repo described above, the Company and PMT entered into an underlying loan and security agreement, dated as of April 30, 2015, pursuant to which PMT was able to borrow up to $150 million from the Company for the purpose of financing ESS (the “Underlying LSA”). In order to secure its borrowings, PMT pledged its ESS to the Company under the Underlying LSA and the Company, in turn, re-pledged such ESS to CSFB under the MSR Repo. The principal amount of the borrowings under the Underlying LSA was based upon a percentage of the market value of the ESS pledged by PMT, subject to the $150 million sublimit described above. Pursuant to the Underlying LSA, PMT granted to the Company a security interest in all of its right, title and interest in, to and under the ESS pledged to secure the borrowings. The Company and PMT agreed in connection with the Underlying LSA that PMT was required to repay the Company the principal amount of borrowings plus accrued interest to the date of such repayment, and the Company was required to repay CSFB the corresponding amount under the MSR Repo. Interest accrued on PMT’s note relating to the Underlying LSA at a rate based on CSFB’s cost of funds under the MSR Repo. PMT was also required to pay the Company a fee for the structuring of the Underlying LSA in an amount equal to the portion of the corresponding fee paid by the Company to CSFB and allocable to the $150 million relating to the ESS financing. The note receivable was replaced by the PMH Repurchase Agreement upon the closing of the GNMA MSR facility. Following is a summary of investing activities between the Company and PMT: Year ended December 31, 2016 2015 2014 (in thousands) Repurchase agreement with PennyMac Mortgage Investment Trust: Activity during the year: Refinancing of note receivable from PennyMac Mortgage Investment Trust $ $ — $ — Interest income $ $ — $ — Balance at end of year $ $ — $ — Note receivable from PennyMac Mortgage Investment Trust: Activity during the year: Advances to PennyMac Mortgage Investment Trust $ — $ $ — Repayments and refinancing with repurchase agreement from PennyMac Mortgage Investment Trust $ $ $ — Interest income $ $ $ — Balance at end of year $ — $ $ — Common shares of beneficial interest of PennyMac Mortgage Investment Trust: Activity during the year: Dividends received from PennyMac Mortgage Investment Trust $ $ $ Change in fair value of investment in common shares of PennyMac Mortgage Investment Trust $ $ $ Balance at end of year: Fair value $ $ Number of shares Financing Activities Spread Acquisition and MSR Servicing Agreements Effective February 1, 2013, the Company entered into a master spread acquisition and MSR servicing agreement (the “2/1/13 Spread Acquisition Agreement”), pursuant to which it sold to PMT or one of its wholly-owned subsidiaries the rights to receive certain ESS from MSRs acquired by the Company from banks and other third party financial institutions. The Company was generally required to service or subservice the related mortgage loans for the applicable Agency or investor. The terms of each transaction under the 2/1/13 Spread Acquisition Agreement were subject to the terms thereof, as modified and supplemented by the terms of a confirmation executed in connection with such transaction. To the extent the Company refinanced any of the mortgage loans relating to the ESS sold to PMT, the 2/1/13 Spread Acquisition Agreement contained recapture provisions requiring that the Company transfer to PMT, at no cost, the ESS relating to a certain percentage of the UPB of the newly originated mortgage loans. To the extent the fair value of the aggregate ESS to be transferred for the applicable month was less than $200,000, the Company was, at its option, permitted to pay cash to PMT in an amount equal to such fair value instead of transferring such ESS. On February 29, 2016, the parties terminated the 2/1/13 Spread Acquisition Agreement and all amendments thereto. In connection with the termination of the 2/1/13 Spread Acquisition Agreement, PLS reacquired from PMH all of its right, title and interest in and to all of the Fannie Mae ESS previously sold by PLS to PMH and then subject to such 2/1/13 Spread Acquisition Agreement. On December 19, 2014, the Company entered into a second master spread acquisition and MSR servicing agreement with PMT (the “12/19/14 Spread Acquisition Agreement”). The terms of the 12/19/14 Spread Acquisition Agreement are substantially similar to the terms of the 2/1/13 Spread Acquisition Agreement, except that the Company only intends to sell ESS relating to Freddie Mac MSRs under the 12/19/14 Spread Acquisition Agreement. To the extent the Company refinances any of the mortgage loans relating to the ESS it sells to PMT, the 12/19/14 Spread Acquisition Agreement also contains recapture provisions requiring that the Company transfer to PMT, at no cost, the ESS relating to a certain percentage of the UPB of the newly originated mortgage loans. To the extent the fair market value of the aggregate ESS to be transferred for the applicable month is less than $200,000, the Company may, at its option, pay cash to PMT in an amount equal to such fair market value in lieu of transferring such ESS. On February 29, 2016, PLS also reacquired from PMT all of its right, title and interest in and to all of the Freddie Mac ESS previously sold by PLS to PMT and then subject to such 12/19/14 Spread Acquisition Agreement. The 12/19/14 Spread Acquisition Agreement remains in full force and effect. On December 19, 2016, the Company amended and restated a third master spread acquisition and MSR servicing agreement with PMT (the “12/19/16 Spread Acquisition Agreement”). The terms of the 12/19/16 Spread Acquisition Agreement are substantially similar to the terms of the 2/1/13 Spread Acquisition Agreement and the 12/19/14 Spread Acquisition Agreement, except that the Company only intends to sell ESS relating to Ginnie Mae MSRs under the 12/19/16 Spread Acquisition Agreement. Pursuant to the 12/19/16 Spread Acquisition Agreement, the Company may sell to PMT, from time to time, the right to receive participation certificates representing beneficial ownership in ESS arising from Ginnie Mae MSRs acquired by the Company, in which case the Company generally would be required to service or subservice the related mortgage loans for Ginnie Mae. The primary purpose of the amendment and restatement was to facilitate the continued financing of the ESS owned by PMT in connection with the parties’ participation in the GNMA MSR Facility. To the extent the Company refinances any of the mortgage loans relating to the ESS it has acquired, the 12/19/16 Spread Acquisition Agreement also contains recapture provisions requiring that the Company transfer to PMT, at no cost, the ESS relating to a certain percentage of the unpaid principal balance of the newly originated mortgage loans. However, under the 12/19/16 Spread Acquisition Agreement, in any month where the transferred ESS relating to newly originated Ginnie Mae mortgage loans is not equivalent to at least 90% of the product of the excess servicing fee rate and the unpaid principal balance of the refinanced mortgage loans, the Company is also required to transfer additional ESS or cash in the amount of such shortfall. Similarly, in any month where the transferred ESS relating to modified Ginnie Mae mortgage loans is not equivalent to at least 90% of the product of the excess servicing fee rate and the unpaid principal balance of the modified mortgage loans, the 12/19/16 Spread Acquisition Agreement contains provisions that require the Company to transfer additional ESS or cash in the amount of such shortfall. To the extent the fair market value of the aggregate ESS to be transferred for the applicable month is less than $200,000, the Company may, at its option, wire cash to PMT in an amount equal to such fair market value in lieu of transferring such ESS. Following is a summary of financing activity between the Company and PMT: Year ended December 31, 2016 2015 2014 (in thousands) Excess servicing spread financing: Issuance: Cash $ - $ $ Pursuant to recapture agreement $ $ Repayment $ $ $ Settlement $ $ - $ - Change in fair value $ $ $ Interest expense $ $ $ Recapture incurred pursuant to refinancings by the Company of mortgage loans subject to excess servicing spread financing included in Net gains on mortgage loans held for sale at fair value $ $ $ Investment Funds The Company has investment management agreements with the Investment Funds pursuant to which it receives management fees consisting of base management fees and carried interest. The management fees are based on the lesser of the funds’ net asset values or aggregate capital contributions. The base management fees accrue at annual rates ranging from 1.5% to 2.0% of the applicable amounts on which they are based. The Carried Interest that the Company recognizes from the Investment Funds is determined by the Investment Funds’ performance and its contractual rights to share in the Investments Funds’ returns in excess of the preferred returns, if any, accruing to the funds’ investors. The Company recognizes Carried Interest as a participation in the profits in the Investment Funds after the investors in the Investment Funds have achieved a preferred return as defined in the fund agreements. After the investors have achieved the preferred returns specified in the respective fund agreements, a “catch up” return accrues to the Company until it receives a specified percentage of the preferred return. Thereafter, the Company participates in future returns in excess of the preferred return at the rates specified in the fund agreements. The amount of the Carried Interest that the Company receives depends on the Investment Funds’ future performance. As a result, the amount of Carried Interest recorded by the Company at period end is subject to adjustment based on future results of the Investment Funds and may be reduced as a result of subsequent performance. However, the Company is not required to pay guaranteed returns to the Investment Funds and the amount of Carried Interest will only be reversed to the extent of amounts previously recognized. The Investment Funds will continue in existence through December 31, 2017, subject to two one-year extensions at the Company’s discretion, in accordance with the terms of the limited liability company and limited partnership agreements that govern the Investment Funds. The Company also has loan servicing agreements with the Investment Funds. The loan servicing to be provided by the Company under the loan servicing agreements with the Investment Funds includes collecting principal, interest and escrow account payments, if any, with respect to mortgage loans, as well as managing loss mitigation, which may include, among other things, collection activities, loan workouts, modifications, foreclosures and short sales. The Company may also engage in certain loan origination activities that include refinancing mortgage loans and arranging financings that facilitate sales of real estate owned properties. The loan servicing agreements with the Investment Funds generally provide for fee revenue, which varies depending on the type and quality of the loans being serviced. The Company is also entitled to certain customary market-based fees and charges. This arrangement was modified, effective January 1, 2012, with respect to one of the Investment Funds. At that time, the Company settled its accrued servicing fee rebate and amended its loan servicing agreement with such fund to charge scheduled servicing fees in place of the previous “at cost” servicing arrangement. Amounts due from and payable to the Investment Funds are summarized below: December 31, 2016 2015 (in thousands) Carried Interest due from Investment Funds: PNMAC Mortgage Opportunity Fund, LLC $ $ PNMAC Mortgage Opportunity Fund Investors, LLC $ $ Receivable from Investment Funds: Management fees $ $ Mortgage loan servicing fee rebate deposit Expense reimbursements Mortgage loan servicing fees $ $ Payable to Investment Funds: Deposits received to fund servicing advances $ $ Other $ $ Exchanged Private National Mortgage Acceptance Company, LLC Unitholders As discussed in Note 3, Significant Accounting Policies, the Company entered into a tax receivable agreement with PennyMac’s existing unitholders on the date of the Company’s initial public offering that will provide for the payment by the Company to PennyMac’s exchanged unitholders in an amount equal to 85% of the amount of the benefits, if any, that the Company is deemed to realize as a result of (i) increases in tax basis resulting from such unitholders’ exchanges and (ii) certain other tax benefits related to entering into the tax receivable agreement, including tax benefits attributable to payments under the tax receivable agreement. Following is a summary of activity in Payable to exchanged Private National Mortgage Acceptance Company, LLC unitholders under tax receivable agreement : Year ended December 31, 2016 2015 2014 (in thousands) Activity during the year: Liability resulting from unit exchanges $ $ $ Payments under tax receivable agreement $ - $ $ - Revaluation of liability $ $ $ Balance at end of year $ $ |
Earnings Per Share of Common St
Earnings Per Share of Common Stock | 12 Months Ended |
Dec. 31, 2016 | |
Earnings Per Share of Common Stock | |
Earnings Per Share of Common Stock | Note 5—Earnings Per Share of Common Stock Basic earnings per share of common stock is determined using net income attributable to the Company’s common stockholders divided by the weighted average number of shares of common stock outstanding during the year. Diluted earnings per share of common stock is determined by dividing net income attributable to the Company’s common stockholders by the weighted average number of dilutive shares of common stock outstanding during the year. The Company applies the treasury stock method to determine the dilutive weighted average shares of common stock represented by the unvested stock-based compensation awards and the exchangeable PennyMac Class A units. The diluted earnings per share calculation assumes the exchange of these PennyMac Class A units for shares of common stock. Accordingly, earnings attributable to the Company’s common stockholders is also adjusted to include the earnings allocated to the PennyMac Class A units after taking into account the income taxes applicable to the earnings attributable to the shares of common stock assumed to be exchanged. The following table summarizes the basic and diluted earnings per share calculations: Year ended December 31, 2016 2015 2014 (in thousands, except per share data) Basic earnings per share of common stock: Net income attributable to PennyMac Financial Services, Inc. common stockholders $ $ $ Weighted average shares of common stock outstanding Basic earnings per share of common stock $ $ $ Diluted earnings per share of common stock: Net income attributable to PennyMac Financial Services, Inc. common stockholders $ $ $ Effect of net income attributable to PennyMac Class A units exchangeable to common stock, net of income taxes Diluted net income attributable to common stockholders $ $ $ Weighted average shares of common stock outstanding Dilutive shares: PennyMac Class A units exchangeable to common stock Non-vested PennyMac Class A units issuable under unit-based stock compensation plan and exchangeable to common stock — Common shares issuable under stock-based compensation plan Diluted weighted average shares of common stock outstanding Diluted earnings per share of common stock $ $ $ The following table summarizes the anti-dilutive weighted-average number of outstanding stock options and performance-based restricted stock units (“RSUs”): Year ended December 31, 2016 2015 2014 (in thousands, except exercise price data) Stock options (1) Performance-based RSUs (2) Total anti-dilutive stock-based compensation units Weighted-average exercise price of anti-dilutive stock options (1) $ $ $ (1) Certain stock options were outstanding but not included in the computation of diluted earnings per share because the weighted-average exercise prices were above the average stock prices during the year. (2) Certain performance-based RSUs were outstanding but not included in the computation of earnings per share because the performance thresholds included in such RSUs have not been achieved. |
Loan Sales and Servicing Activi
Loan Sales and Servicing Activities | 12 Months Ended |
Dec. 31, 2016 | |
Loan Sales and Servicing Activities | |
Loan Sales and Servicing Activities | Note 6—Loan Sales and Servicing Activities The Company originates or purchases and sells mortgage loans in the secondary mortgage market without recourse for credit losses. However, the Company maintains continuing involvement with the mortgage loans in the form of servicing arrangements and the liability under representations and warranties it makes to purchasers and insurers of the mortgage loans. The following table summarizes cash flows between the Company and transferees as a result of the sale of mortgage loans in transactions where the Company maintains continuing involvement as servicer with the mortgage loans: Year ended December 31, 2016 2015 2014 (in thousands) Cash flows: Sales proceeds $ $ $ Servicing fees received (1) $ $ $ Net servicing advances $ $ $ Year end information: Unpaid principal balance of mortgage loans outstanding at end of year $ $ $ Delinquencies: 30-89 days $ $ $ 90 days or more: Not in foreclosure $ $ $ In foreclosure $ $ $ Foreclosed $ $ $ Bankruptcy $ $ $ (1) Net of guarantees paid to the Agencies The Company’s mortgage servicing portfolio in UPB is summarized as follows: December 31, 2016 Contract Total Servicing servicing and mortgage rights owned subservicing loans serviced (in thousands) Investor: Non-affiliated entities $ $ — $ Affiliated entities — Mortgage loans held for sale — $ $ $ Commercial real estate loans subserviced for the Company $ — $ $ Delinquent mortgage loans: 30 days $ $ $ 60 days 90 days or more: Not in foreclosure In foreclosure Foreclosed $ $ $ Bankruptcy $ $ $ Custodial funds managed by the Company (1) $ $ $ (1) Borrower and investor custodial cash accounts relate to mortgage loans serviced under the servicing agreements and are not recorded on the Company’s consolidated balance sheets. The Company earns placement fees on certain of the custodial funds it manages on behalf of the mortgage loans’ investors, which is recorded as part of the Interest income in the Company’s consolidated statements of income. December 31, 2015 Contract Total Servicing servicing and mortgage rights owned subservicing loans serviced (in thousands) Investor: Non-affiliated entities $ $ — $ Affiliated entities — Mortgage loans held for sale — $ $ $ Commercial real estate loans subserviced for the Company $ — $ $ Delinquent mortgage loans: 30 days $ $ $ 60 days 90 days or more: Not in foreclosure In foreclosure Foreclosed $ $ $ Bankruptcy $ $ $ Custodial funds managed by the Company (1) $ $ $ (1) Borrower and investor custodial cash accounts relate to mortgage loans serviced under the servicing agreements and are not recorded on the Company’s consolidated balance sheets. The Company earns placement fees on certain of the custodial funds it manages on behalf of the mortgage loans’ investors, which is recorded as part of the Interest income in the Company’s consolidated statements of income. Following is a summary of the geographical distribution of mortgage loans included in the Company’s servicing portfolio for the top five and all other states as measured by UPB: December 31, State 2016 2015 (in thousands) California $ $ Texas Virginia Florida Maryland All other states $ $ |
Netting of Financial Instrument
Netting of Financial Instruments | 12 Months Ended |
Dec. 31, 2016 | |
Netting of Financial Instruments | |
Netting of Financial Instruments | Note 7—Netting of Financial Instruments The Company uses derivative financial instruments to manage exposure to interest rate risk for the IRLCs it makes to purchase or originate mortgage loans at specified interest rates, its inventory of mortgage loans held for sale and MSRs. The Company has elected to present net derivative asset and liability positions, and cash collateral obtained from (or posted to) its counterparties when subject to a master netting arrangement that is legally enforceable on all counterparties in the event of default. The derivatives that are not subject to a master netting arrangement are IRLCs. Following are summaries of derivative assets and related netting amounts. Offsetting of Derivative Assets December 31, 2016 December 31, 2015 Gross Gross amount Net amount Gross Gross amount Net amount amount of offset in the of assets in the amount of offset in the of assets in the recognized consolidated consolidated recognized consolidated consolidated assets balance sheet balance sheet assets balance sheet balance sheet (in thousands) Derivatives not subject to master netting arrangements - Interest rate lock commitments $ $ — $ $ $ — $ Derivatives subject to a master netting arrangements: Forward purchase contracts — — Forward sale contracts — — MBS put options — — MBS call options — — — Put options on interest rate futures purchase contracts — — Call options on interest rate futures purchase contracts — — Netting — — $ $ $ $ $ $ Derivative Assets, Financial Assets, and Collateral Held by Counterparty The following table summarizes by significant counterparty the amount of derivative asset positions after considering master netting arrangements and financial instruments or cash pledged that do not meet the accounting guidance qualifying for netting. December 31, 2016 December 31, 2015 Gross amount not Gross amount not offset in the offset in the consolidated consolidated balance sheet balance sheet Net amount Net amount of assets in the Cash of assets in the Cash consolidated Financial collateral Net consolidated Financial collateral Net balance sheet instruments received amount balance sheet instruments received amount (in thousands) Interest rate lock commitments $ $ — $ — $ $ $ — $ — $ Barclays Capital — — — — RJ O'Brien — — — — Jefferies & Co. — — — — Goldman Sachs — — — — — — Federal National Mortgage Association — — — — — — Others — — — — $ $ — $ — $ $ $ — $ — $ Offsetting of Derivative Liabilities and Financial Liabilities Following is a summary of net derivative liabilities and assets sold under agreements to repurchase and related netting amounts. As discussed above, all derivatives with the exception of IRLCs are subject to master netting arrangements. The assets sold under agreements to repurchase do not qualify for netting. December 31, 2016 December 31, 2015 Net Net amount amount Gross Gross amount of liabilities Gross Gross amount of liabilities amount of offset in the in the amount of offset in the in the recognized consolidated consolidated recognized consolidated consolidated liabilities balance sheet balance sheet liabilities balance sheet balance sheet (in thousands) Derivatives not subject to master netting arrangements - IRLCs $ $ — $ $ $ — $ Derivatives subject to a master netting arrangement: Forward purchase contracts — — Forward sale contracts — — Put options on interest rate futures purchase contracts — — — — Call options on interest rate futures purchase contracts — — — — Netting — — Total derivatives Mortgage loans sold under agreements to repurchase: Amount outstanding — — Unamortized debt issuance costs — — — — $ $ $ $ $ $ Derivative Liabilities, Financial Liabilities, and Collateral Held by Counterparty The following table summarizes by significant counterparty the amount of derivative liabilities and assets sold under agreements to repurchase after considering master netting arrangements and financial instruments or cash pledged that does not qualify under the accounting guidance for netting. All assets sold under agreements to repurchase are secured by sufficient collateral or have fair value that exceeds the liability amount recorded on the consolidated balance sheets. December 31, 2016 December 31, 2015 Gross amounts Gross amounts not offset in the not offset in the Net amount consolidated Net amount consolidated of liabilities balance sheet of liabilities balance sheet in the Cash in the Cash consolidated Financial collateral Net consolidated Financial collateral Net balance sheet instruments pledged amount balance sheet instruments pledged amount (in thousands) Interest rate lock commitments $ $ — $ — $ $ $ — $ — $ Credit Suisse First Boston Mortgage Capital LLC — — Bank of America, N.A. — — Morgan Stanley Bank, N.A. — — JP Morgan Chase Bank, N.A. — — — — Citibank, N.A. — — Barclays Capital — — — — — — Royal Bank of Canada — — — — — — BNP Paribas — — — — Federal National Mortgage Association — — — — — — Goldman Sachs — — — — — — Others — — — — $ $ $ — $ $ $ $ — $ |
Fair Value
Fair Value | 12 Months Ended |
Dec. 31, 2016 | |
Fair Value | |
Fair Value | Note 8—Fair Value The Company’s consolidated financial statements include assets and liabilities that are measured based on their fair values. The application of fair value may be on a recurring or nonrecurring basis depending on the accounting principles applicable to the specific asset or liability and whether management has elected to carry the item at its fair value as discussed in the following paragraphs. Fair Value Accounting Elections Management identified all of its non-cash financial assets, its originated MSRs relating to loans with initial interest rates of more than 4.5%, its purchased MSRs and its MSLs to be accounted for at fair value so changes in fair value will be reflected in income as they occur and more timely reflect the results of the Company’s performance. Management has also identified its ESS financing to be accounted for at fair value as a means of hedging the related MSRs’ fair value risk. The Company’s subsequent accounting for MSRs and MSLs is based on the class of MSR or MSL. Originated MSRs backed by mortgage loans with initial interest rates of less than or equal to 4.5% are accounted for using the amortization method. Originated MSRs backed by loans with initial interest rates of more than 4.5% and purchased MSRs financed in part by ESS are accounted for at fair value with changes in fair value recorded in current period income. MSLs are carried at fair value with changes in fair value recorded in current period income. Assets and Liabilities Measured at Fair Value on a Recurring Basis Following is a summary of assets and liabilities that are measured at fair value on a recurring basis: December 31, 2016 Level 1 Level 2 Level 3 Total (in thousands) Assets: Short-term investments $ $ — $ — $ Mortgage loans held for sale at fair value — Derivative assets: Interest rate lock commitments — — Forward purchase contracts — — Forward sales contracts — — MBS put options — — MBS call options — — Put options on interest rate futures purchase contracts — — Call options on interest rate futures purchase contracts — — Total derivative assets before netting Netting — — — Total derivative assets Investment in PennyMac Mortgage Investment Trust — — Mortgage servicing rights at fair value — — $ $ $ $ Liabilities: Excess servicing spread financing at fair value payable to PennyMac Mortgage Investment Trust $ — $ — $ $ Derivative liabilities: Interest rate lock commitments — — Forward purchase contracts — — Forward sales contracts — — Total derivative liabilities before netting — Netting — — — Total derivative liabilities — Mortgage servicing liabilities at fair value — — $ — $ $ $ December 31, 2015 Level 1 Level 2 Level 3 Total (in thousands) Assets: Short-term investments $ $ — $ — $ Mortgage loans held for sale at fair value — Derivative assets: Interest rate lock commitments — — Forward purchase contracts — — Forward sales contracts — — MBS put options — — Put options on interest rate futures purchase contracts — — Call options on interest rate futures purchase contracts — — Total derivative assets before netting Netting — — — Total derivative assets Investment in PennyMac Mortgage Investment Trust — — Mortgage servicing rights at fair value — — $ $ $ $ Liabilities: Excess servicing spread financing at fair value payable to PennyMac Mortgage Investment Trust $ — $ — $ $ Derivative liabilities: Interest rate lock commitments — — Forward purchase contracts — — Forward sales contracts — — Put options on interest rate futures purchase contracts — — Call options on interest rate futures purchase contracts — — Total derivative liabilities before netting Netting — — — Total derivative liabilities Mortgage servicing liabilities at fair value — — $ $ $ $ As shown above, certain of the Company’s mortgage loans held for sale, IRLCs, MSRs at fair value, ESS financing at fair value and MSLs are measured using Level 3 fair value inputs. Following are roll forwards of these items for each of the three years ended December 31, 2016 where Level 3 fair value inputs were used: Year ended December 31, 2016 Mortgage Net interest Mortgage loans held rate lock servicing for sale commitments (1) rights Total (in thousands) Assets: Balance, December 31, 2015 $ $ $ $ Purchases — Sales — — Repayments — — Interest rate lock commitments issued, net — — Mortgage servicing rights resulting from mortgage loan sales — — Changes in fair value included in income arising from: Changes in instrument-specific credit risk — — Other factors — Transfers of mortgage loans held for sale from Level 3 to Level 2 (2) — — Transfers of interest rate lock commitments to mortgage loans held for sale — — Balance, December 31, 2016 $ $ $ $ Changes in fair value recognized during the year relating to assets still held at December 31, 2016 $ $ $ $ (1) For the purpose of this table, the interest rate lock asset and liability positions are shown net. (2) Mortgage loans held for sale are transferred from “Level 3” to “Level 2” as a result of the mortgage loan becoming saleable into active mortgage markets pursuant to a loan modification, borrower reperformance or resolution of deficiencies found in the borrowers’ credit files. Year ended December 31, 2016 Excess servicing Mortgage spread servicing financing liabilities Total (in thousands) Liabilities: Balance, December 31, 2015 $ $ $ Issuance of excess servicing spread financing: For cash — — — Pursuant to a recapture agreement with PennyMac Mortgage Investment Trust — Accrual of interest — Repayments — Settlement — Mortgage servicing liabilities accepted for cash — Mortgage servicing liabilities resulting from mortgage loan sales — Changes in fair value included in income Balance, December 31, 2016 $ $ $ Changes in fair value recognized during the year relating to liabilities still outstanding at December 31, 2016 $ $ $ Year ended December 31, 2015 Mortgage Net interest Mortgage loans held rate lock servicing for sale commitments (1) rights Total (in thousands) Assets: Balance, December 31, 2014 $ $ $ $ Purchases — Sales — — Repayments — — Interest rate lock commitments issued, net — — Mortgage servicing rights resulting from mortgage loan sales — — Changes in fair value included in income arising from: Changes in instrument-specific credit risk — — Other factors — Transfers of mortgage loans held for sale from Level 3 to Level 2 (2) — — Transfers of interest rate lock commitments to mortgage loans held for sale — — Balance, December 31, 2015 $ $ $ $ Changes in fair value recognized during the year relating to assets still held at December 31, 2015 $ $ $ $ (1) For the purpose of this table, the interest rate lock asset and liability positions are shown net. (2) Mortgage loans held for sale are transferred from “Level 3” to “Level 2” as a result of the mortgage loan becoming saleable into active mortgage markets pursuant to a loan modification, borrower reperformance or resolution of deficiencies found in the borrowers’ credit files. Year ended December 31, 2015 Excess servicing Mortgage spread servicing financing liabilities Total (in thousands) Liabilities: Balance, December 31, 2014 $ $ $ Issuance of excess servicing spread financing: For cash — Pursuant to a recapture agreement with PennyMac Mortgage Investment Trust — Mortgage servicing liabilities resulting from mortgage loan sales — Accrual of interest — Repayments — Changes in fair value included in income Balance, December 31, 2015 $ $ $ Changes in fair value recognized during the year relating to liabilities still outstanding at December 31, 2015 $ $ $ Year ended December 31, 2014 Mortgage Net interest Mortgage loans held rate lock servicing for sale commitments (1) rights Total (in thousands) Assets: Balance December 31, 2013 $ $ $ $ Purchases — Sales — Repayments — — Interest rate lock commitments issued, net — — Mortgage servicing rights resulting from mortgage loan sales — — Changes in fair value included in income arising from: Changes in instrument-specific credit risk — — — — Other factors Transfers of mortgage loans held for sale from Level 3 to Level 2 (2) — — Transfers of interest rate lock commitments to mortgage loans held for sale — — Balance, December 31, 2014 $ $ $ $ Changes in fair value recognized during the year relating to assets still held at December 31, 2014 $ $ $ $ (1) For the purpose of this table, the interest rate lock asset and liability positions are shown net. (2) Mortgage loans held for sale are transferred from “Level 3” to “Level 2” as a result of the mortgage loan becoming saleable into active mortgage markets pursuant to a loan modification, borrower reperformance or resolution of deficiencies found in the borrowers’ credit files. Year ended December 31, 2014 Excess servicing Mortgage spread servicing financing liabilities Total (in thousands) Liabilities: Balance December 31, 2013 $ $ — $ Issuance of excess servicing spread financing: For cash — Pursuant to a recapture agreement with PennyMac Mortgage Investment Trust — Mortgage servicing liabilities resulting from mortgage loan sales — Accrual of interest — Repayments — Changes in fair value included in income Balance, December 31, 2014 $ $ $ Changes in fair value recognized during the year relating to liabilities still outstanding at December 31, 2014 $ $ $ The information used in the preceding roll forwards represents activity for any assets and liabilities measured at fair value on a recurring basis and identified as using “Level 3” significant fair value inputs at either the beginning or the end of the periods presented. The Company had transfers among the fair value levels arising from transfers of IRLCs to mortgage loans held for sale at fair value upon purchase or funding of the respective mortgage loans and from the return to salability in the active secondary market of certain mortgage loans held for sale. Assets and Liabilities Measured at Fair Value under the Fair Value Option Net changes in fair values included in income for assets and liabilities carried at fair value as a result of management’s election of the fair value option by income statement line item are summarized below: Year ended December 31, 2016 2015 2014 Net gains on Net Net gains on Net Net gains on Net mortgage mortgage mortgage mortgage mortgage mortgage loans held loan loans held loan loans held loan for sale at servicing for sale at servicing for sale at servicing fair value fees Total fair value fees Total fair value fees Total (in thousands) Assets: Mortgage loans held for sale at fair value $ $ — $ $ $ — $ $ $ — $ Mortgage servicing rights at fair value — — — $ $ $ $ $ $ $ $ $ Liabilities: Excess servicing spread financing at fair value payable to PennyMac Mortgage Investment Trust $ — $ $ $ — $ $ $ — $ $ Mortgage servicing liabilities at fair value — — — $ — $ $ $ — $ $ $ — $ $ Following are the fair value and related principal amounts due upon maturity of assets accounted for under the fair value option: December 31, 2016 Principal amount Fair due upon value maturity Difference (in thousands) Mortgage loans held for sale: Current through 89 days delinquent $ $ $ 90 days or more delinquent: Not in foreclosure In foreclosure $ $ $ December 31, 2015 Principal amount Fair due upon value maturity Difference (in thousands) Mortgage loans held for sale: Current through 89 days delinquent $ $ $ 90 days or more delinquent: Not in foreclosure In foreclosure $ $ $ Assets Measured at Fair Value on a Nonrecurring Basis Following is a summary of assets that are measured at fair value on a nonrecurring basis: December 31, 2016 Level 1 Level 2 Level 3 Total (in thousands) Mortgage servicing rights at lower of amortized cost or fair value $ — $ — $ $ Real estate acquired in settlement of loans — — $ — $ — $ $ December 31, 2015 Level 1 Level 2 Level 3 Total (in thousands) Mortgage servicing rights at lower of amortized cost or fair value $ — $ — $ $ $ — $ — $ $ The following table summarizes the total gains (losses) on assets measured at fair values on a nonrecurring basis: Year ended December 31, 2016 2015 2014 Mortgage servicing rights at lower of amortized cost or fair value $ $ $ Real estate acquired in settlement of loans — — $ $ $ Fair Value of Financial Instruments Carried at Amortized Cost The Company’s Financing receivable from PMT, Assets sold under agreements to repurchase , Mortgage loan participation and sale agreements , Notes payable , Obligations under capital lease and amounts receivable from and payable to the Advised Entities are carried at amortized cost. The Company’s borrowings carried at amortized cost do not have observable inputs and the fair value is measured using management’s estimate of fair value, where the inputs into the determination of fair value require significant management judgment or estimation. The Company has classified these financial instruments as “Level 3” fair value liabilities due to the lack of observable inputs to estimate their fair values. The Company has concluded that the fair value of the Financing receivable from PMT and the receivables from and payables to the Advised Entities approximate the carrying value due to their short terms and/or variable interest rates. Valuation Techniques and Inputs Most of the Company’s financial assets, a portion of its MSRs and its ESS financing and MSLs are carried at fair value with changes in fair value recognized in current period income. Certain of the Company’s financial assets and all of its MSRs, ESS and MSLs are “Level 3” fair value assets and liabilities which require the use of unobservable inputs that are significant to the estimation of the items’ fair values. Unobservable inputs reflect the Company’s own judgments about the factors that market participants use in pricing an asset or liability, and are based on the best information available under the circumstances. Due to the difficulty in estimating the fair values of “Level 3” fair value assets and liabilities, management has assigned the responsibility for estimating the fair value of these items to specialized staff and subjects the valuation process to significant senior management oversight. The Company’s Financial Analysis and Valuation group (the “FAV group”) is the Company’s specialized staff responsible for estimating the fair values of “Level 3” fair value assets and liabilities other than IRLCs. With respect to the non-IRLC “Level 3” valuations, the FAV group reports to the Company’s senior management valuation committee, which oversees and approves the valuations. The FAV group monitors the models used for valuation of the Company’s “Level 3” fair value assets and liabilities, including the models’ performance versus actual results, and reports those results to the Company’s senior management valuation committee. During 2016, the Company’s senior management valuation committee included the Company’s chief executive, financial, business development, risk and asset/liability management officers. The FAV group is responsible for reporting to the Company’s senior management valuation committee on a monthly basis on the changes in the valuation of the “Level 3” fair value assets and liabilities, including major factors affecting the valuation and any changes in model methods and inputs. To assess the reasonableness of its valuations, the FAV group presents an analysis of the effect on the valuation of changes to the significant inputs to the models. With respect to IRLCs, the Company has assigned responsibility for developing fair values to its Capital Markets Risk Management staff. The fair values developed by the Capital Markets Risk Management staff are reviewed by the Company’s Capital Markets Operations group. Following is a description of the techniques and inputs used in estimating the fair values of “Level 2” and “Level 3” fair value assets and liabilities. Mortgage Loans Held for Sale Most of the Company’s mortgage loans held for sale at fair value are saleable into active markets and are therefore categorized as “Level 2” fair value assets and their fair values are determined using their quoted market or contracted selling price or market price equivalent. Certain of the Company’s mortgage loans held for sale may become non-saleable into active markets due to identification of a defect by the Company or to the repurchase by the Company of a mortgage loan with an identified defect. The Company may also purchase certain delinquent government guaranteed or insured mortgage loans from Ginnie Mae guaranteed pools in its mortgage loan servicing portfolio. The Company’s right to purchase delinquent government guaranteed or insured mortgage loans arises as the result of the borrower’s failure to make payments for at least three consecutive months preceding the month of repurchase by the Company and provides an alternative to the Company’s obligation to continue advancing principal and interest at the coupon rate of the related Ginnie Mae security. Such repurchased mortgage loans may be resold to third-party investors and thereafter may be repurchased to the extent eligible for resale into a new Ginnie Mae guaranteed pool. To the extent such mortgage loans have not become saleable into another Ginnie Mae guaranteed security by becoming current either through the borrower’s reperformance or through completion of a modification of the mortgage loan’s terms, the Company measures such mortgage loans along with mortgage loans with identified defects using “Level 3” fair value inputs. The significant unobservable inputs used in the fair value measurement of the Company’s “Level 3” fair value mortgage loans held for sale at fair value are discount rates, home price projections, voluntary prepayment/resale speeds and total prepayment speeds. Significant changes in any of those inputs in isolation could result in a significant change to the mortgage loans’ fair value measurement. Increases in home price projections are generally accompanied by an increase in voluntary prepayment speeds. Following is a quantitative summary of key “Level 3” fair value inputs used in the valuation of mortgage loans held for sale at fair value: December 31, Key inputs 2016 2015 Discount rate: Range 2.6% – 8.8% 2.5% – 9.1% Weighted average 3.0% 2.8% Twelve-month projected housing price index change: Range 2.0% – 4.5% 1.8% – 5.0% Weighted average 3.7% 3.7% Voluntary prepayment / resale speed (1): Range 0.1% – 24.4% 0.6% – 20.1% Weighted average 20.9% 16.6% Total prepayment speed (2): Range 0.1% – 39.8% 0.7% – 37.6% Weighted average 34.3% 30.9% (1) Voluntary prepayment/resale speed is measured using Life Voluntary Conditional Prepayment Rate (“CPR”). (2) Total prepayment speed is measured using Life Total CPR. Changes in fair value attributable to changes in instrument specific credit risk are measured by reference to the change in the respective mortgage loan’s delinquency status and performance history at period end from the later of the beginning of the period or acquisition date. Changes in fair value of mortgage loans held for sale are included in Net gains on mortgage loans held for sale at fair value in the Company’s consolidated statements of income. Derivative Financial Instruments Interest Rate Lock Commitments The Company categorizes IRLCs as a “Level 3” fair value asset or liability. The Company estimates the fair value of an IRLC based on quoted Agency MBS prices, its estimate of the fair value of the MSRs it expects to receive in the sale of the mortgage loans and the probability that the mortgage loan will fund or be purchased (the “pull-through rate”). The significant unobservable inputs used in the fair value measurement of the Company’s IRLCs are the pull-through rate and the MSR component of the Company’s estimate of the fair value of the mortgage loans it has committed to purchase. Significant changes in the pull-through rate or the MSR component of the IRLCs, in isolation, could result in significant changes in fair value measurement. The financial effects of changes in these inputs are generally inversely correlated as increasing interest rates have a positive effect on the fair value of the MSR component of IRLC fair value, but increase the pull-through rate for the mortgage loan principal and interest payment cash flow component, which has decreased in fair value. Changes in fair value of IRLCs are included in Net gains on mortgage loans acquired for sale at fair value and may be allocated to Net mortgage loan servicing fees as a hedge of the fair value of MSRs in the consolidated statements of income. Following is a quantitative summary of key unobservable inputs used in the valuation of IRLCs: December 31, Key inputs 2016 2015 Pull-through rate: Range 35.0% – 100.0% 54.1% – 100.0% Weighted average 84.9% 90.1% Mortgage servicing rights value expressed as: Servicing fee multiple: Range 1.2 – 5.9 1.0 – 5.8 Weighted average 4.3 4.4 Percentage of unpaid principal balance: Range 0.3% – 2.8% 0.2% – 3.8% Weighted average 1.3% 1.5% Hedging Derivatives The Company estimates the fair value of commitments to sell mortgage loans based on quoted MBS prices. These derivative financial instruments are categorized by the Company as “Level 1” fair value assets and liabilities for those based on exchange traded market prices or as “Level 2” fair value assets and liabilities for those based on observable MBS prices or interest rate volatilities in the MBS market. Changes in the fair value of hedging derivatives are included in Net gains on mortgage loans acquired for sale at fair value, or Net mortgage loan servicing fees-Amortization, impairment and change in fair value of mortgage servicing rights and mortgage servicing liabilities , as applicable, in the consolidated statements of income. Mortgage Servicing Rights MSRs are categorized as “Level 3” fair value assets. The Company uses a discounted cash flow approach to estimate the fair value of MSRs. This approach consists of projecting net servicing cash flows discounted at a rate that management believes market participants would use in their determinations of fair value. The key inputs used in the estimation of the fair value of MSRs include the prepayment rates of the underlying mortgage loans, the applicable pricing spread (discount rate), and the per-loan annual cost to service the respective mortgage loans. Changes in the fair value of MSRs are included in Net mortgage loan servicing fees — Amortization, impairment and change in fair value of mortgage servicing rights and mortgage servicing liabilities in the consolidated statements of income. Following are the key inputs used in determining the fair value of MSRs at the time of initial recognition, excluding MSR purchases: Year ended December 31, 2016 2015 2014 Fair Amortized Fair Amortized Fair Amortized value cost value cost value cost (Amount recognized and unpaid principal balance of underlying mortgage loans amounts in thousands) MSR and pool characteristics: Amount recognized $17,319 $560,212 $18,013 $454,840 $24,698 $185,152 Unpaid principal balance of underlying mortgage loans $1,452,779 $44,827,516 $1,463,150 $32,849,718 $1,982,505 $15,362,240 Weighted average servicing fee rate (in basis points) 33 30 33 34 33 31 Key inputs: Pricing spread (1): Range 7.2%-10.5% 7.2%-14.4% 7.0% - 14.4% 6.8% - 16.2% 7.8% - 16.2% 6.8% - 15.7% Weighted average 9.2% 9.5% 9.3% 9.2% 11.4% 10.8% Annual total prepayment speed (2): Range 3.3%-53.8% 2.8%-50.9% 1.9% - 62.4% 2.5% - 50.0% 7.6% - 46.1% 7.6% - 47.8% Weighted average 11.8% 9.0% 11.8% 8.9% 9.3% 8.3% Life (in years): Range 0.5-11.9 1.3-12.9 1.1-12.3 1.3 -12.0 1.5 -7.5 1.4 -7.5 Weighted average 6.8 8.1 6.5 7.2 6.9 7.0 Per-loan annual cost of servicing: Range $68-$105 $68-$106 $59 – $101 $59 – $95 $53 – $100 $53 – $100 Weighted average $88 $89 $77 $78 $86 $84 (1) Pricing spread represents a margin that is applied to a reference interest rates forward rate curve to develop periodic discount rates. The Company applies a pricing spread to the United States Dollar London Interbank Offered Rate (“LIBOR”) curve for purposes of discounting cash flows relating to MSRs. (2) Prepayment speed is measured using Life Total CPR. Following is a quantitative summary of key inputs used in the valuation and assessment for impairment of the Company’s MSRs at year end and the effect on the fair value from adverse changes in those inputs (weighted averages are based upon UPB): December 31, 2016 December 31, 2015 Fair Amortized Fair Amortized value cost value cost (Carrying value, unpaid principal balance of underlying mortgage loans and effect on fair value amounts in thousands) MSR and pool characteristics: Carrying value $515,925 $1,111,747 $660,247 $751,688 Unpaid principal balance of underlying mortgage loans $43,667,165 $85,509,941 $54,182,477 $56,420,227 Weighted average note interest rate 4.1% 3.7% 4.1% 3.8% Weighted average servicing fee rate (in basis points) 32 31 32 32 Key inputs: Pricing spread (1): Range 7.6% – 14.9% 7.6% – 14.9% 7.2% – 14.1% 7.2% – 12.8% Weighted average 10.1% 10.7% 8.9% 8.9% Effect on fair value of (2): 5% adverse change ($9,097) ($22,382) ($11,115) ($13,467) 10% adverse change ($17,872) ($43,889) ($21,857) ($26,472) 20% adverse change ($34,516) ($84,464) ($42,283) ($51,183) Average life (in years): Range 1.3 – 8.6 1.6 – 9.4 1.9 – 9.0 1.8 – 9.1 Weighted average 6.7 8.1 6.9 7.4 Prepayment speed (3): Range 7.0% – 46.7% 6.6% – 43.9% 5.3% – 43.8% 5.7% – 46.7% Weighted average 10.3% 8.7% 9.7% 9.5% Effect on fair value of (2): 5% adverse change ($8,818) ($16,636) ($12,475) ($14,360) 10% adverse change ($17,336) ($32,750) ($24,499) ($28,197) 20% adverse change ($33,533) ($63,513) ($47,286) ($54,406) Annual per-loan cost of servicing: Range $78-$101 $79-$101 $68 – $97 $68 – $95 Weighted average $92 $92 $86 $84 Effect on fair value of (2): 5% adverse change ($5,612) ($8,890) ($6,812) ($5,725) 10% adverse change ($11,225) ($17,781) ($13,624) ($11,451) 20% adverse change ($22,450) ($35,562) ($27,247) ($22,901) (1) The Company applies a pricing spread to the United States Dollar LIBOR curve for purposes of discounting cash flows relating to MSRs. (2) For MSRs carried at fair value, an adverse change in one of the above-mentioned key inputs is expected to result in a reduction in fair value which will be recognized in income. For MSRs carried at lower of amortized cost or fair value, an adverse change in one of the above-mentioned key inputs may result in recognition of MSR impairment. The extent of the recognized MSR impairment will depend on the relationship of fair value to the carrying value of such MSRs. (3) Prepayment speed is measured using Life Total CPR. The preceding sensitivity analyses are limited in that they were performed at a particular point in time; only contemplate the movements in the indicated variables; do not incorporate changes to other variables; are subject to the accuracy of various models and inputs used; and do not incorporate other factors that would affect the Company’s overall financial performance in such events, including operational adjustments made by management to account for changing circumstances. For these reasons, the preceding estimates should not be viewed as earnings forecasts. Mortgage Servicing Liabilities MSLs are categorized as “Level 3” fair value liabilities. The Company uses a discounted cash flow approach to estimate the fair value of MSLs. This approach consists of projecting net servicing cash flows discounted at a rate that management believes market participants would use in their determinations of fair value. The key inputs used in the estimation of the fair value of MSLs include the prepayment rates of the underlying mortgage loans, the applicable pricing spread (discount rate), and the per-loan annual cost to service the respective mortgage loans. Changes in the fair value of MSLs are included in Net servicing fees — Amortization, impairment and change in fair value of mortgage servicing rights and mortgage servicing liabilities in the consolidated statements of income. Following are the key inputs used in determining the fair value of MSLs: December 31, 2016 2015 MSL and pool characteristics: Carrying value (in thousands) $15,192 $1,399 Unpaid principal balance of underlying mortgage loans $2,074,896 $806,897 Weighted average servicing fee rate (in basis points) 25 25 Key inputs: Pricing spread (1) 8.0% 6.4% Average life (in years) 3.7 3.4 Prepayment speed (2) 31.7% 33.1% Annual per-loan cost of servicing $497 $258 (1) The Company applies a pricing spread to the United States Dollar LIBOR curve for purposes of discounting cash flows relating to MSLs. (2) Prepayment speed is measured using Life Total CPR. Excess Servicing Spread Financing at Fair Value The Company categorizes ESS as a “Level 3” fair value liability. Because the ESS is a claim to a portion of the cash flows from MSRs, the fair value measurement of the ESS is similar to that of MSRs. The Company uses the same discounted cash flow approach to measuring the ESS as used to measure MSRs except that certain inputs relating to the cost to service the mortgage loans underlying the MSR and certain ancillary income are not included as these cash flows do not accrue to the holder of the ESS. The key inputs used in the estimation of ESS fair value include pricing spread (discount rate) and prepayment speed. Significant changes to either of those inputs in isolation could result in a significant change in the fair value of ESS. Changes in these key inputs are not necessarily directly related. ESS is generally subject to fair value increases when mortgage interest rates increase. Increasing mortgage interest rates normally slow mortgage refinancing activity. Decreased refinancing activity increases the life of the mortgage loans underlying the ESS, thereby increasing its fair value, which is owed to PMT. Increases in the fair value of ESS decrease income and are included in Net mortgage loan servicing fees-Amortization, impairment and change in fair value of mortgage servicing rights and mortgage servicing liabilities. Following are the key inputs used in determining the fair value of ESS financing: December 31, 2016 2015 Carrying value (in thousands) $288,669 $412,425 ESS and pool characteristics: Unpaid principal balance of underlying mortgage loans (in thousands) $32,376,359 $51,966,405 Average servicing fee rate (in basis points) 34 32 Average excess servicing spread (in basis points) 19 17 Key inputs: Pricing spread (1): Range 3.8% – 4.8% 4.8% – 6.5% Weighted average 4.4% 5.7% Average life (in years): Range 1.4 – 8.6 1.4 – 9.0 Weighted average 6.8 6.9 Annualized prepayment speed (2): Range 7.0% – 41.3% 5.2% – 52.4% Weighted average 10.5% 9.6% (1) The Company applies a pricing spread to the United States Dollar LIBOR curve for purposes of discounting cash flows relating to ESS. (2) Prepayment speed is measured using Life Total CPR. |
Mortgage Loans Held for Sale at
Mortgage Loans Held for Sale at Fair Value | 12 Months Ended |
Dec. 31, 2016 | |
Mortgage Loans Held for Sale at Fair Value | |
Mortgage Loans Held for Sale at Fair Value | Note 9—Mortgage Loans Held for Sale at Fair Value Mortgage loans held for sale at fair value include the following: December 31, 2016 2015 (in thousands) Government-insured or guaranteed $ $ Conventional conforming Purchased from Ginnie Mae pools serviced by the Company Repurchased pursuant to representations and warranties $ $ Fair value of mortgage loans pledged to secure: Assets sold under agreements to repurchase $ $ Mortgage loan participation and sale agreements $ $ |
Derivative Financial Instrument
Derivative Financial Instruments | 12 Months Ended |
Dec. 31, 2016 | |
Derivative Financial Instruments | |
Derivative Financial Instruments | Note 10—Derivative Financial Instruments The Company had the following derivative financial instruments recorded on its consolidated balance sheets: December 31, 2016 December 31, 2015 Fair value Fair value Notional Derivative Derivative Notional Derivative Derivative Instrument amount assets liabilities amount assets liabilities (in thousands) Derivatives not designated as hedging instruments: Interest rate lock commitments $ $ $ $ Forward purchase contracts Forward sales contracts MBS put options — — MBS call options — — — — Put options on interest rate futures purchase contracts — Call options on interest rate futures purchase contracts — Interest rate swap futures purchase contracts — — — — — Total derivatives before netting Netting $ $ $ $ Deposits placed with (received from) derivative counterparties, net $ $ The following table summarizes the notional value activity for derivative contracts used in the Company’s hedging activities: Year ended December 31, 2016 Balance Balance beginning of Dispositions/ end of Instrument year Additions expirations year (in thousands) Forward purchase contracts Forward sale contracts MBS put options MBS call options — — Put options on interest rate futures purchase contracts Call options on interest rate futures purchase contracts Put options on interest rate futures sale contracts — — Call options on interest rate futures sale contracts — — Treasury futures purchase contracts — — Treasury futures sale contracts — — Interest rate swap futures purchase contracts — Interest rate swap futures sale contracts — — Year ended December 31, 2015 Balance Balance beginning of Dispositions/ end of Instrument year Additions expirations year (in thousands) Forward purchase contracts Forward sale contracts MBS put options MBS call options — — Put options on interest rate futures purchase contracts Call options on interest rate futures purchase contracts Put options on interest rate futures sale contracts — Call options on interest rate futures sale contracts — — Year ended December 31, 2014 Balance Balance beginning of Dispositions/ end of Instrument year Additions expirations year (in thousands) Forward purchase contracts Forward sale contracts MBS put options MBS call options — Put options on interest rate futures purchase contracts — Call options on interest rate futures purchase contracts — Put options on interest rate futures sale contracts — Call options on interest rate futures sale contracts — — Treasury futures purchase contracts — — Treasury futures sale contracts — — Eurodollar futures purchase contracts — — Eurodollar futures sales contracts — — Following are the gains (losses) recognized by the Company on derivative financial instruments and the income statement line items where such gains and losses are included: Year ended December 31, Hedged item Income statement line 2016 2015 2014 (in thousands) Interest rate lock commitments and mortgage loans held for sale Net gains (losses) on mortgage loans held for sale $ $ $ Mortgage servicing rights Net mortgage loan servicing fees $ $ $ |
Mortgage Servicing Rights
Mortgage Servicing Rights | 12 Months Ended |
Dec. 31, 2016 | |
Mortgage Servicing Rights | |
Mortgage Servicing Assets and Liabilities | Note 11—Mortgage Servicing Rights Carried at Fair Value: The activity in MSRs carried at fair value is as follows: Year ended December 31, 2016 2015 2014 (in thousands) Balance at beginning of year $ $ $ Additions: Purchases Mortgage servicing rights resulting from mortgage loan sales Sales — — Change in fair value due to: Changes in valuation inputs used in valuation model (1) Other changes in fair value (2) Total change in fair value Balance at end of year $ $ $ December 31, 2016 2015 (in thousands) Fair value of mortgage servicing rights pledged to secure: Assets sold under agreements to repurchase $ $ Note payable $ $ (1) Principally reflects changes in discount rates and prepayment speed inputs, primarily due to changes in market interest rates. (2) Represents changes due to realization of cash flows. Carried at Lower of Amortized Cost or Fair Value: The activity in MSRs carried at the lower of amortized cost or fair value is summarized below: Year ended December 31, 2016 2015 2014 (in thousands) Amortized cost: Balance at beginning of year $ $ $ Mortgage servicing rights resulting from mortgage loan sales Amortization Application of valuation allowance to write down mortgage servicing rights with other-than-temporary impairment — — Balance at end of year Valuation allowance: Balance at beginning of year Additions Application of valuation allowance to write down mortgage servicing rights with other-than-temporary impairment — — Balance at end of year Mortgage servicing rights, net $ $ $ Fair value of mortgage servicing rights at end of year $ $ $ Fair value of mortgage servicing rights at beginning of year $ $ $ December 31, 2016 2015 (in thousands) Fair value of mortgage servicing rights pledged to secure: Assets sold under agreements to repurchase $ $ Note payable — $ $ The following table summarizes the Company’s estimate of future amortization of its existing MSRs. This projection was developed using the inputs used by management in its December 31, 2016 valuation of MSRs. The inputs underlying the following estimate will change as market conditions and portfolio composition and behavior change, causing both actual and projected amortization levels to change over time. Estimated MSR Year ending December 31, amortization (in thousands) 2017 $ 2018 2019 2020 2021 Thereafter $ Servicing fees relating to MSRs are recorded in Net mortgage loan servicing fees—Loan servicing fees—From non-affiliates on the consolidated statements of income; late charges and other ancillary fees relating to MSRs are recorded in Net mortgage loan servicing fees—Loan servicing fees—Ancillary and other fees on the consolidated statements of income. The fees are summarized below: Year ended December 31, 2016 2015 2014 (in thousands) Contractual servicing fees $ $ $ Ancillary and other fees: Late charges Other $ $ $ Mortgage Servicing Liabilities at Fair Value: The activity in mortgage servicing liability carried at fair value is summarized below: Year ended December 31, 2016 2015 2014 (in thousands) Balance at beginning of year $ $ $ — Mortgage servicing liabilities accepted for cash — — Mortgage servicing liabilities resulting from mortgage loan sales Changes in fair value due to: Changes in valuation inputs used in valuation model (1) Other changes in fair value (2) Total change in fair value Balance at end of year $ $ $ (1) Principally reflects changes in discount rates and prepayment speed inputs, primarily due to changes in market interest rates. (2) Represents changes due to realization of cash flows. |
Carried Interest Due from Inves
Carried Interest Due from Investment Funds | 12 Months Ended |
Dec. 31, 2016 | |
Carried Interest Due from Investment Funds | |
Carried Interest Due from Investment Funds | Note 12—Carried Interest Due from Investment Funds The activity in the Company’s Carried Interest due from Investment Funds is summarized as follows: Year ended December 31, 2016 2015 2014 (in thousands) Balance at beginning of year $ $ $ Carried Interest recognized during the year Balance at end of year $ $ $ The amount of the Carried Interest that will be received by the Company depends on the Investment Funds’ future performance. As a result, the amount of Carried Interest recorded by the Company is based on the cash flows that would be produced assuming termination of the Investment Funds at year end and may be reduced in future periods based on the performance of the Investment Funds in those periods. However, the Company is not required to pay guaranteed returns to the Investment Funds and the amount of any reduction to Carried Interest will be limited to the amounts previously recognized. Management expects the Carried Interest to be collected by the Company when the Investment Funds liquidate. The Investment Funds will continue in existence through December 31, 2017, as a result of PCM’s election to exercise the first of such three one-year extensions provided in their limited liability company and limited partnership agreements. |
Furniture, Fixtures, Equipment
Furniture, Fixtures, Equipment and Building Improvements | 12 Months Ended |
Dec. 31, 2016 | |
Furniture, Fixtures, Equipment and Building Improvements [Member] | |
Furniture, fixtures, equipment and building improvements | |
Furniture, Fixtures, Equipment and Building Improvements | Note 13—Furniture, Fixtures, Equipment and Building Improvements Furniture, fixtures, equipment and building improvements is summarized below: December 31, 2016 2015 (in thousands) Furniture, fixtures, equipment and building improvements $ $ Less: Accumulated depreciation and amortization $ $ Fixed assets pledged to secure obligations under capital lease $ $ Depreciation and amortization expenses are summarized below: Year ended December 31, 2016 2015 2014 (in thousands) Depreciation and amortization expenses $ $ $ Less: Depreciation and amortization allocated to PMT (1) Depreciation and amortization expenses included in Other expense $ $ $ (1) The Company’s management agreement with PMT provides for allocation by the Company of certain common overhead cost to PMT. |
Capitalized Software
Capitalized Software | 12 Months Ended |
Dec. 31, 2016 | |
Capitalized Software | |
Long-lived asset disclosures | |
Capitalized Software | Note 14—Capitalized Software Capitalized software is summarized below: December 31, 2016 2015 (in thousands) Cost $ $ Less: Accumulated amortization $ $ Capitalized software pledged to secure obligation under capital lease $ $ Software amortization expenses totaled $357,000, $324,000 and $320,000 for the years ended December 31, 2016, 2015 and 2014, respectively. |
Borrowings
Borrowings | 12 Months Ended |
Dec. 31, 2016 | |
Borrowings | |
Borrowings | Note 15—Borrowings The borrowing facilities described throughout this Note 15 contain various covenants, including financial covenants governing the Company’s net worth, debt-to-equity ratio, profitability and liquidity. Management believes that the Company was in compliance with these covenants as of December 31, 2016. Assets Sold Under Agreements to Repurchase The Company has multiple borrowing facilities in the form of asset sales under agreements to repurchase. These borrowing facilities are secured by mortgage loans held for sale at fair value or participation certificates backed by MSRs. Eligible mortgage loans and participation certificates backed by MSRs are sold at advance rates based on the fair value of the assets sold. Interest is charged at a rate based on the buyer’s overnight cost of funds rate or on LIBOR depending on the terms of the respective agreement. Mortgage loans and MSRs financed under these agreements may be re-pledged by the lenders. Assets sold under agreements to repurchase are summarized below: Year ended December 31, 2016 2015 2014 (dollars in thousands) Average balance of assets sold under agreements to repurchase $ $ $ Weighted average interest rate (1) % % % Total interest expense $ $ $ Maximum daily amount outstanding $ $ $ December 31, 2016 2015 (dollars in thousands) Carrying value: Unpaid principal balance $ $ Unamortized debt issuance costs $ $ Unused amount (2) $ $ Fair value of assets securing repurchase agreements: Mortgage loans held for sale $ $ Mortgage servicing rights $ $ Servicing advances $ $ Financing receivable from PennyMac Mortgage Investment Trust $ $ — Weighted average interest rate % % Margin deposits placed with counterparties (3) $ $ (1) Excludes the effect of amortization of commitment fees totaling $ 7.3 million, $7.4 million and $4.7 million for the years ended December 31, 2016, 2015 and 2014, respectively. (2) The amount the Company is able to borrow under asset repurchase agreements is tied to the fair value of unencumbered assets eligible to secure those agreements and the Company’s ability to fund the agreements’ margin requirements relating to the assets sold. (3) Margin deposits are included in Other assets on the Company’s consolidated balance sheets. Following is a summary of maturities of outstanding advances under repurchase agreements by maturity date: Remaining maturity at December 31, 2016 Balance (dollars in thousands) Within 30 days $ Over 30 to 90 days Over 90 days Total loans sold under agreements to repurchase $ Weighted average maturity (in months) The amount at risk (the fair value of the assets pledged plus the related margin deposit, less the amount advanced by the counterparty and interest payable) relating to the Company’s mortgage loans held for sale sold under agreements to repurchase is summarized by counterparty below as of December 31, 2016: Weighted average maturity of advances under repurchase Counterparty Amount at risk agreement Facility maturity (in thousands) Credit Suisse First Boston Mortgage Capital LLC $ March 4, 2017 March 30, 2017 Credit Suisse First Boston Mortgage Capital LLC $ December 19, 2017 December 19, 2017 Bank of America, N.A. $ March 19, 2017 March 28, 2017 Morgan Stanley Bank, N.A. $ February 18, 2017 August 25, 2017 JP Morgan Chase Bank, N.A. $ March 20, 2017 August 18, 2017 Citibank, N.A. $ January 28, 2017 February 2, 2017 Barclays Bank PLC $ March 17, 2017 December 1, 2017 Royal Bank of Canada $ — September 18, 2017 The Company is subject to margin calls during the period the agreements are outstanding and therefore may be required to repay a portion of the borrowings before the respective agreements mature if the fair value (as determined by the applicable lender) of the mortgage loans securing those agreements decreases. Mortgage Loan Participation and Sale Agreements Three of the borrowing facilities secured by mortgage loans held for sale are in the form of mortgage loan participation and sale agreements. Participation certificates, each of which represents an undivided beneficial ownership interest in mortgage loans that have been pooled with Fannie Mae, Freddie Mac or Ginnie Mae, are sold to the lender pending the securitization of the mortgage loans and sale of the resulting securities. A commitment to sell the securities resulting from the pending securitization between the Company and a non-affiliate is also assigned to the lender at the time a participation certificate is sold. The purchase price paid by the lender for each participation certificate is based on the trade price of the security, plus an amount of interest expected to accrue on the security to its anticipated delivery date, minus a present value adjustment, any related hedging costs and a holdback amount that is based on a percentage of the purchase price. The holdback amount is not required to be paid to the Company until the settlement of the security and its delivery to the lender. The mortgage loan participation and sale agreements are summarized below: Year ended December 31, 2016 2015 2014 (dollars in thousands) Average balance $ $ $ Weighted average interest rate (1) % % % Total interest expense $ $ $ Maximum daily amount outstanding $ $ $ December 31, 2016 2015 (dollars in thousands) Carrying value: Unpaid principal balance $ $ Unamortized debt issuance costs $ $ Weighted average interest rate % % Fair value of mortgage loans pledged to secure mortgage loan participation and sale agreements $ $ (1) Excludes the effect of amortization of facility fees totaling $ 740,000 and $355,000 for the years ended December 31, 2016 and 2015, respectively. Notes Payable The Company entered into a revolving credit agreement, dated as of December 30, 2015, pursuant to which the lenders agreed to make revolving loans in an amount not to exceed $100 million. On November 18, 2016, the credit agreement was amended and restated. Pursuant to the amended and restated credit agreement, the lenders have agreed to make revolving loans in an amount not to exceed $150 million. The proceeds of the loans are to be used solely for working capital and general corporate purposes of the Company and its subsidiaries. Interest on the loans shall accrue at a per annum rate of interest equal to, at an election of the Company, either LIBOR plus the applicable margin or an alternate base rate (as defined in the credit agreement). During the existence of certain events of default, interest shall accrue at a higher rate. The maturity date of the loans is 364 days following the date of the credit agreement. During December 2015, the Company entered into a note payable which is secured by MSRs relating to certain mortgage loans in the Company’s servicing portfolio. Interest is charged at a rate based on LIBOR plus the applicable contract margin. Notes payable are summarized below: Year ended December 31, 2016 2015 2014 (dollars in thousands) Average balance $ $ $ Weighted average interest rate (1) % % % Total interest expense $ $ $ Maximum daily amount outstanding $ $ $ (1) Excluding the effect of amortization of debt issuance costs totaling $ 3.0 million and $2.1 million for the years ended December 31, 2016 and 2015, respectively. December 31, 2016 2015 (dollars in thousands) Carrying value: Unpaid principal balance $ $ Unamortized debt issuance costs $ $ Weighted average interest rate % % Unused amount $ $ Assets pledged to secure notes payable: Cash $ $ Carried Interest $ $ Mortgage servicing rights $ $ Obligations Under Capital Lease In December 2015, the Company entered into a sale-leaseback transaction secured by certain fixed assets and capitalized software. The Company accounts for the sale-leaseback transaction as a capital lease. The capital lease matures on November 3, 2019 and bears interest at a spread over one month LIBOR. Obligations under capital lease are summarized below: Year ended December 31, 2016 2015 (dollars in thousands) During the year: Average balance $ $ Weighted average interest rate % % Total interest expense $ $ Maximum daily amount outstanding $ $ Year end: Unpaid principal balance $ $ Weighted average interest rate % % Assets pledged to secure obligations under capital lease: Furniture, fixtures and equipment $ $ Capitalized software $ $ Excess Servicing Spread Financing In conjunction with the Company’s purchase from non-affiliates of certain MSRs on pools of Agency-backed residential mortgage loans, the Company has entered into sale and assignment agreements with PMT. Under these agreements, the Company sold to PMT the right to receive ESS cash flows relating to certain MSRs. The Company retained all ancillary income associated with servicing the loans and a fixed base servicing fee. The Company continues to be the servicer of the mortgage loans and retains all servicing obligations, including responsibility to make servicing advances. The agreements are treated as financings and are carried at fair value with changes in fair value recognized in current period income. Following is a summary of ESS: Year ended December 31, 2016 2015 2014 (in thousands) Balance at beginning of year $ $ $ Issuances of excess servicing spread to PennyMac Mortgage Investment Trust: For cash — Pursuant to a recapture agreement with PennyMac Mortgage Investment Trust Accrual of interest Repayment Settlement (1) — — Change in fair value Balance at end of year $ $ $ (1) On February 29, 2016, the Company and PMT terminated that certain master spread acquisition and MSR servicing agreement that the parties entered into effective February 1, 2013 (the “2/1/13 Spread Acquisition Agreement”) and all amendments thereto. In connection with the termination of the 2/1/13 Spread Acquisition Agreement, the Company reacquired from PMT all of its right, title and interest in and to all of the Fannie Mae ESS previously sold by the Company to PMT under the 2/1/13 Spread Acquisition Agreement and then subject to such 2/1/13 Spread Acquisition Agreement. On February 29, 2016, the Company also reacquired from PMT all of its right, title and interest in and to all of the Freddie Mac ESS previously sold to PMT by the Company. |
Liability for Losses Under Repr
Liability for Losses Under Representations and Warranties | 12 Months Ended |
Dec. 31, 2016 | |
Liability for Losses Under Representations and Warranties | |
Liability for Losses Under Representations and Warranties | Note 16—Liability for Losses Under Representations and Warranties The activity in the Company’s liability for representations and warranties is summarized below: Year ended December 31, 2016 2015 2014 (in thousands) Balance at beginning of year $ $ $ Provision for losses on mortgage loans sold: Resulting from sales of mortgage loans Reduction in liability due to change in estimate — — Incurred losses Balance at end of year $ $ $ Unpaid principal balance of mortgage loans subject to representations and warranties at year end $ $ The Company’s representations and warranties are generally not subject to stated limits of exposure. However, management believes that the current unpaid principal balance (“UPB”) of mortgage loans sold by the Company to date represents the maximum exposure to repurchases related to representations and warranties. Management believes the amount and range of reasonably possible losses in relation to the recorded liability is not material to the Company’s financial condition or income. |
Income Taxes
Income Taxes | 12 Months Ended |
Dec. 31, 2016 | |
Income Taxes | |
Income Taxes | Note 17—Income Taxes The Company files U.S. federal and state corporate income tax returns for PFSI and partnership returns for PennyMac. The Company’s tax returns are subject to examination for 2013 and forward. PennyMac’s federal partnership returns are subject to examination for 2013 and forward, and its state tax returns are generally subject to examination for 2012 and forward. No returns are currently under examination. The following table details the Company’s income tax expense. Year ended December 31, 2016 2015 2014 (in thousands) Current expense: Federal $ $ — $ State — Total current expense — Deferred expense: Federal State Total deferred expense Total provision for income taxes $ $ $ The provision for deferred income taxes for the years ended December 31, 2016, 2015 and 2014 primarily relates to the Company’s investment in PennyMac partially offset by the Company’s generation and utilization of a net operating loss and generation of tax credits. The portion attributable to its investment in PennyMac primarily relates to MSRs that PennyMac received pursuant to sales of mortgage loans held for sale at fair value and Carried Interest from the Investment Funds. The following table is a reconciliation of the Company’s provision for income taxes at statutory rates to the provision for income taxes at the Company’s effective tax rate: Year ended December 31, 2016 2015 2014 Federal income tax statutory rate % % % Less: Rate attributable to noncontrolling interest % % % State income taxes, net of federal benefit % % % Other % % % Valuation allowance % % % Effective tax rate % % % The components of the Company’s provision for deferred income taxes are as follows: Year ended December 31, 2016 2015 2014 (in thousands) Investment in PennyMac $ $ $ Net operating loss Tax credits — — Valuation allowance — — — Total provision for deferred income taxes $ $ $ The components of Deferred tax asset are as follows: December 31, 2016 2015 (in thousands) Taxes currently receivable $ — $ Deferred income tax asset, net — Deferred tax asset $ — $ The components of Income taxes payable are as follows: December 31, 2016 2015 (in thousands) Taxes currently receivable $ $ — Deferred income tax liability, net — Income taxes payable $ $ — The tax effects of temporary differences that gave rise to deferred income tax assets and liabilities are presented below: December 31, 2016 2015 (in thousands) Deferred income tax assets (liabilities): Investment in PennyMac $ $ Net operating loss carryforward Tax credits carryforward — Deferred income tax asset (liabilities), net $ $ The Company recorded a net deferred income tax liability in Income taxes payable in the consolidated balance sheet as of December 31, 2016. At December 31, 2015, the Company had a net deferred income tax asset that was recorded in Deferred tax asset . The current year change from a deferred tax asset to a deferred tax liability is attributable to the results of PennyMac operations, primarily from the deferral for tax purposes of income from MSRs and Carried Interest from Investment Funds. The increase in Income taxes payable was partially offset by increases in deferred tax assets resulting from PennyMac members exchanging Class A units for PFSI Class A common stock. As existing members exchange their units, the Company records a deferred tax asset related to PennyMac’s election pursuant to Section 754 of the Internal Revenue Code. The Company recorded a deferred tax asset of $0.5 million related to a net operating loss of approximately $1.3 million which generally expires in 2036, and tax credits of $0.6 million, most of which have no expiration and some of which expire in 2036. At December 31, 2016 and 2015, the Company had no unrecognized tax benefits and does not anticipate any unrecognized tax benefits. Should the recognition of any interest or penalties relative to unrecognized tax benefits be necessary, it is the Company’s policy to record such expenses in the Company’s income tax accounts. No such accruals existed at December 31, 2016 and 2015. |
Noncontrolling Interest
Noncontrolling Interest | 12 Months Ended |
Dec. 31, 2016 | |
Noncontrolling Interest. | |
Noncontrolling Interest | Note 18—Noncontrolling Interest Net income attributable to the Company’s common stockholders and the effects of changes in noncontrolling ownership interest in PennyMac is summarized below: Year ended December 31, 2016 2015 2014 (in thousands) Net income attributable to PennyMac Financial Services, Inc. common stockholders $ $ $ Increase in the Company's additional paid-in capital for exchanges of Class A units of Private National Mortgage Acceptance Company, LLC to Class A common stock of PennyMac Financial Services, Inc. $ $ $ Shares of Class A common stock of PennyMac Financial Services, Inc. issued pursuant to exchange of Class A units of Private National Mortgage Acceptance Company, LLC December 31, 2016 2015 Percentage of noncontrolling interest in Private National Mortgage Acceptance Company, LLC % % |
Net Gains on Mortgage Loans Hel
Net Gains on Mortgage Loans Held for Sale | 12 Months Ended |
Dec. 31, 2016 | |
Net Gains on Mortgage Loans Held for Sale | |
Net Gains on Mortgage Loans Held for Sale | Note 19—Net Gains on Mortgage Loans Held for Sale Net gains on mortgage loans held for sale at fair value is summarized below: Year ended December 31, 2016 2015 2014 (in thousands) From non-affiliates: Cash loss: Mortgage loans $ $ $ Hedging activities Non-cash gain: Mortgage servicing rights and mortgage servicing liabilities resulting from mortgage loan sales, net Provision for losses relating to representations and warranties: Pursuant to mortgage loan sales Reduction in liability due to change in estimate — — Change in fair value relating to mortgage loans and hedging derivatives held at year end: Interest rate lock commitments Mortgage loans Hedging derivatives Recapture payable to PennyMac Mortgage Investment Trust $ $ $ |
Net Interest Expense
Net Interest Expense | 12 Months Ended |
Dec. 31, 2016 | |
Net Interest Expense | |
Net Interest Expense | Note 20—Net Interest Expense Net interest expense is summarized below: Year ended December 31, 2016 2015 2014 (in thousands) Interest income: From non-affiliates: Short-term investments $ $ $ Mortgage loans held for sale at fair value Placement fees relating to custodial funds From PennyMac Mortgage Investment Trust—Financing receivable — Interest expense: To non-affiliates: Assets sold under agreements to repurchase Mortgage loan participation and sale agreements Notes payable Obligations under capital lease Interest shortfall on repayments of mortgage loans serviced for Agency securitizations Interest on mortgage loan impound deposits To PennyMac Mortgage Investment Trust—Excess servicing spread financing at fair value $ $ $ |
Stock-based Compensation
Stock-based Compensation | 12 Months Ended |
Dec. 31, 2016 | |
Stock-based Compensation | |
Stock-based Compensation | Note 21—Stock‑based Compensation The Company’s 2013 Equity Incentive Plan provides for grants of stock options, time-based and performance-based restricted stock units (“RSUs”), stock appreciation rights, performance units and stock grants. As of December 31, 2016, the Company has 2.0 million units available for future awards. Following is a summary of the stock-based compensation expense by instrument awarded: Year ended December 31, 2016 2015 2014 (in thousands) Performance-based RSUs $ $ $ Stock options Time-based RSUs Exchangeable PNMAC units $ $ $ Performance‑Based RSUs The performance‑based RSUs provide for the issuance of shares of the Company’s Class A common stock based on the attainment of earnings per share and/or total shareholder return goals and are generally adjusted for grantee job performance ratings. The grantees’ satisfaction of the performance goals will be established by review of a committee of the Company’s board of directors. Approximately 414,000 shares vested under the grants with a performance period ended December 31, 2016 will be issued to the grantees in April 2017. No shares were issued relating to the RSUs with a performance period ended December 31, 2015 as the established performance goals were not achieved. The performance‑based RSUs contain performance goals (attainment of earnings per share) and the grants awarded during the year ended December 31, 2014 included a market goal (total shareholder return). The actual amount of shares earned could vary from zero, if the performance goals are not met, to as much as 150% of target, if the performance goals are meaningfully exceeded. The Company separately accounts for the performance and market goals when recognizing compensation expense relating to performance‑based RSUs. The grant date fair value of the market goal component of the performance‑based RSUs is measured using a variant of the Black‑Scholes model. Following are the key inputs for grants made: Year ended December 31, 2014 Expected volatility (1) 42% Expected dividends 0% Risk-free rate 0.1% - 0.7% Expected grantee forfeiture rate 4.3% - 20.2% (1) Based on historical volatilities of comparable companies’ common stock. The fair value of the performance goal component of the performance‑based RSUs is measured based on the fair value of the Company’s common stock at the grant date, taking into consideration management’s estimate of the expected outcome of the performance goal, and the number of shares to be forfeited during the vesting period. Following is a summary of performance‑based RSU activity: Year ended December 31, 2016 2015 2014 (in thousands, except per unit amounts) Number of units: Outstanding at beginning of year Granted Vested — — — Forfeited or cancelled Outstanding at end of year Weighted average grant date fair value per unit: Outstanding at beginning of year $ $ $ Granted $ $ $ Vested — — — Forfeited $ $ $ Outstanding at end of year $ $ $ Compensation expense recorded during the year $ $ $ December 31, 2016 2015 ( in thousands, except for vesting periods) Unamortized compensation cost $ $ Number of shares expected to vest Weighted average remaining vesting period (in months) Stock Options The stock option award agreements provide for the award of stock options to purchase the optioned common stock. In general, and except as otherwise provided by the agreement, one‑third of the stock option awards vests on each of the first, second, and third anniversaries of the grant date, subject to the recipient’s continued service through each anniversary. Each stock option has a term of ten years from the date of grant but expires (1) immediately upon termination of the holder’s employment or other association with the Company for cause, (2) one year after the holder’s employment or other association is terminated due to death or disability and (3) three months after the holder’s employment or other association is terminated for any other reason. The fair value of each stock option award is estimated on the date of grant using a variant of the Black Scholes model based on the following inputs: Year ended December 31, 2016 2015 2014 Expected volatility (1) 28% 41% 42% Expected dividends 0% 0% 0% Risk-free interest rate 0.3% - 2.1% 0.1% - 2.3% 0.1% - 2.9% Expected grantee forfeiture rate 0.0% -20.2% 0.0% -18.7% 4.3% - 20.2% (1) Based on historical volatilities of the Company’s common stock for 2016 grants and based on historical volatilities of comparable companies’ common stock for 2015 and 2014 grants. The Company uses its historical employee departure behavior to estimate grantee forfeiture rates used in the option‑pricing model. The expected term of common stock options granted is derived from the option pricing model and represents the period of time that common stock options granted are expected to be outstanding. The risk‑free interest rate for periods within the contractual term of the common stock option is based on the U.S. Treasury yield curve in effect at the time of grant. The table below summarizes stock option award activity and compensation expense: Year ended December 31, 2016 2015 2014 (in thousands, except per option amounts) Number of Stock Options: Outstanding at beginning of year Granted Exercised — — Forfeited Outstanding at end of year Weighted average exercise price per option: Outstanding at beginning of year $ $ $ Granted $ $ $ Exercised $ $ $ — Forfeited $ $ $ Outstanding at end of year $ $ $ Compensation expense recorded during the year $ $ $ December 31, 2016 2015 (in thousands, except for time periods) Number of options exercisable at end of year Weighted average remaining contractual term (in years): Outstanding Exercisable Aggregate intrinsic value: Outstanding $ $ — Exercisable $ $ — Expected vesting amounts at year end: Number of options expected to vest Weighted average vesting period (in months) Time‑Based RSUs The RSU grant agreements provide for the award of time‑based RSUs, entitling the award recipient to one share of the Company’s Class A common stock for each RSU. One‑third of the time‑based RSUs vest on each of the first, second, and third anniversaries of the grant date, subject to the recipient’s continued service through each anniversary. Compensation cost relating to time‑based RSUs is based on the grant date fair value of the Company’s Class A common stock and the number of shares expected to vest. For purposes of estimating the cost of the time‑based RSUs granted, the Company assumes forfeiture rates of 4.3% ‑ 20.2% per year based on the grantees’ employee classification. Following is a summary of time‑based RSU activity: Year ended December 31, 2016 2015 2014 (in thousands, except per unit amounts) Number of units: Outstanding at beginning of year Granted Vested Forfeited Outstanding at end of year Weighted average grant date fair value per unit: Outstanding at beginning of year $ $ $ Granted $ $ $ Vested $ $ $ Forfeited $ $ $ Outstanding at end of year $ $ $ Compensation expense recorded during the year $ $ $ December 31, 2016 2015 ( in thousands, except for vesting periods) Unamortized compensation cost $ $ Number of shares expected to vest Weighted average remaining vesting period (in months) |
Supplemental Cash Flow Informat
Supplemental Cash Flow Information | 12 Months Ended |
Dec. 31, 2016 | |
Supplemental Cash Flow Information | |
Supplemental Cash Flow Information | Note 22—Supplemental Cash Flow Information Year ended December 31, 2016 2015 2014 (in thousands) Cash paid for interest $ $ $ Cash paid for income taxes $ $ $ Non-cash investing activity: Mortgage servicing rights resulting from mortgage loan sales $ $ $ Mortgage servicing liabilities resulting from mortgage loan sales $ $ $ Transfer of Note receivable from PennyMac Mortgage Investment Trust to Asset sold under agreement to repurchase from PennyMac Mortgage Investment Trust $ $ — $ — Non-cash financing activity: Transfer of excess servicing spread to PennyMac Mortgage Investment Trust pursuant to a recapture agreement $ $ $ Unpaid distribution to Private National Mortgage Acceptance Company, LLC members $ $ — $ — Issuance of common stock in settlement of director fees $ $ $ |
Regulatory Net Worth and Agency
Regulatory Net Worth and Agency Capital Requirements | 12 Months Ended |
Dec. 31, 2016 | |
Regulatory Net Worth and Agency Capital Requirements | |
Regulatory Capital and Liquidity Requirements | Note 23—Regulatory Capital and Liquidity Requirements The Company, through PLS and PennyMac, is required to maintain specified levels of equity to remain a seller/servicer in good standing with the Agencies. Such equity requirements generally are tied to the size of the Company’s loan servicing portfolio or loan origination volume. The Company is subject to financial eligibility requirements for sellers/servicers eligible to sell or service mortgage loans with Fannie Mae and Freddie Mac. The eligibility requirements include tangible net worth of $2.5 million plus 25 basis points (0.25%) of the Company’s total 1-4 unit servicing portfolio, excluding mortgage loans subserviced for others and a liquidity requirement equal to 3.5 basis points of the aggregate UPB serviced for the Agencies plus 200 basis points of total nonperforming Agency UPB in excess of 6.0%. The Company is also subject to financial eligibility requirements for Ginnie Mae single-family issuers. The eligibility requirements include net worth of $2.5 million plus 35 basis points of PLS' outstanding Ginnie Mae single-family obligations and a liquidity requirement equal to the greater of $1.0 million or 10 basis points of PLS' outstanding Ginnie Mae single-family securities. The Agencies’ capital and liquidity requirements, the calculations of which are specified by each Agency, are summarized below: December 31, 2016 December 31, 2015 Agency–company subject to requirement Balance (1) Requirement Balance (1) Requirement (in thousands) Capital Fannie Mae & Freddie Mac - PLS $ $ $ $ Ginnie Mae - PLS $ $ $ $ Ginnie Mae - PennyMac $ $ $ $ HUD - PLS $ $ $ $ Liquidity Fannie Mae & Freddie Mac - PLS $ $ $ $ Ginnie Mae - PLS $ $ $ $ (1) Calculated in compliance with the respective Agency’s requirements. Noncompliance with an Agency’s requirements can result in such Agency taking various remedial actions up to and including terminating PennyMac’s ability to sell loans to and service loans on behalf of the respective Agency. |
Commitments and Contingencies
Commitments and Contingencies | 12 Months Ended |
Dec. 31, 2016 | |
Commitment and Contingencies. | |
Commitments and Contingencies | Note 24—Commitments and Contingencies Litigation The business of the Company involves the collection of numerous accounts, as well as the validation of liens and compliance with various state and federal lending and servicing laws. Accordingly, the Company may be involved in proceedings, claims, and legal actions arising in the ordinary course of business. As of December 31, 2016, the Company was not involved in any legal proceedings, claims, or actions that in management’s view would be reasonably likely to have a material adverse effect on the Company. Commitments to Purchase and Fund Mortgage Loans December 31, 2016 (in thousands) Commitments to purchase mortgage loans from PennyMac Mortgage Investment Trust $ Commitments to fund mortgage loans $ Leases The Company leases office facilities. Rent expense during the years ended December 31, 2016, 2015 and 2014 was $9.1 million, $4.6 million and $4.2 million, respectively. The following table provides a summary of future minimum lease payments required under lease agreements, which may also contain renewal options as of December 31, 2016: Future minimum lease payments (in thousands) 2017 $ 2018 2019 2020 2021 Thereafter $ |
Segments and Related Informatio
Segments and Related Information | 12 Months Ended |
Dec. 31, 2016 | |
Segments and Related Information | |
Segments and Related Information | Note 25—Segments The Company operates in three segments: loan production, loan servicing and investment management. Two of the segments are in the mortgage banking business: loan production and loan servicing. The loan production segment performs mortgage loan origination, acquisition and sale activities. The loan servicing segment performs servicing of newly originated mortgage loans, execution and management of early buyout transactions and servicing of mortgage loans sourced and managed by the investment management segment for the Advised Entities, including executing the loan resolution strategy identified by the investment management segment relating to distressed mortgage loans. The investment management segment represents the activities of the Company’s investment manager, which include sourcing, performing diligence, bidding and closing investment asset acquisitions, managing correspondent production activities for PMT and managing the acquired assets for the Advised Entities. Financial performance and results by segment are as follows: Year ended December 31, 2016 Mortgage Banking Investment Production Servicing Total Management Total (in thousands) Revenue: (1) Net gains (losses) on mortgage loans held for sale at fair value $ $ $ $ — $ Loan origination fees — — Fulfillment fees from PennyMac Mortgage Investment Trust — — Net servicing fees — — Management fees — — — Carried Interest from Investment Funds — — — Net interest income (expense): — — — Interest income Interest expense Other Total net revenue Expenses Income before provision for income taxes and non-segment activities Non-segment activities (2) — — — — Income before provision for income taxes $ $ $ $ $ Segment assets at year end (3) $ $ $ $ $ (1) All revenues are from external customers. (2) Primarily represents repricing Payable to exchanged Private National Mortgage Acceptance Company, LLC unitholders under tax receivable agreement (3) Excludes parent Company assets, which consist primarily of working capital of $ 5.5 million. Year ended December 31, 2015 Mortgage Banking Investment Production Servicing Total Management Total (in thousands) Revenue: (1) Net gains on mortgage loans held for sale at fair value $ $ $ $ — $ Loan origination fees — — Fulfillment fees from PennyMac Mortgage Investment Trust — — Net servicing fees — — Management fees — — — Carried Interest from Investment Funds — — — Net interest income (expense): Interest income — Interest expense — — Other Total net revenue Expenses Income before provision for income taxes and non-segment activities Non-segment activities (2) — — — — Income before provision for income taxes $ $ $ $ $ Segment assets at year end (3) $ $ $ $ $ (1) All revenues are from external customers (2) Represents repricing Payable to exchanged Private National Mortgage Acceptance Company, LLC unitholders under tax receivable agreement. (3) Excludes parent company assets, which consist primarily of deferred tax asset of $18.4 million. Year ended December 31, 2014 Mortgage Banking Investment Production Servicing Total Management Total (in thousands) Revenues: (1) Net gains on mortgage loans held for sale at fair value $ $ $ $ — $ Loan origination fees — — Fulfillment fees from PennyMac Mortgage Investment Trust — — Net servicing fees — — Management fees — — — Carried Interest from Investment Funds — — — Net interest income (expense): Interest income Interest expense — Other Total net revenue Expenses Income before provision for income taxes and non-segment activities Non-segment activities (2) — — — — Income before provision for income taxes $ $ $ $ $ Segment assets at year end (3) $ $ $ $ $ (1) All revenues are from external customers. (2) Represents repricing of Payable to exchanged Private National Mortgage Acceptance Company, LLC unitholders under tax receivable agreement. (3) Excludes parent Company assets, which consist primarily of deferred tax asset of $46.0 million |
Selected Quarterly Results (Una
Selected Quarterly Results (Unaudited) | 12 Months Ended |
Dec. 31, 2016 | |
Selected Quarterly Results (Unaudited) | |
Selected Quarterly Results (Unaudited) | Note 26—Selected Quarterly Results (Unaudited) Following is a presentation of selected quarterly financial data: Quarter ended 2016 2015 Dec. 31 Sept. 30 June. 30 Mar. 31 Dec. 31 Sept. 30 June. 30 Mar. 31 (in thousands, except per share data) During the quarter: Net gains on mortgage loans held for sale at fair value $ $ $ $ $ $ $ $ Fulfillment fees from PennyMac Mortgage Investment Trust Net mortgage loan servicing fees Management fees and Carried Interest Other income Expenses Income before provision for income taxes Provision for income taxes Net income Less: Net income attributable to noncontrolling interest Net income attributable to PennyMac Financial Services, Inc. common stockholders $ $ $ $ $ $ $ $ Earnings per share of common stock: Basic $ $ $ $ $ $ $ $ Diluted $ $ $ $ $ $ $ $ Quarter end: Mortgage loans held for sale at fair value $ $ $ $ $ $ $ $ Mortgage servicing rights Carried Interest from Investment Funds Servicing advances, net Other assets Total assets $ $ $ $ $ $ $ $ Assets sold under agreements to repurchase $ $ $ $ $ $ $ $ Mortgage loan participation and sale agreement Notes payable Excess servicing spread financing at fair value to PennyMac Mortgage Investment Trust Other liabilities Total liabilities Total equity Total liabilities and equity $ $ $ $ $ $ $ $ |
Parent Company Information
Parent Company Information | 12 Months Ended |
Dec. 31, 2016 | |
Parent Company Information | |
Parent Company Information | Note 27—Parent Company Information The Company’s debt financing agreements require PLS, the Company’s indirect controlled subsidiary, to comply with financial covenants that include a minimum tangible net worth of $90 million. PLS is limited from transferring funds to the Parent by this minimum tangible net worth requirement. PENNYMAC FINANCIAL SERVICES, INC. CONDENSED BALANCE SHEET December 31, 2016 2015 (in thousands) ASSETS Cash $ $ Investments in subsidiaries Deferred tax asset — Due from subsidiaries Total assets $ $ LIABILITIES AND STOCKHOLDERS' EQUITY Payable to exchanged Private National Mortgage Acceptance Company, LLC unitholders under tax receivable agreement $ $ Income taxes payable — Total liabilities Stockholders' equity Total liabilities and stockholders' equity $ $ PENNYMAC FINANCIAL SERVICES, INC. CONDENSED STATEMENT OF INCOME Year ended December 31, 2016 2015 2014 (in thousands) Revenues Dividends from subsidiary $ $ $ Interest — Revaluation of Payable to exchanged Private National Mortgage Acceptance Company, LLC unitholders under tax receivable agreement Total revenue Expenses Interest — — Total expenses — — Income before provision for income taxes and equity in undistributed earnings in subsidiaries Provision for income taxes Income before equity in undistributed earnings of subsidiaries Equity in undistributed earnings of subsidiaries Net income $ $ $ PENNYMAC FINANCIAL SERVICES, INC. CONDENSED STATEMENT OF CASH FLOWS Year ended December 31, 2016 2015 2014 (in thousands) Cash flows from operating activities Net income $ $ $ Adjustments to reconcile net income to net cash provided by (used in ) operating activities Equity in undistributed earnings of subsidiaries Revaluation of Payable to exchanged Private National Mortgage Acceptance Company, LLC unitholders under tax receivable agreement Decrease in deferred tax asset Decrease in intercompany receivable — Payments to exchanged Private National Mortgage Acceptance Company, LLC unitholders under tax receivable agreement — — Decrease in payables to subsidiaries — — Increase in income taxes payable — — Net cash provided by (used in) operating activities Cash flows from financing activities Proceeds from common stock options exercised — — Net cash provided by financing activities — — Net change in cash Cash at beginning of year Cash at end of year $ $ $ |
Recently Issued Accounting Pron
Recently Issued Accounting Pronouncements | 12 Months Ended |
Dec. 31, 2016 | |
Recently Issued Accounting Pronouncements. | |
Recently Issued Accounting Pronouncements | Note 28—Recently Issued Accounting Pronouncements In May 2014, the FASB issued Accounting Standards Update (“ASU”) ASU 2014-09, Revenue from Contracts with Customers (Subtopic 606) (“ASU 2014-09”), which supersedes the guidance in ASC 605, Revenue Recognition . ASU 2014-09 clarifies the principles for recognizing revenue in order to improve comparability of revenue recognition practices across entities and industries with certain scope exceptions including financial instruments, leases, and guarantees. ASU 2014-09 provides guidance intended to assist in the identification of contracts with customers and separate performance obligations within those contracts, the determination and allocation of the transaction price to those identified performance obligations and the recognition of revenue when a performance obligation has been satisfied. ASU 2014-09 also requires disclosures regarding the nature, amount, timing, and uncertainty of revenues and cash flows from contracts with customers. Upon adoption, ASU 2014-09 provides for transition through either a full retrospective approach requiring the restatement of all presented prior periods or a modified retrospective approach, which allows the new recognition standard to be applied to only those contracts that are not completed at the date of transition. If the modified retrospective approach is adopted, a cumulative-effect adjustment to retained earnings is performed with additional disclosures required including the amount by which each line item is affected by the transition as compared to the guidance in effect before adoption and an explanation of the reasons for significant changes in these amounts. The FASB has issued several amendments to ASU 2014-09, including: · In May 2014, ASU 2015-14, Revenue From Contracts With Customers (“ASU 2015-14”). This update deferred the initial effective date of ASU 2014-09. As a result of the issuance of ASU 2015-14, ASU 2014-09 is effective for annual reporting periods beginning on or after December 15, 2017, and interim periods within those annual periods. Early adoption is permitted only as of annual reporting periods beginning after December 15, 2016, including interim reporting periods within that reporting period. · In March 2015, ASU 2016-08, Principal Versus Agent Considerations (Reporting Revenue Gross versus Net). The amendments to this update are intended to improve the implementation guidance on principal versus agent considerations in ASU 2014-09 by clarifying how an entity should identify the unit of account (i.e. the specified good or service) and how an entity should apply the control principle to certain types of arrangements. · In May 2016, ASU 2016-12, Narrow-Scope Improvements and Practical Expedients. The amendments to this update clarify certain core recognition principles and provide practical expedients available at transition. The improvements address collectability, sales tax presentation, noncash consideration, contract modifications and completed contracts at transition. · In December 2016, ASU 2016-20, Technical Corrections and Improvements to Topic 606, Revenue from Contracts with Customers . The amendments to this update affect narrow aspects of the guidance issued in ASU 2014-09. The amendments remove certain items under its scope and clarify application of certain principles. The amendments address loan guarantee fees, contracts costs impairment testing, provisions for losses on construction, insurance contracts, disclosure of remaining performance obligations, contract modifications, contract asset versus receivable, refund liability, advertising cost, fixed-odds wagering contracts in the casino industry and cost capitalization for advisor to private funds and public funds. The Company expects that upon adoption, the guidance currently applied by the Company to its Carried Interest may be affected. The Company’s Carried Interest arrangements with the Investment Funds represent capital allocations to PFSI. The Company is currently evaluating whether the nature and substance of its Carried Interest arrangements are within the scope of ASU 2014-09, or whether such Carried Interest should be accounted for under the equity method of accounting under the Investments – Equity Method and Joint Ventures topic of the ASC. If the Company concludes the Carried Interest should be accounted for under the equity method of accounting, Carried Interest would be accounted for as a financial instrument and the amount recognized by the Company would not change significantly. The Company is still determining the potential additional effects of ASU 2014-09 on its financial statements for other arrangements that may be within the scope of ASU 2014-09. In August 2014, the FASB issued Accounting Standards Update No. 2014-15, Presentation of Financial Statements—Going Concern (Subtopic 205-40): Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern (“ASU 2014-15”). ASU 2014-15 is intended to define management’s responsibility to evaluate whether there is substantial doubt about an organization’s ability to continue as a going concern and to provide related note disclosures. Under GAAP, financial statements are prepared under the presumption that the reporting organization will continue to operate as a going concern, except in limited circumstances. Financial reporting under this presumption is commonly referred to as the going concern basis of accounting. The going concern basis of accounting establishes the fundamental basis for measuring and classifying assets and liabilities. Under ASU 2014-15, an entity would be required to evaluate its status as a going concern as part of its periodic financial statement preparation process and would be required to disclose information about its potential inability to continue as a going concern when “substantial doubt” about its ability to continue as a going concern for the period of one year from the earlier of the date its financial statements are issued or are ready to be issued. If management concludes that there is “substantial doubt” about the entity’s ability to continue as a going concern, it must disclose the principal conditions or events causing substantial doubt to be raised, management’s evaluation of the conditions and management’s plans. If substantial doubt is not alleviated as a result of management’s plans, the company is required to include a statement that there is “substantial doubt about the entity’s ability to continue as a going concern.” ASU 2014-15 also requires an entity to disclose how the substantial doubt was resolved in the period that substantial doubt no longer exists. ASU 2014-15 is effective for the annual period ending December 31, 2016. The adoption of ASU 2014-15 did not have an effect on the financial statements of the Company. In February 2015, the FASB issued ASU 2015-02, Consolidation (Topic 810): Amendments to the Consolidation Analysis (“ASU 2015-02”). ASU 2015-02 affects reporting entities that are required to evaluate whether they should consolidate certain legal entities. ASU 2015-02 modifies the evaluation of whether limited partnerships and similar legal entities are VIEs or voting interest entities, eliminates the presumption that a general partner should consolidate a limited partnership and affects the consolidation analysis of reporting entities that are involved with VIEs, particularly those that have fee arrangements and related party relationships. ASU 2015-02 is effective for fiscal years, and for interim periods within those fiscal years, beginning after December 15, 2015. The Company adopted ASU 2015-02 effective January 1, 2016. The adoption of ASU 2015-02 had no effect on the Company’s consolidated financial statements. In January 2016, the FASB issued ASU 2016-01, Financial Instruments–Overall: Recognition and Measurement of Financial Assets and Financial Liabilities (“ASU 2016-01”). ASU 2016-01 affects the accounting for equity investments, financial liabilities under the fair value option, the presentation and disclosure requirements for financial instruments, and the valuation allowance assessment when recognizing deferred tax assets resulting from unrealized losses on available-for-sale debt securities. ASU 2016-01 requires that: · All equity investments in unconsolidated entities (other than those accounted for using the equity method of accounting) with readily determinable fair values will generally be measured at fair value through earnings. · When the fair value option has been elected for financial liabilities, changes in fair value due to instrument-specific credit risk will be recognized separately in other comprehensive income. The accumulated gains and losses due to these changes will be reclassified from accumulated other comprehensive income to earnings if the financial liability is settled before maturity. · For financial instruments measured at amortized cost, public business entities will be required to use the exit price when measuring the fair value of financial instruments for disclosure purposes. · Financial assets and financial liabilities shall be presented separately in the notes to the financial statements, grouped by measurement category (e.g., fair value, amortized cost, lower of cost or fair value) and form of financial asset (e.g., loans, securities). · Public business entities will no longer be required to disclose the methods and significant assumptions used to estimate the fair value of financial instruments carried at amortized cost. · Entities will have to assess the realizability of a deferred tax asset related to a debt security classified as available for sale in combination with the entity’s other deferred tax assets. The classification and measurement guidance will be effective for public business entities in fiscal years beginning after December 15, 2017, including interim periods within those fiscal years. Early adoption of the provision to record fair value changes for financial liabilities under the fair value option resulting from instrument-specific credit risk in other comprehensive income is permitted and can be elected for all financial statements of fiscal years and interim periods that have not yet been issued or that have not yet been made available for issuance. The Company does not expect that the adoption of ASU 2016-01will have an effect on its consolidated financial statements. In February 2016, the FASB issued ASU No. 2016-02 , Leases (Topic 842) (“ASU 2016-02”). ASU 2016-02 sets out the principles for the recognition, measurement, presentation and disclosure of leases for both parties to a contract (i.e. lessees and lessors) and supersedes previous leasing standards. ASU 2016-02 requires lessees to apply a dual approach, classifying leases as either finance or operating leases based on the principle of whether the lease is effectively a financed purchase of the leased asset by the lessee. A lessee is also required to record a right-of-use asset and a lease liability for all leases with a term of greater than 12 months regardless of their classification. ASU 2016-02 is effective for the Company for reporting periods beginning after December 15, 2018, with early adoption permitted. The Company is currently assessing the potential impact that the adoption of ASU 2016-02 will have on its consolidated financial statements. As shown in Note 24 - Commitments and Contingencies , the Company had approximately $100.8 million in future minimum lease payment commitments as of December 31, 2016. Were the Company to adopt ASU 2016-02 as of December 31, 2016, it would be required to recognize a right-of-use asset and a corresponding liability based on the present value of such obligation as of December 31, 2016. The Company does not expect to recognize a significant cumulative effect adjustment to its stockholders’ equity as a result of adopting ASU 2016-02. In March 2016, the FASB issued ASU 2016-09, Compensation—Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting (“ASU 2016-09”). ASU 2016-09 simplifies several aspects of the accounting for share-based payment award transactions, including: · Modifies the accounting for income taxes relating to share-based payments. All excess tax benefits and tax deficiencies (including tax benefits of dividends on share-based payment awards) will be recognized as income tax expense or benefit in the consolidated income statement. The tax effects of exercised or vested awards will be treated as discrete items in the reporting period in which they occur. An entity will recognize excess tax benefits regardless of whether the benefit reduces taxes payable in the current period. Under current GAAP, excess tax benefits are recognized in additional paid-in capital; tax deficiencies are recognized either as an offset to accumulated excess tax benefits, if any, or in the consolidated income statement in the period they reduce income taxes payable. · Changes the classification of excess tax benefits on the consolidated statement of cash flows. In the consolidated statement of cash flows, excess tax benefits will be classified along with other income tax cash flows as an operating activity. Under current GAAP, excess tax benefits are separated from other income tax cash flows and classified as a financing activity. · Changes the requirement to estimate the number of awards that are expected to vest. Under ASU 2016-09, an entity can make an entity-wide accounting policy election to either estimate the number of awards that are expected to vest as presently required or account for forfeitures when they occur. Under current GAAP, accruals of compensation cost are based on the number of awards that are expected to vest. · Changes the tax withholding requirements for share-based payment awards to qualify for equity accounting. The threshold to qualify for equity classification permits withholding up to the maximum statutory tax rates in the applicable jurisdictions. Under current GAAP, for an award to qualify for equity classification is that an entity cannot partially settle the award in cash in excess of the employer’s minimum statutory withholding requirements. · Establishes GAAP for the classification of employee taxes paid when an employer withholds shares for tax withholding purposes. Cash paid by an employer when directly withholding shares for tax- withholding purposes should be classified as a financing activity. This guidance establishes GAAP related to the classification of withholding taxes in the statement of cash flows as there is no such guidance under current GAAP. ASU 2016-09 is effective for annual periods beginning after December 15, 2016, and interim periods within those annual periods. Early adoption is permitted for any organization in any interim or annual period. The Company does not expect the adoption of ASU 2016-09 to have a significant effect on its consolidated financial statements. |
Subsequent Events
Subsequent Events | 12 Months Ended |
Dec. 31, 2016 | |
Subsequent Events | |
Subsequent Events | Note 29—Subsequent Events · On February 16, 2017, the Company, through the Issuer Trust, issued an aggregate principal amount of $400 million in Term Notes to qualified institutional buyers under Rule 144A of the Securities Act of 1933, as amended. The Term Notes bear interest at a rate equal to one-month LIBOR plus 4.75% per annum, payable each month beginning in February 2017. The Term Notes will mature on February 25, 2020 or, if extended pursuant to the terms of the related indenture supplement, February 25, 2021 (unless earlier redeemed in accordance with their terms). The Term Notes rank pari passu with the VFN issued by Issuer Trust to PLS and are secured by certain participation certificates relating to Ginnie Mae MSRs and ESS that are financed pursuant to the GNMA MSR Facility. · On March 3, 2017, the Company, through PLS, amended and restated a master repurchase agreement, by and between Citibank, N.A. (“Citibank”) and PLS, pursuant to which PLS may sell to, and later repurchase from, Citibank certain newly originated mortgage loans that are originated through the PLS consumer direct lending channel or purchased from correspondent sellers through a subsidiary of PMT and, in either case, held by PLS pending sale and/or securitization. This repurchase agreement is committed to March 2, 2018 and provides for a maximum aggregate purchase price of $400 million, of which $200 million is committed. In connection with the amendment and restatement, the committed amount was increased from $150 million to $200 million. |
Significant Accounting Polici36
Significant Accounting Policies (Policies) | 12 Months Ended |
Dec. 31, 2016 | |
Significant Accounting Policies | |
Basis of Presentation | Basis of Presentation The Company’s consolidated financial statements have been prepared in compliance with accounting principles generally accepted in the United States (“GAAP”) as codified in the Financial Accounting Standards Board’s (“FASB”) Accounting Standards Codification (the “ASC” or the “Codification”). |
Principles of Consolidation | Principles of Consolidation The consolidated financial statements include the accounts of PFSI, PennyMac and all of its wholly‑owned subsidiaries. Intercompany accounts and transactions have been eliminated. |
Use of Estimates | Use of Estimates The preparation of financial statements in conformity with GAAP requires management to make judgments and estimates that affect the reported amounts of assets and liabilities and 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. Actual results will likely differ from those estimates. |
Fair Value | Fair Value The Company groups its assets and liabilities at fair value in three levels, based on the markets in which the assets and liabilities are traded and the observability of the inputs used to determine fair value. These levels are: · Level 1—Quoted prices in active markets for identical assets or liabilities. · Level 2—Prices determined or determinable using other significant observable inputs. Observable inputs are inputs that other market participants would use in pricing an asset or liability and are developed based on market data obtained from sources independent of the Company. These may include quoted prices for similar assets and liabilities, interest rates, prepayment speeds, credit risk and other inputs. · Level 3—Prices determined using significant unobservable inputs. In situations where observable inputs are unavailable, unobservable inputs may be used. Unobservable inputs reflect the Company’s own judgments about the factors that market participants use in pricing an asset or liability, and are based on the best information available in the circumstances. As a result of the difficulty in observing certain significant valuation inputs affecting “Level 3” fair value assets and liabilities, the Company is required to make judgments regarding their fair values. Different persons in possession of the same facts may reasonably arrive at different conclusions as to the inputs to be applied in valuing these assets and liabilities and their fair values. Likewise, due to the general illiquidity of some of these assets and liabilities, subsequent transactions may be at values significantly different from those reported. |
Short-Term Investments | Short‑Term Investments Short‑term investments, which represent investments in accounts with a depository institution, are carried at fair value. Changes in fair value are recognized in current period income. The Company classifies its short‑term investments as “Level 1” fair value assets. |
Mortgage Loans Held for Sale at Fair Value | Mortgage Loans Held for Sale at Fair Value Management has elected to account for mortgage loans held for sale at fair value, with changes in fair value recognized in current period income, to more timely reflect the Company’s performance. All changes in fair value, including changes arising from the passage of time, are recognized as a component of Net gains on mortgage loans held for sale at fair value . The Company classifies most of the mortgage loans held for sale at fair value as “Level 2” fair value assets. Certain of the Company’s mortgage loans held for sale may not be readily saleable due to identified defects or delinquency. Such mortgage loans are classified as “Level 3” fair value assets. Sale Recognition The Company recognizes transfers of mortgage loans as sales when it surrenders control over the mortgage loans. Control over transferred mortgage loans is deemed to be surrendered when (i) the mortgage loans have been isolated from the Company, (ii) the transferee has the right (free of conditions that constrain it from taking advantage of that right) to pledge or exchange the transferred mortgage loans, and (iii) the Company does not maintain effective control over the transferred mortgage loans through either (a) an agreement that entitles and obligates the Company to repurchase or redeem them before their maturity or (b) the ability to unilaterally cause the holder to return the specific mortgage loans. |
Interest Income Recognition | Interest Income Recognition Interest income on mortgage loans held for sale at fair value is recognized over the life of the mortgage loans using their contractual interest rates. Income recognition is suspended and the unpaid interest receivable is reversed against interest income when mortgage loans become 90 days delinquent, or when, in management’s opinion, a full recovery of interest and principal becomes doubtful. Income recognition is resumed when the mortgage loan becomes contractually current. |
Derivative Financial Instruments | Derivative Financial Instruments The Company is exposed to price risk relative to its mortgage loans held for sale as well as to the commitments it makes to loan applicants to originate or to PMT to acquire mortgage loans at specified interest rates (“interest rate lock commitments” or “IRLCs”). The Company bears price risk from the time a commitment to fund a mortgage loan is made to a borrower or to purchase a mortgage loan from PMT, to the time the mortgage loan is sold. During this period, the Company is exposed to losses if mortgage market interest rates increase, because the fair value of the purchase commitment or prospective mortgage loan decreases. The Company also is exposed to risk relative to the fair value of its mortgage servicing rights (“MSRs”). The Company is exposed to loss in fair value of its MSRs when interest rates decrease. The Company engages in interest rate risk management activities in an effort to reduce the variability of earnings caused by changes in market interest rates. To manage this fair value risk resulting from interest rate risk, the Company uses derivative financial instruments acquired with the intention of reducing the risk that changes in market interest rates will result in unfavorable changes in the fair value of the Company’s IRLCs, inventory of mortgage loans held for sale and MSRs. IRLCs are accounted for as derivative financial instruments. The Company manages the risk created by IRLCs relating to mortgage loans held for sale by entering into forward sale agreements to sell the mortgage loans and by the purchase and sale of mortgage‑backed securities (“MBS”) options and futures. Such agreements are also accounted for as derivative financial instruments. These instruments and other interest-rate derivatives are also used to manage the risk created by changes in prepayment speeds on certain of the MSRs the Company holds. The Company classifies its IRLCs as “Level 3” fair value assets and liabilities and the derivative financial instruments it acquires to manage the risks created by IRLCs, mortgage loans held for sale and MSRs as “Level 1” or “Level 2” fair value assets and liabilities. The Company does not use derivative financial instruments for purposes other than in support of its risk management activities. The Company accounts for its derivative financial instruments as free‑standing derivatives. The Company does not designate its derivative financial instruments for hedge accounting. All derivative financial instruments are recognized on the consolidated balance sheet at fair value with changes in the fair values being reported in current period income. Changes in fair value of derivative financial instruments hedging IRLCs, mortgage loans held for sale at fair value and MSRs are included in Net gains on mortgage loans held for sale at fair value or in Amortization, impairment and change in fair value of mortgage servicing rights and mortgage servicing liabilities, as applicable, in the Company’s consolidated statements of income. When the Company has multiple derivative financial instruments with the same counterparty under a master netting arrangement, it offsets the amounts recorded as assets and liabilities and amounts recognized for the right to reclaim cash collateral it has deposited with the counterparty or the obligation to return cash collateral it has collected from the counterparty arising from that master netting arrangement. Such offset amounts are presented as either a net asset or liability by counterparty on the Company’s consolidated balance sheets. |
Servicing Advances | Servicing Advances Servicing advances represent advances made on behalf of borrowers and the mortgage loans’ investors to fund delinquent balances for property taxes and insurance premiums and out-of-pocket collection costs (e.g., preservation and restoration of mortgaged or real estate owned property, legal fees, and appraisals). Servicing advances are made in accordance with the Company’s servicing agreements and, when made, are deemed recoverable. The Company periodically reviews servicing advances for collectability and provides a valuation allowance for amounts estimated to be uncollectable. Servicing advances are written off when they are deemed uncollectable. |
Carried Interest Due from Investment Funds | Carried Interest Due from Investment Funds Carried Interest, in general terms, is the share of any profits in excess of specified levels that the general partners receive as compensation. The Company has a general partnership interest or other Carried Interest arrangement with the Investment Funds, and earns Carried Interest thereunder. The amount of Carried Interest to be recorded each period is based on the cash flows that would be realized by all partners assuming liquidation of the Investment Funds’ remaining investments as of the measurement date. |
Investment in PennyMac Mortgage Investment Trust at Fair Value | Investment in PennyMac Mortgage Investment Trust at Fair Value Common shares of beneficial interest in PMT are carried at their fair value with changes in fair value recognized in current period income. Fair value for purposes of the Company’s holdings in PMT is based on the published closing price of the shares as of period end. The Company classifies its investment in common shares of PMT as a “Level 1” fair value asset. |
Mortgage Servicing Rights and Mortgage Servicing Liabilities | Mortgage Servicing Rights and Mortgage Servicing Liabilities MSRs and MSLs arise from contractual agreements between the Company and investors (or their agents) in mortgage securities and mortgage loans. Under these contracts, the Company performs mortgage loan servicing functions in exchange for fees and other remuneration. The servicing functions typically performed include, among other responsibilities, collecting and remitting loan payments; responding to borrower inquiries; accounting for principal and interest; holding custodial (impound) funds for payment of property taxes and insurance premiums; counseling delinquent mortgagors; supervising the acquisition of real estate in settlement of loans (“REO”) and property disposition. REO represents real estate that collateralized the mortgage loans before the properties were acquired in settlement of loans. The fair value of MSRs and MSLs is derived from the net positive or negative, respectively, cash flows associated with the servicing contracts. The Company receives a servicing fee ranging generally from 0.19% to 0.57% annually, net of related guarantee fees, on the remaining outstanding principal balances of the mortgage loans subject to the servicing contracts. The servicing fees are collected from the monthly payments made by the mortgagors. The Company is contractually entitled to receive other remuneration including rights to various mortgagor‑contracted fees such as late charges and collateral reconveyance charges, and the Company is generally entitled to retain the interest earned on funds held pending remittance related to its collection of mortgagor payments. The Company also generally has the right to solicit the mortgagors for other products and services as well as for new mortgages for those considering refinancing or purchasing a new home. The Company recognizes MSRs and MSLs initially at fair value, either as proceeds from or liabilities incurred in, sales of mortgage loans where the Company assumes the obligation to service the mortgage loan in the sale transaction, or from the purchase of MSRs or receipt of cash for acceptance of the MSLs. The Company’s subsequent accounting for MSRs and MSLs is based on the class of MSR or MSL. The Company has identified three classes of MSRs: originated MSRs backed by mortgage loans with initial interest rates of less than or equal to 4.5%; MSRs backed by mortgage loans with initial interest rates of more than 4.5%; and purchased MSRs financed in part through the transfer of the right to receive excess servicing spread (“ESS”) cash flows. Originated MSRs backed by mortgage loans with initial interest rates of less than or equal to 4.5% are accounted for using the amortization method. Originated MSRs backed by loans with initial interest rates of more than 4.5% and purchased MSRs financed in part by ESS are accounted for at fair value with changes in fair value recorded in current period income. MSLs are carried at fair value with changes in fair value recorded in current period income. The fair value of MSRs and MSLs is difficult to determine because MSRs and MSLs are not actively traded in observable stand‑alone markets. Considerable judgment is required to estimate the fair values of MSRs and MSLs and the exercise of such judgment can significantly affect the Company’s income. Therefore, the Company classifies its MSRs and MSLs as “Level 3” fair value assets and liabilities. MSRs and MSLs are generally subject to reduction in fair value when mortgage interest rates decrease. Decreasing mortgage interest rates normally encourage increased mortgage refinancing activity. Increased refinancing activity reduces the expected life of the mortgage loans underlying the MSRs and MSLs, thereby reducing their fair value. Reductions in the fair value of MSRs and MSLs affect earnings primarily through change in fair value and impairment charges. For MSRs backed by mortgage loans with historically low mortgage interest rates, factors other than interest rates (such as housing price changes) take on increasing influence on prepayment behavior of the underlying mortgage loans. MSRs Accounted for Using the Amortization Method The Company amortizes MSRs that are accounted for using the amortization method. MSR amortization is determined by applying the ratio of the net MSR cash flows projected for the current period to the estimated total remaining projected net MSR cash flows. The estimated total net MSR cash flows are determined at the beginning of each month using prepayment inputs applicable at that time. MSRs accounted for using the amortization method are periodically evaluated for impairment. Impairment occurs when the current fair value of the MSRs decreases below the asset’s amortized cost. If MSRs are impaired, the impairment is recognized in current‑period income and the carrying value (carrying value is the MSR’s amortized cost reduced by any related valuation allowance) of the MSRs is adjusted through a valuation allowance. If the fair value of impaired MSRs subsequently increases, the increase in fair value is recognized in current‑period income. When an increase in fair value of MSR is recognized, the valuation allowance is adjusted to increase the carrying value of the MSRs only to the extent of the valuation allowance. For impairment evaluation purposes, the Company stratifies its MSRs by predominant risk characteristic when evaluating for impairment. For purposes of performing its MSR impairment evaluation, the Company stratifies its servicing portfolio on the basis of certain risk characteristics including mortgage loan type (fixed‑rate or adjustable‑rate) and note interest rate. Fixed‑rate mortgage loans are stratified into note rate pools of 50 basis points for note rates between 3.0% and 4.5% and a single pool for note rates of less than or equal to 3.0%. If the fair value of MSRs in any of the note interest rate pools is below the carrying value of the MSRs for that pool, impairment is recognized to the extent of the difference between the estimated fair value and the carrying value of that pool. Management periodically reviews the various impairment strata to determine whether the fair value of the impaired MSRs in a given stratum is likely to recover. When management deems recovery of the fair value to be unlikely in the foreseeable future, a write‑down of the cost of the MSRs for that stratum to its estimated recoverable value is charged to the valuation allowance. Both amortization and changes in the amount of the MSR valuation allowance are recorded in current period income in Amortization, impairment and change in fair value of mortgage servicing rights and mortgage servicing liabilities in the consolidated statements of income. MSRs and MSLs Accounted for at Fair Value Changes in fair value of MSLs and MSRs accounted for at fair value are recognized in current period income in Amortization, impairment and change in fair value of mortgage servicing rights in the consolidated statements of income. |
Furniture, Fixtures, Equipment and Building Improvements | Furniture, Fixtures, Equipment and Building Improvements Furniture, fixtures, equipment and building improvements are stated at historical cost less accumulated depreciation and amortization. Depreciation and amortization are computed using the straight‑line method over the estimated useful lives of the various classes of assets, which range from five to seven years for furniture and equipment and the lesser of the asset’s estimated useful life or the remaining lease term for fixtures and building improvements. |
Capitalized Software | Capitalized Software The Company capitalizes certain consulting, payroll, and payroll‑related costs related to computer software developed for internal use. Once development is complete and the software is placed in service, the Company amortizes the capitalized costs over five years using the straight‑line method. The Company also periodically assesses capitalized software for recoverability when events or changes in circumstances indicate that their carrying amount may not be recoverable. If management identifies an indicator of impairment, it assesses recoverability by comparing the carrying amount of the asset to the sum of the undiscounted cash flows expected to result from the use and the eventual disposal of the asset. An impairment loss is recognized when the carrying amount is not recoverable and is measured as the excess of carrying value over fair value. No such impairment was recorded during the three years ended December 31, 2016. |
Mortgage Loans Eligible for Repurchase | Mortgage Loans Eligible for Repurchase The terms of the Ginnie Mae MBS program allow, but do not require, the Company to repurchase mortgage loans when the borrower has made no payments for three consecutive months. As a result of this right, the Company recognizes the mortgage loans in Mortgage loans eligible for repurchase at their unpaid principal balances and records a corresponding liability in Liability for mortgage loans eligible for repurchase on its consolidated balance sheets. |
Margin Deposits | Margin Deposits Margin deposits represents deposits that serve as collateral for various agreements the Company has entered into, such as derivative contracts and certain repurchase agreements. Margin deposits are included in Other assets in the Company’s consolidated balance sheets. |
Borrowings | Borrowings The carrying value of borrowings other than ESS are based on the accrued cost of the agreements. The costs of creating the facilities underlying the agreements are included in the carrying value of the agreements and are amortized to Interest expense over the terms of the respective borrowing facilities. |
Excess Servicing Spread Financing at Fair Value | Excess Servicing Spread Financing at Fair Value The Company finances certain of its purchases of Agency MSRs through the sale to PMT of the right to receive the excess of the servicing fee rate over a specified rate of the underlying MSRs. This excess is referred to as the ESS. ESS is carried at its fair value. Changes in fair value are recognized in current period income in Change in fair value of excess servicing spread payable to PennyMac Mortgage Investment Trust . Interest expense for ESS is accrued using the interest method based upon the expected cash flows from the ESS through the expected life of the underlying mortgage loans. |
Liability for Losses Under Representations and Warranties | Liability for Losses Under Representations and Warranties The Company provides for its estimate of the losses that it expects to incur in the future as a result of its breach of the representations and warranties that it provides to the purchasers and insurers of the mortgage loans it has sold. The Company’s agreements with the Agencies and other investors include representations and warranties related to the mortgage loans the Company sells to the Agencies and other investors. The representations and warranties require adherence to Agency and other investor origination and underwriting guidelines, including but not limited to the validity of the lien securing the mortgage loan, property eligibility, borrower credit, income and asset requirements, and compliance with applicable federal, state and local law. In the event of a breach of its representations and warranties, the Company may be required to either repurchase the mortgage loans with the identified defects or indemnify the investor or insurer. In such cases, the Company bears any subsequent credit loss on the mortgage loans. The Company’s credit loss may be reduced by any recourse it may realize from correspondent mortgage loan sellers that, in turn, had sold such mortgage loans to PMT and breached similar or other representations and warranties. In such event, the Company has the right to seek a recovery of related repurchase losses from that correspondent mortgage loan sellers, through PMT. The Company records a provision for losses relating to representations and warranties as part of its mortgage loan sale transactions. The method used to estimate the liability for representations and warranties is a function of the representations and warranties given and considers a combination of factors, including, but not limited to, estimated future defaults and mortgage loan repurchase rates, the estimated severity of loss in the event of default and the probability of reimbursement by the correspondent mortgage loan seller. The Company establishes a liability at the time mortgage loans are sold and periodically updates its liability estimate. The level of the liability for representations and warranties is reviewed and approved by the Company’s management credit committee. The level of the liability for representations and warranties is difficult to estimate and requires considerable management judgment. The level of mortgage loan repurchase losses is dependent on economic factors, investor repurchase demand or insurer claim denial strategies, and other external conditions that may change over the lives of the underlying mortgage loans. The Company’s representations and warranties are generally not subject to stated limits of exposure. However, the Company believes that the current unpaid principal balance of mortgage loans sold to date represents the maximum exposure to repurchases related to representations and warranties. The Company believes the range of reasonably possible losses in relation to the recorded liability is not material to its financial condition or income. |
Mortgage Loan Servicing Fees | Mortgage Loan Servicing Fees Mortgage loan servicing fees and other remuneration are received by the Company for servicing residential mortgage loans. Mortgage loan servicing fees are recorded net of Agency guarantee fees paid by the Company. Mortgage loan servicing fees are recognized as earned over the life of the mortgage loans in the servicing portfolio. |
Stock-Based Compensation | Stock‑Based Compensation The Company’s 2013 Equity Incentive Plan provides for awards of nonstatutory and incentive stock options, time‑based restricted stock units, performance‑based restricted stock units, stock appreciation rights, performance units and stock grants. The Company establishes the cost of its share-based awards at the awards’ fair values at the grant date of the awards. The Company estimates the fair value of time‑based restricted stock units and performance‑based restricted stock units awarded with reference to the fair value of its underlying common stock on the date of the award. The Company estimates the fair value of its stock option awards with reference to the expected volatility of its shares of common stock and risk-free interest rate for the period that exercisable stock options are expected to be outstanding. Compensation costs are fixed, except for performance‑based restricted stock units, as of the award date as all grantees are employees of PennyMac or directors of the Company. The cost of performance share units is adjusted in each reporting period after the grant for changes in expected performance attainment until the performance share units vest. The Company amortizes the cost of stock based awards to compensation expense over the vesting period using the graded vesting method. Expense relating to awards is included in Compensation expense in the consolidated statements of income. |
Income Taxes | Income Taxes The Company is subject to federal and state income taxes. Income taxes are provided using the asset and liability method. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using the enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred taxes of a change in tax rates is recognized in income in the period in which the change occurs. A valuation allowance is established if, in management’s judgment, it is not more likely than not that a deferred tax asset will be realized. The Company recognizes tax benefits relating to its tax positions only if, in the opinion of management, it is more likely than not that the tax position will be sustained upon examination by the appropriate taxing authority. A tax position that meets this standard is recognized as the largest amount that is greater than 50% likely to be realized upon ultimate settlement with the appropriate taxing authority. The Company will classify any penalties and interest as a component of provision for income taxes. As a result of the PennyMac recapitalization and reorganization, the Company expects to benefit from amortization and other tax deductions due to increases in the tax basis of PennyMac’s assets from the exchange of PennyMac Class A units. Those deductions will be allocated to the Company and will be taken into account in reporting the Company’s taxable income. The Company has entered into an agreement with the unitholders of PennyMac that will provide for the additional payment by the Company to exchanging unitholders of PennyMac equal to 85% of the amount of cash savings, if any, in U.S. federal, state and local income tax that PFSI realizes due to (i) increases in tax basis resulting from exchanges of the then‑existing unitholders and (ii) certain other tax benefits related to PFSI entering into the tax receivable agreement, including tax benefits attributable to payments under the tax receivable agreement. |
Variable Interest Held in Unconsolidated Variable Interest Entities | Variable Interest Held in Unconsolidated Variable Interest Entities A Variable Interest Entity (“VIE”) is an entity having either a total equity investment that is insufficient to finance its activities without additional subordinated financial support or equity investors at risk that lack the ability to control the entity’s activities. Variable interests are investments or other interests that will absorb portions of a VIE’s expected losses or receive portions of the VIE’s expected residual returns. PFSI consolidates the assets and liabilities of VIEs of which the Company is the primary beneficiary. The primary beneficiary is the party that has both the power to direct the activities that most significantly impact the VIE and holds a variable interest that could potentially be significant to the VIE. To determine whether a variable interest the Company holds could potentially be significant to the VIE, the Company considers both quantitative and qualitative factors regarding the nature, size and form of its involvement with the VIE. The Company assesses whether it is the primary beneficiary of a VIE on an ongoing basis. PMOFA is the general partner of the Master Fund. The Master Fund wholly owns PennyMac Mortgage Co. Funding, LLC (“Funding, LLC”) and PennyMac Mortgage Co., LLC. Funding LLC is the majority interest holder in PennyMac Loan Trust 2015‑NPL1 (the “Trust”), which holds the mortgage loans for Funding LLC. PLS provides mortgage loan servicing for the mortgage loans held by the Trust as well as for mortgage loans held by the Mortgage Co. The related party group constituting the Company and its affiliates (including PMOFA) has an equity interest in the Master Fund, the ultimate parent of the Trust, Mortgage Co and Funding, LLC. The direct equity holders in the Trust, Mortgage Co and Funding, LLC, however, do not have power to direct the activities of the respective entities and as such, both the Trust and Mortgage Co are considered to be VIEs as defined in the Consolidations topic of the Codification. The Company is not the primary beneficiary in these VIEs, given it does not represent the enterprise within the related party group that is most closely associated with these VIEs and, as such, the Company does not consolidate these VIEs. Exposure to loss of the related party group from the unconsolidated VIEs is limited to the contributed capital of the related party group in the Master Fund totaling $2,000 which represents the general partnership interest held by PMOFA in the Master Fund. |
Transactions with Affiliates (T
Transactions with Affiliates (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
Transactions with Affiliates | |
Summary of activity in Payable to exchanged Private National Mortgage Acceptance Company, LLC unitholders under tax receivable agreement | Year ended December 31, 2016 2015 2014 (in thousands) Activity during the year: Liability resulting from unit exchanges $ $ $ Payments under tax receivable agreement $ - $ $ - Revaluation of liability $ $ $ Balance at end of year $ $ |
PMT | |
Transactions with Affiliates | |
Summary of lending activity between the Company and affiliate | Year ended December 31, 2016 2015 2014 (in thousands) Mortgage servicing rights and excess servicing spread recapture incurred included in Net gains on mortgage loans for sale at fair value $ $ $ Fulfillment fee revenue $ $ $ Unpaid principal balance of mortgage loans fulfilled for PMT $ $ $ Sourcing fees paid to PMT $ $ $ Unpaid principal balance of mortgage loans purchased from PMT $ $ $ Proceeds from sale of mortgage loans held for sale to PMT $ $ $ Tax service fees received from PMT included in Mortgage loan origination fees $ $ $ Early purchase program fees earned from PMT included in Mortgage loan servicing fees $ $ — $ — |
Summary of mortgage loan servicing fees earned from PMT | Year ended December 31, 2016 2015 2014 (in thousands) Mortgage loans acquired for sale at fair value: Base and supplemental $ $ $ Activity-based Mortgage loans at fair value: Base and supplemental Activity-based Mortgage servicing rights: Base and supplemental Activity-based $ $ $ |
Summary of management fees earned | Year ended December 31, 2016 2015 2014 (in thousands) Base management $ $ $ Performance incentive — $ $ $ |
Summary of investing activity between the Company and affiliate | Year ended December 31, 2016 2015 2014 (in thousands) Repurchase agreement with PennyMac Mortgage Investment Trust: Activity during the year: Refinancing of note receivable from PennyMac Mortgage Investment Trust $ $ — $ — Interest income $ $ — $ — Balance at end of year $ $ — $ — Note receivable from PennyMac Mortgage Investment Trust: Activity during the year: Advances to PennyMac Mortgage Investment Trust $ — $ $ — Repayments and refinancing with repurchase agreement from PennyMac Mortgage Investment Trust $ $ $ — Interest income $ $ $ — Balance at end of year $ — $ $ — Common shares of beneficial interest of PennyMac Mortgage Investment Trust: Activity during the year: Dividends received from PennyMac Mortgage Investment Trust $ $ $ Change in fair value of investment in common shares of PennyMac Mortgage Investment Trust $ $ $ Balance at end of year: Fair value $ $ Number of shares |
Summary of financing activty between the Company and affiliate | Year ended December 31, 2016 2015 2014 (in thousands) Excess servicing spread financing: Issuance: Cash $ - $ $ Pursuant to recapture agreement $ $ Repayment $ $ $ Settlement $ $ - $ - Change in fair value $ $ $ Interest expense $ $ $ Recapture incurred pursuant to refinancings by the Company of mortgage loans subject to excess servicing spread financing included in Net gains on mortgage loans held for sale at fair value $ $ $ |
Summary of reimbursement of expenses | Year ended December 31, 2016 2015 2014 (in thousands) Reimbursement of: Common overhead incurred by the Company $ $ $ Expenses incurred on (the Company's) PMT's behalf, net $ $ $ Payments and settlements during the period (1) $ $ $ Payments and settlements include payments for management fees and correspondent production activities itemized in the preceding tables and netting settlements made pursuant to master netting agreements between the Company and PMT. |
Summary of amounts due from and payable to affiliate | December 31, 2016 2015 (in thousands) Receivable from PMT: Servicing fees $ $ Management fees Correspondent production fees Fulfillment fees Allocated expenses and expenses incurred on PMT's behalf Conditional Reimbursement Interest on financing receivable $ $ Payable to PMT: Deposits made by PMT to fund servicing advances $ $ Mortgage servicing rights recapture payable Other $ $ |
Investment Funds | |
Transactions with Affiliates | |
Summary of amounts due from and payable to affiliate | December 31, 2016 2015 (in thousands) Carried Interest due from Investment Funds: PNMAC Mortgage Opportunity Fund, LLC $ $ PNMAC Mortgage Opportunity Fund Investors, LLC $ $ Receivable from Investment Funds: Management fees $ $ Mortgage loan servicing fee rebate deposit Expense reimbursements Mortgage loan servicing fees $ $ Payable to Investment Funds: Deposits received to fund servicing advances $ $ Other $ $ |
Earnings Per Share of Common 38
Earnings Per Share of Common Stock (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
Earnings Per Share of Common Stock | |
Summary of basic and diluted earnings per share calculations | Year ended December 31, 2016 2015 2014 (in thousands, except per share data) Basic earnings per share of common stock: Net income attributable to PennyMac Financial Services, Inc. common stockholders $ $ $ Weighted average shares of common stock outstanding Basic earnings per share of common stock $ $ $ Diluted earnings per share of common stock: Net income attributable to PennyMac Financial Services, Inc. common stockholders $ $ $ Effect of net income attributable to PennyMac Class A units exchangeable to common stock, net of income taxes Diluted net income attributable to common stockholders $ $ $ Weighted average shares of common stock outstanding Dilutive shares: PennyMac Class A units exchangeable to common stock Non-vested PennyMac Class A units issuable under unit-based stock compensation plan and exchangeable to common stock — Common shares issuable under stock-based compensation plan Diluted weighted average shares of common stock outstanding Diluted earnings per share of common stock $ $ $ |
Schedule of anti-dilutive shares outstanding | Year ended December 31, 2016 2015 2014 (in thousands, except exercise price data) Stock options (1) Performance-based RSUs (2) Total anti-dilutive stock-based compensation units Weighted-average exercise price of anti-dilutive stock options (1) $ $ $ (1) Certain stock options were outstanding but not included in the computation of diluted earnings per share because the weighted-average exercise prices were above the average stock prices during the year. (2) Certain performance-based RSUs were outstanding but not included in the computation of earnings per share because the performance thresholds included in such RSUs have not been achieved. |
Loan Sales and Servicing Acti39
Loan Sales and Servicing Activities (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
Loan Sales and Servicing Activities | |
Summary of cash flows between the Company and transferees upon sale of mortgage loans in transactions | Year ended December 31, 2016 2015 2014 (in thousands) Cash flows: Sales proceeds $ $ $ Servicing fees received (1) $ $ $ Net servicing advances $ $ $ Year end information: Unpaid principal balance of mortgage loans outstanding at end of year $ $ $ Delinquencies: 30-89 days $ $ $ 90 days or more: Not in foreclosure $ $ $ In foreclosure $ $ $ Foreclosed $ $ $ Bankruptcy $ $ $ (1) Net of guarantees paid to the Agencies |
Summary of mortgage servicing portfolio | December 31, 2016 Contract Total Servicing servicing and mortgage rights owned subservicing loans serviced (in thousands) Investor: Non-affiliated entities $ $ — $ Affiliated entities — Mortgage loans held for sale — $ $ $ Commercial real estate loans subserviced for the Company $ — $ $ Delinquent mortgage loans: 30 days $ $ $ 60 days 90 days or more: Not in foreclosure In foreclosure Foreclosed $ $ $ Bankruptcy $ $ $ Custodial funds managed by the Company (1) $ $ $ (1) Borrower and investor custodial cash accounts relate to mortgage loans serviced under the servicing agreements and are not recorded on the Company’s consolidated balance sheets. The Company earns placement fees on certain of the custodial funds it manages on behalf of the mortgage loans’ investors, which is recorded as part of the Interest income in the Company’s consolidated statements of income. December 31, 2015 Contract Total Servicing servicing and mortgage rights owned subservicing loans serviced (in thousands) Investor: Non-affiliated entities $ $ — $ Affiliated entities — Mortgage loans held for sale — $ $ $ Commercial real estate loans subserviced for the Company $ — $ $ Delinquent mortgage loans: 30 days $ $ $ 60 days 90 days or more: Not in foreclosure In foreclosure Foreclosed $ $ $ Bankruptcy $ $ $ Custodial funds managed by the Company (1) $ $ $ (1) Borrower and investor custodial cash accounts relate to mortgage loans serviced under the servicing agreements and are not recorded on the Company’s consolidated balance sheets. The Company earns placement fees on certain of the custodial funds it manages on behalf of the mortgage loans’ investors, which is recorded as part of the Interest income in the Company’s consolidated statements of income. |
Summary of the geographical distribution of loans for the top five and all other states as measured by the total unpaid principal balance (UPB) | December 31, State 2016 2015 (in thousands) California $ $ Texas Virginia Florida Maryland All other states $ $ |
Netting of Financial Instrume40
Netting of Financial Instruments (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
Netting of Financial Instruments | |
Summaries of derivative assets and related netting amounts | December 31, 2016 December 31, 2015 Gross Gross amount Net amount Gross Gross amount Net amount amount of offset in the of assets in the amount of offset in the of assets in the recognized consolidated consolidated recognized consolidated consolidated assets balance sheet balance sheet assets balance sheet balance sheet (in thousands) Derivatives not subject to master netting arrangements - Interest rate lock commitments $ $ — $ $ $ — $ Derivatives subject to a master netting arrangements: Forward purchase contracts — — Forward sale contracts — — MBS put options — — MBS call options — — — Put options on interest rate futures purchase contracts — — Call options on interest rate futures purchase contracts — — Netting — — $ $ $ $ $ $ |
Summary of the amount of derivative asset positions by significant counterparty after considering master netting arrangements and financial instruments or cash pledged | December 31, 2016 December 31, 2015 Gross amount not Gross amount not offset in the offset in the consolidated consolidated balance sheet balance sheet Net amount Net amount of assets in the Cash of assets in the Cash consolidated Financial collateral Net consolidated Financial collateral Net balance sheet instruments received amount balance sheet instruments received amount (in thousands) Interest rate lock commitments $ $ — $ — $ $ $ — $ — $ Barclays Capital — — — — RJ O'Brien — — — — Jefferies & Co. — — — — Goldman Sachs — — — — — — Federal National Mortgage Association — — — — — — Others — — — — $ $ — $ — $ $ $ — $ — $ |
Summary of net derivative liabilities and assets sold under agreements to repurchase and related netting amounts | December 31, 2016 December 31, 2015 Net Net amount amount Gross Gross amount of liabilities Gross Gross amount of liabilities amount of offset in the in the amount of offset in the in the recognized consolidated consolidated recognized consolidated consolidated liabilities balance sheet balance sheet liabilities balance sheet balance sheet (in thousands) Derivatives not subject to master netting arrangements - IRLCs $ $ — $ $ $ — $ Derivatives subject to a master netting arrangement: Forward purchase contracts — — Forward sale contracts — — Put options on interest rate futures purchase contracts — — — — Call options on interest rate futures purchase contracts — — — — Netting — — Total derivatives Mortgage loans sold under agreements to repurchase: Amount outstanding — — Unamortized debt issuance costs — — — — $ $ $ $ $ $ |
Summary of amount of derivative liabilities and assets sold under agreements to repurchase by significant counterparty after considering master netting arrangements and financial instruments or cash pledged | December 31, 2016 December 31, 2015 Gross amounts Gross amounts not offset in the not offset in the Net amount consolidated Net amount consolidated of liabilities balance sheet of liabilities balance sheet in the Cash in the Cash consolidated Financial collateral Net consolidated Financial collateral Net balance sheet instruments pledged amount balance sheet instruments pledged amount (in thousands) Interest rate lock commitments $ $ — $ — $ $ $ — $ — $ Credit Suisse First Boston Mortgage Capital LLC — — Bank of America, N.A. — — Morgan Stanley Bank, N.A. — — JP Morgan Chase Bank, N.A. — — — — Citibank, N.A. — — Barclays Capital — — — — — — Royal Bank of Canada — — — — — — BNP Paribas — — — — Federal National Mortgage Association — — — — — — Goldman Sachs — — — — — — Others — — — — $ $ $ — $ $ $ $ — $ |
Fair Value (Tables)
Fair Value (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
Fair Value | |
Summary of financial statement items measured at estimated fair value on a recurring basis | December 31, 2016 Level 1 Level 2 Level 3 Total (in thousands) Assets: Short-term investments $ $ — $ — $ Mortgage loans held for sale at fair value — Derivative assets: Interest rate lock commitments — — Forward purchase contracts — — Forward sales contracts — — MBS put options — — MBS call options — — Put options on interest rate futures purchase contracts — — Call options on interest rate futures purchase contracts — — Total derivative assets before netting Netting — — — Total derivative assets Investment in PennyMac Mortgage Investment Trust — — Mortgage servicing rights at fair value — — $ $ $ $ Liabilities: Excess servicing spread financing at fair value payable to PennyMac Mortgage Investment Trust $ — $ — $ $ Derivative liabilities: Interest rate lock commitments — — Forward purchase contracts — — Forward sales contracts — — Total derivative liabilities before netting — Netting — — — Total derivative liabilities — Mortgage servicing liabilities at fair value — — $ — $ $ $ December 31, 2015 Level 1 Level 2 Level 3 Total (in thousands) Assets: Short-term investments $ $ — $ — $ Mortgage loans held for sale at fair value — Derivative assets: Interest rate lock commitments — — Forward purchase contracts — — Forward sales contracts — — MBS put options — — Put options on interest rate futures purchase contracts — — Call options on interest rate futures purchase contracts — — Total derivative assets before netting Netting — — — Total derivative assets Investment in PennyMac Mortgage Investment Trust — — Mortgage servicing rights at fair value — — $ $ $ $ Liabilities: Excess servicing spread financing at fair value payable to PennyMac Mortgage Investment Trust $ — $ — $ $ Derivative liabilities: Interest rate lock commitments — — Forward purchase contracts — — Forward sales contracts — — Put options on interest rate futures purchase contracts — — Call options on interest rate futures purchase contracts — — Total derivative liabilities before netting Netting — — — Total derivative liabilities Mortgage servicing liabilities at fair value — — $ $ $ $ |
Summary of roll forward of items measured using Level 3 inputs on a recurring basis | Year ended December 31, 2016 Mortgage Net interest Mortgage loans held rate lock servicing for sale commitments (1) rights Total (in thousands) Assets: Balance, December 31, 2015 $ $ $ $ Purchases — Sales — — Repayments — — Interest rate lock commitments issued, net — — Mortgage servicing rights resulting from mortgage loan sales — — Changes in fair value included in income arising from: Changes in instrument-specific credit risk — — Other factors — Transfers of mortgage loans held for sale from Level 3 to Level 2 (2) — — Transfers of interest rate lock commitments to mortgage loans held for sale — — Balance, December 31, 2016 $ $ $ $ Changes in fair value recognized during the year relating to assets still held at December 31, 2016 $ $ $ $ (1) For the purpose of this table, the interest rate lock asset and liability positions are shown net. (2) Mortgage loans held for sale are transferred from “Level 3” to “Level 2” as a result of the mortgage loan becoming saleable into active mortgage markets pursuant to a loan modification, borrower reperformance or resolution of deficiencies found in the borrowers’ credit files. Year ended December 31, 2016 Excess servicing Mortgage spread servicing financing liabilities Total (in thousands) Liabilities: Balance, December 31, 2015 $ $ $ Issuance of excess servicing spread financing: For cash — — — Pursuant to a recapture agreement with PennyMac Mortgage Investment Trust — Accrual of interest — Repayments — Settlement — Mortgage servicing liabilities accepted for cash — Mortgage servicing liabilities resulting from mortgage loan sales — Changes in fair value included in income Balance, December 31, 2016 $ $ $ Changes in fair value recognized during the year relating to liabilities still outstanding at December 31, 2016 $ $ $ Year ended December 31, 2015 Mortgage Net interest Mortgage loans held rate lock servicing for sale commitments (1) rights Total (in thousands) Assets: Balance, December 31, 2014 $ $ $ $ Purchases — Sales — — Repayments — — Interest rate lock commitments issued, net — — Mortgage servicing rights resulting from mortgage loan sales — — Changes in fair value included in income arising from: Changes in instrument-specific credit risk — — Other factors — Transfers of mortgage loans held for sale from Level 3 to Level 2 (2) — — Transfers of interest rate lock commitments to mortgage loans held for sale — — Balance, December 31, 2015 $ $ $ $ Changes in fair value recognized during the year relating to assets still held at December 31, 2015 $ $ $ $ (1) For the purpose of this table, the interest rate lock asset and liability positions are shown net. (2) Mortgage loans held for sale are transferred from “Level 3” to “Level 2” as a result of the mortgage loan becoming saleable into active mortgage markets pursuant to a loan modification, borrower reperformance or resolution of deficiencies found in the borrowers’ credit files. Year ended December 31, 2015 Excess servicing Mortgage spread servicing financing liabilities Total (in thousands) Liabilities: Balance, December 31, 2014 $ $ $ Issuance of excess servicing spread financing: For cash — Pursuant to a recapture agreement with PennyMac Mortgage Investment Trust — Mortgage servicing liabilities resulting from mortgage loan sales — Accrual of interest — Repayments — Changes in fair value included in income Balance, December 31, 2015 $ $ $ Changes in fair value recognized during the year relating to liabilities still outstanding at December 31, 2015 $ $ $ Year ended December 31, 2014 Mortgage Net interest Mortgage loans held rate lock servicing for sale commitments (1) rights Total (in thousands) Assets: Balance December 31, 2013 $ $ $ $ Purchases — Sales — Repayments — — Interest rate lock commitments issued, net — — Mortgage servicing rights resulting from mortgage loan sales — — Changes in fair value included in income arising from: Changes in instrument-specific credit risk — — — — Other factors Transfers of mortgage loans held for sale from Level 3 to Level 2 (2) — — Transfers of interest rate lock commitments to mortgage loans held for sale — — Balance, December 31, 2014 $ $ $ $ Changes in fair value recognized during the year relating to assets still held at December 31, 2014 $ $ $ $ (1) For the purpose of this table, the interest rate lock asset and liability positions are shown net. (2) Mortgage loans held for sale are transferred from “Level 3” to “Level 2” as a result of the mortgage loan becoming saleable into active mortgage markets pursuant to a loan modification, borrower reperformance or resolution of deficiencies found in the borrowers’ credit files. Year ended December 31, 2014 Excess servicing Mortgage spread servicing financing liabilities Total (in thousands) Liabilities: Balance December 31, 2013 $ $ — $ Issuance of excess servicing spread financing: For cash — Pursuant to a recapture agreement with PennyMac Mortgage Investment Trust — Mortgage servicing liabilities resulting from mortgage loan sales — Accrual of interest — Repayments — Changes in fair value included in income Balance, December 31, 2014 $ $ $ Changes in fair value recognized during the year relating to liabilities still outstanding at December 31, 2014 $ $ $ |
Summary of net gains (losses) from changes in fair values included in earnings for financial statement items carried at fair value | Year ended December 31, 2016 2015 2014 Net gains on Net Net gains on Net Net gains on Net mortgage mortgage mortgage mortgage mortgage mortgage loans held loan loans held loan loans held loan for sale at servicing for sale at servicing for sale at servicing fair value fees Total fair value fees Total fair value fees Total (in thousands) Assets: Mortgage loans held for sale at fair value $ $ — $ $ $ — $ $ $ — $ Mortgage servicing rights at fair value — — — $ $ $ $ $ $ $ $ $ Liabilities: Excess servicing spread financing at fair value payable to PennyMac Mortgage Investment Trust $ — $ $ $ — $ $ $ — $ $ Mortgage servicing liabilities at fair value — — — $ — $ $ $ — $ $ $ — $ $ |
Schedule of fair value and related principal amounts due upon maturity of assets and liabilities accounted for under the fair value option | December 31, 2016 Principal amount Fair due upon value maturity Difference (in thousands) Mortgage loans held for sale: Current through 89 days delinquent $ $ $ 90 days or more delinquent: Not in foreclosure In foreclosure $ $ $ December 31, 2015 Principal amount Fair due upon value maturity Difference (in thousands) Mortgage loans held for sale: Current through 89 days delinquent $ $ $ 90 days or more delinquent: Not in foreclosure In foreclosure $ $ $ |
Summary of financial statement items measured at estimated fair value on a nonrecurring basis | December 31, 2016 Level 1 Level 2 Level 3 Total (in thousands) Mortgage servicing rights at lower of amortized cost or fair value $ — $ — $ $ Real estate acquired in settlement of loans — — $ — $ — $ $ December 31, 2015 Level 1 Level 2 Level 3 Total (in thousands) Mortgage servicing rights at lower of amortized cost or fair value $ — $ — $ $ $ — $ — $ $ |
Summary of total gains (losses) on assets measured at estimated fair values on a nonrecurring basis | Year ended December 31, 2016 2015 2014 Mortgage servicing rights at lower of amortized cost or fair value $ $ $ Real estate acquired in settlement of loans — — $ $ $ |
Quantitative summary of key inputs used in the valuation of the MSRs at year end and the effect on estimated fair value from adverse changes in those inputs | December 31, 2016 December 31, 2015 Fair Amortized Fair Amortized value cost value cost (Carrying value, unpaid principal balance of underlying mortgage loans and effect on fair value amounts in thousands) MSR and pool characteristics: Carrying value $515,925 $1,111,747 $660,247 $751,688 Unpaid principal balance of underlying mortgage loans $43,667,165 $85,509,941 $54,182,477 $56,420,227 Weighted average note interest rate 4.1% 3.7% 4.1% 3.8% Weighted average servicing fee rate (in basis points) 32 31 32 32 Key inputs: Pricing spread (1): Range 7.6% – 14.9% 7.6% – 14.9% 7.2% – 14.1% 7.2% – 12.8% Weighted average 10.1% 10.7% 8.9% 8.9% Effect on fair value of (2): 5% adverse change ($9,097) ($22,382) ($11,115) ($13,467) 10% adverse change ($17,872) ($43,889) ($21,857) ($26,472) 20% adverse change ($34,516) ($84,464) ($42,283) ($51,183) Average life (in years): Range 1.3 – 8.6 1.6 – 9.4 1.9 – 9.0 1.8 – 9.1 Weighted average 6.7 8.1 6.9 7.4 Prepayment speed (3): Range 7.0% – 46.7% 6.6% – 43.9% 5.3% – 43.8% 5.7% – 46.7% Weighted average 10.3% 8.7% 9.7% 9.5% Effect on fair value of (2): 5% adverse change ($8,818) ($16,636) ($12,475) ($14,360) 10% adverse change ($17,336) ($32,750) ($24,499) ($28,197) 20% adverse change ($33,533) ($63,513) ($47,286) ($54,406) Annual per-loan cost of servicing: Range $78-$101 $79-$101 $68 – $97 $68 – $95 Weighted average $92 $92 $86 $84 Effect on fair value of (2): 5% adverse change ($5,612) ($8,890) ($6,812) ($5,725) 10% adverse change ($11,225) ($17,781) ($13,624) ($11,451) 20% adverse change ($22,450) ($35,562) ($27,247) ($22,901) (1) The Company applies a pricing spread to the United States Dollar LIBOR curve for purposes of discounting cash flows relating to MSRs. (2) For MSRs carried at fair value, an adverse change in one of the above-mentioned key inputs is expected to result in a reduction in fair value which will be recognized in income. For MSRs carried at lower of amortized cost or fair value, an adverse change in one of the above-mentioned key inputs may result in recognition of MSR impairment. The extent of the recognized MSR impairment will depend on the relationship of fair value to the carrying value of such MSRs. (3) Prepayment speed is measured using Life Total CPR. |
Mortgage servicing liabilities | |
Fair Value | |
Schedule of key inputs used in determining the fair value of liabilities | December 31, 2016 2015 MSL and pool characteristics: Carrying value (in thousands) $15,192 $1,399 Unpaid principal balance of underlying mortgage loans $2,074,896 $806,897 Weighted average servicing fee rate (in basis points) 25 25 Key inputs: Pricing spread (1) 8.0% 6.4% Average life (in years) 3.7 3.4 Prepayment speed (2) 31.7% 33.1% Annual per-loan cost of servicing $497 $258 (1) The Company applies a pricing spread to the United States Dollar LIBOR curve for purposes of discounting cash flows relating to MSLs. (2) Prepayment speed is measured using Life Total CPR. |
Interest rate lock commitments | |
Fair Value | |
Quantitative summary of key inputs or assumptions used in the valuation of financial statement items | December 31, Key inputs 2016 2015 Pull-through rate: Range 35.0% – 100.0% 54.1% – 100.0% Weighted average 84.9% 90.1% Mortgage servicing rights value expressed as: Servicing fee multiple: Range 1.2 – 5.9 1.0 – 5.8 Weighted average 4.3 4.4 Percentage of unpaid principal balance: Range 0.3% – 2.8% 0.2% – 3.8% Weighted average 1.3% 1.5% |
Mortgage servicing rights | |
Fair Value | |
Quantitative summary of key inputs or assumptions used in the valuation of financial statement items, excluding MSR purchases | Year ended December 31, 2016 2015 2014 Fair Amortized Fair Amortized Fair Amortized value cost value cost value cost (Amount recognized and unpaid principal balance of underlying mortgage loans amounts in thousands) MSR and pool characteristics: Amount recognized $17,319 $560,212 $18,013 $454,840 $24,698 $185,152 Unpaid principal balance of underlying mortgage loans $1,452,779 $44,827,516 $1,463,150 $32,849,718 $1,982,505 $15,362,240 Weighted average servicing fee rate (in basis points) 33 30 33 34 33 31 Key inputs: Pricing spread (1): Range 7.2%-10.5% 7.2%-14.4% 7.0% - 14.4% 6.8% - 16.2% 7.8% - 16.2% 6.8% - 15.7% Weighted average 9.2% 9.5% 9.3% 9.2% 11.4% 10.8% Annual total prepayment speed (2): Range 3.3%-53.8% 2.8%-50.9% 1.9% - 62.4% 2.5% - 50.0% 7.6% - 46.1% 7.6% - 47.8% Weighted average 11.8% 9.0% 11.8% 8.9% 9.3% 8.3% Life (in years): Range 0.5-11.9 1.3-12.9 1.1-12.3 1.3 -12.0 1.5 -7.5 1.4 -7.5 Weighted average 6.8 8.1 6.5 7.2 6.9 7.0 Per-loan annual cost of servicing: Range $68-$105 $68-$106 $59 – $101 $59 – $95 $53 – $100 $53 – $100 Weighted average $88 $89 $77 $78 $86 $84 (1) Pricing spread represents a margin that is applied to a reference interest rates forward rate curve to develop periodic discount rates. The Company applies a pricing spread to the United States Dollar London Interbank Offered Rate (“LIBOR”) curve for purposes of discounting cash flows relating to MSRs. (2) Prepayment speed is measured using Life Total CPR. |
Mortgage loans held for sale | |
Fair Value | |
Quantitative summary of key inputs or assumptions used in the valuation of financial statement items | December 31, Key inputs 2016 2015 Discount rate: Range 2.6% – 8.8% 2.5% – 9.1% Weighted average 3.0% 2.8% Twelve-month projected housing price index change: Range 2.0% – 4.5% 1.8% – 5.0% Weighted average 3.7% 3.7% Voluntary prepayment / resale speed (1): Range 0.1% – 24.4% 0.6% – 20.1% Weighted average 20.9% 16.6% Total prepayment speed (2): Range 0.1% – 39.8% 0.7% – 37.6% Weighted average 34.3% 30.9% (1) Voluntary prepayment/resale speed is measured using Life Voluntary Conditional Prepayment Rate (“CPR”). (2) Total prepayment speed is measured using Life Total CPR. |
Mortgage Loans Held for Sale 42
Mortgage Loans Held for Sale at Fair Value (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
Mortgage Loans Held for Sale at Fair Value | |
Summary of mortgage loans held for sale at fair value | December 31, 2016 2015 (in thousands) Government-insured or guaranteed $ $ Conventional conforming Purchased from Ginnie Mae pools serviced by the Company Repurchased pursuant to representations and warranties $ $ Fair value of mortgage loans pledged to secure: Assets sold under agreements to repurchase $ $ Mortgage loan participation and sale agreements $ $ |
Derivative Financial Instrume43
Derivative Financial Instruments (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
Derivative Financial Instruments | |
Summary of derivative financial instruments | December 31, 2016 December 31, 2015 Fair value Fair value Notional Derivative Derivative Notional Derivative Derivative Instrument amount assets liabilities amount assets liabilities (in thousands) Derivatives not designated as hedging instruments: Interest rate lock commitments $ $ $ $ Forward purchase contracts Forward sales contracts MBS put options — — MBS call options — — — — Put options on interest rate futures purchase contracts — Call options on interest rate futures purchase contracts — Interest rate swap futures purchase contracts — — — — — Total derivatives before netting Netting $ $ $ $ Deposits placed with (received from) derivative counterparties, net $ $ |
Summary of the notional value activity for derivative contracts used to hedge the IRLCs and inventory of mortgage loans held for sale at fair value and MSRs | Year ended December 31, 2016 Balance Balance beginning of Dispositions/ end of Instrument year Additions expirations year (in thousands) Forward purchase contracts Forward sale contracts MBS put options MBS call options — — Put options on interest rate futures purchase contracts Call options on interest rate futures purchase contracts Put options on interest rate futures sale contracts — — Call options on interest rate futures sale contracts — — Treasury futures purchase contracts — — Treasury futures sale contracts — — Interest rate swap futures purchase contracts — Interest rate swap futures sale contracts — — Year ended December 31, 2015 Balance Balance beginning of Dispositions/ end of Instrument year Additions expirations year (in thousands) Forward purchase contracts Forward sale contracts MBS put options MBS call options — — Put options on interest rate futures purchase contracts Call options on interest rate futures purchase contracts Put options on interest rate futures sale contracts — Call options on interest rate futures sale contracts — — Year ended December 31, 2014 Balance Balance beginning of Dispositions/ end of Instrument year Additions expirations year (in thousands) Forward purchase contracts Forward sale contracts MBS put options MBS call options — Put options on interest rate futures purchase contracts — Call options on interest rate futures purchase contracts — Put options on interest rate futures sale contracts — Call options on interest rate futures sale contracts — — Treasury futures purchase contracts — — Treasury futures sale contracts — — Eurodollar futures purchase contracts — — Eurodollar futures sales contracts — — |
Summary of gains (losses) recognized on derivative financial instruments and the respective income statement line items | Year ended December 31, Hedged item Income statement line 2016 2015 2014 (in thousands) Interest rate lock commitments and mortgage loans held for sale Net gains (losses) on mortgage loans held for sale $ $ $ Mortgage servicing rights Net mortgage loan servicing fees $ $ $ |
Mortgage Servicing Rights (Tabl
Mortgage Servicing Rights (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
Mortgage Servicing Rights | |
Schedule of activity in MSRs carried at fair value | Year ended December 31, 2016 2015 2014 (in thousands) Balance at beginning of year $ $ $ Additions: Purchases Mortgage servicing rights resulting from mortgage loan sales Sales — — Change in fair value due to: Changes in valuation inputs used in valuation model (1) Other changes in fair value (2) Total change in fair value Balance at end of year $ $ $ December 31, 2016 2015 (in thousands) Fair value of mortgage servicing rights pledged to secure: Assets sold under agreements to repurchase $ $ Note payable $ $ (1) Principally reflects changes in discount rates and prepayment speed inputs, primarily due to changes in market interest rates. (2) Represents changes due to realization of cash flows. |
Schedule of activity in MSRs carried at lower of amortized cost or fair value | Year ended December 31, 2016 2015 2014 (in thousands) Amortized cost: Balance at beginning of year $ $ $ Mortgage servicing rights resulting from mortgage loan sales Amortization Application of valuation allowance to write down mortgage servicing rights with other-than-temporary impairment — — Balance at end of year Valuation allowance: Balance at beginning of year Additions Application of valuation allowance to write down mortgage servicing rights with other-than-temporary impairment — — Balance at end of year Mortgage servicing rights, net $ $ $ Fair value of mortgage servicing rights at end of year $ $ $ Fair value of mortgage servicing rights at beginning of year $ $ $ December 31, 2016 2015 (in thousands) Fair value of mortgage servicing rights pledged to secure: Assets sold under agreements to repurchase $ $ Note payable — $ $ |
Summary of estimate of future amortization of existing MSRs | Estimated MSR Year ending December 31, amortization (in thousands) 2017 $ 2018 2019 2020 2021 Thereafter $ |
Summary of servicing fees, late fees and ancillary and other fees relating to MSRs recorded on the consolidated statements of income | Year ended December 31, 2016 2015 2014 (in thousands) Contractual servicing fees $ $ $ Ancillary and other fees: Late charges Other $ $ $ |
Schedule of activity in mortgage servicing liability carried at fair value | Year ended December 31, 2016 2015 2014 (in thousands) Balance at beginning of year $ $ $ — Mortgage servicing liabilities accepted for cash — — Mortgage servicing liabilities resulting from mortgage loan sales Changes in fair value due to: Changes in valuation inputs used in valuation model (1) Other changes in fair value (2) Total change in fair value Balance at end of year $ $ $ |
Carried Interest Due from Inv45
Carried Interest Due from Investment Funds (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
Carried Interest Due from Investment Funds | |
Summary of activity in the Company's Carried interest due from Investment Funds | Year ended December 31, 2016 2015 2014 (in thousands) Balance at beginning of year $ $ $ Carried Interest recognized during the year Balance at end of year $ $ $ |
Furniture, Fixtures, Equipmen46
Furniture, Fixtures, Equipment and Building Improvements (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
Furniture, fixtures, equipment and building improvements | |
Summary of depreciation and amortization expenses | Year ended December 31, 2016 2015 2014 (in thousands) Depreciation and amortization expenses $ $ $ Less: Depreciation and amortization allocated to PMT (1) Depreciation and amortization expenses included in Other expense $ $ $ The Company’s management agreement with PMT provides for allocation by the Company of certain common overhead cost to PMT. |
Furniture, Fixtures, Equipment and Building Improvements [Member] | |
Furniture, fixtures, equipment and building improvements | |
Schedule of furniture, fixtures, equipment and building improvements | December 31, 2016 2015 (in thousands) Furniture, fixtures, equipment and building improvements $ $ Less: Accumulated depreciation and amortization $ $ Fixed assets pledged to secure obligations under capital lease $ $ |
Capitalized Software (Tables)
Capitalized Software (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
Capitalized Software | |
Long-lived asset disclosures | |
Summary of capitalized software | December 31, 2016 2015 (in thousands) Cost $ $ Less: Accumulated amortization $ $ Capitalized software pledged to secure obligation under capital lease $ $ |
Borrowings (Tables)
Borrowings (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
Borrowings | |
Summary of financial data pertaining to assets sold under agreements to repurchase | Year ended December 31, 2016 2015 2014 (dollars in thousands) Average balance of assets sold under agreements to repurchase $ $ $ Weighted average interest rate (1) % % % Total interest expense $ $ $ Maximum daily amount outstanding $ $ $ December 31, 2016 2015 (dollars in thousands) Carrying value: Unpaid principal balance $ $ Unamortized debt issuance costs $ $ Unused amount (2) $ $ Fair value of assets securing repurchase agreements: Mortgage loans held for sale $ $ Mortgage servicing rights $ $ Servicing advances $ $ Financing receivable from PennyMac Mortgage Investment Trust $ $ — Weighted average interest rate % % Margin deposits placed with counterparties (3) $ $ (1) Excludes the effect of amortization of commitment fees totaling $ 7.3 million, $7.4 million and $4.7 million for the years ended December 31, 2016, 2015 and 2014, respectively. (2) The amount the Company is able to borrow under asset repurchase agreements is tied to the fair value of unencumbered assets eligible to secure those agreements and the Company’s ability to fund the agreements’ margin requirements relating to the assets sold. (3) Margin deposits are included in Other assets on the Company’s consolidated balance sheets. |
Summary of maturities of outstanding advances under repurchase agreements by maturity date | Remaining maturity at December 31, 2016 Balance (dollars in thousands) Within 30 days $ Over 30 to 90 days Over 90 days Total loans sold under agreements to repurchase $ Weighted average maturity (in months) |
Summary of amount at risk relating to the mortgage loans held for sale sold under agreements to repurchase by counterparty | Weighted average maturity of advances under repurchase Counterparty Amount at risk agreement Facility maturity (in thousands) Credit Suisse First Boston Mortgage Capital LLC $ March 4, 2017 March 30, 2017 Credit Suisse First Boston Mortgage Capital LLC $ December 19, 2017 December 19, 2017 Bank of America, N.A. $ March 19, 2017 March 28, 2017 Morgan Stanley Bank, N.A. $ February 18, 2017 August 25, 2017 JP Morgan Chase Bank, N.A. $ March 20, 2017 August 18, 2017 Citibank, N.A. $ January 28, 2017 February 2, 2017 Barclays Bank PLC $ March 17, 2017 December 1, 2017 Royal Bank of Canada $ — September 18, 2017 |
Summary of participating mortgage loans | Year ended December 31, 2016 2015 2014 (dollars in thousands) Average balance $ $ $ Weighted average interest rate (1) % % % Total interest expense $ $ $ Maximum daily amount outstanding $ $ $ December 31, 2016 2015 (dollars in thousands) Carrying value: Unpaid principal balance $ $ Unamortized debt issuance costs $ $ Weighted average interest rate % % Fair value of mortgage loans pledged to secure mortgage loan participation and sale agreements $ $ (1) Excludes the effect of amortization of facility fees totaling $ 740,000 and $355,000 for the years ended December 31, 2016 and 2015, respectively. |
Summary of note payable | Year ended December 31, 2016 2015 2014 (dollars in thousands) Average balance $ $ $ Weighted average interest rate (1) % % % Total interest expense $ $ $ Maximum daily amount outstanding $ $ $ (1) Excluding the effect of amortization of debt issuance costs totaling $ 3.0 million and $2.1 million for the years ended December 31, 2016 and 2015, respectively. December 31, 2016 2015 (dollars in thousands) Carrying value: Unpaid principal balance $ $ Unamortized debt issuance costs $ $ Weighted average interest rate % % Unused amount $ $ Assets pledged to secure notes payable: Cash $ $ Carried Interest $ $ Mortgage servicing rights $ $ |
Summary of obligations under capital lease | Year ended December 31, 2016 2015 (dollars in thousands) During the year: Average balance $ $ Weighted average interest rate % % Total interest expense $ $ Maximum daily amount outstanding $ $ Year end: Unpaid principal balance $ $ Weighted average interest rate % % Assets pledged to secure obligations under capital lease: Furniture, fixtures and equipment $ $ Capitalized software $ $ |
Summary of roll forward of Excess Servicing Spread Financing | Year ended December 31, 2016 2015 2014 (in thousands) Balance at beginning of year $ $ $ Issuances of excess servicing spread to PennyMac Mortgage Investment Trust: For cash — Pursuant to a recapture agreement with PennyMac Mortgage Investment Trust Accrual of interest Repayment Settlement (1) — — Change in fair value Balance at end of year $ $ $ On February 29, 2016, the Company and PMT terminated that certain master spread acquisition and MSR servicing agreement that the parties entered into effective February 1, 2013 (the “2/1/13 Spread Acquisition Agreement”) and all amendments thereto. In connection with the termination of the 2/1/13 Spread Acquisition Agreement, the Company reacquired from PMT all of its right, title and interest in and to all of the Fannie Mae ESS previously sold by the Company to PMT under the 2/1/13 Spread Acquisition Agreement and then subject to such 2/1/13 Spread Acquisition Agreement. |
Liability for Losses Under Re49
Liability for Losses Under Representations and Warranties (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
Liability for Losses Under Representations and Warranties | |
Summary of repurchase activity | Year ended December 31, 2016 2015 2014 (in thousands) Balance at beginning of year $ $ $ Provision for losses on mortgage loans sold: Resulting from sales of mortgage loans Reduction in liability due to change in estimate — — Incurred losses Balance at end of year $ $ $ Unpaid principal balance of mortgage loans subject to representations and warranties at year end $ $ |
Income Taxes (Tables)
Income Taxes (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
Income Taxes | |
Schedule of the Company's income tax expense (benefit) | Year ended December 31, 2016 2015 2014 (in thousands) Current expense: Federal $ $ — $ State — Total current expense — Deferred expense: Federal State Total deferred expense Total provision for income taxes $ $ $ |
Schedule of reconciliation of the Company's provision for income taxes at statutory rates to the provision for income taxes at the Company's effective tax rate | Year ended December 31, 2016 2015 2014 Federal income tax statutory rate % % % Less: Rate attributable to noncontrolling interest % % % State income taxes, net of federal benefit % % % Other % % % Valuation allowance % % % Effective tax rate % % % |
Schedule of components of the Company's provision for deferred income taxes | Year ended December 31, 2016 2015 2014 (in thousands) Investment in PennyMac $ $ $ Net operating loss Tax credits — — Valuation allowance — — — Total provision for deferred income taxes $ $ $ |
Schedule of components of Deferred tax asset | December 31, 2016 2015 (in thousands) Taxes currently receivable $ — $ Deferred income tax asset, net — Deferred tax asset $ — $ |
Schedule of components of income taxes payable, net | December 31, 2016 2015 (in thousands) Taxes currently receivable $ $ — Deferred income tax liability, net — Income taxes payable $ $ — |
Schedule of tax effects of temporary differences that gave rise to deferred income tax assets and liabilities | December 31, 2016 2015 (in thousands) Deferred income tax assets (liabilities): Investment in PennyMac $ $ Net operating loss carryforward Tax credits carryforward — Deferred income tax asset (liabilities), net $ $ |
Noncontrolling Interest (Tables
Noncontrolling Interest (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
Noncontrolling Interest. | |
Noncontrolling Interest | Year ended December 31, 2016 2015 2014 (in thousands) Net income attributable to PennyMac Financial Services, Inc. common stockholders $ $ $ Increase in the Company's additional paid-in capital for exchanges of Class A units of Private National Mortgage Acceptance Company, LLC to Class A common stock of PennyMac Financial Services, Inc. $ $ $ Shares of Class A common stock of PennyMac Financial Services, Inc. issued pursuant to exchange of Class A units of Private National Mortgage Acceptance Company, LLC December 31, 2016 2015 Percentage of noncontrolling interest in Private National Mortgage Acceptance Company, LLC % % |
Net Gains on Mortgage Loans H52
Net Gains on Mortgage Loans Held for Sale (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
Net Gains on Mortgage Loans Held for Sale | |
Net Gains on Mortgage Loans Held for Sale | Year ended December 31, 2016 2015 2014 (in thousands) From non-affiliates: Cash loss: Mortgage loans $ $ $ Hedging activities Non-cash gain: Mortgage servicing rights and mortgage servicing liabilities resulting from mortgage loan sales, net Provision for losses relating to representations and warranties: Pursuant to mortgage loan sales Reduction in liability due to change in estimate — — Change in fair value relating to mortgage loans and hedging derivatives held at year end: Interest rate lock commitments Mortgage loans Hedging derivatives Recapture payable to PennyMac Mortgage Investment Trust $ $ $ |
Net Interest Expense (Tables)
Net Interest Expense (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
Net Interest Expense | |
Summary of net interest income (expense) | Year ended December 31, 2016 2015 2014 (in thousands) Interest income: From non-affiliates: Short-term investments $ $ $ Mortgage loans held for sale at fair value Placement fees relating to custodial funds From PennyMac Mortgage Investment Trust—Financing receivable — Interest expense: To non-affiliates: Assets sold under agreements to repurchase Mortgage loan participation and sale agreements Notes payable Obligations under capital lease Interest shortfall on repayments of mortgage loans serviced for Agency securitizations Interest on mortgage loan impound deposits To PennyMac Mortgage Investment Trust—Excess servicing spread financing at fair value $ $ $ |
Stock-based Compensation (Table
Stock-based Compensation (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
Summary of the stock-based compensation expense by instrument awarded | Year ended December 31, 2016 2015 2014 (in thousands) Performance-based RSUs $ $ $ Stock options Time-based RSUs Exchangeable PNMAC units $ $ $ |
Summary of valuation assumptions, stock options | Year ended December 31, 2016 2015 2014 Expected volatility (1) 28% 41% 42% Expected dividends 0% 0% 0% Risk-free interest rate 0.3% - 2.1% 0.1% - 2.3% 0.1% - 2.9% Expected grantee forfeiture rate 0.0% -20.2% 0.0% -18.7% 4.3% - 20.2% (1) Based on historical volatilities of the Company’s common stock for 2016 grants and based on historical volatilities of comparable companies’ common stock for 2015 and 2014 grants. |
Summary of Stock Option award activity and compensation expense | Year ended December 31, 2016 2015 2014 (in thousands, except per option amounts) Number of Stock Options: Outstanding at beginning of year Granted Exercised — — Forfeited Outstanding at end of year Weighted average exercise price per option: Outstanding at beginning of year $ $ $ Granted $ $ $ Exercised $ $ $ — Forfeited $ $ $ Outstanding at end of year $ $ $ Compensation expense recorded during the year $ $ $ December 31, 2016 2015 (in thousands, except for time periods) Number of options exercisable at end of year Weighted average remaining contractual term (in years): Outstanding Exercisable Aggregate intrinsic value: Outstanding $ $ — Exercisable $ $ — Expected vesting amounts at year end: Number of options expected to vest Weighted average vesting period (in months) |
Performance-based RSUs | |
Summary of valuation assumptions, awards other than options | Year ended December 31, 2014 Expected volatility (1) 42% Expected dividends 0% Risk-free rate 0.1% - 0.7% Expected grantee forfeiture rate 4.3% - 20.2% (1) Based on historical volatilities of comparable companies’ common stock. |
Summary of RSU activity and compensation expense | Year ended December 31, 2016 2015 2014 (in thousands, except per unit amounts) Number of units: Outstanding at beginning of year Granted Vested — — — Forfeited or cancelled Outstanding at end of year Weighted average grant date fair value per unit: Outstanding at beginning of year $ $ $ Granted $ $ $ Vested — — — Forfeited $ $ $ Outstanding at end of year $ $ $ Compensation expense recorded during the year $ $ $ December 31, 2016 2015 ( in thousands, except for vesting periods) Unamortized compensation cost $ $ Number of shares expected to vest Weighted average remaining vesting period (in months) |
Time-based RSUs | |
Summary of RSU activity and compensation expense | Year ended December 31, 2016 2015 2014 (in thousands, except per unit amounts) Number of units: Outstanding at beginning of year Granted Vested Forfeited Outstanding at end of year Weighted average grant date fair value per unit: Outstanding at beginning of year $ $ $ Granted $ $ $ Vested $ $ $ Forfeited $ $ $ Outstanding at end of year $ $ $ Compensation expense recorded during the year $ $ $ December 31, 2016 2015 ( in thousands, except for vesting periods) Unamortized compensation cost $ $ Number of shares expected to vest Weighted average remaining vesting period (in months) |
Supplemental Cash Flow Inform55
Supplemental Cash Flow Information (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
Supplemental Cash Flow Information | |
Schedule of supplemental cash flow information | Year ended December 31, 2016 2015 2014 (in thousands) Cash paid for interest $ $ $ Cash paid for income taxes $ $ $ Non-cash investing activity: Mortgage servicing rights resulting from mortgage loan sales $ $ $ Mortgage servicing liabilities resulting from mortgage loan sales $ $ $ Transfer of Note receivable from PennyMac Mortgage Investment Trust to Asset sold under agreement to repurchase from PennyMac Mortgage Investment Trust $ $ — $ — Non-cash financing activity: Transfer of excess servicing spread to PennyMac Mortgage Investment Trust pursuant to a recapture agreement $ $ $ Unpaid distribution to Private National Mortgage Acceptance Company, LLC members $ $ — $ — Issuance of common stock in settlement of director fees $ $ $ |
Regulatory Net Worth and Agen56
Regulatory Net Worth and Agency Capital Requirements (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
Regulatory Net Worth and Agency Capital Requirements | |
Summary of agencies' capital and liquidity requirements by each agency | December 31, 2016 December 31, 2015 Agency–company subject to requirement Balance (1) Requirement Balance (1) Requirement (in thousands) Capital Fannie Mae & Freddie Mac - PLS $ $ $ $ Ginnie Mae - PLS $ $ $ $ Ginnie Mae - PennyMac $ $ $ $ HUD - PLS $ $ $ $ Liquidity Fannie Mae & Freddie Mac - PLS $ $ $ $ Ginnie Mae - PLS $ $ $ $ (1) Calculated in compliance with the respective Agency’s requirements. |
Commitments and Contingencies (
Commitments and Contingencies (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
Commitment and Contingencies. | |
Schedule of commitments to fund and sell mortgage loans | December 31, 2016 (in thousands) Commitments to purchase mortgage loans from PennyMac Mortgage Investment Trust $ Commitments to fund mortgage loans $ |
Summary of future minimum lease payments | Future minimum lease payments (in thousands) 2017 $ 2018 2019 2020 2021 Thereafter $ |
Segments and Related Informat58
Segments and Related Information (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
Segments and Related Information | |
Summary of financial highlights by segment | Year ended December 31, 2016 Mortgage Banking Investment Production Servicing Total Management Total (in thousands) Revenue: (1) Net gains (losses) on mortgage loans held for sale at fair value $ $ $ $ — $ Loan origination fees — — Fulfillment fees from PennyMac Mortgage Investment Trust — — Net servicing fees — — Management fees — — — Carried Interest from Investment Funds — — — Net interest income (expense): — — — Interest income Interest expense Other Total net revenue Expenses Income before provision for income taxes and non-segment activities Non-segment activities (2) — — — — Income before provision for income taxes $ $ $ $ $ Segment assets at year end (3) $ $ $ $ $ (1) All revenues are from external customers. (2) Primarily represents repricing Payable to exchanged Private National Mortgage Acceptance Company, LLC unitholders under tax receivable agreement (3) Excludes parent Company assets, which consist primarily of working capital of $ 5.5 million. Year ended December 31, 2015 Mortgage Banking Investment Production Servicing Total Management Total (in thousands) Revenue: (1) Net gains on mortgage loans held for sale at fair value $ $ $ $ — $ Loan origination fees — — Fulfillment fees from PennyMac Mortgage Investment Trust — — Net servicing fees — — Management fees — — — Carried Interest from Investment Funds — — — Net interest income (expense): Interest income — Interest expense — — Other Total net revenue Expenses Income before provision for income taxes and non-segment activities Non-segment activities (2) — — — — Income before provision for income taxes $ $ $ $ $ Segment assets at year end (3) $ $ $ $ $ (1) All revenues are from external customers (2) Represents repricing Payable to exchanged Private National Mortgage Acceptance Company, LLC unitholders under tax receivable agreement. (3) Excludes parent company assets, which consist primarily of deferred tax asset of $18.4 million. Year ended December 31, 2014 Mortgage Banking Investment Production Servicing Total Management Total (in thousands) Revenues: (1) Net gains on mortgage loans held for sale at fair value $ $ $ $ — $ Loan origination fees — — Fulfillment fees from PennyMac Mortgage Investment Trust — — Net servicing fees — — Management fees — — — Carried Interest from Investment Funds — — — Net interest income (expense): Interest income Interest expense — Other Total net revenue Expenses Income before provision for income taxes and non-segment activities Non-segment activities (2) — — — — Income before provision for income taxes $ $ $ $ $ Segment assets at year end (3) $ $ $ $ $ (1) All revenues are from external customers. (2) Represents repricing of Payable to exchanged Private National Mortgage Acceptance Company, LLC unitholders under tax receivable agreement. (3) Excludes parent Company assets, which consist primarily of deferred tax asset of $46.0 million |
Selected Quarterly Results (U59
Selected Quarterly Results (Unaudited) (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
Selected Quarterly Results (Unaudited) | |
Schedule of selected quarterly financial data | Quarter ended 2016 2015 Dec. 31 Sept. 30 June. 30 Mar. 31 Dec. 31 Sept. 30 June. 30 Mar. 31 (in thousands, except per share data) During the quarter: Net gains on mortgage loans held for sale at fair value $ $ $ $ $ $ $ $ Fulfillment fees from PennyMac Mortgage Investment Trust Net mortgage loan servicing fees Management fees and Carried Interest Other income Expenses Income before provision for income taxes Provision for income taxes Net income Less: Net income attributable to noncontrolling interest Net income attributable to PennyMac Financial Services, Inc. common stockholders $ $ $ $ $ $ $ $ Earnings per share of common stock: Basic $ $ $ $ $ $ $ $ Diluted $ $ $ $ $ $ $ $ Quarter end: Mortgage loans held for sale at fair value $ $ $ $ $ $ $ $ Mortgage servicing rights Carried Interest from Investment Funds Servicing advances, net Other assets Total assets $ $ $ $ $ $ $ $ Assets sold under agreements to repurchase $ $ $ $ $ $ $ $ Mortgage loan participation and sale agreement Notes payable Excess servicing spread financing at fair value to PennyMac Mortgage Investment Trust Other liabilities Total liabilities Total equity Total liabilities and equity $ $ $ $ $ $ $ $ |
Parent Company Information (Tab
Parent Company Information (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
Parent Company Information | |
Schedule of condensed balance sheets | December 31, 2016 2015 (in thousands) ASSETS Cash $ $ Investments in subsidiaries Deferred tax asset — Due from subsidiaries Total assets $ $ LIABILITIES AND STOCKHOLDERS' EQUITY Payable to exchanged Private National Mortgage Acceptance Company, LLC unitholders under tax receivable agreement $ $ Income taxes payable — Total liabilities Stockholders' equity Total liabilities and stockholders' equity $ $ |
Schedule of condensed statements of income | Year ended December 31, 2016 2015 2014 (in thousands) Revenues Dividends from subsidiary $ $ $ Interest — Revaluation of Payable to exchanged Private National Mortgage Acceptance Company, LLC unitholders under tax receivable agreement Total revenue Expenses Interest — — Total expenses — — Income before provision for income taxes and equity in undistributed earnings in subsidiaries Provision for income taxes Income before equity in undistributed earnings of subsidiaries Equity in undistributed earnings of subsidiaries Net income $ $ $ |
Schedule of condensed statements of cash flows | Year ended December 31, 2016 2015 2014 (in thousands) Cash flows from operating activities Net income $ $ $ Adjustments to reconcile net income to net cash provided by (used in ) operating activities Equity in undistributed earnings of subsidiaries Revaluation of Payable to exchanged Private National Mortgage Acceptance Company, LLC unitholders under tax receivable agreement Decrease in deferred tax asset Decrease in intercompany receivable — Payments to exchanged Private National Mortgage Acceptance Company, LLC unitholders under tax receivable agreement — — Decrease in payables to subsidiaries — — Increase in income taxes payable — — Net cash provided by (used in) operating activities Cash flows from financing activities Proceeds from common stock options exercised — — Net cash provided by financing activities — — Net change in cash Cash at beginning of year Cash at end of year $ $ $ |
Concentration of Risk (Details)
Concentration of Risk (Details) | 12 Months Ended | ||
Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | |
Sales Revenue, Services, Net [Member] | Customer Concentration Risk [Member] | |||
Concentration of Risk | |||
Percentage of total net revenue | 18.00% | 16.00% | 32.00% |
Significant Accounting Polici62
Significant Accounting Policies - Mortgage Servicing Rights and Mortgage Servicing Liabilities (Details) | 12 Months Ended |
Dec. 31, 2016item | |
Mortgage servicing rights | |
Mortgage Servicing Rights | |
Number of classes of MSRs | 3 |
Mortgage servicing rights | Minimum | |
Mortgage Servicing Rights | |
Servicing fee (as a percent) | 0.19% |
Mortgage servicing rights | Maximum | |
Mortgage Servicing Rights | |
Servicing fee (as a percent) | 0.57% |
Mortgage servicing rights | Fixed Rate Stratified Mortgage Pool | |
Mortgage Servicing Rights | |
Stratification range, as a percent | 0.50% |
Mortgage servicing rights | Fixed Rate Stratified Mortgage Pool | Minimum | |
Mortgage Servicing Rights | |
Note rates (as a percent) | 3.00% |
Mortgage servicing rights | Fixed Rate Stratified Mortgage Pool | Maximum | |
Mortgage Servicing Rights | |
Note rates (as a percent) | 4.50% |
Mortgage servicing rights | Fixed Rate Single Mortgage Pool | Maximum | |
Mortgage Servicing Rights | |
Note rates (as a percent) | 3.00% |
Mortgage Servicing Rights Class One [Member] | |
Mortgage Servicing Rights | |
Interest rate (as a percent) | 4.50% |
Mortgage Servicing Rights Class Two [Member] | |
Mortgage Servicing Rights | |
Interest rate (as a percent) | 4.50% |
Significant Accounting Polici63
Significant Accounting Policies - Long-lived Assets (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | |
Long-lived asset disclosures | |||
Period of payment default | 3 months | ||
Furniture, Fixtures, Equipment and Building Improvements [Member] | Minimum | |||
Long-lived asset disclosures | |||
Estimated useful lives | 5 years | ||
Furniture, Fixtures, Equipment and Building Improvements [Member] | Maximum | |||
Long-lived asset disclosures | |||
Estimated useful lives | 7 years | ||
Capitalized Software | |||
Long-lived asset disclosures | |||
Estimated useful lives | 5 years | ||
Impairment of capitalized software | $ 0 | $ 0 | $ 0 |
Significant Accounting Polici64
Significant Accounting Policies - Income Taxes (Details) | 12 Months Ended |
Dec. 31, 2016 | |
Income Taxes | |
Amount of tax benefits under the tax sharing agreement (as a percent) | 85.00% |
Significant Accounting Polici65
Significant Accounting Policies - Variable Interest (Details) $ in Thousands | Dec. 31, 2016USD ($) |
PNMAC Opportunity Fund Associates [Member] | |
Variable Interest Held in Unconsolidated Variable Interest Entities | |
Maximum exposure of loss from the unconsolidated VIEs | $ 2,000 |
Transactions with Affiliates -
Transactions with Affiliates - Mortgage Loan Production Activities (Details) | Sep. 12, 2016USD ($)item | Sep. 11, 2016 | Dec. 31, 2016USD ($) | Sep. 30, 2016USD ($) | Jun. 30, 2016USD ($) | Mar. 31, 2016USD ($) | Dec. 31, 2015USD ($) | Sep. 30, 2015USD ($) | Jun. 30, 2015USD ($) | Mar. 31, 2015USD ($) | Dec. 31, 2016USD ($) | Dec. 31, 2015USD ($) | Dec. 31, 2014USD ($) |
Lending activity between the entity and affiliate | |||||||||||||
Fulfillment fee revenue | $ 86,465,000 | $ 58,607,000 | $ 48,719,000 | ||||||||||
PMT | |||||||||||||
Lending activity between the entity and affiliate | |||||||||||||
Fulfillment fee revenue | $ 27,164,000 | $ 27,255,000 | $ 19,111,000 | $ 12,935,000 | $ 12,855,000 | $ 17,553,000 | $ 15,333,000 | $ 12,866,000 | 86,465,000 | 58,607,000 | 48,719,000 | ||
Proceeds from sale of mortgage loans held for sale to PennyMac Mortgage Investment Trust | 21,541,000 | 28,445,000 | 8,081,000 | ||||||||||
PMT | MBS Agreement | |||||||||||||
Transactions with Affiliates | |||||||||||||
Fulfillment fee as a percent of UPB for conventional mortgage loans | 0.50% | ||||||||||||
Fulfillment fee as a percent of UPB of loans sold in accordance with Ginne Mae Mortgage-Backed Securities Guide | 0.88% | ||||||||||||
Fulfillment fee as a percent of UPB of all other mortgage loans | 0.50% | ||||||||||||
Early purchase program facility fee per annum per early purchase facility | $ 1,500 | ||||||||||||
Early purchase facility fee per loan | $ 35 | ||||||||||||
Fulfillment fee as a percent of UPB for mortgage loans sold or delivered to Fannie Mae or Freddie Mac | 0.35% | ||||||||||||
Fulfillment fee as a percent of UPB of all other mortgage loans, excluding Ginnie Mae mortgage loans | 0.85% | ||||||||||||
PMT | MSR Recapture Agreement | |||||||||||||
Transactions with Affiliates | |||||||||||||
Related party transaction, automatic renewal period | 18 months | ||||||||||||
Lending activity between the entity and affiliate | |||||||||||||
Number of subsidiaries of related party to which MSR of loan originated through refinancing must be transferred to, if related party previously held the refinanced loan's MSR | item | 1 | ||||||||||||
Minimum percent of total UPB of loans originated from refinancing of loans which a related party previously held the MSR required to be transferred | 30.00% | ||||||||||||
Fair value of MSRs to be transferred, per month, that may be paid in cash | $ 200,000 | ||||||||||||
PMT | Mortgage Lending | |||||||||||||
Lending activity between the entity and affiliate | |||||||||||||
Mortgage servicing rights and excess servicing spread recapture incurred | 8,092,000 | 7,836,000 | 7,837,000 | ||||||||||
Fulfillment fee revenue | 86,465,000 | 58,607,000 | 48,719,000 | ||||||||||
Unpaid principal balance of loans fulfilled for PennyMac Mortgage Investment Trust | 23,188,386,000 | 14,014,603,000 | 11,476,448,000 | ||||||||||
Sourcing fees paid | 11,976,000 | 8,966,000 | 4,676,000 | ||||||||||
Unpaid principal balance of loans purchased from PennyMac Mortgage Investment Trust | 39,908,163,000 | 29,867,580,000 | 16,431,338,000 | ||||||||||
Proceeds from sale of mortgage loans held for sale to PennyMac Mortgage Investment Trust | 21,541,000 | 28,445,000 | 8,081,000 | ||||||||||
Tax service fee | 6,690,000 | $ 4,390,000 | $ 2,080,000 | ||||||||||
Early purchase program fees earned from PMT | $ 30,000 |
Transactions with Affiliates 67
Transactions with Affiliates - Mortgage Loan Servicing (Details) - PMT | Sep. 12, 2016USD ($)item | Dec. 31, 2016USD ($) | Dec. 31, 2015USD ($) | Dec. 31, 2014USD ($) |
Summary of mortgage loan servicing fees earned | ||||
Loan servicing fees | $ 50,615,000 | $ 46,423,000 | $ 52,522,000 | |
Mortgage Loan Servicing Agreement | ||||
Transactions with Affiliates | ||||
Base servicing fees per month for REO | $ 75 | |||
Rental fee per month per REO | 30 | |||
Renewal fee, per lease renewal, on REO property | $ 100 | |||
Property management fees on REOs, as a percent of gross rental income | 9.00% | |||
Base servicing fees per month for fixed-rate non-distressed loans subserviced | 7.50 | |||
Base servicing fees per month for adjustable rate non-distressed loans subserviced | 8.50 | |||
Supplemental fee per month for each distressed whole loan | $ 25 | |||
Activity-based fee, percent, due to a streamline modification | 0.50% | |||
Activity-based fee, percent, due to a liquidation | 1.50% | |||
Activity-based fee due to a deed-in-lieu of foreclosure | $ 500 | |||
Maximum number of liquidation, reperformance, or modification fees that can be earned during earnable period | item | 1 | |||
Liquidation, reperformance, or modification fees earnable period | 18 months | |||
Related party transaction, automatic renewal period | 18 months | |||
Minimum | Mortgage Loan Servicing Agreement | ||||
Transactions with Affiliates | ||||
Servicing fees amount per month for current loans | $ 30 | |||
Maximum | Mortgage Loan Servicing Agreement | ||||
Transactions with Affiliates | ||||
Servicing fees amount per month for severely delinquent loans | $ 100 | |||
Mortgage loans acquired for sale at fair value | ||||
Summary of mortgage loan servicing fees earned | ||||
Base and supplemental | 330,000 | 260,000 | 103,000 | |
Activity-based | 733,000 | 371,000 | 149,000 | |
Loan servicing fees | 1,063,000 | 631,000 | 252,000 | |
Mortgage loans at fair value | ||||
Summary of mortgage loan servicing fees earned | ||||
Base and supplemental | 11,078,000 | 16,123,000 | 18,953,000 | |
Activity-based | 18,521,000 | 12,437,000 | 19,608,000 | |
Loan servicing fees | 29,599,000 | 28,560,000 | 38,561,000 | |
Mortgage servicing rights | ||||
Summary of mortgage loan servicing fees earned | ||||
Base and supplemental | 19,461,000 | 16,911,000 | 13,515,000 | |
Activity-based | 492,000 | 321,000 | 194,000 | |
Loan servicing fees | $ 19,953,000 | $ 17,232,000 | $ 13,709,000 |
Transactions with Affiliates 68
Transactions with Affiliates - Management Fees (Details) - USD ($) | Sep. 12, 2016 | Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 |
Management Fees Revenue [Abstract] | ||||
Management fees | $ 22,746,000 | $ 28,237,000 | $ 42,508,000 | |
PMT | ||||
Management Fees Revenue [Abstract] | ||||
Management fees | 20,657,000 | 24,194,000 | 35,035,000 | |
PMT | Management Agreement | ||||
Transactions with Affiliates | ||||
Percentage of change in net income due to quarterly adjustments | 8.00% | |||
Related party transaction, automatic renewal period | 18 months | |||
Management Fees Revenue [Abstract] | ||||
Base management fee | 20,657,000 | 22,851,000 | 23,330,000 | |
Performance incentive | 1,343,000 | 11,705,000 | ||
Management fees | $ 20,657,000 | $ 24,194,000 | $ 35,035,000 | |
PMT | Management Agreement | Maximum | ||||
Transactions with Affiliates | ||||
Percentage of performance incentive fee payable by issuance of common shares | 50.00% | |||
PMT | Management Agreement | Minimum | ||||
Transactions with Affiliates | ||||
High watermark | $ 0 | |||
PMT | Shareholders Equity Up To 2 Billion Dollars | Maximum | ||||
Transactions with Affiliates | ||||
Base management fee annual rate (as a percent) | 1.50% | |||
Base management fee shareholders' equity limit | $ 2,000,000,000 | |||
PMT | Shareholders Equity In Excess Of 2 Billion Dollars And Upto 5 Billion Dollars | ||||
Transactions with Affiliates | ||||
Base management fee annual rate (as a percent) | 1.375% | |||
PMT | Shareholders Equity In Excess Of 2 Billion Dollars And Upto 5 Billion Dollars | Maximum | ||||
Transactions with Affiliates | ||||
Base management fee shareholders' equity limit | $ 5,000,000,000 | |||
PMT | Shareholders Equity In Excess Of 2 Billion Dollars And Upto 5 Billion Dollars | Minimum | ||||
Transactions with Affiliates | ||||
Base management fee shareholders' equity limit | $ 2,000,000,000 | |||
PMT | Shareholders Equity In Excess Of 5 Billion Dollars | ||||
Transactions with Affiliates | ||||
Base management fee annual rate (as a percent) | 1.25% | |||
PMT | Shareholders Equity In Excess Of 5 Billion Dollars | Maximum | ||||
Transactions with Affiliates | ||||
Base management fee shareholders' equity limit | $ 5,000,000,000 | |||
PMT | Return on Shareholders Equity 8 Percent | ||||
Transactions with Affiliates | ||||
Percentage of net income for calculation of performance incentive fees | 10.00% | |||
PMT | Return on Shareholders Equity 8 Percent | Maximum | ||||
Transactions with Affiliates | ||||
Percentage of return on affiliate's equity | 12.00% | |||
PMT | Return on Shareholders Equity 8 Percent | Minimum | ||||
Transactions with Affiliates | ||||
Percentage of return on affiliate's equity | 8.00% | |||
PMT | Return on Shareholders Equity 12 Percent | ||||
Transactions with Affiliates | ||||
Percentage of net income for calculation of performance incentive fees | 15.00% | |||
Percentage of return on affiliate's equity | 12.00% | |||
PMT | Return on Shareholders Equity 12 Percent | Maximum | ||||
Transactions with Affiliates | ||||
Percentage of return on affiliate's equity | 16.00% | |||
PMT | Return on Shareholders Equity in Excess of 16 Percent | ||||
Transactions with Affiliates | ||||
Percentage of net income for calculation of performance incentive fees | 20.00% | |||
Percentage of return on affiliate's equity | 16.00% |
Transactions with Affiliates 69
Transactions with Affiliates - Expense Reimbursement (Details) - PMT - USD ($) | Sep. 12, 2016 | Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 |
Transactions with Affiliates | ||||
Expense reimbursement amount, per quarter, relating to personnel | $ 120,000 | |||
Reimbursement of common overhead and expenses incurred on behalf of affiliates | ||||
Reimbursement of common overhead and expenses incurred by the Company | $ 7,735,000 | $ 11,324,000 | $ 11,642,000 | |
Payments and settlements during the period | 143,542,000 | 99,967,000 | 99,987,000 | |
Common overhead incurred | ||||
Reimbursement of common overhead and expenses incurred on behalf of affiliates | ||||
Reimbursement of common overhead and expenses incurred by the Company | 7,898,000 | 10,742,000 | 10,850,000 | |
Expenses incurred by related party (reporting entity), net | ||||
Reimbursement of common overhead and expenses incurred on behalf of affiliates | ||||
Reimbursement of common overhead and expenses incurred by the Company | $ (163,000) | $ 582,000 | $ 792,000 |
Transactions with Affiliates 70
Transactions with Affiliates - Conditional Reimbursement (Details) - PMT - Conditional Reimbursement - USD ($) | 12 Months Ended | 23 Months Ended | |||
Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2014 | Aug. 04, 2009 | |
Conditional reimbursement | |||||
Conditional reimbursement | $ 2,900,000 | ||||
Performance incentive fees reimbursement under the management agreement for every $100 of performance incentive fees earned | $ 10 | ||||
Maximum performance incentive fees reimbursement within 12-month period | $ 1,000,000 | ||||
Payments received | $ 0 | $ 237,000 | $ 651,000 | ||
Maximum | |||||
Conditional reimbursement | |||||
Conditional reimbursement | $ 2,900,000 |
Transactions with Affiliates 71
Transactions with Affiliates - Amounts due from Affilate (Details) - PMT - USD ($) $ in Thousands | Dec. 31, 2016 | Dec. 31, 2015 |
Amounts due from affiliate | ||
Management fees | $ 5,081 | $ 5,670 |
Servicing fees | 5,465 | 3,682 |
Allocated expenses | 1,046 | 4,490 |
Fulfillment fees | 1,300 | 1,082 |
Conditional Reimbursement | 900 | 900 |
Interest on financing receivable | 253 | 412 |
Correspondent production fees | 2,371 | 2,729 |
Total due from affiliate | 16,416 | 18,965 |
Payable to affiliate | ||
Deposits made by PMT | 162,945 | 153,573 |
MSR Recapture Payable to PMT | 707 | 781 |
Other expenses | 6,384 | 8,025 |
Payable to affiliates | $ 170,036 | $ 162,379 |
Transactions with Affiliates 72
Transactions with Affiliates - Investing Activities (Details) shares in Thousands, $ in Thousands | Dec. 19, 2016USD ($)item | Dec. 31, 2016USD ($)shares | Dec. 31, 2015USD ($)shares | Dec. 31, 2014USD ($) |
Activity during the year: | ||||
Advances to PennyMac Mortgage Investment Trust | $ 168,546 | |||
Repayments from PennyMac Mortgage Investment Trust | (18,546) | |||
Activity during the period: | ||||
Fair value of PennyMac Mortgage Investment Trust shares | $ 1,228 | 1,145 | ||
PMT | ||||
Repurchase agreement with PennyMac Mortgage Investment Trust: | ||||
Financings receivable from PennyMac Mortgage Investment Trust (pledged to creditors at December 31, 2016) | 150,000 | 150,000 | ||
Activity during the year: | ||||
Interest income on receivable from PennyMac Mortgage Investment Trust | 7,830 | 3,343 | ||
Activity during the period: | ||||
Dividends received from PennyMac Mortgage Investment Trust | 141 | 207 | $ 134 | |
Change in fair value of investment in Common shares of PennyMac Mortgage Investment Trust | 83 | (437) | (140) | |
Dividends received and change in fair value | 224 | (230) | $ (6) | |
Fair value of PennyMac Mortgage Investment Trust shares | $ 1,228 | $ 1,145 | ||
Number of shares | shares | 75 | 75 | ||
PMT | PennyMac Holdings, L L C Repurchase Agreement [Member] | ||||
Transactions with Affiliates | ||||
Number of subsidiaries entered into master repurchase agreement | item | 1 | |||
Maximum principal balance of VFN | $ 1,000,000 | |||
Repurchase agreement with PennyMac Mortgage Investment Trust: | ||||
Refinancing from PennyMac Mortgage Investment Trust | $ 150,000 | |||
Financings receivable from PennyMac Mortgage Investment Trust (pledged to creditors at December 31, 2016) | 150,000 | |||
Activity during the year: | ||||
Interest income on receivable from PennyMac Mortgage Investment Trust | 253 | |||
PMT | Notes Receivable [Member] | ||||
Activity during the year: | ||||
Advances to PennyMac Mortgage Investment Trust | $ 168,546 | |||
Repayments from PennyMac Mortgage Investment Trust | (150,000) | (18,546) | ||
Interest income on receivable from PennyMac Mortgage Investment Trust | $ 7,577 | 3,343 | ||
Financing receivable from PennyMac Mortgage Investment Trust | $ 150,000 |
Transactions with Affiliates 73
Transactions with Affiliates - Financing Activities (Details) - USD ($) | 12 Months Ended | |||
Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | Feb. 01, 2013 | |
Financing activities: | ||||
Issuance: Cash | $ 271,554,000 | $ 95,892,000 | ||
Interest expense from excess servicing spread financing | $ 11,052,000 | 7,775,000 | 5,989,000 | |
PMT | ||||
Financing activities: | ||||
Issuance: Pursuant to recapture agreement | 6,603,000 | 6,728,000 | 7,342,000 | |
PMT | 2/1/13 Spread Acquisition Agreement | ||||
Financing activities: | ||||
Maximum ESS recapture obligation | $ 200,000 | |||
Excess servicing spread financing | PMT | ||||
Financing activities: | ||||
Issuance: Cash | 271,554,000 | 99,728,000 | ||
Issuance: Pursuant to recapture agreement | 6,603,000 | 6,728,000 | 7,342,000 | |
Repayments | (69,992,000) | (78,578,000) | (39,256,000) | |
Settlement | (59,045,000) | |||
Changes in fair value included in income | (23,923,000) | (3,810,000) | (28,663,000) | |
Interest expense from excess servicing spread financing | 22,601,000 | 25,365,000 | 13,292,000 | |
Excess servicing spread recapture recognized | $ 6,529,000 | $ 7,049,000 | $ 7,828,000 |
Transactions with Affiliates 74
Transactions with Affiliates - Amounts due from Investment Funds (Details) $ in Thousands | 12 Months Ended | |||||||||
Dec. 31, 2016USD ($)item | Sep. 30, 2016USD ($) | Jun. 30, 2016USD ($) | Mar. 31, 2016USD ($) | Dec. 31, 2015USD ($) | Sep. 30, 2015USD ($) | Jun. 30, 2015USD ($) | Mar. 31, 2015USD ($) | Dec. 31, 2014USD ($) | Dec. 31, 2013USD ($) | |
Amounts due from affiliate | ||||||||||
Carried Interest from Investment Funds | $ 70,906 | $ 70,870 | $ 70,763 | $ 70,519 | $ 69,926 | $ 70,196 | $ 68,713 | $ 68,531 | ||
Investment Funds | ||||||||||
Amounts due from affiliate | ||||||||||
Related party agreement, number of extensions | item | 2 | |||||||||
Related party extension term | 1 year | |||||||||
Carried Interest from Investment Funds | $ 70,906 | 69,926 | $ 67,298 | $ 61,142 | ||||||
Management fees | 500 | 655 | ||||||||
Loan servicing rebate | 238 | 45 | ||||||||
Expense reimbursements | 231 | 392 | ||||||||
Loan servicing fees | 250 | 224 | ||||||||
Total due from affiliate | 1,219 | 1,316 | ||||||||
Deposits received to fund servicing advances | 20,221 | 30,065 | ||||||||
Other | 172 | 364 | ||||||||
Payable to affiliates | $ 20,393 | 30,429 | ||||||||
Investment Funds | Minimum | ||||||||||
Amounts due from affiliate | ||||||||||
Base management fees, annual accrual rate | 1.50% | |||||||||
Investment Funds | Maximum | ||||||||||
Amounts due from affiliate | ||||||||||
Base management fees, annual accrual rate | 2.00% | |||||||||
PNMAC Mortgage Opportunity Fund, LLC | ||||||||||
Amounts due from affiliate | ||||||||||
Carried Interest from Investment Funds | $ 42,427 | 41,893 | ||||||||
PNMAC Mortgage Opportunity Fund Investors, LLC | ||||||||||
Amounts due from affiliate | ||||||||||
Carried Interest from Investment Funds | $ 28,479 | $ 28,033 |
Transactions with Affiliates 75
Transactions with Affiliates - Exchanged Private National Mortgage Acceptance Company, LLC Unitholders (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | |
Transactions with Affiliates | |||
Amount of tax benefits under the tax sharing agreement (as a percent) | 85.00% | ||
Liability resulting from unit exchanges | $ 2,190 | $ 2,728 | $ 5,346 |
Payments to exchanged Private National Mortgage Acceptance Company, LLC unitholders under tax receivable agreement | (5,132) | ||
Revaluation of Payable to exchanged Private National Mortgage Acceptance Company, LLC unitholders under tax receivable agreement | (551) | 1,695 | (1,378) |
Payable to exchanged PNMAC unitholders under tax receivable agreement | 75,954 | 74,315 | |
Parent Company [Member] | |||
Transactions with Affiliates | |||
Revaluation of Payable to exchanged Private National Mortgage Acceptance Company, LLC unitholders under tax receivable agreement | (551) | 1,695 | $ (1,378) |
Payable to exchanged PNMAC unitholders under tax receivable agreement | $ 75,954 | $ 74,315 |
Earnings Per Share of Common 76
Earnings Per Share of Common Stock (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 12 Months Ended | |||||||||
Dec. 31, 2016 | Sep. 30, 2016 | Jun. 30, 2016 | Mar. 31, 2016 | Dec. 31, 2015 | Sep. 30, 2015 | Jun. 30, 2015 | Mar. 31, 2015 | Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | |
Basic earnings per share of common stock: | |||||||||||
Net income attributable to PennyMac Financial Services, Inc common stockholders | $ 22,744 | $ 23,685 | $ 14,475 | $ 5,175 | $ 12,771 | $ 12,680 | $ 12,749 | $ 9,028 | $ 66,079 | $ 47,228 | $ 36,842 |
Weighted-average common stock outstanding | 22,161,000 | 21,755,000 | 21,250,000 | ||||||||
Basic earnings per share of common stock (in dollars per share) | $ 1.02 | $ 1.07 | $ 0.66 | $ 0.24 | $ 0.58 | $ 0.58 | $ 0.59 | $ 0.42 | $ 2.98 | $ 2.17 | $ 1.73 |
Diluted earnings per share of common stock: | |||||||||||
Net income attributable to PennyMac Financial Services, Inc common stockholders | $ 22,744 | $ 23,685 | $ 14,475 | $ 5,175 | $ 12,771 | $ 12,680 | $ 12,749 | $ 9,028 | $ 66,079 | $ 47,228 | $ 36,842 |
Effect of net income attributable to noncontrolling interest, net of tax | 159,570 | 119,697 | 95,283 | ||||||||
Diluted net income attributable to common stockholders | $ 225,649 | $ 166,925 | $ 132,125 | ||||||||
Weighted-average common stock outstanding | 22,161,000 | 21,755,000 | 21,250,000 | ||||||||
Dilutive shares: | |||||||||||
PennyMac Class A units exchangeable to common stock | 53,951,000 | 53,803,000 | 53,550,000 | ||||||||
Non-vested PennyMac Class A units issuable under unit-based stock compensation plan and exchangeable to common stock | 427,000 | 1,083,000 | |||||||||
Shares issuable under stock-based compensation plans (in shares) | 517,000 | 119,000 | 72,000 | ||||||||
Diluted weighted-average common stock outstanding | 76,629,000 | 76,104,000 | 75,955,000 | ||||||||
Diluted earnings per share of common stock (in dollars per share) | $ 1 | $ 1.06 | $ 0.65 | $ 0.23 | $ 0.58 | $ 0.58 | $ 0.59 | $ 0.42 | $ 2.94 | $ 2.17 | $ 1.73 |
Total anti-dilutive stock-based compensation units | 3,883 | 4,106 | 2,031 | ||||||||
Weighted-average exercise price of anti-dilutive stock options | $ 15.81 | $ 18.17 | $ 18.23 | ||||||||
Stock Options | |||||||||||
Dilutive shares: | |||||||||||
Total anti-dilutive stock-based compensation units | 1,829 | 1,748 | 976 | ||||||||
Performance-based RSUs | |||||||||||
Dilutive shares: | |||||||||||
Total anti-dilutive stock-based compensation units | 2,054 | 2,358 | 1,055 |
Loan Sales and Servicing Acti77
Loan Sales and Servicing Activities - Summary of Cash Flows with Transferees (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | |
Cash flows: | |||
Sales proceeds | $ 49,633,909 | $ 36,679,638 | $ 18,793,619 |
Servicing fees received | 261,163 | 140,767 | 113,364 |
Net servicing advances | 8,274 | 9,842 | 16,796 |
Period end information: | |||
Unpaid principal balance of mortgage loans outstanding at end of period | 89,516,155 | 60,687,246 | 36,564,434 |
30-89 days | 2,545,970 | 1,561,483 | 852,826 |
90 days or more - Not in foreclosure | 735,263 | 361,515 | 181,522 |
90 days or more - In foreclosure | 137,856 | 106,264 | 20,180 |
90 days or more - Foreclosed | 2,552 | 755 | 591 |
Bankruptcy | $ 256,471 | $ 120,761 | $ 60,382 |
Loan Sales and Servicing Acti78
Loan Sales and Servicing Activities - Summary of Mortgage Servicing Portfolio (Details) - USD ($) $ in Thousands | Dec. 31, 2016 | Dec. 31, 2015 |
Mortgage servicing portfolio | ||
Mortgage loans held for sale | $ 1,052,485 | |
Total loans serviced | $ 194,240,002 | 160,272,718 |
Commercial real estate loans subserviced for the Company | 14,454 | |
Delinquent mortgage loans: | ||
30 days | 3,016,294 | |
60 days | 971,541 | |
90 days or more - Not in foreclosure | 2,058,646 | |
90 days or more - In foreclosure | 1,836,631 | |
90 days or more - Foreclosed | 565,403 | |
Total delinquent mortgage loans | 8,448,515 | |
Bankruptcy | 799,324 | |
Custodial funds managed by the Company | 2,744,897 | |
Mortgage servicing rights | ||
Mortgage servicing portfolio | ||
Mortgage loans held for sale | 2,101,283 | |
Total loans serviced | 194,240,002 | |
Commercial real estate loans subserviced for the Company | 22,338 | |
Delinquent mortgage loans: | ||
30 days | 3,647,817 | |
60 days | 1,181,591 | |
90 days or more - Not in foreclosure | 2,770,391 | |
90 days or more - In foreclosure | 1,622,205 | |
90 days or more - Foreclosed | 476,960 | |
Total delinquent mortgage loans | 9,698,964 | |
Bankruptcy | 1,073,976 | |
Custodial funds managed by the Company | 3,833,763 | |
Servicing rights owned | ||
Mortgage servicing portfolio | ||
Mortgage loans held for sale | 2,101,283 | 1,052,485 |
Total loans serviced | 133,353,285 | 112,462,086 |
Delinquent mortgage loans: | ||
30 days | 3,240,640 | 2,666,435 |
60 days | 1,035,871 | 834,617 |
90 days or more - Not in foreclosure | 2,203,895 | 1,270,236 |
90 days or more - In foreclosure | 937,204 | 656,617 |
90 days or more - Foreclosed | 28,943 | 23,372 |
Total delinquent mortgage loans | 7,446,553 | 5,451,277 |
Bankruptcy | 793,517 | 457,192 |
Custodial funds managed by the Company | 3,097,365 | 2,242,146 |
Contract servicing and subservicing | ||
Mortgage servicing portfolio | ||
Total loans serviced | 60,886,717 | 47,810,632 |
Commercial real estate loans subserviced for the Company | 22,338 | 14,454 |
Delinquent mortgage loans: | ||
30 days | 407,177 | 349,859 |
60 days | 145,720 | 136,924 |
90 days or more - Not in foreclosure | 566,496 | 788,410 |
90 days or more - In foreclosure | 685,001 | 1,180,014 |
90 days or more - Foreclosed | 448,017 | 542,031 |
Total delinquent mortgage loans | 2,252,411 | 2,997,238 |
Bankruptcy | 280,459 | 342,132 |
Custodial funds managed by the Company | 736,398 | 502,751 |
Non affiliated entities | ||
Mortgage servicing portfolio | ||
Total loans serviced, excluding loans held for sale | 111,409,601 | |
Non affiliated entities | Mortgage servicing rights | ||
Mortgage servicing portfolio | ||
Total loans serviced, excluding loans held for sale | 131,252,002 | |
Non affiliated entities | Servicing rights owned | ||
Mortgage servicing portfolio | ||
Total loans serviced, excluding loans held for sale | 131,252,002 | 111,409,601 |
Affiliated entities | ||
Mortgage servicing portfolio | ||
Total loans serviced, excluding loans held for sale | 47,810,632 | |
Affiliated entities | Mortgage servicing rights | ||
Mortgage servicing portfolio | ||
Total loans serviced, excluding loans held for sale | 60,886,717 | |
Affiliated entities | Contract servicing and subservicing | ||
Mortgage servicing portfolio | ||
Total loans serviced, excluding loans held for sale | $ 60,886,717 | $ 47,810,632 |
Loan Sales and Servicing Acti79
Loan Sales and Servicing Activities - Geographical Distriubtion of Loans (Details) - USD ($) $ in Thousands | Dec. 31, 2016 | Dec. 31, 2015 |
Loan Sales and Servicing Activities | ||
Total loans serviced | $ 194,240,002 | $ 160,272,718 |
California | ||
Loan Sales and Servicing Activities | ||
Total loans serviced | 42,303,952 | 39,007,363 |
Texas | ||
Loan Sales and Servicing Activities | ||
Total loans serviced | 16,037,426 | 12,191,722 |
Virginia | ||
Loan Sales and Servicing Activities | ||
Total loans serviced | 13,143,510 | 9,816,114 |
Florida | ||
Loan Sales and Servicing Activities | ||
Total loans serviced | 12,817,627 | 9,709,940 |
Maryland | ||
Loan Sales and Servicing Activities | ||
Total loans serviced | 8,564,923 | 6,151,945 |
All other states | ||
Loan Sales and Servicing Activities | ||
Total loans serviced | $ 101,372,564 | $ 83,395,634 |
Netting of Financial Instrume80
Netting of Financial Instruments - Offsetting of Derivative Assets (Details) - USD ($) $ in Thousands | Dec. 31, 2016 | Dec. 31, 2015 |
Derivatives subject to master netting arrangements: | ||
Gross amounts of recognized assets | $ 113,692 | $ 12,937 |
Gross amounts offset in the consolidated balance sheet | (96,635) | (8,542) |
Net amounts of assets presented in the consolidated balance sheet | 17,057 | 4,395 |
Total | ||
Gross amounts of recognized assets | 179,540 | 58,822 |
Net amounts of assets presented in the balance sheet | 82,905 | 50,280 |
Margin Deposits | ||
Total | ||
Gross amounts of recognized assets | 10,591 | (1,238) |
Interest rate lock commitments | ||
Derivatives not subject to master netting arrangements | ||
Gross amounts of recognized assets | 65,848 | 45,885 |
Total | ||
Net amounts of assets presented in the balance sheet | 65,848 | 45,885 |
MBS put options | ||
Derivatives subject to master netting arrangements: | ||
Gross amounts of recognized assets | 3,934 | 404 |
Net amounts of assets presented in the consolidated balance sheet | 3,934 | 404 |
MBS call options | ||
Derivatives subject to master netting arrangements: | ||
Gross amounts of recognized assets | 217 | |
Net amounts of assets presented in the consolidated balance sheet | 217 | |
Forward contracts | Purchases | ||
Derivatives subject to master netting arrangements: | ||
Gross amounts of recognized assets | 77,905 | 4,181 |
Net amounts of assets presented in the consolidated balance sheet | 77,905 | 4,181 |
Forward contracts | Sales | ||
Derivatives subject to master netting arrangements: | ||
Gross amounts of recognized assets | 28,324 | 4,965 |
Net amounts of assets presented in the consolidated balance sheet | 28,324 | 4,965 |
Put options on interest rate futures | ||
Derivatives subject to master netting arrangements: | ||
Gross amounts of recognized assets | 3,109 | 1,832 |
Net amounts of assets presented in the consolidated balance sheet | 3,109 | 1,832 |
Call options on interest rate futures | ||
Derivatives subject to master netting arrangements: | ||
Gross amounts of recognized assets | 203 | 1,555 |
Net amounts of assets presented in the consolidated balance sheet | $ 203 | $ 1,555 |
Netting of Financial Instrume81
Netting of Financial Instruments - Derivative Assets, Financial Assets, and Collateral Held by Counterparty (Details) - USD ($) $ in Thousands | Dec. 31, 2016 | Dec. 31, 2015 |
Total | ||
Net amounts of assets presented in the balance sheet | $ 82,905 | $ 50,280 |
Net amount | 82,905 | 50,280 |
Barclays | ||
Total | ||
Net amounts of assets presented in the balance sheet | 12,002 | 72 |
Net amount | 12,002 | 72 |
RJ O'Brien | ||
Total | ||
Net amounts of assets presented in the balance sheet | 2,750 | 2,246 |
Net amount | 2,750 | 2,246 |
Jefferies & Co. | ||
Total | ||
Net amounts of assets presented in the balance sheet | 540 | 888 |
Net amount | 540 | 888 |
Goldman Sachs | ||
Total | ||
Net amounts of assets presented in the balance sheet | 471 | |
Net amount | 471 | |
Federal National Mortgage Association | ||
Total | ||
Net amounts of assets presented in the balance sheet | 453 | |
Net amount | 453 | |
Other | ||
Total | ||
Net amounts of assets presented in the balance sheet | 1,765 | 265 |
Net amount | 1,765 | 265 |
Interest rate lock commitments | ||
Total | ||
Net amounts of assets presented in the balance sheet | 65,848 | 45,885 |
Net amount | $ 65,848 | $ 45,885 |
Netting of Financial Instrume82
Netting of Financial Instruments - Offsetting of Derivative and Financial Liabilites (Details) - USD ($) $ in Thousands | 12 Months Ended | |||||||
Dec. 31, 2016 | Dec. 31, 2015 | Sep. 30, 2016 | Jun. 30, 2016 | Mar. 31, 2016 | Sep. 30, 2015 | Jun. 30, 2015 | Mar. 31, 2015 | |
Derivatives: Subject to master netting arrangements: | ||||||||
Gross amounts of recognized liabilities | $ 101,949 | $ 16,751 | ||||||
Netting | (86,044) | (9,780) | ||||||
Net amounts of liabilities presented in the balance sheet | 15,905 | 6,971 | ||||||
Total | ||||||||
Gross amounts of recognized liabilities | 108,406 | 18,863 | ||||||
Net amounts of liabilities presented in the consolidated balance sheet | 22,362 | 9,083 | ||||||
Mortgage loans sold under agreements to repurchase | ||||||||
Net amounts of liabilities presented in the consolidated balance sheet | 1,736,922 | |||||||
Debt Issuance Costs | ||||||||
Gross amounts of recognized liabilities | 1,735,114 | 1,166,731 | ||||||
Net amount of liabilities in the consolidated balance sheet | 1,735,114 | 1,166,731 | $ 2,491,366 | $ 1,591,798 | $ 1,658,578 | $ 1,286,411 | $ 1,263,248 | $ 992,187 |
Total | ||||||||
Gross amounts of recognized liabilities | 1,843,520 | 1,185,594 | ||||||
Gross amounts offset in the consolidated balance sheet | (86,044) | (9,780) | ||||||
Net amounts of liabilities presented in the consolidated balance sheet | 1,759,284 | 1,176,488 | ||||||
Net amount of liabilities in the consolidated balance sheet | 22,362 | 9,083 | ||||||
Receivable from Counterparties | ||||||||
Total | ||||||||
Net amounts of liabilities presented in the consolidated balance sheet | 1,757,476 | 1,175,814 | ||||||
Assets sold under agreements to repurchase | ||||||||
Mortgage loans sold under agreements to repurchase | ||||||||
Gross amounts of recognized liabilities | 1,736,922 | 1,167,405 | ||||||
Net amounts of liabilities presented in the consolidated balance sheet | 1,736,922 | 1,167,405 | ||||||
Debt Issuance Costs | ||||||||
Debt issuance costs, gross | (1,808) | (674) | ||||||
Debt issuance costs | (1,808) | (674) | ||||||
Net amount of liabilities in the consolidated balance sheet | 1,735,114 | 1,166,731 | ||||||
Forward contracts | Purchases | ||||||||
Derivatives: Subject to master netting arrangements: | ||||||||
Gross amounts of recognized liabilities | 16,914 | 9,004 | ||||||
Net amounts of liabilities presented in the balance sheet | 16,914 | 9,004 | ||||||
Forward contracts | Sales | ||||||||
Derivatives: Subject to master netting arrangements: | ||||||||
Gross amounts of recognized liabilities | 85,035 | 7,497 | ||||||
Net amounts of liabilities presented in the balance sheet | 85,035 | 7,497 | ||||||
Interest rate lock commitments | ||||||||
Derivatives not subject to master netting arrangements | ||||||||
Gross amounts of recognized liabilities | 6,457 | 2,112 | ||||||
Total | ||||||||
Net amounts of liabilities presented in the consolidated balance sheet | 6,457 | 2,112 | ||||||
Net amount of liabilities in the consolidated balance sheet | $ 6,457 | 2,112 | ||||||
Put options on interest rate futures | Purchases | ||||||||
Derivatives: Subject to master netting arrangements: | ||||||||
Gross amounts of recognized liabilities | 203 | |||||||
Net amounts of liabilities presented in the balance sheet | 203 | |||||||
Call options on interest rate futures | Purchases | ||||||||
Derivatives: Subject to master netting arrangements: | ||||||||
Gross amounts of recognized liabilities | 47 | |||||||
Net amounts of liabilities presented in the balance sheet | $ 47 |
Netting of Financial Instrume83
Netting of Financial Instruments - Derivative Liabilites, Financial Liabilities, and Collateral Held by Counterparty (Details) - USD ($) $ in Thousands | Dec. 31, 2016 | Dec. 31, 2015 |
Derivative liabilities: | ||
Net amounts of liabilities presented in the consolidated balance sheet | $ 1,759,284 | $ 1,176,488 |
Financial instruments | (1,736,922) | (1,167,405) |
Net amount of liabilities in the consolidated balance sheet | 22,362 | 9,083 |
Credit Suisse First Boston Mortgage Capital LLC | ||
Derivative liabilities: | ||
Net amounts of liabilities presented in the consolidated balance sheet | 961,533 | 795,179 |
Financial instruments | (960,988) | (794,470) |
Net amount of liabilities in the consolidated balance sheet | 545 | 709 |
Bank of America, N.A. | ||
Derivative liabilities: | ||
Net amounts of liabilities presented in the consolidated balance sheet | 349,638 | 271,130 |
Financial instruments | (342,769) | (269,510) |
Net amount of liabilities in the consolidated balance sheet | 6,869 | 1,620 |
Morgan Stanley Bank | ||
Derivative liabilities: | ||
Net amounts of liabilities presented in the consolidated balance sheet | 189,756 | 49,763 |
Financial instruments | (188,851) | (49,521) |
Net amount of liabilities in the consolidated balance sheet | 905 | 242 |
JP Morgan | ||
Derivative liabilities: | ||
Net amounts of liabilities presented in the consolidated balance sheet | 135,322 | 672 |
Financial instruments | (135,322) | |
Net amount of liabilities in the consolidated balance sheet | 672 | |
Citibank, N.A. | ||
Derivative liabilities: | ||
Net amounts of liabilities presented in the consolidated balance sheet | 81,555 | 55,948 |
Financial instruments | (80,525) | (53,904) |
Net amount of liabilities in the consolidated balance sheet | 1,030 | 2,044 |
Barclays | ||
Derivative liabilities: | ||
Net amounts of liabilities presented in the consolidated balance sheet | 28,467 | |
Financial instruments | (28,467) | |
Royal Bank of Canada | ||
Derivative liabilities: | ||
Net amounts of liabilities presented in the consolidated balance sheet | 2,937 | |
Net amount of liabilities in the consolidated balance sheet | 2,937 | |
BNP Paribas | ||
Derivative liabilities: | ||
Net amounts of liabilities presented in the consolidated balance sheet | 1,151 | 738 |
Net amount of liabilities in the consolidated balance sheet | 1,151 | 738 |
Federal National Mortgage Association | ||
Derivative liabilities: | ||
Net amounts of liabilities presented in the consolidated balance sheet | 1,033 | |
Net amount of liabilities in the consolidated balance sheet | 1,033 | |
Goldman Sachs | ||
Derivative liabilities: | ||
Net amounts of liabilities presented in the consolidated balance sheet | 823 | |
Net amount of liabilities in the consolidated balance sheet | 823 | |
Other | ||
Derivative liabilities: | ||
Net amounts of liabilities presented in the consolidated balance sheet | 612 | 946 |
Net amount of liabilities in the consolidated balance sheet | 612 | 946 |
Interest rate lock commitments | ||
Derivative liabilities: | ||
Net amounts of liabilities presented in the consolidated balance sheet | 6,457 | 2,112 |
Net amount of liabilities in the consolidated balance sheet | $ 6,457 | $ 2,112 |
Fair Value - Financial Statemen
Fair Value - Financial Statement Items Measured at Fair Value on a Recurring Basis (Details) - USD ($) $ in Thousands | 12 Months Ended | |||||||
Dec. 31, 2016 | Sep. 30, 2016 | Jun. 30, 2016 | Mar. 31, 2016 | Dec. 31, 2015 | Sep. 30, 2015 | Jun. 30, 2015 | Mar. 31, 2015 | |
Fair value | ||||||||
Interest rate threshold used in determination of accounting for loans underlying mortgage servicing rights (as a percent) | 4.50% | |||||||
Assets: | ||||||||
Short-term investments at fair value | $ 85,964 | $ 46,319 | ||||||
Mortgage loans held for sale at fair value | 2,172,815 | $ 3,127,377 | $ 2,097,138 | $ 1,653,963 | 1,101,204 | $ 1,696,980 | $ 1,594,262 | $ 1,353,944 |
Derivative assets: | ||||||||
Derivative asset, before netting | 179,540 | 58,822 | ||||||
Netting | (96,635) | (8,542) | ||||||
Total derivative assets | 82,905 | 50,280 | ||||||
Investment in PennyMac Mortgage Investment Trust | 1,228 | 1,145 | ||||||
Mortgage servicing rights at fair value | 515,925 | 660,247 | ||||||
Derivative liabilities: | ||||||||
Derivative liability, before netting | 108,406 | 18,863 | ||||||
Netting | (86,044) | (9,780) | ||||||
Net amounts of liabilities presented in the consolidated balance sheet | 22,362 | 9,083 | ||||||
Mortgage servicing liabilities | 15,192 | 1,399 | ||||||
PMT | ||||||||
Derivative assets: | ||||||||
Investment in PennyMac Mortgage Investment Trust | 1,228 | 1,145 | ||||||
Recurring basis | ||||||||
Assets: | ||||||||
Short-term investments at fair value | 85,964 | 46,319 | ||||||
Mortgage loans held for sale at fair value | 2,172,815 | 1,101,204 | ||||||
Derivative assets: | ||||||||
Derivative asset, before netting | 179,540 | 58,822 | ||||||
Netting | (96,635) | (8,542) | ||||||
Total derivative assets | 82,905 | 50,280 | ||||||
Mortgage servicing rights at fair value | 515,925 | 660,247 | ||||||
Total assets | 2,858,837 | 1,859,195 | ||||||
Derivative liabilities: | ||||||||
Derivative liability, before netting | 108,406 | 18,863 | ||||||
Netting | (86,044) | (9,780) | ||||||
Net amounts of liabilities presented in the consolidated balance sheet | 22,362 | 9,083 | ||||||
Mortgage servicing liabilities | 15,192 | 1,399 | ||||||
Total liabilities | 326,223 | 422,907 | ||||||
Recurring basis | PMT | ||||||||
Derivative assets: | ||||||||
Investment in PennyMac Mortgage Investment Trust | 1,228 | 1,145 | ||||||
Derivative liabilities: | ||||||||
Excess servicing spread financing at fair value to affiliate | 288,669 | 412,425 | ||||||
Recurring basis | Interest rate lock commitments | ||||||||
Derivative assets: | ||||||||
Derivative asset, before netting | 65,848 | 45,885 | ||||||
Derivative liabilities: | ||||||||
Derivative liability, before netting | 6,457 | 2,112 | ||||||
Recurring basis | Forward contracts | Purchases | ||||||||
Derivative assets: | ||||||||
Derivative asset, before netting | 77,905 | 4,181 | ||||||
Derivative liabilities: | ||||||||
Derivative liability, before netting | 16,914 | 9,004 | ||||||
Recurring basis | Forward contracts | Sales | ||||||||
Derivative assets: | ||||||||
Derivative asset, before netting | 28,324 | 4,965 | ||||||
Derivative liabilities: | ||||||||
Derivative liability, before netting | 85,035 | 7,497 | ||||||
Recurring basis | MBS put options | ||||||||
Derivative assets: | ||||||||
Derivative asset, before netting | 3,934 | 404 | ||||||
Recurring basis | MBS call options | ||||||||
Derivative assets: | ||||||||
Derivative asset, before netting | 217 | |||||||
Recurring basis | Call options on interest rate futures | Purchases | ||||||||
Derivative assets: | ||||||||
Derivative asset, before netting | 203 | 1,555 | ||||||
Derivative liabilities: | ||||||||
Derivative liability, before netting | 47 | |||||||
Recurring basis | Put options on interest rate futures | Purchases | ||||||||
Derivative assets: | ||||||||
Derivative asset, before netting | 3,109 | 1,832 | ||||||
Derivative liabilities: | ||||||||
Derivative liability, before netting | 203 | |||||||
Recurring basis | Level 1 | ||||||||
Assets: | ||||||||
Short-term investments at fair value | 85,964 | 46,319 | ||||||
Derivative assets: | ||||||||
Derivative asset, before netting | 3,312 | 3,387 | ||||||
Total derivative assets | 3,312 | 3,387 | ||||||
Total assets | 90,504 | 50,851 | ||||||
Derivative liabilities: | ||||||||
Derivative liability, before netting | 250 | |||||||
Net amounts of liabilities presented in the consolidated balance sheet | 250 | |||||||
Total liabilities | 250 | |||||||
Recurring basis | Level 1 | PMT | ||||||||
Derivative assets: | ||||||||
Investment in PennyMac Mortgage Investment Trust | 1,228 | 1,145 | ||||||
Recurring basis | Level 1 | Call options on interest rate futures | Purchases | ||||||||
Derivative assets: | ||||||||
Derivative asset, before netting | 203 | 1,555 | ||||||
Derivative liabilities: | ||||||||
Derivative liability, before netting | 47 | |||||||
Recurring basis | Level 1 | Put options on interest rate futures | Purchases | ||||||||
Derivative assets: | ||||||||
Derivative asset, before netting | 3,109 | 1,832 | ||||||
Derivative liabilities: | ||||||||
Derivative liability, before netting | 203 | |||||||
Recurring basis | Level 2 | ||||||||
Assets: | ||||||||
Mortgage loans held for sale at fair value | 2,125,544 | 1,052,673 | ||||||
Derivative assets: | ||||||||
Derivative asset, before netting | 110,380 | 9,550 | ||||||
Total derivative assets | 110,380 | 9,550 | ||||||
Total assets | 2,235,924 | 1,062,223 | ||||||
Derivative liabilities: | ||||||||
Derivative liability, before netting | 101,949 | 16,501 | ||||||
Net amounts of liabilities presented in the consolidated balance sheet | 101,949 | 16,501 | ||||||
Total liabilities | 101,949 | 16,501 | ||||||
Recurring basis | Level 2 | Forward contracts | Purchases | ||||||||
Derivative assets: | ||||||||
Derivative asset, before netting | 77,905 | 4,181 | ||||||
Derivative liabilities: | ||||||||
Derivative liability, before netting | 16,914 | 9,004 | ||||||
Recurring basis | Level 2 | Forward contracts | Sales | ||||||||
Derivative assets: | ||||||||
Derivative asset, before netting | 28,324 | 4,965 | ||||||
Derivative liabilities: | ||||||||
Derivative liability, before netting | 85,035 | 7,497 | ||||||
Recurring basis | Level 2 | MBS put options | ||||||||
Derivative assets: | ||||||||
Derivative asset, before netting | 3,934 | 404 | ||||||
Recurring basis | Level 2 | MBS call options | ||||||||
Derivative assets: | ||||||||
Derivative asset, before netting | 217 | |||||||
Recurring basis | Level 3 | ||||||||
Assets: | ||||||||
Mortgage loans held for sale at fair value | 47,271 | 48,531 | ||||||
Derivative assets: | ||||||||
Derivative asset, before netting | 65,848 | 45,885 | ||||||
Total derivative assets | 65,848 | 45,885 | ||||||
Mortgage servicing rights at fair value | 515,925 | 660,247 | ||||||
Total assets | 629,044 | 754,663 | ||||||
Derivative liabilities: | ||||||||
Derivative liability, before netting | 6,457 | 2,112 | ||||||
Net amounts of liabilities presented in the consolidated balance sheet | 6,457 | 2,112 | ||||||
Mortgage servicing liabilities | 15,192 | 1,399 | ||||||
Total liabilities | 310,318 | 415,936 | ||||||
Recurring basis | Level 3 | PMT | ||||||||
Derivative liabilities: | ||||||||
Excess servicing spread financing at fair value to affiliate | 288,669 | 412,425 | ||||||
Recurring basis | Level 3 | Interest rate lock commitments | ||||||||
Derivative assets: | ||||||||
Derivative asset, before netting | 65,848 | 45,885 | ||||||
Derivative liabilities: | ||||||||
Derivative liability, before netting | $ 6,457 | $ 2,112 |
Fair Value - Level 3 Input Roll
Fair Value - Level 3 Input Roll Forward, Recurring Basis (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | |
Roll forward of liabilities measured using Level 3 inputs on a recurring basis | |||
Assumption of mortgage servicing liability | $ 10,139 | ||
Mortgage servicing liabilities resulting from mortgage loan sales | 14,991 | $ 20,442 | $ 1,965 |
Recurring basis | |||
Roll forward of assets measured using Level 3 inputs on a recurring basis | |||
Balance at the beginning of the year | 752,551 | 567,692 | 235,607 |
Purchases | 1,608,773 | 1,293,948 | 1,185,318 |
Sales | (1,164,201) | (803,424) | (588,849) |
Repayments | (38,420) | (40,995) | (22,016) |
Interest rate lock commitments issued, net | 429,598 | 271,692 | 181,159 |
Mortgage servicing rights resulting from mortgage loan sales | 17,319 | 18,013 | 22,733 |
Changes in fair value included in income arising from: | |||
Changes in instrument specific credit risk | 3,469 | 4,233 | |
Other factors | (17,920) | 7,095 | (27,655) |
Total changes in fair value included in income | (14,451) | 11,328 | (27,655) |
Transfers of mortgage loans held for sale from Level 3 to Level 2 | 410,735 | 232,315 | (240,345) |
Transfers of interest rate lock commitments to mortgage loans held for sale | (557,847) | (333,388) | (178,260) |
Balance at the end of the year | 622,587 | 752,551 | 567,692 |
Changes in fair value recognized during the period relating to assets still held at the end of the period | (101,460) | (17,895) | (18,594) |
Roll forward of liabilities measured using Level 3 inputs on a recurring basis | |||
Balance at the beginning of the year | 413,824 | 197,472 | 138,723 |
Mortgage servicing liabilities resulting from mortgage loan sales | 14,991 | 20,442 | 1,965 |
Accrual of interest on excess servicing spread financing | 22,601 | 25,365 | 13,292 |
Repayments | (69,992) | (78,578) | (39,256) |
Settlement | (59,045) | ||
Assumption of mortgage servicing liability | 10,139 | ||
Changes in fair value included in income | (35,260) | (29,159) | (24,322) |
Balance at the end of the year | 303,861 | 413,824 | 197,472 |
Changes in fair value recognized during the period relating to liability still outstanding at the end of the period | (28,050) | (29,159) | (24,322) |
Recurring basis | Excess servicing spread financing | |||
Roll forward of liabilities measured using Level 3 inputs on a recurring basis | |||
Balance at the beginning of the year | 412,425 | 191,166 | 138,723 |
Accrual of interest on excess servicing spread financing | 22,601 | 25,365 | 13,292 |
Repayments | (69,992) | (78,578) | (39,256) |
Settlement | (59,045) | ||
Changes in fair value included in income | (23,923) | (3,810) | (28,663) |
Balance at the end of the year | 288,669 | 412,425 | 191,166 |
Changes in fair value recognized during the period relating to liability still outstanding at the end of the period | (16,713) | (3,810) | (28,663) |
Unused Element [Abstract] | |||
ESS issued pursuant to a recapture agreement with PennyMac Mortgage Investment Trust | 6,603 | 6,728 | 7,342 |
Recurring basis | Excess Servicing Spread Financing for Cash | |||
Roll forward of liabilities measured using Level 3 inputs on a recurring basis | |||
Issuances | 271,554 | 99,728 | |
Recurring basis | Excess Servicing Spread Financing Pursuant to Recapture Agreement | |||
Roll forward of liabilities measured using Level 3 inputs on a recurring basis | |||
Issuances | 6,603 | 6,728 | 7,342 |
Recurring basis | Mortgage servicing liabilities | |||
Roll forward of liabilities measured using Level 3 inputs on a recurring basis | |||
Balance at the beginning of the year | 1,399 | 6,306 | |
Mortgage servicing liabilities resulting from mortgage loan sales | 14,991 | 20,442 | 1,965 |
Assumption of mortgage servicing liability | 10,139 | ||
Changes in fair value included in income | (11,337) | (25,349) | 4,341 |
Balance at the end of the year | 15,192 | 1,399 | 6,306 |
Changes in fair value recognized during the period relating to liability still outstanding at the end of the period | (11,337) | (25,349) | 4,341 |
Recurring basis | Mortgage loans held for sale | |||
Roll forward of assets measured using Level 3 inputs on a recurring basis | |||
Balance at the beginning of the year | 48,531 | 209,908 | 3,933 |
Purchases | 1,608,627 | 911,124 | 1,049,838 |
Sales | (1,164,201) | (803,424) | (577,968) |
Repayments | (38,420) | (40,995) | (22,016) |
Changes in fair value included in income arising from: | |||
Changes in instrument specific credit risk | 3,469 | 4,233 | |
Other factors | (3,534) | ||
Total changes in fair value included in income | 3,469 | 4,233 | (3,534) |
Transfers of mortgage loans held for sale from Level 3 to Level 2 | 410,735 | 232,315 | (240,345) |
Balance at the end of the year | 47,271 | 48,531 | 209,908 |
Changes in fair value recognized during the period relating to assets still held at the end of the period | 936 | 4,305 | (3,377) |
Recurring basis | Interest rate lock commitments | |||
Roll forward of assets measured using Level 3 inputs on a recurring basis | |||
Balance at the beginning of the year | 43,773 | 32,401 | 6,761 |
Interest rate lock commitments issued, net | 429,598 | 271,692 | 181,159 |
Changes in fair value included in income arising from: | |||
Other factors | 143,867 | 73,068 | 22,741 |
Total changes in fair value included in income | 143,867 | 73,068 | 22,741 |
Transfers of interest rate lock commitments to mortgage loans held for sale | (557,847) | (333,388) | (178,260) |
Balance at the end of the year | 59,391 | 43,773 | 32,401 |
Changes in fair value recognized during the period relating to assets still held at the end of the period | 59,391 | 43,773 | 32,401 |
Recurring basis | Mortgage servicing rights | |||
Roll forward of assets measured using Level 3 inputs on a recurring basis | |||
Balance at the beginning of the year | 660,247 | 325,383 | 224,913 |
Purchases | 146 | 382,824 | 135,480 |
Sales | (10,881) | ||
Mortgage servicing rights resulting from mortgage loan sales | 17,319 | 18,013 | 22,733 |
Changes in fair value included in income arising from: | |||
Other factors | (161,787) | (65,973) | (46,862) |
Total changes in fair value included in income | (161,787) | (65,973) | (46,862) |
Balance at the end of the year | 515,925 | 660,247 | 325,383 |
Changes in fair value recognized during the period relating to assets still held at the end of the period | $ (161,787) | $ (65,973) | $ (47,618) |
Fair Value - Changes in Fair Va
Fair Value - Changes in Fair Value, Fair Value Option, Recurring Basis (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | |
Liabilities. | |||
Net gains (losses) from changes in estimated fair values included in earnings for financial statement items carried at estimated fair value | |||
Total gains (losses) from changes in estimated fair values included in earnings | $ 35,260 | $ 29,159 | $ 24,322 |
Liabilities. | Net loan servicing fees | |||
Net gains (losses) from changes in estimated fair values included in earnings for financial statement items carried at estimated fair value | |||
Total gains (losses) from changes in estimated fair values included in earnings | 35,260 | 29,159 | 24,322 |
Excess servicing spread financing | |||
Net gains (losses) from changes in estimated fair values included in earnings for financial statement items carried at estimated fair value | |||
Total gains (losses) from changes in estimated fair values included in earnings | 23,923 | 3,810 | 28,663 |
Excess servicing spread financing | Net loan servicing fees | |||
Net gains (losses) from changes in estimated fair values included in earnings for financial statement items carried at estimated fair value | |||
Total gains (losses) from changes in estimated fair values included in earnings | 23,923 | 3,810 | 28,663 |
Mortgage servicing liabilities | |||
Net gains (losses) from changes in estimated fair values included in earnings for financial statement items carried at estimated fair value | |||
Total gains (losses) from changes in estimated fair values included in earnings | 11,337 | 25,349 | (4,341) |
Mortgage servicing liabilities | Net loan servicing fees | |||
Net gains (losses) from changes in estimated fair values included in earnings for financial statement items carried at estimated fair value | |||
Total gains (losses) from changes in estimated fair values included in earnings | 11,337 | 25,349 | (4,341) |
Assets | |||
Net gains (losses) from changes in estimated fair values included in earnings for financial statement items carried at estimated fair value | |||
Total gains (losses) from changes in estimated fair values included in earnings | 351,544 | 306,166 | 210,107 |
Assets | Net gains on mortgage loans held for sale at fair value | |||
Net gains (losses) from changes in estimated fair values included in earnings for financial statement items carried at estimated fair value | |||
Total gains (losses) from changes in estimated fair values included in earnings | 513,331 | 372,139 | 264,312 |
Assets | Net loan servicing fees | |||
Net gains (losses) from changes in estimated fair values included in earnings for financial statement items carried at estimated fair value | |||
Total gains (losses) from changes in estimated fair values included in earnings | (161,787) | (65,973) | (54,205) |
Mortgage loans held for sale | |||
Net gains (losses) from changes in estimated fair values included in earnings for financial statement items carried at estimated fair value | |||
Total gains (losses) from changes in estimated fair values included in earnings | 513,331 | 372,139 | 264,312 |
Mortgage loans held for sale | Net gains on mortgage loans held for sale at fair value | |||
Net gains (losses) from changes in estimated fair values included in earnings for financial statement items carried at estimated fair value | |||
Total gains (losses) from changes in estimated fair values included in earnings | 513,331 | 372,139 | 264,312 |
Mortgage servicing rights at fair value | |||
Net gains (losses) from changes in estimated fair values included in earnings for financial statement items carried at estimated fair value | |||
Total gains (losses) from changes in estimated fair values included in earnings | (161,787) | (65,973) | (54,205) |
Mortgage servicing rights at fair value | Net loan servicing fees | |||
Net gains (losses) from changes in estimated fair values included in earnings for financial statement items carried at estimated fair value | |||
Total gains (losses) from changes in estimated fair values included in earnings | $ (161,787) | $ (65,973) | $ (54,205) |
Fair Value - Fair Value Option
Fair Value - Fair Value Option Maturities, Recurring Basis (Details) - USD ($) $ in Thousands | Dec. 31, 2016 | Sep. 30, 2016 | Jun. 30, 2016 | Mar. 31, 2016 | Dec. 31, 2015 | Sep. 30, 2015 | Jun. 30, 2015 | Mar. 31, 2015 |
Fair value | ||||||||
Total fair value | $ 2,172,815 | $ 3,127,377 | $ 2,097,138 | $ 1,653,963 | $ 1,101,204 | $ 1,696,980 | $ 1,594,262 | $ 1,353,944 |
Recurring basis | ||||||||
Fair value | ||||||||
Total fair value | 2,172,815 | 1,101,204 | ||||||
Mortgage loans held for sale | ||||||||
Fair value | ||||||||
Current through 89 days delinquent | 2,148,947 | 1,068,548 | ||||||
Not in foreclosure | 19,227 | 26,399 | ||||||
In foreclosure | 4,641 | 6,257 | ||||||
Total fair value | 2,172,815 | 1,101,204 | ||||||
Principal amount due upon maturity | ||||||||
Current through 89 days delinquent | 2,077,034 | 1,016,314 | ||||||
Not in foreclosure | 19,399 | 26,999 | ||||||
In foreclosure | 4,850 | 6,598 | ||||||
Total principal amount due upon maturity | 2,101,283 | 1,049,911 | ||||||
Difference | ||||||||
Current through 89 days delinquent | 71,913 | 52,234 | ||||||
Not in foreclosure | (172) | (600) | ||||||
In foreclosure | (209) | (341) | ||||||
Total difference | $ 71,532 | $ 51,293 |
Fair Value - Measurement Basis,
Fair Value - Measurement Basis, Nonrecurring (Details) - Nonrecurring basis - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | |
Financial statement items measured at fair value on a nonrecurring basis | |||
Mortgage servicing rights at lower of amortized cost or fair value | $ 1,093,242 | $ 202,991 | |
Real estate acquired in settlement of loans | 1,152 | ||
Total assets | 1,094,394 | 202,991 | |
Total gains (losses) on assets measured at estimated fair values on a nonrecurring basis | |||
Mortgage servicing rights at lower of amortized cost or fair value | (60,487) | (37,437) | $ (5,178) |
Real estate acquired in settlement of loans | (86) | ||
Total gains on assets measured at estimated fair values on a nonrecurring basis | (60,573) | (37,437) | $ (5,178) |
Level 3 | |||
Financial statement items measured at fair value on a nonrecurring basis | |||
Mortgage servicing rights at lower of amortized cost or fair value | 1,093,242 | 202,991 | |
Real estate acquired in settlement of loans | 1,152 | ||
Total assets | $ 1,094,394 | $ 202,991 |
Fair Value - Level 3 Unobservab
Fair Value - Level 3 Unobservable Inputs, Mortgage Loans and IRLC (Details) | 12 Months Ended | |
Dec. 31, 2016 | Dec. 31, 2015 | |
Mortgage loans held for sale | Minimum | ||
Quantitative summary of key inputs or assumptions used in the valuation of financial statement items | ||
Discount rate (as a percent) | 2.50% | |
Twelve-month projected housing price index change (as a percent) | 1.80% | |
Prepayment / resale speed (1) | 0.60% | |
Total prepayment speed (as a percent) | 0.70% | |
Mortgage loans held for sale | Maximum | ||
Quantitative summary of key inputs or assumptions used in the valuation of financial statement items | ||
Discount rate (as a percent) | 9.10% | |
Twelve-month projected housing price index change (as a percent) | 5.00% | |
Prepayment / resale speed (1) | 20.10% | |
Total prepayment speed (as a percent) | 37.60% | |
Mortgage loans held for sale | Weighted average | ||
Quantitative summary of key inputs or assumptions used in the valuation of financial statement items | ||
Discount rate (as a percent) | 2.80% | |
Twelve-month projected housing price index change (as a percent) | 3.70% | |
Prepayment / resale speed (1) | 16.60% | |
Total prepayment speed (as a percent) | 30.90% | |
Mortgage loans held for sale | Level 3 | Minimum | ||
Quantitative summary of key inputs or assumptions used in the valuation of financial statement items | ||
Discount rate (as a percent) | 2.60% | |
Twelve-month projected housing price index change (as a percent) | 2.00% | |
Prepayment / resale speed (1) | 0.10% | |
Total prepayment speed (as a percent) | 0.10% | |
Mortgage loans held for sale | Level 3 | Maximum | ||
Quantitative summary of key inputs or assumptions used in the valuation of financial statement items | ||
Discount rate (as a percent) | 8.80% | |
Twelve-month projected housing price index change (as a percent) | 4.50% | |
Prepayment / resale speed (1) | 24.40% | |
Total prepayment speed (as a percent) | 39.80% | |
Mortgage loans held for sale | Level 3 | Weighted average | ||
Quantitative summary of key inputs or assumptions used in the valuation of financial statement items | ||
Discount rate (as a percent) | 3.00% | |
Twelve-month projected housing price index change (as a percent) | 3.70% | |
Prepayment / resale speed (1) | 20.90% | |
Total prepayment speed (as a percent) | 34.30% | |
Interest rate lock commitments | Level 3 | Minimum | ||
Quantitative summary of key inputs or assumptions used in the valuation of financial statement items | ||
Pull-through rate (as a percent) | 35.00% | 54.10% |
Mortgage servicing rights value expressed as: Servicing fee multiple | 1.2 | 1 |
Mortgage servicing rights value expressed as: Percentage of unpaid principal balance | 0.30% | 0.20% |
Interest rate lock commitments | Level 3 | Maximum | ||
Quantitative summary of key inputs or assumptions used in the valuation of financial statement items | ||
Pull-through rate (as a percent) | 100.00% | 100.00% |
Mortgage servicing rights value expressed as: Servicing fee multiple | 5.9 | 5.8 |
Mortgage servicing rights value expressed as: Percentage of unpaid principal balance | 2.80% | 3.80% |
Interest rate lock commitments | Level 3 | Weighted average | ||
Quantitative summary of key inputs or assumptions used in the valuation of financial statement items | ||
Pull-through rate (as a percent) | 84.10% | 90.10% |
Mortgage servicing rights value expressed as: Servicing fee multiple | 4.3 | 4.4 |
Mortgage servicing rights value expressed as: Percentage of unpaid principal balance | 1.30% | 1.50% |
Fair Value - Level 3 Unobserv90
Fair Value - Level 3 Unobservable Inputs, Mortgage Servicing Rights - Initial Recognition (Details) - Level 3 - USD ($) | 12 Months Ended | ||
Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | |
Fair Values | Mortgage servicing rights | |||
MSR and pool characteristics | |||
Amount recognized | $ 17,319,000 | $ 18,013,000 | $ 24,698,000 |
Weighted-average servicing fee rate (as a percent) | 32.00% | 32.00% | |
Fair Values | Mortgage servicing rights | Minimum | |||
Inputs: | |||
Pricing spread (as a percent) | 7.60% | 7.20% | |
Annual total prepayment speed (as a percent) | 7.30% | 5.30% | |
Life (in years) | 1 year 3 months 18 days | 1 year 10 months 24 days | |
Annual per-loan cost of servicing | $ 78,000 | $ 68,000 | |
Fair Values | Mortgage servicing rights | Maximum | |||
Inputs: | |||
Pricing spread (as a percent) | 14.90% | 14.10% | |
Annual total prepayment speed (as a percent) | 46.70% | 43.80% | |
Life (in years) | 8 years 7 months 6 days | 9 years | |
Annual per-loan cost of servicing | $ 101,000 | $ 97,000 | |
Fair Values | Mortgage servicing rights | Weighted average | |||
Inputs: | |||
Pricing spread (as a percent) | 10.10% | 8.90% | |
Annual total prepayment speed (as a percent) | 10.30% | 9.70% | |
Life (in years) | 6 years 8 months 12 days | 6 years 10 months 24 days | |
Annual per-loan cost of servicing | $ 92,000 | $ 86,000 | |
Fair Values | MSRs at the time of initial recognition, excluding MSR purchases | |||
MSR and pool characteristics | |||
Unpaid principal balance of underlying mortgage loans | $ 1,452,779,000 | $ 1,463,150,000 | $ 1,982,505,000 |
Weighted-average servicing fee rate (as a percent) | 33.00% | 33.00% | 33.00% |
Fair Values | MSRs at the time of initial recognition, excluding MSR purchases | Minimum | |||
Inputs: | |||
Pricing spread (as a percent) | 7.20% | 7.00% | 7.80% |
Annual total prepayment speed (as a percent) | 3.30% | 1.90% | 7.60% |
Life (in years) | 6 months | 1 year 1 month 6 days | 1 year 6 months |
Annual per-loan cost of servicing | $ 68 | $ 59 | $ 53 |
Fair Values | MSRs at the time of initial recognition, excluding MSR purchases | Maximum | |||
Inputs: | |||
Pricing spread (as a percent) | 10.50% | 14.40% | 16.20% |
Annual total prepayment speed (as a percent) | 53.80% | 62.40% | 46.10% |
Life (in years) | 11 years 10 months 24 days | 12 years 3 months 18 days | 7 years 6 months |
Annual per-loan cost of servicing | $ 105 | $ 101 | $ 100 |
Fair Values | MSRs at the time of initial recognition, excluding MSR purchases | Weighted average | |||
Inputs: | |||
Pricing spread (as a percent) | 9.20% | 9.30% | 11.40% |
Annual total prepayment speed (as a percent) | 11.80% | 11.80% | 9.30% |
Life (in years) | 6 years 9 months 18 days | 6 years 6 months | 6 years 10 months 24 days |
Annual per-loan cost of servicing | $ 88 | $ 77 | $ 86 |
Amortized cost | Mortgage servicing rights | |||
MSR and pool characteristics | |||
Amount recognized | $ 560,212,000 | $ 454,840,000 | 185,152,000 |
Weighted-average servicing fee rate (as a percent) | 32.00% | ||
Amortized cost | Mortgage servicing rights | Minimum | |||
Inputs: | |||
Pricing spread (as a percent) | 7.60% | 7.20% | |
Annual total prepayment speed (as a percent) | 6.60% | 5.70% | |
Life (in years) | 1 year 7 months 6 days | 1 year 9 months 18 days | |
Annual per-loan cost of servicing | $ 79,000 | $ 68,000 | |
Amortized cost | Mortgage servicing rights | Maximum | |||
MSR and pool characteristics | |||
Weighted-average servicing fee rate (as a percent) | 31.00% | ||
Inputs: | |||
Pricing spread (as a percent) | 14.90% | 12.80% | |
Annual total prepayment speed (as a percent) | 43.90% | 46.70% | |
Life (in years) | 9 years 4 months 24 days | 9 years 1 month 6 days | |
Annual per-loan cost of servicing | $ 101,000 | $ 95,000 | |
Amortized cost | Mortgage servicing rights | Weighted average | |||
Inputs: | |||
Pricing spread (as a percent) | 10.70% | 8.90% | |
Annual total prepayment speed (as a percent) | 8.70% | 9.50% | |
Life (in years) | 8 years 1 month 6 days | 7 years 4 months 24 days | |
Annual per-loan cost of servicing | $ 92,000 | $ 84,000 | |
Amortized cost | MSRs at the time of initial recognition, excluding MSR purchases | |||
MSR and pool characteristics | |||
Unpaid principal balance of underlying mortgage loans | $ 44,827,516,000 | $ 32,849,718,000 | $ 15,362,240,000 |
Weighted-average servicing fee rate (as a percent) | 30.00% | 34.00% | 31.00% |
Amortized cost | MSRs at the time of initial recognition, excluding MSR purchases | Minimum | |||
Inputs: | |||
Pricing spread (as a percent) | 7.20% | 6.80% | 6.80% |
Annual total prepayment speed (as a percent) | 2.80% | 2.50% | 7.60% |
Life (in years) | 1 year 3 months 18 days | 1 year 3 months 18 days | 1 year 4 months 24 days |
Annual per-loan cost of servicing | $ 68 | $ 59 | $ 53 |
Amortized cost | MSRs at the time of initial recognition, excluding MSR purchases | Maximum | |||
Inputs: | |||
Pricing spread (as a percent) | 14.40% | 16.20% | 15.70% |
Annual total prepayment speed (as a percent) | 50.90% | 50.00% | 47.80% |
Life (in years) | 12 years 10 months 24 days | 12 years | 7 years 6 months |
Annual per-loan cost of servicing | $ 106 | $ 95 | $ 100 |
Amortized cost | MSRs at the time of initial recognition, excluding MSR purchases | Weighted average | |||
Inputs: | |||
Pricing spread (as a percent) | 9.50% | 9.20% | 10.80% |
Annual total prepayment speed (as a percent) | 9.00% | 8.90% | 8.30% |
Life (in years) | 8 years 1 month 6 days | 7 years 2 months 12 days | 7 years |
Annual per-loan cost of servicing | $ 89 | $ 78 | $ 84 |
Fair Value - Level 3 Unobserv91
Fair Value - Level 3 Unobservable Inputs, Mortgage Services Rights, Effect of Change In Inputs on Fair Value (Details) - Mortgage servicing rights - Level 3 - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2016 | Dec. 31, 2015 | |
Fair Values | ||
MSR and pool characteristics | ||
Carrying value | $ 515,925 | $ 660,247 |
Unpaid principal balance of underlying mortgage loans | $ 43,667,165 | $ 54,182,477 |
Weighted-average note interest rate (as a percent) | 4.11% | 4.13% |
Weighted-average servicing fee rate (as a percent) | 32.00% | 32.00% |
Pricing spread | ||
Effect on fair value of 5% adverse change | $ (9,097) | $ (11,115) |
Effect on fair value of 10% adverse change | (17,871) | (21,857) |
Effect on fair value of 20% adverse change | (34,516) | (42,283) |
Prepayment speed | ||
Effect on fair value of 5% adverse change | (8,818) | (12,475) |
Effect on fair value of 10% adverse change | (17,336) | (24,499) |
Effect on fair value of 20% adverse change | (33,533) | (47,286) |
Annual per-loan cost of servicing | ||
Effect on fair value of 5% adverse change | (5,612) | (6,812) |
Effect on fair value of 10% adverse change | (11,225) | (13,624) |
Effect on fair value of 20% adverse change | $ (22,450) | $ (27,247) |
Fair Values | Minimum | ||
Inputs | ||
Pricing spread (as a percent) | 7.60% | 7.20% |
Pricing spread | ||
Average life (in years) | 1 year 3 months 18 days | 1 year 10 months 24 days |
Prepayment speed (as a percent) | 7.30% | 5.30% |
Prepayment speed | ||
Annual per-loan cost of servicing | $ 78 | $ 68 |
Fair Values | Maximum | ||
Inputs | ||
Pricing spread (as a percent) | 14.90% | 14.10% |
Pricing spread | ||
Average life (in years) | 8 years 7 months 6 days | 9 years |
Prepayment speed (as a percent) | 46.70% | 43.80% |
Prepayment speed | ||
Annual per-loan cost of servicing | $ 101 | $ 97 |
Fair Values | Weighted average | ||
Inputs | ||
Pricing spread (as a percent) | 10.10% | 8.90% |
Pricing spread | ||
Average life (in years) | 6 years 8 months 12 days | 6 years 10 months 24 days |
Prepayment speed (as a percent) | 10.30% | 9.70% |
Prepayment speed | ||
Annual per-loan cost of servicing | $ 92 | $ 86 |
Amortized cost | ||
MSR and pool characteristics | ||
Carrying value | 845,646 | |
Unpaid principal balance of underlying mortgage loans | $ 56,420,227 | |
Weighted-average note interest rate (as a percent) | 3.83% | |
Weighted-average servicing fee rate (as a percent) | 32.00% | |
Pricing spread | ||
Effect on fair value of 5% adverse change | $ (13,467) | |
Effect on fair value of 10% adverse change | (26,472) | |
Effect on fair value of 20% adverse change | (51,183) | |
Prepayment speed | ||
Effect on fair value of 5% adverse change | (14,360) | |
Effect on fair value of 10% adverse change | (28,197) | |
Effect on fair value of 20% adverse change | (54,406) | |
Annual per-loan cost of servicing | ||
Effect on fair value of 5% adverse change | (5,725) | |
Effect on fair value of 10% adverse change | (11,451) | |
Effect on fair value of 20% adverse change | $ (22,901) | |
Amortized cost | Minimum | ||
Inputs | ||
Pricing spread (as a percent) | 7.60% | 7.20% |
Pricing spread | ||
Average life (in years) | 1 year 7 months 6 days | 1 year 9 months 18 days |
Prepayment speed (as a percent) | 6.60% | 5.70% |
Prepayment speed | ||
Annual per-loan cost of servicing | $ 79 | $ 68 |
Amortized cost | Maximum | ||
MSR and pool characteristics | ||
Carrying value | 845,646 | |
Unpaid principal balance of underlying mortgage loans | $ 85,509,941 | |
Weighted-average note interest rate (as a percent) | 3.69% | |
Weighted-average servicing fee rate (as a percent) | 31.00% | |
Inputs | ||
Pricing spread (as a percent) | 14.90% | 12.80% |
Pricing spread | ||
Effect on fair value of 5% adverse change | $ (22,382) | |
Effect on fair value of 10% adverse change | (43,889) | |
Effect on fair value of 20% adverse change | $ (84,464) | |
Average life (in years) | 9 years 4 months 24 days | 9 years 1 month 6 days |
Prepayment speed (as a percent) | 43.90% | 46.70% |
Prepayment speed | ||
Effect on fair value of 5% adverse change | $ (16,636) | |
Effect on fair value of 10% adverse change | (32,750) | |
Effect on fair value of 20% adverse change | (63,513) | |
Annual per-loan cost of servicing | 101 | $ 95 |
Annual per-loan cost of servicing | ||
Effect on fair value of 5% adverse change | (8,890) | |
Effect on fair value of 10% adverse change | (17,781) | |
Effect on fair value of 20% adverse change | $ (35,562) | |
Amortized cost | Weighted average | ||
Inputs | ||
Pricing spread (as a percent) | 10.70% | 8.90% |
Pricing spread | ||
Average life (in years) | 8 years 1 month 6 days | 7 years 4 months 24 days |
Prepayment speed (as a percent) | 8.70% | 9.50% |
Prepayment speed | ||
Annual per-loan cost of servicing | $ 92 | $ 84 |
Fair Value - Level 3 Unobserv92
Fair Value - Level 3 Unobservable Inputs, Mortgage Services Liabilities (Details) - Mortgage servicing liabilities - USD ($) | 12 Months Ended | |
Dec. 31, 2016 | Dec. 31, 2015 | |
Sensitivity Analysis of Fair Value of Interests Continued to be Held by Transferor, Servicing Assets or Liabilities, Impact of Adverse Change in Assumption [Line Items] | ||
Carrying value | $ 15,192,000 | $ 1,399,000 |
Unpaid principal balance of underlying mortgage loans | $ 2,074,896,000 | $ 806,897,000 |
Weighted-average note interest rate (as a percent) | 0.25% | 0.25% |
Pricing spread (as a percent) | 8.00% | 6.40% |
Average life (in years) | 3 years 8 months 12 days | 3 years 4 months 24 days |
Prepayment speed (as a percent) | 31.70% | 33.10% |
Annual per-loan cost of servicing | $ 497 | $ 258 |
Fair Value - Level 3 Unobserv93
Fair Value - Level 3 Unobservable Inputs, ESS (Details) - Excess servicing spread financing - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2016 | Dec. 31, 2015 | |
Sensitivity Analysis of Fair Value of Interests Continued to be Held by Transferor, Servicing Assets or Liabilities, Impact of Adverse Change in Assumption [Line Items] | ||
Carrying value | $ 288,669 | $ 412,425 |
Unpaid principal balance of underlying mortgage loans | $ 32,376,359 | $ 51,966,405 |
Average servicing fee rate (as a percent) | 34.00% | 32.00% |
Average excess servicing spread (as a percent) | 19.00% | 17.00% |
Minimum | ||
Sensitivity Analysis of Fair Value of Interests Continued to be Held by Transferor, Servicing Assets or Liabilities, Impact of Adverse Change in Assumption [Line Items] | ||
Pricing spread (as a percent) | 3.80% | 4.80% |
Average life (in years) | 1 year 4 months 24 days | 1 year 4 months 24 days |
Prepayment speed (as a percent) | 7.00% | 5.20% |
Maximum | ||
Sensitivity Analysis of Fair Value of Interests Continued to be Held by Transferor, Servicing Assets or Liabilities, Impact of Adverse Change in Assumption [Line Items] | ||
Pricing spread (as a percent) | 4.80% | 6.50% |
Average life (in years) | 8 years 7 months 6 days | 9 years |
Prepayment speed (as a percent) | 41.30% | 52.40% |
Weighted average | ||
Sensitivity Analysis of Fair Value of Interests Continued to be Held by Transferor, Servicing Assets or Liabilities, Impact of Adverse Change in Assumption [Line Items] | ||
Pricing spread (as a percent) | 4.40% | 5.70% |
Average life (in years) | 6 years 9 months 18 days | 6 years 10 months 24 days |
Prepayment speed (as a percent) | 10.50% | 9.60% |
Mortgage Loans Held for Sale 94
Mortgage Loans Held for Sale at Fair Value (Details) - USD ($) $ in Thousands | Dec. 31, 2016 | Sep. 30, 2016 | Jun. 30, 2016 | Mar. 31, 2016 | Dec. 31, 2015 | Sep. 30, 2015 | Jun. 30, 2015 | Mar. 31, 2015 |
Mortgage Loans Held for Sale at Fair Value | ||||||||
Mortgage loans held for sale at fair value | $ 2,172,815 | $ 3,127,377 | $ 2,097,138 | $ 1,653,963 | $ 1,101,204 | $ 1,696,980 | $ 1,594,262 | $ 1,353,944 |
Fair value of mortgage loans pledged to secure mortgage loans sold under agreements to repurchase | 1,422,255 | 833,748 | ||||||
Fair value of mortgage loans pledged to secure mortgage loan participation and sale agreement | 702,919 | 245,741 | ||||||
Pledged Assets Separately Reported, Loans Pledged as Collateral, at Fair Value, Total | 2,125,174 | 1,079,489 | ||||||
Government-insured or guaranteed | ||||||||
Mortgage Loans Held for Sale at Fair Value | ||||||||
Mortgage loans held for sale at fair value | 1,984,020 | 992,805 | ||||||
Conventional mortgage loans | ||||||||
Mortgage Loans Held for Sale at Fair Value | ||||||||
Mortgage loans held for sale at fair value | 141,524 | 59,868 | ||||||
Mortgage loans purchased from Ginnie Mae pools serviced by the entity | ||||||||
Mortgage Loans Held for Sale at Fair Value | ||||||||
Mortgage loans held for sale at fair value | 40,437 | 42,600 | ||||||
Mortgage loans repurchased pursuant to representations and warranties | ||||||||
Mortgage Loans Held for Sale at Fair Value | ||||||||
Mortgage loans held for sale at fair value | $ 6,834 | $ 5,931 |
Derivative Financial Instrume95
Derivative Financial Instruments (Details) - USD ($) $ in Thousands | 12 Months Ended | ||||
Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2016 | Dec. 31, 2015 | |
Derivative assets: | |||||
Derivative asset, before netting | $ 179,540 | $ 58,822 | |||
Netting | (96,635) | (8,542) | |||
Total derivative assets | 82,905 | 50,280 | |||
Derivative liabilities: | |||||
Derivative liability, before netting | 108,406 | 18,863 | |||
Netting | (86,044) | (9,780) | |||
Net amounts of liabilities presented in the consolidated balance sheet | 22,362 | 9,083 | |||
Net gains on mortgage loans held for sale at fair value | Interest rate lock commitments and mortgage loans held for sale | |||||
Activity for derivative contracts used to hedge the IRLCs and inventory of mortgage loans at notional value | |||||
Gains (losses) recognized on derivative financial instruments | $ 20,619 | $ (48,960) | $ (109,771) | ||
Net loan servicing fees | Mortgage servicing rights | |||||
Activity for derivative contracts used to hedge the IRLCs and inventory of mortgage loans at notional value | |||||
Gains (losses) recognized on derivative financial instruments | 26,405 | (7,717) | 26,840 | ||
Margin Deposits | |||||
Derivative assets: | |||||
Derivative asset, before netting | 10,591 | (1,238) | |||
Not designated as hedging instrument | Interest rate lock commitments | |||||
Derivative Instruments | |||||
Notional amount | 3,487,366 | 3,487,366 | 4,279,611 | 3,487,366 | |
Derivative assets: | |||||
Derivative asset, before netting | 65,848 | 45,885 | |||
Derivative liabilities: | |||||
Derivative liability, before netting | 6,457 | 2,112 | |||
Activity for derivative contracts used to hedge the IRLCs and inventory of mortgage loans at notional value | |||||
Balance at beginning of period | 3,487,366 | ||||
Balance end of period | 4,279,611 | 3,487,366 | |||
Not designated as hedging instrument | Forward contracts | Purchases | |||||
Derivative Instruments | |||||
Notional amount | 5,254,293 | 2,634,218 | 1,418,527 | 12,746,191 | 5,254,293 |
Derivative assets: | |||||
Derivative asset, before netting | 77,905 | 4,181 | |||
Derivative liabilities: | |||||
Derivative liability, before netting | 16,914 | 9,004 | |||
Activity for derivative contracts used to hedge the IRLCs and inventory of mortgage loans at notional value | |||||
Balance at beginning of period | 5,254,293 | 2,634,218 | 1,418,527 | ||
Additions | 210,412,697 | 103,571,212 | 45,827,559 | ||
Dispositions/expirations | (202,920,799) | (100,951,137) | (44,611,868) | ||
Balance end of period | 12,746,191 | 5,254,293 | 2,634,218 | ||
Not designated as hedging instrument | Forward contracts | Sales | |||||
Derivative Instruments | |||||
Notional amount | 6,230,811 | 3,901,851 | 2,659,000 | 16,577,942 | 6,230,811 |
Derivative assets: | |||||
Derivative asset, before netting | 28,324 | 4,965 | |||
Derivative liabilities: | |||||
Derivative liability, before netting | 85,035 | 7,497 | |||
Activity for derivative contracts used to hedge the IRLCs and inventory of mortgage loans at notional value | |||||
Balance at beginning of period | 6,230,811 | 3,901,851 | 2,659,000 | ||
Additions | 262,202,884 | 137,061,118 | 63,117,808 | ||
Dispositions/expirations | (251,855,753) | (134,732,158) | (61,874,957) | ||
Balance end of period | 16,577,942 | 6,230,811 | 3,901,851 | ||
Not designated as hedging instrument | MBS put options | |||||
Derivative Instruments | |||||
Notional amount | 1,275,000 | 340,000 | 185,000 | 1,175,000 | 1,275,000 |
Derivative assets: | |||||
Derivative asset, before netting | 3,934 | 404 | |||
Activity for derivative contracts used to hedge the IRLCs and inventory of mortgage loans at notional value | |||||
Balance at beginning of period | 1,275,000 | 340,000 | 185,000 | ||
Additions | 19,225,000 | 3,902,500 | 1,730,000 | ||
Dispositions/expirations | (19,325,000) | (2,967,500) | (1,575,000) | ||
Balance end of period | 1,175,000 | 1,275,000 | 340,000 | ||
Not designated as hedging instrument | MBS call options | |||||
Derivative Instruments | |||||
Notional amount | 1,600,000 | 105,000 | 1,600,000 | ||
Derivative assets: | |||||
Derivative asset, before netting | 217 | ||||
Activity for derivative contracts used to hedge the IRLCs and inventory of mortgage loans at notional value | |||||
Balance at beginning of period | 105,000 | ||||
Additions | 1,600,000 | 160,000 | 590,000 | ||
Dispositions/expirations | (160,000) | (695,000) | |||
Balance end of period | 1,600,000 | ||||
Not designated as hedging instrument | Put options on interest rate futures | Purchases | |||||
Derivative Instruments | |||||
Notional amount | 1,650,000 | 755,000 | 755,000 | 1,125,000 | 1,650,000 |
Derivative assets: | |||||
Derivative asset, before netting | 3,109 | 1,832 | |||
Derivative liabilities: | |||||
Derivative liability, before netting | 203 | ||||
Activity for derivative contracts used to hedge the IRLCs and inventory of mortgage loans at notional value | |||||
Balance at beginning of period | 1,650,000 | 755,000 | |||
Additions | 15,331,000 | 8,790,000 | 2,997,500 | ||
Dispositions/expirations | (15,856,000) | (7,895,000) | (2,242,500) | ||
Balance end of period | 1,125,000 | 1,650,000 | 755,000 | ||
Not designated as hedging instrument | Put options on interest rate futures | Sales | |||||
Derivative Instruments | |||||
Notional amount | 50,000 | 50,000 | |||
Activity for derivative contracts used to hedge the IRLCs and inventory of mortgage loans at notional value | |||||
Balance at beginning of period | 50,000 | ||||
Additions | 9,436,000 | 50,000 | 425,000 | ||
Dispositions/expirations | (9,436,000) | (100,000) | (375,000) | ||
Balance end of period | 50,000 | ||||
Not designated as hedging instrument | Call options on interest rate futures | Purchases | |||||
Derivative Instruments | |||||
Notional amount | 600,000 | 630,000 | 630,000 | 900,000 | 600,000 |
Derivative assets: | |||||
Derivative asset, before netting | 203 | 1,555 | |||
Derivative liabilities: | |||||
Derivative liability, before netting | $ 47 | ||||
Activity for derivative contracts used to hedge the IRLCs and inventory of mortgage loans at notional value | |||||
Balance at beginning of period | 600,000 | 630,000 | |||
Additions | 5,687,500 | 6,055,000 | 2,385,000 | ||
Dispositions/expirations | (5,387,500) | (6,085,000) | (1,755,000) | ||
Balance end of period | 900,000 | 600,000 | 630,000 | ||
Not designated as hedging instrument | Call options on interest rate futures | Sales | |||||
Activity for derivative contracts used to hedge the IRLCs and inventory of mortgage loans at notional value | |||||
Additions | 550,000 | 35,100 | 1,025,000 | ||
Dispositions/expirations | (550,000) | $ (35,100) | (1,025,000) | ||
Not designated as hedging instrument | Treasury future | Purchases | |||||
Activity for derivative contracts used to hedge the IRLCs and inventory of mortgage loans at notional value | |||||
Additions | 585,800 | 148,900 | |||
Dispositions/expirations | (585,800) | (148,900) | |||
Not designated as hedging instrument | Treasury future | Sales | |||||
Activity for derivative contracts used to hedge the IRLCs and inventory of mortgage loans at notional value | |||||
Additions | 585,800 | 170,600 | |||
Dispositions/expirations | (585,800) | (170,600) | |||
Not designated as hedging instrument | Interest rate swap futures | Purchases | |||||
Derivative Instruments | |||||
Notional amount | 200,000 | $ 200,000 | |||
Activity for derivative contracts used to hedge the IRLCs and inventory of mortgage loans at notional value | |||||
Additions | 400,000 | ||||
Dispositions/expirations | (200,000) | ||||
Balance end of period | 200,000 | ||||
Not designated as hedging instrument | Interest rate swap futures | Sales | |||||
Activity for derivative contracts used to hedge the IRLCs and inventory of mortgage loans at notional value | |||||
Additions | 200,000 | ||||
Dispositions/expirations | $ (200,000) | ||||
Not designated as hedging instrument | Eurodollar futures | Purchases | |||||
Activity for derivative contracts used to hedge the IRLCs and inventory of mortgage loans at notional value | |||||
Additions | 26,000 | ||||
Dispositions/expirations | (26,000) | ||||
Not designated as hedging instrument | Eurodollar futures | Sales | |||||
Activity for derivative contracts used to hedge the IRLCs and inventory of mortgage loans at notional value | |||||
Additions | 26,000 | ||||
Dispositions/expirations | $ (26,000) |
Mortgage Servicing Rights (Acti
Mortgage Servicing Rights (Activity in MSRs at fair value) (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | |
Activity in MSRs carried at fair value | |||
Balance at beginning of year | $ 660,247 | ||
Change in fair value: | |||
Balance at end of year | 515,925 | $ 660,247 | |
Mortgage servicing rights | |||
Activity in MSRs carried at fair value | |||
Balance at beginning of year | 660,247 | 325,383 | $ 224,913 |
Additions - Purchases | 146 | 382,824 | 135,480 |
Additions - Mortgage servicing rights resulting from mortgage loan sales | 17,319 | 18,013 | 24,698 |
Additions | 17,465 | 400,837 | 160,178 |
Sales | (10,881) | ||
Change in fair value: | |||
Changes in valuation inputs used in valuation model | (80,244) | 7,352 | (9,447) |
Other changes in fair value | (81,543) | (73,325) | (39,380) |
Total change in fair value | (161,787) | (65,973) | (48,827) |
Balance at end of year | 515,925 | 660,247 | $ 325,383 |
Fair value of mortgage servicing rights pledged to secure: Assets sold under agreements to repurchase | 403,099 | 37,705 | |
Fair value of mortgage servicing rights pledged to secure: Note payable | 106,748 | 20,881 | |
Total | $ 509,847 | $ 58,586 |
Mortgage Servicing Rights (Ac97
Mortgage Servicing Rights (Activity in MSRs carried at lower of Amortize Cost or FV) (Details) - Mortgage servicing rights - USD ($) $ in Thousands | 12 Months Ended | |||
Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 | |
Amortized cost: | ||||
Amortized cost at beginning of year | $ 798,925 | $ 415,245 | $ 263,373 | |
Mortgage servicing rights resulting from mortgage loan sales | 560,212 | 454,840 | 185,152 | |
Amortization | (139,666) | (71,160) | (33,280) | |
Application of valuation allowance to write down mortgage servicing rights with other-than-temporary impairment | (12,777) | |||
Amortized cost at end of year | 1,206,694 | 798,925 | 415,245 | |
Valuation allowance: | ||||
Balance at beginning of year | (47,237) | (9,800) | (4,622) | |
(Additions) reversals | (60,487) | (37,437) | (5,178) | |
Application of valuation allowance to write down mortgage servicing rights with other-than-temporary impairment | 12,777 | |||
Balance at end of year | (94,947) | (47,237) | (9,800) | |
Additional disclosures | ||||
Mortgage servicing rights, net | 1,111,747 | 751,688 | 405,445 | |
Fair value of mortgage servicing rights at beginning of year | 1,112,302 | 766,345 | 416,802 | $ 269,422 |
Fair value of mortgage servicing rights at end of year | 1,112,302 | 766,345 | $ 416,802 | $ 269,422 |
Fair value of mortgage servicing rights pledged to secure: Assets sold under agreements to repurchase | 1,076,223 | 744,974 | ||
Fair value of mortgage servicing rights pledged to secure: Note payable | 31,601 | |||
Total | 1,107,824 | $ 744,974 | ||
Estimated amortization | ||||
2,017 | 134,697 | |||
2,018 | 123,738 | |||
2,019 | 112,616 | |||
2,020 | 101,852 | |||
2,021 | 91,814 | |||
Thereafter | 641,977 | |||
Total | $ 1,206,694 |
Mortgage Servicing Rights (Esti
Mortgage Servicing Rights (Estimate of future amortization) (Details) - Mortgage servicing rights $ in Thousands | Dec. 31, 2016USD ($) |
Estimated amortization | |
2,017 | $ 134,697 |
2,018 | 123,738 |
2,019 | 112,616 |
2,020 | 101,852 |
2,021 | 91,814 |
Thereafter | 641,977 |
Total | $ 1,206,694 |
Mortgage Servicing Rights (Serv
Mortgage Servicing Rights (Servicing, late, ancillary and other fees relating to MSRs) (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | |
Contractually Specified Servicing Fees, Late Fees, and Ancillary Fees Earned in Exchange for Servicing Financial Assets [Line Items] | |||
Contractually Specified Servicing Fees, Amount | $ 385,633 | $ 290,474 | $ 173,005 |
Late Fees and Ancillary Fees Earned in Exchange for Servicing Financial Assets [Abstract] | |||
Ancillary Fee Income Generated by Servicing Financial Assets, Amount | 46,910 | 43,139 | 26,469 |
Bank Servicing Fees | 185,466 | 229,543 | 216,919 |
Servicing Asset Pledged To Creditors | 1,617,671 | 803,560 | |
Mortgage servicing rights | |||
Contractually Specified Servicing Fees, Late Fees, and Ancillary Fees Earned in Exchange for Servicing Financial Assets [Line Items] | |||
Contractually Specified Servicing Fees, Amount | 385,633 | 290,474 | 173,005 |
Late Fees and Ancillary Fees Earned in Exchange for Servicing Financial Assets [Abstract] | |||
Late Fee Income Generated by Servicing Financial Assets, Amount | 19,341 | 5,835 | 4,320 |
Ancillary Fee Income Generated by Servicing Financial Assets, Amount | 4,706 | 2,266 | 1,257 |
Bank Servicing Fees | $ 409,680 | $ 298,575 | $ 178,582 |
Mortgage Servicing Rights (Mort
Mortgage Servicing Rights (Mortgage servicing liabilities carried at FV) (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | |
Amortized cost: | |||
Mortgage servicing liability assumed | $ 10,139 | ||
Mortgage servicing liabilities resulting from mortgage loan sales | 14,991 | $ 20,442 | $ 1,965 |
Mortgage servicing liabilities | |||
Amortized cost: | |||
Balance at beginning of year | 1,399 | 6,306 | |
Mortgage servicing liability assumed | 10,139 | ||
Mortgage servicing liabilities resulting from mortgage loan sales | 14,991 | 20,442 | 1,965 |
Changes in valuation inputs used in valuation model | 5,264 | (15,653) | 8,005 |
Other changes in fair value | (16,601) | (9,696) | (3,664) |
Total change in fair value | (11,337) | (25,349) | 4,341 |
Balance at end of year | $ 15,192 | $ 1,399 | $ 6,306 |
Carried Interest Due from In101
Carried Interest Due from Investment Funds (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | |
Activity in the carried interest | |||
Balance at beginning of year | $ 69,926 | ||
Carried Interest recognized during the year | 980 | $ 2,628 | $ 6,156 |
Balance at end of year | 70,906 | 69,926 | |
Investment Funds | |||
Activity in the carried interest | |||
Balance at beginning of year | 69,926 | 67,298 | 61,142 |
Carried Interest recognized during the year | 980 | 2,628 | 6,156 |
Balance at end of year | $ 70,906 | $ 69,926 | $ 67,298 |
Furniture, Fixtures, Equipme102
Furniture, Fixtures, Equipment and Building Improvements (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | |
Furniture, fixtures, equipment and building improvements | |||
Property, Plant and Equipment, Net, Total | $ 31,321 | $ 16,311 | |
Furniture, fixtures, equipment and building improvements pledged to creditors | 25,134 | 14,034 | |
Depreciation and amortization expense | 5,849 | 2,423 | $ 1,365 |
Furniture, Fixtures, Equipment and Building Improvements [Member] | |||
Furniture, fixtures, equipment and building improvements | |||
Furniture, fixtures, equipment and building improvements | 48,713 | 26,862 | |
Less: accumulated depreciation and amortization | (17,392) | (10,551) | |
Property, Plant and Equipment, Net, Total | 31,321 | 16,311 | |
Depreciation and amortization expense | 6,842 | 4,149 | 3,111 |
Furniture, Fixtures, Equipment and Building Improvements [Member] | Other expenses. | |||
Furniture, fixtures, equipment and building improvements | |||
Depreciation and amortization expense | 5,492 | 2,098 | 1,045 |
Furniture, Fixtures, Equipment and Building Improvements [Member] | PMT | Management Agreement | |||
Furniture, fixtures, equipment and building improvements | |||
Depreciation and amortization expense | $ 1,350 | $ 2,051 | $ 2,066 |
Capitalized Software (Detail)
Capitalized Software (Detail) - USD ($) | 12 Months Ended | ||
Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | |
Capitalized Software. | |||
Cost | $ 13,457,000 | $ 4,920,000 | |
Less: Accumulated amortization | (2,252,000) | (1,895,000) | |
Capitalized Computer Software, Net, Total | 11,205,000 | 3,025,000 | |
Capitalized software pledged to creditors | 515,000 | 783,000 | |
Software amortization expense | $ 357,000 | $ 324,000 | $ 320,000 |
Borrowings - Assets Sold Under
Borrowings - Assets Sold Under Agreement to Repurchase (Details) - USD ($) $ in Thousands | 12 Months Ended | ||||||||
Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | Sep. 30, 2016 | Jun. 30, 2016 | Mar. 31, 2016 | Sep. 30, 2015 | Jun. 30, 2015 | Mar. 31, 2015 | |
Carrying value: | |||||||||
Unpaid principal balance | $ 1,736,922 | ||||||||
Total loans sold under agreements to repurchase | 1,735,114 | $ 1,166,731 | $ 2,491,366 | $ 1,591,798 | $ 1,658,578 | $ 1,286,411 | $ 1,263,248 | $ 992,187 | |
Amortization of commitment fees excluded from calculation of Weighted average interest rate | 22,601 | 25,365 | $ 13,292 | ||||||
Assets sold under agreements to repurchase | |||||||||
During the period: | |||||||||
Average balance of mortgage loans sold under agreements to repurchase | $ 1,438,181 | $ 823,490 | $ 529,832 | ||||||
Weighted-average interest rate (as a percent) | 2.91% | 1.78% | 1.78% | ||||||
Total interest expense | $ 49,791 | $ 21,377 | $ 14,285 | ||||||
Maximum daily amount outstanding | 2,661,746 | 1,976,744 | 1,073,073 | ||||||
Carrying value: | |||||||||
Unpaid principal balance | 1,736,922 | 1,167,405 | |||||||
Unamortized issuance costs | (1,808) | (674) | |||||||
Total loans sold under agreements to repurchase | 1,735,114 | 1,166,731 | |||||||
Unused amount | $ 1,205,078 | $ 40,178 | |||||||
Weighted average interest rate (as a percent) | 3.02% | 2.50% | |||||||
Margin deposits placed with counterparties | $ 3,000 | $ 2,500 | |||||||
Amortization of commitment fees excluded from calculation of Weighted average interest rate | 7,300 | 7,400 | $ 4,700 | ||||||
Assets sold under agreements to repurchase | Mortgage Loans held for sale | |||||||||
Carrying value: | |||||||||
Fair value of assets pledged to secure | 1,422,255 | 833,748 | |||||||
Assets sold under agreements to repurchase | Mortgage servicing rights | |||||||||
Carrying value: | |||||||||
Fair value of assets pledged to secure | 1,479,322 | 782,679 | |||||||
Assets sold under agreements to repurchase | Servicing advances | |||||||||
Carrying value: | |||||||||
Fair value of assets pledged to secure | 81,306 | $ 68,507 | |||||||
Assets sold under agreements to repurchase | Financing receivable | PMT | |||||||||
Carrying value: | |||||||||
Fair value of assets pledged to secure | $ 150,000 |
Borrowings - Maturities of Outs
Borrowings - Maturities of Outstanding Advances Under Repurchase Agreements (Details) $ in Thousands | 12 Months Ended |
Dec. 31, 2016USD ($) | |
Mortgage loans sold under agreement to repurchase | |
Unpaid principal balance | $ 1,736,922 |
Weighted-average maturity (in months) | 4 months 12 days |
Within 30 days | |
Mortgage loans sold under agreement to repurchase | |
Unpaid principal balance | $ 136,213 |
Over 30 to 90 days | |
Mortgage loans sold under agreement to repurchase | |
Unpaid principal balance | 1,193,709 |
Over 90 days | |
Mortgage loans sold under agreement to repurchase | |
Unpaid principal balance | $ 407,000 |
Borrowings - Mortgage Loans Sol
Borrowings - Mortgage Loans Sold Under Agreement to Repurchase by Counterparty (Details) - Assets sold under agreements to repurchase $ in Thousands | Dec. 31, 2016USD ($) |
Credit Suisse First Boston Mortgage Capital LLC Tranche One | |
Mortgage loans sold under agreement to repurchase | |
Amount at risk | $ 36,579 |
Credit Suisse First Boston Mortgage Capital LLC Tranche Two | |
Mortgage loans sold under agreement to repurchase | |
Amount at risk | 1,072,322 |
Bank of America, N.A. | |
Mortgage loans sold under agreement to repurchase | |
Amount at risk | 26,932 |
Morgan Stanley Bank | |
Mortgage loans sold under agreement to repurchase | |
Amount at risk | 11,741 |
JP Morgan | |
Mortgage loans sold under agreement to repurchase | |
Amount at risk | 8,076 |
Citibank, N.A. | |
Mortgage loans sold under agreement to repurchase | |
Amount at risk | 5,338 |
Barclays | |
Mortgage loans sold under agreement to repurchase | |
Amount at risk | $ 2,351 |
Borrowings - Mortgage Loan Part
Borrowings - Mortgage Loan Particpation and Sale Agreement (Details) - USD ($) | 12 Months Ended | ||||||||
Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | Sep. 30, 2016 | Jun. 30, 2016 | Mar. 31, 2016 | Sep. 30, 2015 | Jun. 30, 2015 | Mar. 31, 2015 | |
During the period: | |||||||||
Total interest expense | $ 5,523,000 | $ 2,670,000 | $ 427,000 | ||||||
Carrying value: | |||||||||
Mortgage loan participation and sale agreement secured by mortgage loan participation certificates | 671,426,000 | 234,872,000 | $ 782,913,000 | $ 737,176,000 | $ 246,636,000 | $ 247,410,000 | $ 195,959,000 | $ 190,762,000 | |
Amortization of debt issuance costs and commitment fees relating to financing facilities | 22,601,000 | 25,365,000 | 13,292,000 | ||||||
Mortgage Loan Participation and Sale Agreement member | |||||||||
During the period: | |||||||||
Average balance | $ 268,416,000 | $ 157,918,000 | $ 22,756,000 | ||||||
Weighted-average interest rate (as a percent) | 1.75% | 1.45% | 1.43% | ||||||
Total interest expense | $ 5,523,000 | $ 2,670,000 | $ 427,000 | ||||||
Maximum daily amount outstanding | 1,268,871,000 | 250,325,000 | $ 144,846,000 | ||||||
Carrying value: | |||||||||
Unpaid principal balance of mortgage loan participation and sale agreement secured by mortgage loan participation certificates | 671,562,000 | 234,898,000 | |||||||
Unamortized issuance costs | (136,000) | (26,000) | |||||||
Mortgage loan participation and sale agreement secured by mortgage loan participation certificates | $ 671,426,000 | $ 234,872,000 | |||||||
Weighted-average interest rate (as a percent) | 2.02% | 1.45% | |||||||
Fair value of mortgage loans pledged to secure | $ 702,919,000 | $ 245,741,000 | |||||||
Amortization of debt issuance costs and commitment fees relating to financing facilities | $ 740,000 | $ 355,000 |
Borrowings - Note Payable (Deta
Borrowings - Note Payable (Details) - USD ($) $ in Thousands | Nov. 18, 2016 | Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | Sep. 30, 2016 | Jun. 30, 2016 | Mar. 31, 2016 | Dec. 30, 2015 | Sep. 30, 2015 | Jun. 30, 2015 | Mar. 31, 2015 |
During the period: | |||||||||||
Total interest expense | $ 8,688 | $ 9,336 | $ 4,382 | ||||||||
Carrying value: | |||||||||||
Note Payable | 150,942 | 61,136 | $ 110,619 | $ 114,235 | $ 127,693 | $ 406,990 | $ 246,456 | $ 134,665 | |||
Amortization of Financing Costs | 22,601 | 25,365 | 13,292 | ||||||||
Note Payable | |||||||||||
During the period: | |||||||||||
Average balance | $ 108,475 | $ 214,235 | $ 102,546 | ||||||||
Weighted-average interest rate (as a percent) | 5.13% | 3.28% | 2.93% | ||||||||
Total interest expense | $ 8,688 | $ 9,336 | $ 4,382 | ||||||||
Maximum daily amount outstanding | 153,849 | 469,380 | $ 154,948 | ||||||||
Carrying value: | |||||||||||
Unpaid principal balance | 151,935 | 62,677 | |||||||||
Unamortized issuance costs | (993) | (1,541) | |||||||||
Note Payable | $ 150,942 | $ 61,136 | |||||||||
Weighted-average interest rate (as a percent) | 4.67% | 4.17% | |||||||||
Unused amount | $ 98,065 | $ 57,328 | |||||||||
Amortization of Financing Costs | 3,000 | 2,100 | |||||||||
Note Payable | Revolving credit agreement | |||||||||||
Short-term Debt [Line Items] | |||||||||||
Maximum loan amount | $ 150,000 | $ 100,000 | |||||||||
Term of loan | 364 days | ||||||||||
Note Payable | Mortgage servicing rights | |||||||||||
Carrying value: | |||||||||||
Assets pledged to secure | 138,349 | 20,881 | |||||||||
Note Payable | Cash. | |||||||||||
Carrying value: | |||||||||||
Assets pledged to secure | 91,788 | 93,757 | |||||||||
Note Payable | Carried interest | |||||||||||
Carrying value: | |||||||||||
Assets pledged to secure | $ 70,906 | $ 69,926 |
Borrowings - Obligations Under
Borrowings - Obligations Under Capital Lease (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | |
Borrowings | |||
Average balance | $ 18,620 | $ 1,132 | |
Weighted average interest rate | 2.47% | 2.34% | |
Total interest expense | $ 510 | $ 18 | $ 2 |
Maximum daily amount outstanding | 24,242 | 13,579 | |
Unpaid principal balance | $ 23,424 | $ 13,579 | |
Weighted average interest rate | 2.48% | 2.34% | |
Furniture, fixtures, equipment and building improvements pledged to creditors | $ 25,134 | $ 14,034 | |
Capitalized software pledged to creditors | $ 515 | $ 783 |
Borrowings - ESS (Details)
Borrowings - ESS (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | |
Issuances of excess servicing spread to PennyMac Mortgage Investment Trust: | |||
MSRs pledged to secure excess servicing spread | $ 1,617,671 | $ 803,560 | |
Recurring basis | |||
Roll forward of liabilities measured using Level 3 inputs on a recurring basis | |||
Balance at the beginning of the year | 413,824 | 197,472 | $ 138,723 |
Issuances of excess servicing spread to PennyMac Mortgage Investment Trust: | |||
Accrual of interest expense | 22,601 | 25,365 | 13,292 |
Repayments | (69,992) | (78,578) | (39,256) |
Settlement | (59,045) | ||
Change in fair value | (35,260) | (29,159) | (24,322) |
Balance at the end of the year | 303,861 | 413,824 | 197,472 |
Excess servicing spread financing | PMT | |||
Issuances of excess servicing spread to PennyMac Mortgage Investment Trust: | |||
Change in fair value | (23,923) | (3,810) | (28,663) |
Excess servicing spread financing | Recurring basis | |||
Roll forward of liabilities measured using Level 3 inputs on a recurring basis | |||
Balance at the beginning of the year | 412,425 | 191,166 | 138,723 |
Issuances of excess servicing spread to PennyMac Mortgage Investment Trust: | |||
For cash | 271,554 | 99,728 | |
Pursuant to a recapture agreement | 6,603 | 6,728 | 7,342 |
Accrual of interest expense | 22,601 | 25,365 | 13,292 |
Repayments | (69,992) | (78,578) | (39,256) |
Settlement | (59,045) | ||
Change in fair value | (23,923) | (3,810) | (28,663) |
Balance at the end of the year | 288,669 | 412,425 | 191,166 |
Excess Servicing Spread Financing for Cash | Recurring basis | |||
Issuances of excess servicing spread to PennyMac Mortgage Investment Trust: | |||
Issuances | 271,554 | 99,728 | |
Excess Servicing Spread Financing Pursuant to Recapture Agreement | Recurring basis | |||
Issuances of excess servicing spread to PennyMac Mortgage Investment Trust: | |||
Issuances | $ 6,603 | $ 6,728 | $ 7,342 |
Liability for Losses Under R111
Liability for Losses Under Representations and Warranties (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | |
During the year: | |||
Balance at beginning of year | $ 20,611 | $ 13,259 | $ 8,123 |
Provision for losses relating to representations and warranties on loans sold pursuant to mortgage loan sales | 7,090 | 7,512 | 5,291 |
Provision for losses relating to representations and warranties on loans sold reduction in liability due to change in estimate | (7,672) | ||
Incurred losses | (962) | (160) | (155) |
Balance at end of year | 19,067 | 20,611 | $ 13,259 |
Unpaid principal balance of mortgage loans subject to representations and warranties at year end | $ 90,650,605 | $ 60,687,246 |
Income Taxes - Returns Currentl
Income Taxes - Returns Currently Under Examination (Details) item in Millions | 12 Months Ended |
Dec. 31, 2016item | |
Income Taxes | |
Returns currently under examination | 0 |
Income Taxes - Income Tax Expen
Income Taxes - Income Tax Expense Details (Details) - USD ($) $ in Thousands | 3 Months Ended | 12 Months Ended | |||||||||
Dec. 31, 2016 | Sep. 30, 2016 | Jun. 30, 2016 | Mar. 31, 2016 | Dec. 31, 2015 | Sep. 30, 2015 | Jun. 30, 2015 | Mar. 31, 2015 | Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | |
Current Income Tax Expense (Benefit), Continuing Operations [Abstract] | |||||||||||
Federal | $ (1,622) | $ 2,234 | |||||||||
State | (244) | 559 | |||||||||
Total current expense | (1,866) | 2,793 | |||||||||
Deferred Income Tax Expense (Benefit), Continuing Operations [Abstract] | |||||||||||
Federal | 38,082 | $ 24,819 | 19,126 | ||||||||
State | 9,887 | 6,816 | 4,803 | ||||||||
Total deferred expense | 47,969 | 31,635 | 23,929 | ||||||||
Income Tax Expense (Benefit), Total | $ 15,568 | $ 16,976 | $ 9,963 | $ 3,596 | $ 8,327 | $ 8,575 | $ 8,619 | $ 6,114 | $ 46,103 | $ 31,635 | $ 26,722 |
Income Taxes - Effective Tax Ra
Income Taxes - Effective Tax Rates (Details) | 12 Months Ended | ||
Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | |
Reconciliation of the entity's provision for income taxes at statutory rates to the provision for income taxes at the entity's effective tax rate | |||
Federal income tax statutory rate (as a percent) | 35.00% | 35.00% | 35.00% |
Less: Rate attributable to non-controlling interest members (as a percent) | (24.80%) | (25.10%) | (25.00%) |
State income taxes, net of federal benefit (as a percent) | 1.60% | 1.60% | 1.50% |
Other (as a percent) | 0.20% | (0.20%) | 0.50% |
Valuation allowance (as a percent) | 0.00% | 0.00% | 0.00% |
Effective tax rate (as a percent) | 12.00% | 11.30% | 12.00% |
Income Taxes - Deferred Tax Ass
Income Taxes - Deferred Tax Assets And Liabilities (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | |
Deferred expense: | |||
Investment in PennyMac | $ 40,493 | $ 40,272 | $ 20,981 |
Net operating loss carryforward | 8,110 | (8,637) | 2,948 |
Tax credits | (634) | ||
Total deferred expense | 47,969 | 31,635 | $ 23,929 |
Components of Deferred tax asset: | |||
Taxes currently receivable | 7,615 | 3,883 | |
Deferred income tax asset, net | 14,495 | ||
Deferred tax asset | 18,378 | ||
Components of income taxes payable: | |||
Deferred income tax liabilities, net | (32,703) | ||
Income taxes payable | (25,088) | ||
Deferred income tax assets: | |||
Investment in PennyMac | 5,858 | ||
Net operating loss carryforward | 527 | 8,637 | |
Tax credits carryforward | 634 | ||
Deferred income tax assets, net | 14,495 | ||
Deferred income tax liabilities: | |||
Investment in PennyMac | (33,864) | ||
Deferred income tax liabilities, net | (32,703) | ||
Net operating loss carryforward, generally expires in 2035 | 1,300 | ||
Unrecognized tax benefits | 0 | 0 | |
Accrual of interest or penalties related to unrecognized tax benefits | 0 | $ 0 | |
Parent Company [Member] | |||
Components of income taxes payable: | |||
Income taxes payable | $ (25,077) |
Noncontrolling Interest (Detail
Noncontrolling Interest (Details) - USD ($) shares in Thousands, $ in Thousands | 3 Months Ended | 12 Months Ended | |||||||||
Dec. 31, 2016 | Sep. 30, 2016 | Jun. 30, 2016 | Mar. 31, 2016 | Dec. 31, 2015 | Sep. 30, 2015 | Jun. 30, 2015 | Mar. 31, 2015 | Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | |
Net income and the effects of changes in noncontrolling interest | |||||||||||
Net Income (Loss) Available to Common Stockholders, Basic | $ 22,744 | $ 23,685 | $ 14,475 | $ 5,175 | $ 12,771 | $ 12,680 | $ 12,749 | $ 9,028 | $ 66,079 | $ 47,228 | $ 36,842 |
Increase in the Company's additional paid-in capital for exchanges of Class A units of Private National Mortgage Acceptance Company, LLC to Class A common stock of PennyMac Financial Services, Inc. | $ 6,877 | $ 4,982 | $ 7,107 | ||||||||
Exchange of Class A units of Private National Mortgage Acceptance Company, LLC to Class A stock of PennyMac Financial Services, Inc. (in shares) | 301 | 319 | 718 | ||||||||
Noncontrolling interest in Private National Mortgage Acceptance Company, LLC (as a percent) | 70.60% | 71.10% | 70.60% | 71.10% | |||||||
Class A Common Stock | |||||||||||
Net income and the effects of changes in noncontrolling interest | |||||||||||
Exchange of Class A units of Private National Mortgage Acceptance Company, LLC to Class A stock of PennyMac Financial Services, Inc. (in shares) | 301 | 319 |
Net Gains on Mortgage Loans 117
Net Gains on Mortgage Loans Held for Sale (Details) - USD ($) $ in Thousands | 3 Months Ended | 12 Months Ended | |||||||||
Dec. 31, 2016 | Sep. 30, 2016 | Jun. 30, 2016 | Mar. 31, 2016 | Dec. 31, 2015 | Sep. 30, 2015 | Jun. 30, 2015 | Mar. 31, 2015 | Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | |
Cash loss: | |||||||||||
Mortgage Loans | $ (62,283) | $ (82,709) | $ 43,665 | ||||||||
Hedging activities | 10,275 | (47,150) | (90,507) | ||||||||
Cash gain (loss), net of effects of cash hedging, on sale of mortgage loans held for sale | (52,008) | (129,859) | (46,842) | ||||||||
Non-cash gain: | |||||||||||
Mortgage servicing rights and mortgage servicing liabilities resulting from mortgage loan sales, net | 562,540 | 452,411 | 207,885 | ||||||||
Provision for losses relating to representations and warranties on loans sold pursuant to mortgage loan sales | (7,090) | (7,512) | (5,291) | ||||||||
Provision for losses relating to representations and warranties on loans sold reduction in liability due to change in estimate | 7,672 | ||||||||||
Change in fair value relating to loans and hedging derivatives held at period end: | |||||||||||
Interest rate lock commitments | 15,618 | 11,372 | 25,640 | ||||||||
Mortgage loans | 2,796 | 3,949 | 12,733 | ||||||||
Hedging derivatives | 10,344 | (1,810) | (19,264) | ||||||||
From non-affiliates | 539,872 | 328,551 | 174,861 | ||||||||
Recapture payable to PennyMac Mortgage Investment Trust | (8,092) | (7,836) | (7,837) | ||||||||
Net gains on mortgage loans held for sale at fair value | $ 127,932 | $ 182,121 | $ 130,203 | $ 91,524 | $ 78,736 | $ 82,646 | $ 83,955 | $ 75,378 | $ 531,780 | $ 320,715 | $ 167,024 |
Net Interest Expense (Details)
Net Interest Expense (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | |
Interest income: | |||
Short-term investments | $ 2,558 | $ 506 | $ 734 |
Mortgage loans held for sale at fair value | 54,584 | 42,008 | 26,180 |
Custodial funds | 16,155 | 3,298 | 857 |
Interest income, excluding related parties | 73,297 | 45,812 | 27,771 |
Interest income | 81,127 | 49,155 | 27,771 |
Interest expense: | |||
Mortgage loan participation and sale agreement | 5,523 | 2,670 | 427 |
Note payable | 8,688 | 9,336 | 4,382 |
Obligations under capital lease | 510 | 18 | 2 |
Interest shortfall on repayments of mortgage loans serviced for Agency securitizations | 15,102 | 6,883 | 2,460 |
Interest on mortgage loan impound deposits | 3,991 | 2,888 | 2,409 |
Interest expense, non-affiliates | 83,605 | 43,172 | 23,965 |
Interest expense | 106,206 | 68,537 | 37,257 |
Net interest expense: | (25,079) | (19,382) | (9,486) |
PMT | |||
Interest income: | |||
From PennyMac Mortgage Investment Trust | 7,830 | 3,343 | |
Interest expense: | |||
To PennyMac Mortgage Investment Trust Excess servicing spread financing at fair value | 22,601 | 25,365 | 13,292 |
Parent Company [Member] | |||
Interest income: | |||
Interest income | 49 | 121 | |
Interest expense: | |||
Interest expense | 6 | ||
Assets sold under agreements to repurchase | |||
Interest expense: | |||
Assets sold under agreements to repurchase | $ 49,791 | $ 21,377 | $ 14,285 |
Stock-based Compensation - Comp
Stock-based Compensation - Compensation Expense by Award (Details) - USD ($) $ in Thousands, shares in Millions | 12 Months Ended | ||
Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | |
Stock-Based Compensation | |||
Units available for future awards under 2013 Equity Incentive Plan (in units) | 2 | ||
Stock-based compensation expense | $ 16,505 | $ 17,521 | $ 10,331 |
Stock Options | |||
Stock-Based Compensation | |||
Stock-based compensation expense | 4,464 | 5,713 | 5,101 |
Performance-based RSUs | |||
Stock-Based Compensation | |||
Stock-based compensation expense | 9,475 | 9,293 | 3,075 |
Time-based RSUs | |||
Stock-Based Compensation | |||
Stock-based compensation expense | 2,494 | 2,294 | 1,824 |
Exchangable PNMAC Units | |||
Stock-Based Compensation | |||
Stock-based compensation expense | $ 72 | $ 221 | $ 331 |
Stock-based Compensation - Perf
Stock-based Compensation - Performance-Based RSUs (Details) - USD ($) $ / shares in Units, $ in Thousands | 12 Months Ended | ||
Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | |
Fair Value Assumptions | |||
Expected volatility (as a percent) | 28.00% | ||
Expected dividends (as a percent) | 0.00% | ||
Summary of equity award grants, RSUs | |||
Compensation expense recorded during the year | $ 16,505 | $ 17,521 | $ 10,331 |
Performance-based RSUs | |||
Fair Value Assumptions | |||
Expected volatility (as a percent) | 42.00% | ||
Expected dividends (as a percent) | 0.00% | ||
Summary of equity award grants, RSUs | |||
Balance at beginning of period (in units) | 2,350,000 | 1,257,000 | 491,000 |
Granted (in units) | 813,000 | 1,143,000 | 789,000 |
Vested (in units) | (414,000) | ||
Forfeited or canceled (in units) | (688,000) | (50,000) | (23,000) |
Balance at end of period (in units) | 2,475,000 | 2,350,000 | 1,257,000 |
Compensation expense recorded during the year | $ 9,475 | $ 9,293 | $ 3,075 |
Weighted-average grant date fair value per unit: | |||
Outstanding at beginning of year (in dollars per share) | $ 16.30 | $ 15.48 | $ 11.30 |
Granted (in dollars per share) | 11.28 | 17.21 | 14.35 |
Forfeited (in dollars per share) | 16.87 | 16.46 | 15.94 |
Outstanding at end of year (in dollars per share) | $ 14.24 | $ 16.30 | $ 15.48 |
Unamortized compensation cost | $ 10,048 | $ 16,620 | |
Number of shares expected to vest (in units) | 2,109,000 | 2,141,000 | |
Weighted average remaining vesting period (in months) | 12 months | 17 months | |
Minimum | Performance-based RSUs | |||
Fair Value Assumptions | |||
Risk-free rate, Minimum (as a percent) | 0.10% | ||
Expected grantee forfeiture rate (as a percent) | 4.30% | ||
Maximum | Performance-based RSUs | |||
Fair Value Assumptions | |||
Risk-free rate, Maximum (as a percent) | 0.70% | ||
Expected grantee forfeiture rate (as a percent) | 20.20% |
Stock-based Compensation - Stoc
Stock-based Compensation - Stock Options (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands | 12 Months Ended | ||
Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | |
Fair Value Assumptions | |||
Expected volatility (as a percent) | 28.00% | ||
Expected dividends (as a percent) | 0.00% | ||
Weighted-average exercise price per share: | |||
Compensation expense recorded during the year | $ 16,505 | $ 17,521 | $ 10,331 |
Stock Options | |||
Stock-Based Compensation | |||
Percentage of the award vesting at each of the three anniversaries | 33.00% | ||
Contractual term of the stock options | 10 years | ||
Fair Value Assumptions | |||
Expected volatility (as a percent) | 41.00% | 42.00% | |
Expected dividends (as a percent) | 0.00% | 0.00% | |
Risk-free rate, Minimum (as a percent) | 0.30% | 0.10% | 0.10% |
Risk-free rate, Maximum (as a percent) | 2.10% | 2.30% | 2.90% |
Summary of equity awards, options | |||
Balance at beginning of period (in units) | 1,845 | 1,167 | 419 |
Granted (in units) | 962 | 715 | 769 |
Exercised (in units) | (9) | ||
Forfeited or canceled (in units) | (60) | (37) | (21) |
Balance at end of period (in units) | 2,738 | 1,845 | 1,167 |
Weighted-average exercise price per share: | |||
Outstanding at beginning of year (in dollars per share) | $ 18.17 | $ 18.23 | $ 21.03 |
Granted (in dollars per share) | 11.29 | 17.52 | 17.22 |
Exercised (in dollars per share) | 17.33 | 17.26 | |
Forfeited | 15.66 | 17.88 | 18.71 |
Outstanding at end of year (in dollars per share) | $ 15.81 | $ 18.17 | $ 18.23 |
Compensation expense recorded during the year | $ 4,464 | $ 5,713 | $ 5,101 |
Number of options exercisable at end of year | 1,104 | 533 | |
Weighted-average remaining contractual term: | |||
Outstanding at end of year | 8 years | 8 years 7 months 6 days | |
Exercisable at end of year | 7 years 1 month 6 days | 8 years | |
Aggregate intrinsic value | |||
Outstanding at end of year | $ 5,042 | ||
Exercisable at end of year | $ 13 | ||
Number of shares expected to vest | 1,504 | 1,280 | |
Weighted-average vesting period (in months) | 11 months | 17 months | |
Minimum | Stock Options | |||
Fair Value Assumptions | |||
Expected grantee forfeiture rate (as a percent) | 0.00% | 0.00% | 4.30% |
Maximum | Stock Options | |||
Fair Value Assumptions | |||
Expected grantee forfeiture rate (as a percent) | 20.20% | 18.70% | 20.20% |
Stock-based Compensation - Time
Stock-based Compensation - Time-Based RSUs (Details) $ / shares in Units, $ in Thousands | 12 Months Ended | ||
Dec. 31, 2016USD ($)$ / sharesshares | Dec. 31, 2015USD ($)$ / sharesshares | Dec. 31, 2014USD ($)$ / sharesshares | |
Summary of equity award grants, RSUs | |||
Compensation expense recorded during the year | $ | $ 16,505 | $ 17,521 | $ 10,331 |
Time-based RSUs | |||
Stock-Based Compensation | |||
Percentage of the award vesting at each of the three anniversaries | 33.00% | ||
Summary of equity award grants, RSUs | |||
Balance at beginning of period (in units) | 271,000 | 202,000 | 100,000 |
Granted (in units) | 261,000 | 150,000 | 147,000 |
Vested (in units) | (127,000) | (75,000) | (33,000) |
Forfeited or canceled (in units) | (23,000) | (6,000) | (12,000) |
Balance at end of period (in units) | 382,000 | 271,000 | 202,000 |
Compensation expense recorded during the year | $ | $ 2,494 | $ 2,294 | $ 1,824 |
Weighted-average grant date fair value per unit: | |||
Outstanding at beginning of year (in dollars per share) | $ / shares | $ 17.81 | $ 17.92 | $ 18.04 |
Granted (in dollars per share) | $ / shares | 11.77 | 17.87 | 16.73 |
Vested (in dollars per share) | $ / shares | 17.99 | 18.25 | 20.46 |
Forfeited (in dollars per share) | $ / shares | 15.55 | 26.07 | 10.72 |
Outstanding at end of year (in dollars per share) | $ / shares | $ 13.71 | $ 17.81 | $ 17.92 |
Unamortized compensation cost | $ | $ 1,742 | $ 2,270 | |
Number of shares expected to vest (in units) | 339,000 | 232,000 | |
Weighted average remaining vesting period (in months) | 12 months | 20 months | |
Time-based RSUs | Minimum | |||
Stock-Based Compensation | |||
Turnover rates (as a percent) | 4.3 | ||
Time-based RSUs | Maximum | |||
Stock-Based Compensation | |||
Turnover rates (as a percent) | 20.2 | ||
Time-based RSUs | Class A Common Stock | |||
Stock-Based Compensation | |||
Number of share awarded for each RSU (in shares) | 1 |
Supplemental Cash Flow Infor123
Supplemental Cash Flow Information (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | |
Cash paid for interest | $ 104,938 | $ 69,317 | $ 36,320 |
Cash paid for income taxes | 1,866 | 1,909 | 4,800 |
Non-cash investing activity: | |||
Mortgage servicing rights resulting from mortgage loan sales | 577,531 | 472,853 | 209,850 |
Mortgage servicing liabilities resulting from mortgage loan sales | 14,991 | 20,442 | 1,965 |
Non-cash financing activity: | |||
Issuance of common stock in settlement of director fees | 313 | 297 | 222 |
PMT | |||
Non-cash investing activity: | |||
Transfer of Note receivable from PennyMac Mortgage Investment Trust to Financing receivable from PennyMac Mortgage Investment Trust | 150,000 | ||
Non-cash financing activity: | |||
Transfer of excess servicing spread pursuant to recapture agreement with PennyMac Mortgage Investment Trust | 6,603 | $ 6,728 | $ 7,342 |
Unpaid distribution | $ 7,585 |
Regulatory Net Worth and Age124
Regulatory Net Worth and Agency Capital Requirements (Details) - USD ($) | Dec. 31, 2015 | Dec. 31, 2016 |
Fannie Mae / Freddie Mac - PLS | ||
Regulatory Net Worth and Agency Capital Requirements | ||
Net worth | $ 835,157,000 | $ 1,289,464,000 |
Capital Requirement | 283,655,000 | 335,883,000 |
Liquidity | 145,431,000 | 179,230,000 |
Liquidity requirement | 38,936,000 | 45,930,000 |
Ginnie Mae - PLS | ||
Regulatory Net Worth and Agency Capital Requirements | ||
Net worth | 633,222,000 | 1,085,549,000 |
Capital Requirement | 386,732,000 | 455,542,000 |
Liquidity | 145,431,000 | 179,230,000 |
Liquidity requirement | 95,868,000 | 115,304,000 |
Ginnie Mae - PennyMac | ||
Regulatory Net Worth and Agency Capital Requirements | ||
Net worth | 894,731,000 | 1,261,565,000 |
Capital Requirement | 425,405,000 | 501,097,000 |
Ginnie Mae - PennyMac | 1-4 unit servicing portfolio | ||
Regulatory Net Worth and Agency Capital Requirements | ||
Net worth | $ 2,500,000 | |
FHFA net worth requirement spread | 0.35% | |
FHFA liquidity spread of UPB serviced | 0.10% | |
Liquidity requirement | $ 1,000,000 | |
HUD - PLS | ||
Regulatory Net Worth and Agency Capital Requirements | ||
Net worth | 633,222,000 | 1,085,549,000 |
Capital Requirement | 2,500,000 | $ 2,500,000 |
Federal Housing Finance Agency | ||
Regulatory Net Worth and Agency Capital Requirements | ||
Net worth | $ 2,500,000 | |
FHFA liquidity spread of UPB serviced | 0.035% | |
FHFA additional liquidity spread of UPB in excess of 6% | $ 2 | |
Federal Housing Finance Agency | 1-4 unit servicing portfolio | ||
Regulatory Net Worth and Agency Capital Requirements | ||
FHFA net worth requirement spread | 0.25% |
Commitments and Contingencies -
Commitments and Contingencies - Commitments to Fund and Sell Mortgage Loans (Details) $ in Thousands | Dec. 31, 2016USD ($) |
Commitment and Contingencies. | |
Commitments to purchase mortgage loans from PennyMac Mortgage Investment Trust | $ 2,508,788 |
Commitments to fund mortgage loans | 1,770,823 |
Total commitments to purchase and fund mortgage loans | $ 4,279,611 |
Commitments and Contingencie126
Commitments and Contingencies - Leases (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | |
Commitment and Contingencies. | |||
Rent expense | $ 9,100 | $ 4,600 | $ 4,200 |
Future minimum lease payments | |||
2,017 | 9,516 | ||
2,018 | 12,702 | ||
2,019 | 13,227 | ||
2,020 | 12,885 | ||
2,021 | 11,304 | ||
Thereafter | 41,152 | ||
Total future minimum lease payments | $ 100,786 |
Segments and Related Informa127
Segments and Related Information - Financial Hilights by Segment (Details) $ in Thousands | 3 Months Ended | 12 Months Ended | |||||||||
Dec. 31, 2016USD ($) | Sep. 30, 2016USD ($) | Jun. 30, 2016USD ($) | Mar. 31, 2016USD ($) | Dec. 31, 2015USD ($) | Sep. 30, 2015USD ($) | Jun. 30, 2015USD ($) | Mar. 31, 2015USD ($) | Dec. 31, 2016USD ($)item | Dec. 31, 2015USD ($) | Dec. 31, 2014USD ($) | |
Segments and Related Information | |||||||||||
Number of segments | item | 3 | ||||||||||
Revenues: | |||||||||||
Net gains (losses) on mortgage loans held for sale at fair value | $ 127,932 | $ 182,121 | $ 130,203 | $ 91,524 | $ 78,736 | $ 82,646 | $ 83,955 | $ 75,378 | $ 531,780 | $ 320,715 | $ 167,024 |
Mortgage loan origination fees | 125,534 | 91,520 | 41,576 | ||||||||
Fulfillment fees from PennyMac Mortgage Investment Trust | 86,465 | 58,607 | 48,719 | ||||||||
Net servicing fees | 185,466 | 229,543 | 216,919 | ||||||||
Management fees | 22,746 | 28,237 | 42,508 | ||||||||
Carried Interest from Investment Funds | 980 | 2,628 | 6,156 | ||||||||
Net interest (expense) income: | |||||||||||
Interest income | 81,127 | 49,155 | 27,771 | ||||||||
Interest expense | 106,206 | 68,537 | 37,257 | ||||||||
Net interest expense: | (25,079) | (19,382) | (9,486) | ||||||||
Other | 3,445 | 2,937 | 3,483 | ||||||||
Total net revenues, before non-segment activities | 931,287 | 714,805 | 516,899 | ||||||||
Expenses | 159,877 | 152,117 | 123,548 | 113,262 | 110,007 | 115,282 | 121,552 | 87,076 | 548,804 | 433,917 | 295,244 |
Income (loss) before provision for income taxes and non-segement activites | 382,483 | 280,888 | 221,655 | ||||||||
Non-segment activities | 600 | (1,695) | 1,378 | ||||||||
Income before provision for income taxes | 129,408 | 139,278 | 84,258 | 30,139 | 77,233 | 73,923 | 74,799 | 53,238 | 383,083 | 279,193 | 223,033 |
Assets: | |||||||||||
Segment assets at period end | 5,133,902 | 5,596,194 | 4,616,320 | 3,981,263 | 3,505,294 | 3,815,322 | 3,430,605 | 2,858,001 | 5,133,902 | 3,505,294 | |
Deferred tax asset | 18,378 | 18,378 | |||||||||
Parent Company [Member] | |||||||||||
Net interest (expense) income: | |||||||||||
Interest income | 49 | 121 | |||||||||
Interest expense | 6 | ||||||||||
Expenses | 6 | ||||||||||
Income before provision for income taxes | 7,018 | 2,245 | 13,278 | ||||||||
Assets: | |||||||||||
Segment assets at period end | 481,882 | 367,044 | 481,882 | 367,044 | |||||||
Deferred tax asset | 18,378 | 18,378 | 46,000 | ||||||||
Working capital | 5,500 | 5,500 | |||||||||
PMT | |||||||||||
Revenues: | |||||||||||
Fulfillment fees from PennyMac Mortgage Investment Trust | 27,164 | $ 27,255 | $ 19,111 | $ 12,935 | 12,855 | $ 17,553 | $ 15,333 | $ 12,866 | 86,465 | 58,607 | 48,719 |
Management fees | 20,657 | 24,194 | 35,035 | ||||||||
Investment Funds | |||||||||||
Revenues: | |||||||||||
Management fees | 2,089 | 4,043 | 7,473 | ||||||||
Carried Interest from Investment Funds | 980 | 2,628 | 6,156 | ||||||||
Operating segment | |||||||||||
Net interest (expense) income: | |||||||||||
Interest expense | 106,256 | ||||||||||
Net interest expense: | (25,129) | ||||||||||
Assets: | |||||||||||
Segment assets at period end | 5,128,398 | 3,486,075 | 5,128,398 | 3,486,075 | 2,453,331 | ||||||
Operating segment | Investment management | |||||||||||
Revenues: | |||||||||||
Management fees | 22,746 | 28,237 | 42,508 | ||||||||
Carried Interest from Investment Funds | 6,156 | ||||||||||
Net interest (expense) income: | |||||||||||
Interest income | 1 | 5 | |||||||||
Interest expense | 50 | ||||||||||
Net interest expense: | (49) | 5 | |||||||||
Other | 319 | (18) | 318 | ||||||||
Total net revenues, before non-segment activities | 23,996 | 30,847 | 48,987 | ||||||||
Expenses | 21,510 | 23,125 | 28,876 | ||||||||
Income (loss) before provision for income taxes and non-segement activites | 2,486 | 7,722 | 20,111 | ||||||||
Income before provision for income taxes | 2,486 | 7,722 | 20,111 | ||||||||
Assets: | |||||||||||
Segment assets at period end | 91,517 | 92,893 | 91,517 | 92,893 | 92,881 | ||||||
Operating segment | Investment management | Investment Funds | |||||||||||
Revenues: | |||||||||||
Carried Interest from Investment Funds | 980 | 2,628 | |||||||||
Operating segment | Mortgage banking | |||||||||||
Revenues: | |||||||||||
Net gains (losses) on mortgage loans held for sale at fair value | 531,780 | 320,715 | 167,024 | ||||||||
Mortgage loan origination fees | 125,534 | 91,520 | 41,576 | ||||||||
Net servicing fees | 185,466 | 229,543 | 216,919 | ||||||||
Net interest (expense) income: | |||||||||||
Interest income | 81,126 | 49,155 | 27,766 | ||||||||
Interest expense | 106,206 | 68,537 | 37,257 | ||||||||
Net interest expense: | (25,080) | (19,382) | (9,491) | ||||||||
Other | 3,126 | 2,955 | 3,165 | ||||||||
Total net revenues, before non-segment activities | 907,291 | 683,958 | 467,912 | ||||||||
Expenses | 527,294 | 410,792 | 266,368 | ||||||||
Income (loss) before provision for income taxes and non-segement activites | 379,997 | 273,166 | 201,544 | ||||||||
Income before provision for income taxes | 379,997 | 273,166 | 201,544 | ||||||||
Assets: | |||||||||||
Segment assets at period end | 5,036,881 | 3,393,182 | 5,036,881 | 3,393,182 | 2,360,450 | ||||||
Operating segment | Mortgage banking | PMT | |||||||||||
Revenues: | |||||||||||
Fulfillment fees from PennyMac Mortgage Investment Trust | 86,465 | 58,607 | 48,719 | ||||||||
Operating segment | Mortgage banking Production | |||||||||||
Revenues: | |||||||||||
Net gains (losses) on mortgage loans held for sale at fair value | 464,027 | 310,254 | 158,758 | ||||||||
Mortgage loan origination fees | 125,534 | 91,520 | 41,576 | ||||||||
Net interest (expense) income: | |||||||||||
Interest income | 48,944 | 39,238 | 21,873 | ||||||||
Interest expense | 32,669 | 19,851 | 12,143 | ||||||||
Net interest expense: | 16,275 | 19,387 | 9,730 | ||||||||
Other | 2,104 | 1,868 | 1,890 | ||||||||
Total net revenues, before non-segment activities | 694,405 | 481,636 | 260,673 | ||||||||
Expenses | 278,309 | 209,767 | 125,054 | ||||||||
Income (loss) before provision for income taxes and non-segement activites | 416,096 | 271,869 | 135,619 | ||||||||
Income before provision for income taxes | 416,096 | 271,869 | 135,619 | ||||||||
Assets: | |||||||||||
Segment assets at period end | 2,195,330 | 1,122,242 | 2,195,330 | 1,122,242 | 1,040,358 | ||||||
Operating segment | Mortgage banking Production | PMT | |||||||||||
Revenues: | |||||||||||
Fulfillment fees from PennyMac Mortgage Investment Trust | 86,465 | 58,607 | 48,719 | ||||||||
Operating segment | Mortgage banking Servicing | |||||||||||
Revenues: | |||||||||||
Net gains (losses) on mortgage loans held for sale at fair value | 67,753 | 10,461 | 8,266 | ||||||||
Net servicing fees | 185,466 | 229,543 | 216,919 | ||||||||
Net interest (expense) income: | |||||||||||
Interest income | 32,182 | 9,917 | 5,893 | ||||||||
Interest expense | 73,537 | 48,686 | 25,114 | ||||||||
Net interest expense: | (41,355) | (38,769) | (19,221) | ||||||||
Other | 1,022 | 1,087 | 1,275 | ||||||||
Total net revenues, before non-segment activities | 212,886 | 202,322 | 207,239 | ||||||||
Expenses | 248,985 | 201,025 | 141,314 | ||||||||
Income (loss) before provision for income taxes and non-segement activites | (36,099) | 1,297 | 65,925 | ||||||||
Income before provision for income taxes | (36,099) | 1,297 | 65,925 | ||||||||
Assets: | |||||||||||
Segment assets at period end | $ 2,841,551 | $ 2,270,940 | $ 2,841,551 | $ 2,270,940 | $ 1,320,092 |
Selected Quarterly Results (128
Selected Quarterly Results (Unaudited) (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 12 Months Ended | |||||||||
Dec. 31, 2016 | Sep. 30, 2016 | Jun. 30, 2016 | Mar. 31, 2016 | Dec. 31, 2015 | Sep. 30, 2015 | Jun. 30, 2015 | Mar. 31, 2015 | Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | |
Revenue | |||||||||||
Net gains (losses) on mortgage loans held for sale at fair value | $ 127,932 | $ 182,121 | $ 130,203 | $ 91,524 | $ 78,736 | $ 82,646 | $ 83,955 | $ 75,378 | $ 531,780 | $ 320,715 | $ 167,024 |
Fulfillment fees from affiliate | 86,465 | 58,607 | 48,719 | ||||||||
Net servicing fees | 95,528 | 45,864 | 26,555 | 17,519 | 76,959 | 57,258 | 68,549 | 26,776 | 485,741 | 382,672 | 258,421 |
Management fees and Carried Interest | 5,619 | 5,628 | 5,974 | 6,505 | 6,059 | 7,939 | 7,145 | 9,722 | |||
Other income | 33,042 | 30,527 | 25,963 | 14,918 | 12,631 | 23,809 | 21,369 | 15,572 | 3,853 | 1,472 | 4,867 |
Total net revenue | 289,285 | 291,395 | 207,806 | 143,401 | 187,240 | 189,205 | 196,351 | 140,314 | 931,887 | 713,110 | 518,277 |
Expenses | 159,877 | 152,117 | 123,548 | 113,262 | 110,007 | 115,282 | 121,552 | 87,076 | 548,804 | 433,917 | 295,244 |
Income before provision for income taxes | 129,408 | 139,278 | 84,258 | 30,139 | 77,233 | 73,923 | 74,799 | 53,238 | 383,083 | 279,193 | 223,033 |
Provision for income taxes | 15,568 | 16,976 | 9,963 | 3,596 | 8,327 | 8,575 | 8,619 | 6,114 | 46,103 | 31,635 | 26,722 |
Net income | 113,840 | 122,302 | 74,295 | 26,543 | 68,906 | 65,348 | 66,180 | 47,124 | 336,980 | 247,558 | 196,311 |
Less: Net income attributable to noncontrolling interest | 91,096 | 98,617 | 59,820 | 21,368 | 56,135 | 52,668 | 53,431 | 38,096 | 270,901 | 200,330 | 159,469 |
Net income attributable to PennyMac Financial Services, Inc. common stockholders | $ 22,744 | $ 23,685 | $ 14,475 | $ 5,175 | $ 12,771 | $ 12,680 | $ 12,749 | $ 9,028 | $ 66,079 | $ 47,228 | $ 36,842 |
Earnings per share of Common Stock: | |||||||||||
Basic (in dollars per share) | $ 1.02 | $ 1.07 | $ 0.66 | $ 0.24 | $ 0.58 | $ 0.58 | $ 0.59 | $ 0.42 | $ 2.98 | $ 2.17 | $ 1.73 |
Diluted (in dollars per share) | $ 1 | $ 1.06 | $ 0.65 | $ 0.23 | $ 0.58 | $ 0.58 | $ 0.59 | $ 0.42 | $ 2.94 | $ 2.17 | $ 1.73 |
Assets: | |||||||||||
Mortgage loans held for sale at fair value | $ 2,172,815 | $ 3,127,377 | $ 2,097,138 | $ 1,653,963 | $ 1,101,204 | $ 1,696,980 | $ 1,594,262 | $ 1,353,944 | $ 2,172,815 | $ 1,101,204 | |
Mortgage servicing rights | 1,627,672 | 1,337,674 | 1,290,928 | 1,337,082 | 1,411,935 | 1,307,392 | 1,135,510 | 790,411 | 1,627,672 | 1,411,935 | |
Carried Interest from Investment Funds | 70,906 | 70,870 | 70,763 | 70,519 | 69,926 | 70,196 | 68,713 | 68,531 | 70,906 | 69,926 | |
Servicing advances | 348,306 | 306,150 | 296,581 | 284,140 | 299,354 | 252,172 | 244,806 | 242,397 | 348,306 | 299,354 | |
Other assets | 914,203 | 754,123 | 860,910 | 635,559 | 622,875 | 488,582 | 387,314 | 402,718 | 914,203 | 622,875 | |
Total assets | 5,133,902 | 5,596,194 | 4,616,320 | 3,981,263 | 3,505,294 | 3,815,322 | 3,430,605 | 2,858,001 | 5,133,902 | 3,505,294 | |
Liabilities: | |||||||||||
Assets sold under agreements to repurchase | 1,735,114 | 2,491,366 | 1,591,798 | 1,658,578 | 1,166,731 | 1,286,411 | 1,263,248 | 992,187 | 1,735,114 | 1,166,731 | |
Mortgage loans participation and sale agreement | 671,426 | 782,913 | 737,176 | 246,636 | 234,872 | 247,410 | 195,959 | 190,762 | 671,426 | 234,872 | |
Note payable | 150,942 | 110,619 | 114,235 | 127,693 | 61,136 | 406,990 | 246,456 | 134,665 | 150,942 | 61,136 | |
Excess servicing spread financing at fair value payable to affiliate | 288,669 | 412,425 | 288,669 | 412,425 | |||||||
Other liabilities | 888,395 | 640,525 | 707,707 | 533,167 | 567,780 | 466,631 | 446,367 | 465,242 | 888,395 | 567,780 | |
Total liabilities | 3,734,546 | 4,305,790 | 3,445,467 | 2,888,050 | 2,442,944 | 2,826,015 | 2,511,132 | 2,005,165 | 3,734,546 | 2,442,944 | |
Total equity | 1,399,356 | 1,290,404 | 1,170,853 | 1,093,213 | 1,062,350 | 989,307 | 919,473 | 852,836 | 1,399,356 | 1,062,350 | $ 807,266 |
Total liabilities and stockholders' equity | 5,133,902 | 5,596,194 | 4,616,320 | 3,981,263 | 3,505,294 | 3,815,322 | 3,430,605 | 2,858,001 | 5,133,902 | 3,505,294 | |
PMT | |||||||||||
Revenue | |||||||||||
Fulfillment fees from affiliate | 27,164 | 27,255 | 19,111 | 12,935 | 12,855 | 17,553 | 15,333 | 12,866 | 86,465 | 58,607 | $ 48,719 |
Liabilities: | |||||||||||
Excess servicing spread financing at fair value payable to affiliate | $ 288,669 | $ 280,367 | $ 294,551 | $ 321,976 | $ 412,425 | $ 418,573 | $ 359,102 | $ 222,309 | $ 288,669 | $ 412,425 |
Parent Company Information - Mi
Parent Company Information - Minimum Tangible Net Worth (Details) $ in Millions | Dec. 31, 2016USD ($) |
PLS | |
Parent Company Information | |
Minimum tangible net worth | $ 90 |
Parent Company Information - Co
Parent Company Information - Condensed Balance Sheet (Details) - USD ($) $ in Thousands | Dec. 31, 2016 | Sep. 30, 2016 | Jun. 30, 2016 | Mar. 31, 2016 | Dec. 31, 2015 | Sep. 30, 2015 | Jun. 30, 2015 | Mar. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 |
ASSETS | ||||||||||
Cash | $ 99,367 | $ 105,472 | $ 76,256 | $ 30,639 | ||||||
Investment in PennyMac Mortgage Investment Trust at fair value | 1,228 | 1,145 | ||||||||
Deferred tax asset | 18,378 | |||||||||
Total assets | 5,133,902 | $ 5,596,194 | $ 4,616,320 | $ 3,981,263 | 3,505,294 | $ 3,815,322 | $ 3,430,605 | $ 2,858,001 | ||
LIABILITIES AND STOCKHOLDERS' EQUITY | ||||||||||
Payable to exchanged PNMAC unitholders under tax receivable agreement | 75,954 | 74,315 | ||||||||
Income taxes payable | 25,088 | |||||||||
Total liabilities | 3,734,546 | 4,305,790 | 3,445,467 | 2,888,050 | 2,442,944 | 2,826,015 | 2,511,132 | 2,005,165 | ||
Stockholders' equity | 347,323 | 270,826 | ||||||||
Total liabilities and stockholders' equity | 5,133,902 | $ 5,596,194 | $ 4,616,320 | $ 3,981,263 | 3,505,294 | $ 3,815,322 | $ 3,430,605 | $ 2,858,001 | ||
Parent Company [Member] | ||||||||||
ASSETS | ||||||||||
Cash | 5,505 | 841 | 7,757 | $ 707 | ||||||
Investment in PennyMac Mortgage Investment Trust at fair value | 472,792 | 344,007 | ||||||||
Deferred tax asset | 18,378 | $ 46,000 | ||||||||
Due from subsidiaries | 3,585 | 3,818 | ||||||||
Total assets | 481,882 | 367,044 | ||||||||
LIABILITIES AND STOCKHOLDERS' EQUITY | ||||||||||
Payable to exchanged PNMAC unitholders under tax receivable agreement | 75,954 | 74,315 | ||||||||
Income taxes payable | 25,077 | |||||||||
Total liabilities | 101,031 | 74,315 | ||||||||
Stockholders' equity | 380,851 | 292,729 | ||||||||
Total liabilities and stockholders' equity | $ 481,882 | $ 367,044 |
Parent Company Information -131
Parent Company Information - Condensed Statement of Income (Details) - USD ($) $ in Thousands | 3 Months Ended | 12 Months Ended | |||||||||
Dec. 31, 2016 | Sep. 30, 2016 | Jun. 30, 2016 | Mar. 31, 2016 | Dec. 31, 2015 | Sep. 30, 2015 | Jun. 30, 2015 | Mar. 31, 2015 | Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | |
Revenue | |||||||||||
Interest | $ 81,127 | $ 49,155 | $ 27,771 | ||||||||
Revaluation of Payable to exchanged Private National Mortgage Acceptance Company, LLC unitholders under tax receivable agreement | 551 | (1,695) | 1,378 | ||||||||
Total net revenue | $ 289,285 | $ 291,395 | $ 207,806 | $ 143,401 | $ 187,240 | $ 189,205 | $ 196,351 | $ 140,314 | 931,887 | 713,110 | 518,277 |
Expenses | |||||||||||
Interest | 106,206 | 68,537 | 37,257 | ||||||||
Total expenses | 159,877 | 152,117 | 123,548 | 113,262 | 110,007 | 115,282 | 121,552 | 87,076 | 548,804 | 433,917 | 295,244 |
Income before provision for income taxes | 129,408 | 139,278 | 84,258 | 30,139 | 77,233 | 73,923 | 74,799 | 53,238 | 383,083 | 279,193 | 223,033 |
Provision for income taxes | 15,568 | 16,976 | 9,963 | 3,596 | 8,327 | 8,575 | 8,619 | 6,114 | 46,103 | 31,635 | 26,722 |
Net income | $ 113,840 | $ 122,302 | $ 74,295 | $ 26,543 | $ 68,906 | $ 65,348 | $ 66,180 | $ 47,124 | 336,980 | 247,558 | 196,311 |
Parent Company [Member] | |||||||||||
Revenue | |||||||||||
Dividends from subsidiaries | 6,418 | 3,825 | 11,900 | ||||||||
Interest | 49 | 121 | |||||||||
Revaluation of Payable to exchanged Private National Mortgage Acceptance Company, LLC unitholders under tax receivable agreement | 551 | (1,695) | 1,378 | ||||||||
Total net revenue | 7,018 | 2,251 | 13,278 | ||||||||
Expenses | |||||||||||
Interest | 6 | ||||||||||
Total expenses | 6 | ||||||||||
Income before provision for income taxes | 7,018 | 2,245 | 13,278 | ||||||||
Provision for income taxes | 46,103 | 31,635 | 26,722 | ||||||||
Income before equity in undistributed earnings of subsidiaries | (39,085) | (29,390) | (13,444) | ||||||||
Equity in undistributed earnings of subsidiaries | 105,164 | 76,618 | 50,286 | ||||||||
Net income | 66,079 | 47,228 | 36,842 | ||||||||
Private National Mortgage Acceptance Company, LLC | Parent Company [Member] | |||||||||||
Revenue | |||||||||||
Revaluation of Payable to exchanged Private National Mortgage Acceptance Company, LLC unitholders under tax receivable agreement | $ 551 | $ (1,695) | $ 1,378 |
Parent Company Information -132
Parent Company Information - Condensed Statement of Cash Flows (Details) - USD ($) $ in Thousands | 3 Months Ended | 12 Months Ended | |||||||||
Dec. 31, 2016 | Sep. 30, 2016 | Jun. 30, 2016 | Mar. 31, 2016 | Dec. 31, 2015 | Sep. 30, 2015 | Jun. 30, 2015 | Mar. 31, 2015 | Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | |
Cash flow from operating activities | |||||||||||
Net income | $ 113,840 | $ 122,302 | $ 74,295 | $ 26,543 | $ 68,906 | $ 65,348 | $ 66,180 | $ 47,124 | $ 336,980 | $ 247,558 | $ 196,311 |
Revaluation of Payable to exchanged Private National Mortgage Acceptance Company, LLC unitholders under tax receivable agreement | (551) | 1,695 | (1,378) | ||||||||
Decrease in deferred tax asset | 18,668 | 29,726 | 21,922 | ||||||||
Increase in intercompany receivable | (76) | (3,819) | |||||||||
Payments to exchanged Private National Mortgage Acceptance Company, LLC unitholders under tax receivable agreement | (5,132) | ||||||||||
Increase in income tax payable | 25,570 | ||||||||||
Net cash (used in) provided by operating activities | (938,522) | 53,144 | (578,954) | ||||||||
Cash flow from financing activities | |||||||||||
Proceeds from Stock Options Exercised | 149 | ||||||||||
Net cash provided by financing activities | 967,156 | 539,214 | 617,819 | ||||||||
Net change in cash | (6,105) | 29,216 | 45,617 | ||||||||
Cash at beginning of year | 105,472 | 76,256 | 105,472 | 76,256 | 30,639 | ||||||
Cash at end of year | 99,367 | 105,472 | 99,367 | 105,472 | 76,256 | ||||||
Parent Company [Member] | |||||||||||
Cash flow from operating activities | |||||||||||
Net income | 66,079 | 47,228 | 36,842 | ||||||||
Equity in undistributed earnings of subsidiaries | (105,164) | (76,618) | (50,286) | ||||||||
Revaluation of Payable to exchanged Private National Mortgage Acceptance Company, LLC unitholders under tax receivable agreement | (551) | 1,695 | (1,378) | ||||||||
Decrease in deferred tax asset | 18,668 | 29,730 | 21,922 | ||||||||
(Decrease) increase in payables to subsidiaries | (50) | ||||||||||
Increase in income tax payable | 25,559 | ||||||||||
Net cash (used in) provided by operating activities | 4,515 | (6,916) | 7,050 | ||||||||
Cash flow from financing activities | |||||||||||
Proceeds from Stock Options Exercised | 149 | ||||||||||
Net cash provided by financing activities | 149 | ||||||||||
Net change in cash | 4,664 | (6,916) | 7,050 | ||||||||
Cash at beginning of year | $ 841 | $ 7,757 | 841 | 7,757 | 707 | ||||||
Cash at end of year | $ 5,505 | $ 841 | $ 5,505 | $ 841 | $ 7,757 |
Recently Issued Accounting P133
Recently Issued Accounting Pronouncements (Details) $ in Thousands | Dec. 31, 2016USD ($) |
Recently Issued Accounting Pronouncements. | |
Future minimum lease payments | $ 100,786 |
Subsequent Events (Details)
Subsequent Events (Details) - Subsequent Event [Member] - USD ($) $ in Millions | Feb. 17, 2017 | Mar. 03, 2017 | Mar. 02, 2017 |
Note Payable | |||
Subsequent Event [Line Items] | |||
Proceeds from notes payable | $ 400 | ||
Interest rate spread | 4.75% | ||
Citibank, N.A. | |||
Securities Sold under Agreements to Repurchase [Abstract] | |||
Maximum aggregate purchase price | $ 400 | ||
Aggregate purchase price, amount committed | $ 200 | $ 150 |