Document and Entity Information
Document and Entity Information - shares | 9 Months Ended | |
Sep. 30, 2020 | Oct. 23, 2020 | |
Cover [Abstract] | ||
Document type | 10-Q | |
Document quarterly report | true | |
Document period end date | Sep. 30, 2020 | |
Document transition report | false | |
Entity file number | 001-14667 | |
Entity registrant name | Mr. Cooper Group Inc. | |
Entity incorporation, state or country code | DE | |
Entity tax identification number | 91-1653725 | |
Entity address, address line one | 8950 Cypress Waters Blvd | |
Entity address, city or town | Coppell | |
Entity address, state or province | TX | |
Entity address, postal zip code | 75019 | |
City area code | 469 | |
Local phone number | 549-2000 | |
Title of 12(b) security | Common stock, $0.01 par value per share | |
Trading symbol | COOP | |
Security exchange name | NASDAQ | |
Entity current reporting status | Yes | |
Entity interactive data current | Yes | |
Entity filer category | Accelerated Filer | |
Entity small business | false | |
Entity emerging growth company | false | |
Entity shell company | false | |
Entity common stock, shares outstanding | 90,853,569 | |
Entity central index key | 0000933136 | |
Current fiscal year end date | --12-31 | |
Document fiscal year focus | 2020 | |
Document fiscal period focus | Q3 | |
Amendment flag | false |
Consolidated Balance Sheets
Consolidated Balance Sheets - USD ($) $ in Millions | Sep. 30, 2020 | Dec. 31, 2019 |
Assets | ||
Cash and cash equivalents | $ 946 | $ 329 |
Restricted cash | 229 | 283 |
Mortgage servicing rights, $2,663 and $3,496 at fair value, respectively | 2,669 | 3,502 |
Advances and other receivables, net of reserves of $191 and $175, respectively | 745 | 988 |
Reverse mortgage interests, net of purchase discount of $125 and $114, respectively | 5,460 | 6,279 |
Mortgage loans held for sale at fair value | 3,817 | 4,077 |
Property and equipment, net of accumulated depreciation of $84 and $55, respectively | 114 | 112 |
Deferred tax assets, net | 1,344 | 1,345 |
Other assets | 6,431 | 1,390 |
Total assets | 21,755 | 18,305 |
Liabilities and Stockholders’ Equity | ||
Unsecured senior notes, net | 2,167 | 2,366 |
Advance and warehouse facilities, net | 4,851 | 4,997 |
Payables and other liabilities | 6,590 | 2,016 |
MSR related liabilities - nonrecourse at fair value | 1,091 | 1,348 |
Mortgage servicing liabilities | 44 | 61 |
Other nonrecourse debt, net | 4,671 | 5,286 |
Total liabilities | 19,414 | 16,074 |
Commitments and contingencies (Note 15) | ||
Preferred stock at $0.00001 - 10 million shares authorized, 1.0 million shares issued and outstanding, respectively; aggregate liquidation preference of ten dollars, respectively | 0 | 0 |
Common stock at $0.01 par value - 300 million shares authorized, 92.0 million and 91.1 million shares issued, respectively | 1 | 1 |
Additional paid-in-capital | 1,120 | 1,109 |
Retained earnings | 1,243 | 1,122 |
Treasury shares at cost - 1.2 million and zero shares, respectively | (24) | 0 |
Total Mr. Cooper stockholders’ equity | 2,340 | 2,232 |
Non-controlling interests | 1 | (1) |
Total stockholders’ equity | 2,341 | 2,231 |
Total liabilities and stockholders’ equity | $ 21,755 | $ 18,305 |
Consolidated Balance Sheets (Pa
Consolidated Balance Sheets (Parenthetical) - USD ($) | Sep. 30, 2020 | Dec. 31, 2019 |
Statement of Financial Position [Abstract] | ||
Forward MSRs - fair value | $ 2,663,000,000 | $ 3,496,000,000 |
Advances and other receivables, reserves | 191,000,000 | 175,000,000 |
Purchase discount, net | 125,000,000 | 114,000,000 |
Accumulated depreciation | $ 84,000,000 | $ 55,000,000 |
Preferred stock, par value (in dollars per share) | $ 0.00001 | $ 0.00001 |
Preferred stock, shares authorized (in shares) | 10,000,000 | 10,000,000 |
Preferred stock, shares issued (in shares) | 1,000,000 | 1,000,000 |
Preferred stock, shares outstanding (in shares) | 1,000,000 | 1,000,000 |
Preferred stock, liquidation preference | $ 10 | $ 10 |
Common stock, par value (in dollars per share) | $ 0.01 | $ 0.01 |
Common stock, shares authorized (in shares) | 300,000,000 | 300,000,000 |
Common stock, shares, issued (in shares) | 92,000,000 | 91,100,000 |
Treasury stock (in shares) | 1,200,000 | 0 |
Unaudited Consolidated Statemen
Unaudited Consolidated Statements of Operations - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | |
Revenues: | ||||
Service related, net | $ 227 | $ 258 | $ 186 | $ 479 |
Net gain on mortgage loans held for sale | 645 | 360 | 1,594 | 788 |
Total revenues | 872 | 618 | 1,780 | 1,267 |
Expenses: | ||||
Salaries, wages and benefits | 275 | 250 | 769 | 703 |
General and administrative | 156 | 228 | 525 | 710 |
Total expenses | 431 | 478 | 1,294 | 1,413 |
Interest income | 56 | 163 | 250 | 459 |
Interest expense | (165) | (196) | (534) | (572) |
Other income (expense), net | (51) | 0 | (50) | 16 |
Total other expenses, net | (160) | (33) | (334) | (97) |
Income (loss) before income tax expense (benefit) | 281 | 107 | 152 | (243) |
Less: Income tax expense (benefit) | 67 | 24 | 36 | (52) |
Net income (loss) | 214 | 83 | 116 | (191) |
Less: Net income (loss) attributable to non-controlling interests | 5 | (1) | 2 | (2) |
Net income (loss) attributable to Mr. Cooper | 209 | 84 | 114 | (189) |
Less: Undistributed earnings attributable to participating stockholders | 2 | 1 | 1 | 0 |
Net income (loss) attributable to common stockholders | $ 207 | $ 83 | $ 113 | $ (189) |
Net income (loss) per common share attributable to Mr. Cooper: | ||||
Basic (in dollars per share) | $ 2.26 | $ 0.91 | $ 1.23 | $ (2.08) |
Diluted (in dollars per share) | $ 2.18 | $ 0.90 | $ 1.20 | $ (2.08) |
Unaudited Consolidated Statem_2
Unaudited Consolidated Statements of Stockholders' Equity - USD ($) shares in Thousands, $ in Millions | Total | Cumulative effect, period of adoption, adjustment | Preferred Stock | Common Stock | Additional Paid-in Capital | Retained Earnings | Retained EarningsCumulative effect, period of adoption, adjustment | Total Mr. Cooper Stockholders’ Equity | Total Mr. Cooper Stockholders’ EquityCumulative effect, period of adoption, adjustment | Non-controlling Interests | Treasury Stock |
Shares outstanding, beginning balance (in shares) at Dec. 31, 2018 | 1,000 | 90,821 | |||||||||
Stockholders' equity, beginning balance at Dec. 31, 2018 | $ 1,945 | $ 0 | $ 1 | $ 1,093 | $ 848 | $ 1,942 | $ 3 | $ 0 | |||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||||||
Shares issued / (surrendered) under incentive compensation plan (in shares) | 266 | ||||||||||
Shares issued / (surrendered) under incentive compensation plan | (1) | (1) | (1) | ||||||||
Share-based compensation | 14 | 14 | 14 | ||||||||
Net income (loss) | (191) | (189) | (189) | (2) | |||||||
Shares outstanding, ending balance (in shares) at Sep. 30, 2019 | 1,000 | 91,087 | |||||||||
Stockholders' equity, ending balance at Sep. 30, 2019 | 1,767 | $ 0 | $ 1 | 1,106 | 659 | 1,766 | 1 | 0 | |||
Shares outstanding, beginning balance (in shares) at Dec. 31, 2018 | 1,000 | 90,821 | |||||||||
Stockholders' equity, beginning balance at Dec. 31, 2018 | 1,945 | $ 0 | $ 1 | 1,093 | 848 | 1,942 | 3 | 0 | |||
Shares outstanding, ending balance (in shares) at Dec. 31, 2019 | 1,000 | 91,118 | |||||||||
Stockholders' equity, ending balance at Dec. 31, 2019 | $ 2,231 | $ 7 | $ 0 | $ 1 | 1,109 | 1,122 | $ 7 | 2,232 | $ 7 | (1) | 0 |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||||||
Accounting standards update | us-gaap:AccountingStandardsUpdate201613Member | ||||||||||
Shares outstanding, beginning balance (in shares) at Jun. 30, 2019 | 1,000 | 91,061 | |||||||||
Stockholders' equity, beginning balance at Jun. 30, 2019 | $ 1,678 | $ 0 | $ 1 | 1,100 | 575 | 1,676 | 2 | 0 | |||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||||||
Shares issued / (surrendered) under incentive compensation plan (in shares) | 26 | ||||||||||
Shares issued / (surrendered) under incentive compensation plan | 1 | 1 | 1 | ||||||||
Share-based compensation | 5 | 5 | 5 | ||||||||
Net income (loss) | 83 | 84 | 84 | (1) | |||||||
Shares outstanding, ending balance (in shares) at Sep. 30, 2019 | 1,000 | 91,087 | |||||||||
Stockholders' equity, ending balance at Sep. 30, 2019 | 1,767 | $ 0 | $ 1 | 1,106 | 659 | 1,766 | 1 | 0 | |||
Shares outstanding, beginning balance (in shares) at Dec. 31, 2019 | 1,000 | 91,118 | |||||||||
Stockholders' equity, beginning balance at Dec. 31, 2019 | 2,231 | $ 7 | $ 0 | $ 1 | 1,109 | 1,122 | $ 7 | 2,232 | $ 7 | (1) | 0 |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||||||
Shares issued / (surrendered) under incentive compensation plan (in shares) | 923 | ||||||||||
Shares issued / (surrendered) under incentive compensation plan | (5) | (5) | (5) | ||||||||
Share-based compensation | 16 | 16 | 16 | ||||||||
Repurchase of common stock (in shares) | (1,187) | ||||||||||
Repurchase of common stock | (24) | (24) | (24) | ||||||||
Net income (loss) | 116 | 114 | 114 | 2 | |||||||
Shares outstanding, ending balance (in shares) at Sep. 30, 2020 | 1,000 | 90,854 | |||||||||
Stockholders' equity, ending balance at Sep. 30, 2020 | $ 2,341 | $ 0 | $ 1 | 1,120 | 1,243 | 2,340 | 1 | (24) | |||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||||||
Accounting standards update | us-gaap:AccountingStandardsUpdate201613Member | ||||||||||
Shares outstanding, beginning balance (in shares) at Jun. 30, 2020 | 1,000 | 92,022 | |||||||||
Stockholders' equity, beginning balance at Jun. 30, 2020 | $ 2,145 | $ 0 | $ 1 | 1,114 | 1,034 | 2,149 | (4) | 0 | |||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||||||
Shares issued / (surrendered) under incentive compensation plan (in shares) | 19 | ||||||||||
Share-based compensation | 6 | 6 | 6 | ||||||||
Repurchase of common stock (in shares) | (1,187) | ||||||||||
Repurchase of common stock | (24) | (24) | (24) | ||||||||
Net income (loss) | 214 | 209 | 209 | 5 | |||||||
Shares outstanding, ending balance (in shares) at Sep. 30, 2020 | 1,000 | 90,854 | |||||||||
Stockholders' equity, ending balance at Sep. 30, 2020 | $ 2,341 | $ 0 | $ 1 | $ 1,120 | $ 1,243 | $ 2,340 | $ 1 | $ (24) |
Unaudited Consolidated Statem_3
Unaudited Consolidated Statements of Cash Flows - USD ($) $ in Millions | 9 Months Ended | ||
Sep. 30, 2020 | Sep. 30, 2019 | ||
Operating Activities | |||
Net income (loss) | $ 116 | $ (191) | |
Adjustments to reconcile net income (loss) to net cash attributable to operating activities: | |||
Deferred tax benefit | (1) | (53) | |
Net gain on mortgage loans held for sale | (1,594) | (788) | |
Interest income on reverse mortgage loans | (158) | (241) | |
Provision for servicing and non-servicing reserves | 18 | 53 | |
Fair value changes and amortization/accretion of mortgage servicing rights/liabilities | 1,258 | 998 | |
Fair value changes in excess spread financing | (132) | (190) | |
Fair value changes in mortgage servicing rights financing liability | 10 | 15 | |
Fair value changes in mortgage loans held for investment | 0 | (3) | |
Amortization of premiums, net of discount accretion | 45 | (38) | |
Depreciation and amortization for property and equipment and intangible assets | 56 | 67 | |
Share-based compensation | 16 | 14 | |
Loss on redemption of unsecured senior notes | 52 | 0 | |
Other loss | 17 | 5 | |
Repurchases of forward loan assets out of Ginnie Mae securitizations | (3,173) | (1,823) | |
Mortgage loans originated and purchased for sale, net of fees | (38,709) | (27,673) | |
Sales proceeds and loan payment proceeds for mortgage loans held for sale and held for investment | 43,040 | 27,916 | |
Changes in assets and liabilities: | |||
Advances and other receivables | 228 | 264 | |
Reverse mortgage interests | 1,031 | 1,700 | |
Other assets | (4,797) | 9 | |
Payables and other liabilities | 4,555 | (69) | |
Net cash attributable to operating activities | 1,878 | (28) | |
Investing Activities | |||
Acquisitions, net of cash acquired | 0 | (85) | |
Property and equipment additions, net of disposals | (43) | (38) | |
Purchase of forward mortgage servicing rights, net of liabilities incurred | (39) | (454) | |
Proceeds on sale of forward and reverse mortgage servicing rights | 44 | 298 | |
Net cash attributable to investing activities | (38) | (279) | |
Financing Activities | |||
(Decrease) increase in advance and warehouse facilities | (135) | 1,835 | |
Repayment of notes payable | 0 | (294) | |
Proceeds from HECM securitizations | 516 | 398 | |
Proceeds from sale of HECM securitizations | 0 | 20 | |
Repayment of HECM securitizations | (508) | (568) | |
Proceeds from issuance of participating interest financing in reverse mortgage interests | 139 | 220 | |
Repayment of participating interest financing in reverse mortgage interests | (845) | (1,472) | |
Proceeds from the issuance of excess spread financing | 24 | 469 | |
Settlements and repayments of excess spread financing | (159) | (182) | |
Issuance of unsecured senior debt | 1,450 | 0 | |
Repayment of nonrecourse debt – legacy assets | 0 | (29) | |
Redemption and repayment of unsecured senior notes | (1,686) | 0 | |
Repayment of finance lease liability | (1) | (3) | |
Surrender of shares relating to stock vesting | (5) | (1) | |
Repurchase of common stock | (24) | 0 | |
Debt financing costs | (43) | (5) | |
Net cash attributable to financing activities | (1,277) | 388 | |
Net increase in cash, cash equivalents, and restricted cash | 563 | 81 | |
Cash, cash equivalents, and restricted cash - beginning of period | 612 | 561 | |
Cash, cash equivalents, and restricted cash - end of period | [1] | 1,175 | 642 |
Supplemental Disclosures of Cash Activities | |||
Cash paid for interest expense | 180 | 166 | |
Net cash paid (refunded) for income taxes | 40 | (4) | |
Total cash, cash equivalents, and restricted cash | [1] | $ 1,175 | $ 642 |
[1] | The following table provides a reconciliation of cash, cash equivalents and restricted cash to amount reported within the consolidated balance sheets. |
Nature of Business and Basis of
Nature of Business and Basis of Presentation | 9 Months Ended |
Sep. 30, 2020 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Nature of business and basis of presentation | 1. Nature of Business and Basis of Presentation Nature of Business Mr. Cooper Group Inc., collectively with its consolidated subsidiaries, (“Mr. Cooper,” the “Company,” “we,” “us” or “our”) provides servicing, origination and transaction-based services related to single family residences throughout the United States with operations under its primary brands: Mr. Cooper® and Xome®. Mr. Cooper is one of the largest home loan originators and servicers in the country focused on delivering a variety of servicing and lending products, services and technologies. Xome provides real estate services including real estate brokerage, title, closing, valuation and field services to lenders, investors and consumers. The Company’s corporate website is located at www.mrcoopergroup.com . The Company has provided a glossary of terms, which defines certain industry-specific and other terms that are used herein, in the MD&A section of this Form 10-Q. On February 1, 2019, the Company completed the acquisition of all the limited liability units of Pacific Union Financial, LLC (“Pacific Union”), a California limited liability company. The final purchase price was $116, paid in cash, and the purchase price allocation was finalized as of December 31, 2019. Pacific Union was a privately held company that was engaged in the origination, as well as servicing of residential mortgage loans, and operated throughout the United States. The acquisition allows the Company to expand its servicing portfolio and increase its mortgage lending volume and capabilities. Basis of Presentation The consolidated interim financial statements of the Company have been prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) for interim financial information and in accordance with the instructions to Form 10-Q and Article 10 of Regulation S-X as promulgated by the SEC. Accordingly, the financial statements do not include all of the information and footnotes required by GAAP for complete financial statements and should be read in conjunction with the audited consolidated financial statements and notes thereto included in the Company’s Annual Reports on Form 10-K for the year ended December 31, 2019. The interim consolidated financial statements are unaudited; however, in the opinion of management, all adjustments, consisting of normal recurring items, considered necessary for a fair presentation of the results of the interim periods have been included. Dollar amounts are reported in millions, except per share data and other key metrics, unless otherwise noted. The Company evaluated subsequent events through the date these interim consolidated financial statements were issued. Basis of Consolidation The consolidated financial statements include the accounts of the Company, its wholly-owned subsidiaries, other entities in which the Company has a controlling financial interest and those variable interest entities (“VIE”) where the Company’s wholly-owned subsidiaries are the primary beneficiaries. Assets and liabilities of VIEs and their respective results of operations are consolidated from the date that the Company became the primary beneficiary through the date the Company ceases to be the primary beneficiary. The Company applies the equity method of accounting to investments where it is able to exercise significant influence, but not control, over the policies and procedures of the entity and owns less than 50% of the voting interests. Investments in certain companies over which the Company does not exert significant influence are accounted for as cost method investments. Intercompany balances and transactions on consolidated entities have been eliminated. Business combinations are included in the consolidated financial statements from their respective dates of acquisition. Use of Estimates The preparation of the consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts reported in the consolidated financial statements and accompanying notes. Actual results could differ from these estimates due to factors such as adverse changes in the economy, changes in interest rates, secondary market pricing for loans held for sale and derivatives, strength of underwriting and servicing practices, changes in prepayment assumptions, declines in home prices or discrete events adversely affecting specific borrowers, uncertainties in the economy from the COVID-19 pandemic, and such differences could be material. Recent Accounting Guidance Adopted Accounting Standards Update No. 2016-13, Financial Instruments - Credit Losses (Topic 326), (“ASU 2016-13”) requires expected credit losses for financial instruments held at the reporting date to be measured based on historical experience, current conditions and reasonable and supportable forecasts, which is referred to as the current expected credit loss (“CECL”) methodology. The update eliminates the initial recognition of credit losses on an incurred basis in current GAAP and instead reflects an entity’s current estimate of all expected credit losses over the life of the asset. Previously, when credit losses were measured under GAAP, an entity generally only considered past events and current conditions in measuring the incurred loss. The new standard will reflect management’s best estimate of all expected credit losses for the Company’s financial assets that are recognized at amortized cost. The guidance was effective for the Company as of January 1, 2020, with a cumulative-effect adjustment to retained earnings as of that date. Based upon management’s scoping analysis, the Company determined that reverse mortgage interests, net of reserves, advances and other receivables, net of reserves, and certain financial instruments included in other assets are within the scope of ASU 2016-13. Certain financial instruments within these respective line items have been determined to have limited expected credit-related losses due to the contractual servicing agreements with agencies and loan product guarantees. For advances and other receivables, net, the Company determined that the majority of estimated losses are due to servicing operational errors and credit-related losses are not significant because of the contractual relationships with the agencies. For reverse mortgage interests the Company determined that the guarantee from Federal Housing Administration (“FHA”) on Home Equity Conversion Mortgage (“HECM”) loan products limits credit-related losses to an immaterial amount with substantially all losses related to servicing operational errors. For other assets, primarily trade receivables, the Company determined that these are short-term in nature (less than one year), and the estimated credit-related losses over the life of these receivables are similar to those resulting from the Company’s existing loss reserve process. For each of the aforementioned financial instruments carried at amortized cost, the Company enhanced its processes to consider and include the requirements of ASU 2016-13, as applicable, into the determination of credit-related losses. On January 1, 2020, the Company adopted ASU 2016-13 In connection with adoption of ASU 2016-13, the Company updated its accounting policies as follows: For certain financial instruments included in advances and other receivables, net, and certain trade receivables and accrued revenues included in other assets that are within the scope of ASU 2016-13, the reserve methodology was revised to consider CECL losses. The revised CECL methodology considers expected lifetime loss rates calculated from historical data using a weighted average life to determine the current expected credit loss required. Due to the nature of the financial instrument, reverse mortgage interests, net of reserves, and advances and other receivables had limited impact from the adoption of CECL to the reserve methodology. See Note 3, Advances and Other Receivables, Net , and Note 4, Reverse Mortgage Interests, Net, for additional information. Factors that influenced management’s current estimate of expected credit losses for certain advances and other receivables and certain trade receivables and accrued revenues included the following: historical collection and loss rates, passage of time, weighted average life of receivables, and various qualitative factors including current economic conditions. Factors that influenced management’s current estimate of expected credit related losses for certain reverse mortgage interests included the following: historical collection and loss rates, foreclosure timelines, and values of underlying collateral. Accounting Standards Update No. 2018-13, Fair Value Measurement (Topic 820) - Changes to the Disclosure Requirements for Fair Value Measurement , (“ASU 2018-13”) removes the requirement to disclose the amount of and reasons for transfers between Level 1 and Level 2 fair value measurement methodologies, the policy for timing of transfers between levels and the valuation processes for Level 3 fair value measurements. It also adds a requirement to disclose changes in unrealized gains and losses for the period included in other comprehensive income for recurring Level 3 fair value measurements held at the end of the reporting period and the range and weighted average of significant unobservable inputs used to develop Level 3 measurements. For certain unobservable inputs, entities may disclose other quantitative information in lieu of the weighted average if the other quantitative information would be a more reasonable and rational method to reflect the distribution of unobservable inputs used to develop Level 3 fair value measurements. The Company adopted ASU 2018-13 on January 1, 2020. The guidance does not have a material impact to the disclosures currently provided by the Company. |
Mortgage Servicing Rights ("MSR
Mortgage Servicing Rights ("MSRs") and Related Liabilities | 9 Months Ended |
Sep. 30, 2020 | |
Transfers and Servicing [Abstract] | |
Mortgage servicing rights and related liabilities | 2. Mortgage Servicing Rights and Related Liabilities The following table sets forth the carrying value of the Company’s mortgage servicing rights (“MSRs”) and the related liabilities. In estimating the fair value of all servicing rights and related liabilities, the impact of the COVID-19 pandemic was considered in the determination of key assumptions. MSRs and Related Liabilities September 30, 2020 December 31, 2019 Forward MSRs - fair value $ 2,663 $ 3,496 Reverse MSRs - amortized cost 6 6 Mortgage servicing rights $ 2,669 $ 3,502 Mortgage servicing liabilities - amortized cost $ 44 $ 61 Excess spread financing - fair value $ 1,044 $ 1,311 Mortgage servicing rights financing - fair value 47 37 MSR related liabilities - nonrecourse at fair value $ 1,091 $ 1,348 Mortgage Servicing Rights The following table sets forth the activities of forward MSRs: Nine Months Ended September 30, Forward MSRs - Fair Value 2020 2019 Fair value - beginning of period $ 3,496 $ 3,665 Additions: Servicing retained from mortgage loans sold 412 298 Purchases of servicing rights (1) 30 732 Dispositions: Sales of servicing assets — (317) Changes in fair value: Changes in valuation inputs or assumptions used in the valuation model (782) (716) Other changes in fair value (493) (323) Fair value - end of period $ 2,663 $ 3,339 (1) Purchases of servicing rights during the nine months ended September 30, 2019 includes $271 of mortgage servicing rights that were acquired from Pacific Union. See Note 1, Nature of Business and Basis of Presentation , for further discussion. In addition, in 2019, the Company entered into a subservicing contract, resulting in additional $253 servicing rights in the second quarter of 2019. During the nine months ended September 30, 2020 and 2019, the Company sold $94 and $25,639 in unpaid principal balance (“UPB”) of forward MSRs, of which none and $20,560 were retained by the Company as subservicer, respectively. MSRs measured at fair value are primarily segregated between credit sensitive and interest sensitive pools (referred to herein as “acquisition pools”). Credit sensitive pools are primarily impacted by borrower performance under specified repayment terms, which most directly impacts involuntary prepayments and delinquency rates. Interest sensitive pools are primarily impacted by changes in forecasted interest rates, which in turn impact voluntary prepayment speeds. MSRs measured at fair value are also segregated between investor type into agency and non-agency pools (referred to herein as “investor pools”) based upon contractual servicing agreements with investors at the respective balance sheet date to evaluate the MSR portfolio and fair value of the portfolio. The following table provides a breakdown of UPB and fair value for the Company’s forward MSRs: September 30, 2020 December 31, 2019 Forward MSRs - UPB and fair value breakdown UPB Fair Value UPB Fair Value Acquisition Pools Credit sensitive $ 122,422 $ 1,206 $ 147,895 $ 1,613 Interest sensitive 144,245 1,457 148,887 1,883 Total $ 266,667 $ 2,663 $ 296,782 $ 3,496 Investor Pools Agency (1) $ 220,139 $ 2,234 $ 240,688 $ 2,944 Non-agency (2) 46,528 429 56,094 552 Total $ 266,667 $ 2,663 $ 296,782 $ 3,496 (1) Agency investors primarily consist of government sponsored enterprises (“GSE”), such as the Federal National Mortgage Association (“Fannie Mae” or “FNMA”) and the Federal Home Loan Mortgage Corp (“Freddie Mac” or “FHLMC”), and the Government National Mortgage Association (“Ginnie Mae” or “GNMA”). (2) Non-agency investors consist of investors in private-label securitizations. The Company used the following key weighted-average inputs and assumptions in estimating the fair value of forward MSRs: Forward MSRs - Key inputs and assumptions September 30, 2020 December 31, 2019 Total MSR Portfolio Discount rate 9.5 % 9.7 % Prepayment speeds 14.4 % 13.1 % Average life 5.2 years 5.8 years Acquisition Pools Credit Sensitive Discount rate 10.0 % 10.4 % Prepayment speeds 12.6 % 12.7 % Average life 5.6 years 6.0 years Interest Sensitive Discount rate 9.0 % 9.1 % Prepayment speeds 15.9 % 13.5 % Average life 4.9 years 5.7 years Investor Pools Agency Discount rate 8.9 % 9.0 % Prepayment speeds 14.5 % 13.0 % Average life 5.1 years 5.8 years Non-agency Discount rate 12.0 % 12.6 % Prepayment speeds 13.9 % 13.8 % Average life 5.5 years 6.2 years The following table shows the hypothetical effect on the fair value of the Company’s forward MSRs when applying certain unfavorable variations of key assumptions to these assets for the dates indicated: Discount Rate Total Prepayment Speeds Forward MSRs - Hypothetical Sensitivities 100 bps Adverse Change 200 bps Adverse Change 10% Adverse Change 20% Adverse Change September 30, 2020 Mortgage servicing rights $ (87) $ (179) $ (157) $ (321) December 31, 2019 Mortgage servicing rights $ (127) $ (245) $ (165) $ (317) These hypothetical sensitivities should be evaluated with care. The effect on fair value of a 10% adverse change in assumptions generally cannot be determined because the relationship of the change in assumptions to the fair value may not be linear. Additionally, the impact of a variation in a particular assumption on the fair value is calculated while holding other assumptions constant. In reality, changes in one factor may lead to changes in other factors, which could impact the above hypothetical effects. Reverse Mortgage Servicing Rights and Liabilities - Amortized Cost The Company services certain HECM reverse mortgage loans with an unpaid principal balance of $20,006 and $22,725 as of September 30, 2020 and December 31, 2019, respectively. The following table sets forth the activities of reverse MSRs and mortgage servicing liabilities (“MSL”): Nine Months Ended September 30, 2020 2019 Reverse MSRs and Liabilities - Amortized Cost Assets Liabilities Assets Liabilities Balance - beginning of period $ 6 $ 61 $ 11 $ 71 Amortization/accretion — (17) 2 (39) Adjustments (1) — — (6) 37 Balance - end of the period $ 6 $ 44 $ 7 $ 69 Fair value - end of period $ 6 $ 7 $ 7 $ 41 (1) Reverse MSR and MSL net adjustments recorded by the Company during the nine months ended September 30, 2019 primarily relate to the finalization of the preliminary fair value estimates recorded in connection with the merger of Nationstar Mortgage Holdings, Inc. (the “Merger”). Management evaluates reverse MSRs and MSLs each reporting period for impairment. Based on management’s assessment at September 30, 2020, no impairment or increased obligation was needed. Excess Spread Financing - Fair Value The Company had excess spread financing liability of $1,044 and $1,311 as of September 30, 2020 and December 31, 2019, respectively. The Company used the following key weighted-average assumptions in the Company’s valuation of excess spread financing: Excess Spread Financing Key Assumptions September 30, 2020 December 31, 2019 Discount rate 11.9 % 11.6 % Prepayment speeds 13.6 % 12.6 % Recapture rate 19.1 % 20.1 % Average life 5.3 years 5.8 years The following table shows the hypothetical effect on the Company’s excess spread financing fair value when applying certain unfavorable variations of key assumptions to these liabilities for the dates indicated: Discount Rate Prepayment Speeds Excess Spread Financing - Hypothetical Sensitivities 100 bps Adverse Change 200 bps Adverse Change 10% Adverse Change 20% Adverse Change September 30, 2020 Excess spread financing $ 35 $ 72 $ 44 $ 92 December 31, 2019 Excess spread financing $ 46 $ 95 $ 46 $ 96 These hypothetical sensitivities should be evaluated with care. The effect on fair value of a 10% variation in assumptions generally cannot be determined because the relationship of the change in assumptions to the fair value may not be linear. Additionally, the impact of a variation in a particular assumption on the fair value is calculated while holding other assumptions constant. In reality, changes in one factor may lead to changes in other factors, which could impact the above hypothetical effects. Also, a positive change in the above assumptions would not necessarily correlate with the corresponding decrease in the net carrying amount of the excess spread financing. Excess spread financing’s cash flow assumptions that are utilized in determining fair value are based on the related cash flow assumptions used in the financed MSRs. Any fair value change recognized in the financed MSRs attributable to related cash flows assumptions would inherently have an inverse impact on the carrying amount of the related excess spread financing. Mortgage Servicing Rights Financing - Fair Value The Company had MSR financing liability of $47 and $37 as of September 30, 2020 and December 31, 2019, respectively. The following table sets forth the key weighted-average assumptions used in the valuation of the MSR financing liability: Mortgage Servicing Rights Financing Key Assumptions September 30, 2020 December 31, 2019 Advance financing and counterparty fee rates 8.2 % 8.9 % Annual advance recovery rates 20.2 % 18.8 % Servicing Segment Revenues The following table sets forth the items comprising total revenues for the Servicing segment: Three Months Ended September 30, Nine Months Ended September 30, Total Revenues - Servicing 2020 2019 2020 2019 Contractually specified servicing fees (1) $ 282 $ 305 $ 864 $ 893 Other service-related income (1) 59 51 170 133 Incentive and modification income (1) 12 12 30 29 Late fees (1) 18 30 65 82 Reverse servicing fees 6 7 19 24 Mark-to-market adjustments (2) (29) (83) (673) (607) Counterparty revenue share (3) (104) (86) (268) (204) Amortization, net of accretion (4) (112) (73) (290) (152) Total revenues - Servicing $ 132 $ 163 $ (83) $ 198 (1) The Company recognizes revenue on an earned basis for services performed. Amounts include subservicing related revenues. (2) Mark-to-market (“MTM”) adjustments include fair value adjustments on MSR, excess spread financing and MSR financing liabilities. The amount of MSR MTM includes the impact of negative modeled cash flows which have been transferred to reserves on advances and other receivables. The negative modeled cash flows relate to advances and other receivables associated with inactive and liquidated loans that are no longer part of the MSR portfolio. The impact of negative modeled cash flows was $7 and $18 during the three months ended September 30, 2020 and 2019, and $20 and $46 during the nine months ended September 30, 2020 and 2019, respectively. (3) Counterparty revenue share represents the excess servicing fee that the Company pays to the counterparties under the excess spread financing arrangements and the payments made associated with MSR financing arrangements. (4) Amortization is net of excess spread accretion of $96 and $77 and MSL accretion of $4 and $10 during the three months ended September 30, 2020 and 2019, respectively. During the nine months ended September 30, 2020 and 2019, amortization is net of excess spread accretion of $243 and $172 and MSL accretion of $17 and $39, respectively. |
Advances and Other Receivables,
Advances and Other Receivables, Net | 9 Months Ended |
Sep. 30, 2020 | |
Receivables [Abstract] | |
Advances and other receivables, net | 3. Advances and Other Receivables, Net Advances and other receivables, net, consists of the following: Advances and Other Receivables, Net September 30, 2020 December 31, 2019 Servicing advances, net of $92 and $131 purchase discount, respectively $ 746 $ 970 Receivables from agencies, investors and prior servicers, net of $21 and $21 purchase discount, respectively 190 193 Reserves (191) (175) Total advances and other receivables, net $ 745 $ 988 The following table sets forth the activities of the servicing reserves for advances and other receivables: Three Months Ended September 30, Nine Months Ended September 30, Reserves for Advances and Other Receivables 2020 2019 2020 2019 Balance - beginning of period $ 216 $ 98 $ 168 $ 47 Provision and other additions (1) 13 35 72 102 Write-offs (38) (3) (49) (19) Balance - end of period $ 191 $ 130 $ 191 $ 130 (1) The Company recorded a provision of $7 and $18 through the MTM adjustments in revenues - service related, net, in the consolidated statements of operations during the three months ended September 30, 2020 and 2019, respectively, and $20 and $46 during the nine months ended September 30, 2020 and 2019, respectively, for inactive and liquidated l oans that are no longer part of the MSR portfolio. Other additions represent reclassifications of required reserves provisioned within other balance sheet accounts as associated serviced loans become inactive or liquidate. Purchase Discount for Advances and Other Receivables The following tables set forth the activities of the purchase discounts for advances and other receivables: Three Months Ended September 30, 2020 Three Months Ended September 30, 2019 Purchase Discount for Advances and Other Receivables Servicing Advances Receivables from Agencies, Investors and Prior Servicers Servicing Advances Receivables from Agencies, Investors and Prior Servicers Balance - beginning of period $ 117 $ 21 $ 156 $ 48 Utilization of purchase discounts (25) — (8) — Balance - end of period $ 92 $ 21 $ 148 $ 48 Nine Months Ended September 30, 2020 Nine Months Ended September 30, 2019 Purchase Discount for Advances and Other Receivables Servicing Advances Receivables from Agencies, Investors and Prior Servicers Servicing Advances Receivables from Agencies, Investors and Prior Servicers Balance - beginning of period $ 131 $ 21 $ 205 $ 48 Addition from acquisition — — 19 — Utilization of purchase discounts (39) — (76) — Balance - end of period $ 92 $ 21 $ 148 $ 48 Credit Loss for Advances and Other Receivables As described in Note 1, Nature of Business and Basis of Presentation , advances and other receivables are within the scope of ASU 2016-13 L framework. During the three and nine months ended September 30, 2020, the Company increased the CECL reserve by $13 and $27, respectively. As of September 30, 2020, the total CECL reserve was $44, of which $27 and $17 was recorded in reserves and purchase discount for advances and other receivables, respectively. Based upon the Company’s application of ASU 2016-13, the Company determined that the credit-related risk associated with applicable financial instruments typically increase with the passage of time. The CECL reserve methodology considers these financial instruments collectible to a point in time o f 39 months. An y projected remaining balance at the end of the collection period is considered a loss and factors into the overall CECL loss rate required. |
Reverse Mortgage Interests, Net
Reverse Mortgage Interests, Net | 9 Months Ended |
Sep. 30, 2020 | |
Reverse Mortgage Interests [Abstract] | |
Reverse Mortgage Interests, Net | 4. Reverse Mortgage Interests, Net Reverse mortgage interests, net, consists of the following: Reverse Mortgage Interests, Net September 30, 2020 December 31, 2019 Participating interests in HECM mortgage-backed securities (“HMBS”) $ 3,663 $ 4,282 Other interests securitized 1,002 994 Unsecuritized interests 920 1,117 Purchase discount, net (125) (114) Total reverse mortgage interests, net $ 5,460 $ 6,279 Participating Interests in HMBS The Company does not originate reverse mortgages, but during the nine months ended September 30, 2020 and 2019, a total of $134 and $211 in UPB associated with new draws on existing loans was transferred to GNMA and securitized by the Company, respectively. In March 2019, the Company entered into an agreement with Fannie Mae for the transfer of reverse mortgage loans. As a result, $61 was transferred from Fannie Mae and securitized into GNMA HMBS during the nine months ended September 30, 2019. There was no such activity during the nine months ended September 30, 2020. Other Interests Securitized The reverse mort gage interests under other interest securitized have been transferred to private securitization trusts and are accounted for as a secured borrowing. During the nine months ended September 30, 2020, the Company securitized a total of $516 UPB through Trust 2020-1 and a total of $337 UPB from Trust 2018-2 and Trust 2018-3 was called and the related debt was extinguished. During the nine months ended September 30, 2019, the Company securitized a total of $398 UPB through Trust 2019-1 and a total of $249 UPB from Trust 2017-2 was called and the related debt was extinguished. The Company sold $20 UPB of Trust 2018-3 during the nine months ended September 30, 2019. Refer to Other Nonrecourse Debt in Note 9, Indebtedness for additional information. Unsecuritized Interests Unsecuritized interests in reverse mortgages consist of the following: Unsecuritized interests September 30, 2020 December 31, 2019 Repurchased HECM loans (exceeds 98% of their Max Claim Amount (“MCA”)) $ 634 $ 789 HECM related receivables (1) 213 250 Funded borrower draws not yet securitized 56 64 Real estate owned (“REO”) related receivables 17 14 Total unsecuritized interests $ 920 $ 1,117 (1) HECM related receivables consist primarily of receivables from FNMA for corporate advances and service fees and claims receivables from the U.S. Department of Housing and Urban Development (“HUD”) on reverse mortgage interests. The Company repurchased a total of $912 and $2,132 of HECM loans out of GNMA HMBS securitizations during the nine months ended September 30, 2020 and 2019, respectively, of which $244 and $561 were subsequently assigned to a third party in accordance with applicable servicing agreements, respectively. To the extent a loan is not subject to applicable servicing agreements and assigned to a third party, the loan is either subject to assignment to HUD, per contractual obligations with GNMA, liquidated via a payoff from the borrower or liquidated via a foreclosure according to the terms of the underlying mortgage. The Company assigned a total of $630 and $1,458 of HECM loans to HUD during the nine months ended September 30, 2020 and 2019, respectively. Purchase Discount, net, for Reverse Mortgage Interests The following table sets forth the activities of the purchase discounts, net, for reverse mortgage interests: Three Months Ended September 30, Nine Months Ended September 30, Purchase discount, net, for reverse mortgage interests (1) 2020 2019 2020 2019 Balance - beginning of period $ (127) $ (163) $ (114) $ (164) Adjustments (2) — — — (24) Utilization of purchase discounts (3) 8 40 27 80 Amortization, net of accretion (6) (1) (38) (16) Balance - end of period $ (125) $ (124) $ (125) $ (124) (1) Net position as certain items are in a premium/(discount) position, based on the characteristics of underlying tranches of loans. (2) Adjustments during the nine months ended September 30, 2019 due to revised cost to service assumption utilized in the valuation of reverse mortgage assets and liabilities acquired from the Merger. (3) Utilization of purchase discounts on liquidated loans, for which the remaining receivable was written off. Credit Loss for Reverse Mortgage Interests As described in Note 1, Nature of Business and Basis of Presentation , reverse mortgage interests are within the scope of ASU nd no additional CECL reserve was recorded as of September 30, 2020. The credit-risk characteristics of reverse mortgage interests do not vary with time as the financial instruments have no contractual life or financial profile as the primary counterparty is the government agency insuring the loans. Reverse Mortgage Interest Income Total interest earned on the Company’s reverse mortgage interests wa s $41 a nd $74 during the three months ended September 30, 2020 and 2019, respectively, and $158 |
Mortgage Loans Held for Sale
Mortgage Loans Held for Sale | 9 Months Ended |
Sep. 30, 2020 | |
Mortgage Loans Held for Sale and Investment [Abstract] | |
Mortgage loans held for sale | 5. Mortgage Loans Held for Sale Mortgage loans held for sale are recorded at fair value as set forth below: Mortgage Loans Held for Sale September 30, 2020 December 31, 2019 Mortgage loans held for sale – UPB $ 3,642 $ 3,949 Mark-to-market adjustment (1) 175 128 Total mortgage loans held for sale $ 3,817 $ 4,077 (1) The mark-to-market adjustment includes net change in unrealized gain/loss, premium on correspondent loans and fees on direct-to-consumer loans. The mark-to-market adjustment is recorded in net gain on mortgage loans held for sale in the consolidated statements of operations. The following table sets forth the activities of mortgage loans held for sale: Nine Months Ended September 30, Mortgage Loans Held for Sale 2020 2019 Balance - beginning of period $ 4,077 $ 1,631 Loans sold (42,185) (27,413) Mortgage loans originated and purchased, net of fees 38,709 28,209 Repurchase of loans out of Ginnie Mae securitizations 3,173 1,823 Net change in unrealized gain (loss) of loans held for sale 36 2 Net transfers of mortgage loans held for sale (1) 7 15 Balance - end of period $ 3,817 $ 4,267 (1) Amount reflects transfers to other assets for loans transitioning into REO status and transfers to advances and other receivables, net, for claims made on certain government insurance mortgage loans. Transfers out are net of transfers in upon receipt of proceeds from an REO sale or claim filing. During the nine months ended September 30, 2020 and 2019, the Company received proceeds of $43,040 and $27,778, respectively, on the sale of mortgage loans held for sale, resulting in gains of $855 and $365, respectively. The total UPB and fair value of mortgage loans held for sale on non-accrual status was as follows: September 30, 2020 December 31, 2019 Mortgage Loans Held for Sale UPB Fair Value UPB Fair Value Non-accrual (1) $ 49 $ 39 $ 29 $ 22 (1) Non-accrual UPB includes $37 and $25 of UPB related to Ginnie Mae repurchased loans as of September 30, 2020 and December 31, 2019, respectively. The total UPB of mortgage loans held for sale for which the Company has begun formal foreclosure proceedings was $20 and $21 as of September 30, 2020 and December 31, 2019, respectively. |
Loans Subject to Repurchase fro
Loans Subject to Repurchase from Ginnie Mae | 9 Months Ended |
Sep. 30, 2020 | |
Receivables [Abstract] | |
Loans Subject to Repurchase from Ginnie Mae | 6. Loans Subject to Repurchase from Ginnie Mae Forward loans are sold to Ginnie Mae in conjunction with the issuance of mortgage backed securities. The Company, as the issuer of the mortgage backed securities, has the unilateral right to repurchase any individual loan in a Ginnie Mae securitization pool if that loan meets certain criteria, including payments not being received from borrowers for greater than 90 days. Once the Company has the unilateral right to repurchase a delinquent loan, it has effectively regained control over the loan and recognizes these rights to the loan on its consolidated balance sheets and establishes a corresponding repur chase liability regardless of the Company’s intention to repurchase the loan. The Company had loans subject to repurchase from Ginnie Mae of $5,395 and $560 as of September 30, 2020 and December 31, 2019, respectively, which are included in both other assets and payables and other liabilities in the consolidated balance sheets. Loans subject to repurchase from Ginnie Mae as of September 30, 2020 include $5,095 loans in forbearance related to the Coronavirus Aid, Relief, and Economic Security Act (“CARES Act”) whereby no payments have been received from borrowers for greater than 90 days. |
Goodwill and Intangible Assets
Goodwill and Intangible Assets | 9 Months Ended |
Sep. 30, 2020 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Goodwill and Intangible Assets | 7. Goodwill and Intangible Assets The Company had goodwill of $120 as of September 30, 2020 and December 31, 2019. The Company had intangible assets of $45 |
Derivative Financial Instrument
Derivative Financial Instruments | 9 Months Ended |
Sep. 30, 2020 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
Derivative financial instruments | 8. Derivative Financial Instruments Derivative instruments are used as part of the overall strategy to manage exposure to market risks primarily associated with fluctuations in interest rates related to originations. Derivative instruments utilized by the Company primarily include interest rate lock commitments (“IRLCs”), loan purchase commitments (“LPCs”), forward Mortgage Backed Securities (“MBS”) purchase commitments, Eurodollar and Treasury futures and interest rate swap agreements. The following tables provide the outstanding notional balances, fair values of outstanding positions and recorded gains/(losses) for the derivative financial instruments: September 30, 2020 Nine Months Ended September 30, 2020 Derivative Financial Instruments Expiration Outstanding Fair Gains/(Losses) Assets Mortgage loans held for sale Loan sale commitments 2020 $ 1,908 $ 75 $ 43 Derivative financial instruments IRLCs 2020-2021 10,967 414 279 LPCs 2020 5,217 38 26 Forward MBS trades 2020-2021 11,452 23 17 Total derivative financial instruments - assets $ 27,636 $ 475 $ 322 Liabilities Derivative financial instruments IRLCs 2020 $ 2 $ — $ — LPCs 2020 598 2 (1) Forward MBS trades 2020-2021 15,974 42 30 Total derivative financial instruments - liabilities $ 16,574 $ 44 $ 29 September 30, 2019 Nine Months Ended September 30, 2019 Derivative Financial Instruments Expiration Outstanding Fair Gains/(Losses) Assets Mortgage loans held for sale Loan sale commitments 2019 $ 1,508 $ 35 $ 9 Derivative financial instruments IRLCs 2019 4,964 144 84 LPCs 2019 1,397 18 17 Forward MBS trades 2019 3,054 8 6 Eurodollar futures 2019-2021 6 — — Total derivative financial instruments - assets $ 9,421 $ 170 $ 107 Liabilities Derivative financial instruments IRLCs 2019 $ 15 $ — $ — LPCs 2019 547 3 3 Forward MBS trades 2019 5,667 16 (8) Eurodollar futures 2019-2021 8 — — Total derivative financial instruments - liabilities $ 6,237 $ 19 $ (5) Associated with the Company’s derivatives are $14 |
Indebtedness
Indebtedness | 9 Months Ended |
Sep. 30, 2020 | |
Debt Disclosure [Abstract] | |
Indebtedness | 9. Indebtedness Notes Payable September 30, 2020 December 31, 2019 Interest Rate Maturity Date Collateral Capacity Amount Outstanding Collateral Pledged Outstanding Collateral Pledged Advance Facilities $875 advance facility (1) CP+2.5% to 6.5% April 2021 Servicing advance receivables $ 875 $ 144 $ 169 $ 37 $ 88 $640 advance facility (2) LIBOR+3.9% August 2022 Servicing advance receivables 640 144 196 — — $425 advance facility (3) LIBOR+2.8% to 6.5% October 2021 Servicing advance receivables 425 206 261 224 285 $250 advance facility (4) LIBOR+1.5% to 2.6% December 2020 Servicing advance receivables 250 — — 98 167 $100 advance facility LIBOR+2.5% January 2021 Servicing advance receivables 100 75 102 63 125 Advance facilities principal amount 569 728 422 665 Warehouse Facilities $1,500 warehouse facility LIBOR+1.7% June 2021 Mortgage loans or MBS 1,500 666 634 759 733 $1,200 warehouse facility LIBOR+1.5% to 3.0% November 2020 Mortgage loans or MBS 1,200 564 610 683 724 $1,050 warehouse facility (5) LIBOR+1.8% to 3.9% September 2022 Mortgage loans or MBS 1,050 627 679 589 656 September 30, 2020 December 31, 2019 Interest Rate Maturity Date Collateral Capacity Amount Outstanding Collateral Pledged Outstanding Collateral Pledged $750 warehouse facility LIBOR+1.8% August 2021 Mortgage loans or MBS 750 574 591 — — $750 warehouse facility LIBOR+1.7% to 2.8% October 2021 Mortgage loans or MBS 750 472 481 411 425 $750 warehouse facility (6) LIBOR+2.3% September 2022 Mortgage loans or MBS 750 105 135 54 78 $700 warehouse facility (7) LIBOR+1.3% to 2.2% November 2020 Mortgage loans or MBS 700 488 505 469 488 $600 warehouse facility LIBOR+2.2% February 2021 Mortgage loans or MBS 600 156 185 174 202 $500 warehouse facility LIBOR+2.5% to 4.0% May 2021 Mortgage loans or MBS 500 — — 336 349 $300 warehouse facility LIBOR+1.4% January 2021 Mortgage loans or MBS 300 258 258 136 136 $250 warehouse facility (8) LIBOR+1.4% to 2.3% December 2020 Mortgage loans or MBS 250 — — 762 783 $200 warehouse facility LIBOR+1.8% April 2021 Mortgage loans or MBS 200 72 74 27 27 $200 warehouse facility LIBOR+1.3% November 2020 Mortgage loans or MBS 200 — — — — $50 warehouse facility LIBOR+1.8% to 4.8% April 2021 Mortgage loans or MBS 50 43 45 11 15 $40 warehouse facility LIBOR+3.3% January 2021 Mortgage loans or MBS 40 3 4 5 6 Warehouse facilities principal amount 4,028 4,201 4,416 4,622 MSR Facilities $450 warehouse facility (9) LIBOR+5.1% May 2021 MSR 450 — — 150 945 $260 warehouse facility (2) LIBOR+3.9% August 2022 MSR 260 256 659 — — $200 warehouse facility (10) LIBOR+3.5% August 2021 MSR 200 — 187 — 200 $150 warehouse facility (5) LIBOR+3.8% September 2022 MSR 150 — 149 — 130 $50 warehouse facility LIBOR+2.8% November 2020 MSR 50 10 80 10 84 MSR facilities principal amount 266 1,075 160 1,359 Advance, warehouse and MSR facilities principal amount 4,863 $ 6,004 4,998 $ 6,646 Unamortized debt issuance costs (12) (1) Advance and warehouse facilities, net $ 4,851 $ 4,997 Pledged Collateral for warehouse and MSR facilities: Mortgage loans held for sale $ 3,560 $ 3,637 $ 3,826 $ 3,931 Reverse mortgage interests 468 564 590 691 MSR 266 1,075 160 1,359 (1) The capacity amount for this advance facility increased from $125 to $875 in April 2020. (2) Total capacity for this facility is $900, of which $640 is internally allocated for Advance financing and $260 is internally allocated for MSR financing; capacity is fully fungible and is not restricted by these allocations. (3) The capacity amount for this advance facility increased from $325 to $425 in April 2020. (4) This advance facility was terminated and transferred to another advance facility in April 2020. (5) Total capacity amount for this facility is $1,200 , of which $150 is a sublimit for MSR financing. The capacity amount increased from $800 to $1,200 in September 2020. (6) The capacity amount for this warehouse facility increased from $200 to $750 in September 2020. (7) The capacity amount for this warehouse facility was subsequently increased to $1,500 in October 2020 with a maturity date of October 2021. (8) The capacity amount for this warehouse facility decreased from $1,000 to $250 in May 2020. (9) This MSR facility was terminated in August 2020. (10) The capacity amount for this MSR facility decreased from $400 to $200 in August 2020. Unsecured Senior Notes Unsecured senior notes consist of the following: Unsecured senior notes September 30, 2020 December 31, 2019 $850 face value, 5.500% interest rate payable semi-annually, due August 2028 (1) $ 850 $ — $750 face value, 9.125% interest rate payable semi-annually, due July 2026 750 750 $600 face value, 6.000% interest rate payable semi-annually, due January 2027 (2) 600 — $600 face value, 6.500% interest rate payable semi-annually, due July 2021 (3) — 492 $300 face value, 6.500% interest rate payable semi-annually, due June 2022 (3) — 206 $950 face value, 8.125% interest rate payable semi-annually, due July 2023 (4) — 950 Unsecured senior notes principal amount 2,200 2,398 Unamortized debt issuance costs, premium and discount (33) (32) Unsecured senior notes, net $ 2,167 $ 2,366 (1) On August 6, 2020, the Company completed an offering of $850 aggregate principal amount of 5.500% Senior Notes due 2028 (the “2028 Notes”) (2) On January 16, 2020, the Company completed an offering of $600 aggregate principal amount of 6.000% Senior Notes due 2027 (the “2027 Notes”). (3) This note was redeemed in full on February 15, 2020 using the net proceeds of the 2027 Notes offering, together with cash on hand. (4) This note was redeemed in full on August 13, 2020 using the net proceeds of the 2028 Notes offering, together with cash on hand. The indentures provide that on or before certain fixed dates, the Company may redeem up to 40% of the aggregate principal amount of the unsecured senior notes with the net proceeds of certain equity offerings at fixed redemption prices, plus accrued and unpaid interest, to the redemption dates, subject to compliance with certain conditions. In addition, the Company may redeem all or a portion of the unsecured senior notes at any time on or after certain fixed dates at the applicable redemption prices set forth in the indentures plus accrued and unpaid interest, to the redemption dates. During the nine months ended September 30, 2020, the Company repaid $100 in principal of outstanding notes. Additionally, the Company redeemed $950 and $1,548 in principal of outstanding notes during the three and nine months ended September 30, 2020, resulting in a net loss of $53 and $52, respectively. N o notes were repurchased or redeemed during the three and nine months ended September 30, 2019. As of September 30, 2020, the expected maturities of the Company’s unsecured senior notes based on contractual maturities are as follows: Year Ending December 31, Amount 2020 through 2024 $ — Thereafter 2,200 Total unsecured senior notes principal amount $ 2,200 Other Nonrecourse Debt Other nonrecourse debt consists of the following: September 30, 2020 December 31, 2019 Other nonrecourse debt Issue Date Maturity Date Interest Rate Class of Note Collateral Amount Outstanding Outstanding Participating interest financing (1) — — 0.3%-5.6% — $ — $ 3,664 $ 4,284 Securitization of nonperforming HECM loans Trust 2020-1 September 2020 September 2030 1.3%-7.5% A, M1, M2, M3, M4, M5 519 516 — Trust 2019-2 November 2019 November 2029 2.3%-6.0% A, M1, M2, M3, M4, M5 275 259 333 Trust 2019-1 June 2019 June 2029 2.7%-6.0% A, M1, M2, M3, M4, M5 248 226 302 Trust 2018-3 (2) November 2018 November 2028 3.6%-6.0% A, M1, M2, M3, M4, M5 — — 209 Trust 2018-2 (2) July 2018 July 2028 3.2%-6.0% A, M1, M2, M3, M4, M5 — — 148 Other nonrecourse debt principal amount 4,665 5,276 Unamortized debt issuance costs, premium and discount 6 10 Other nonrecourse debt, net $ 4,671 $ 5,286 (1) Amounts represent the Company’s participating interest in GNMA HMBS securitized portfolios. (2) As discussed in Note 4, Reverse Mortgage Interests, Net , Trust 2018-3 and Trust 2018-2 were collapsed and the related debt was extinguished during the nine months ended September 30, 2020. Financial Covenants The Company’s credit facilities contain various financial covenants which primarily relate to required tangible net worth amounts, liquidity reserves, leverage requirements, and profitability requirements, which are measured at the Company’s operating subsidiary, Nationstar Mortgage LLC. The Company was in compliance with its required financial covenants as of September 30, 2020. |
Securitizations and Financings
Securitizations and Financings | 9 Months Ended |
Sep. 30, 2020 | |
Variable Interest Entities and Securitizations [Abstract] | |
Securitizations and Financings | 10. Securitizations and Financings Variable Interest Entities In the normal course of business, the Company enters into various types of on- and off-balance sheet transactions with special purpose entities (“SPEs”) determined to be VIEs, which primarily consist of securitization trusts established for a limited purpose. Generally, these SPEs are formed for the purpose of securitization transactions in which the Company transfers assets to an SPE, which then issues to investors various forms of debt obligations supported by those assets. The Company has determined that the SPEs created in connection with certain advance facilities trusts should be consolidated as the Company is the primary beneficiary of each of these entities. Also, the Company consolidated certain reverse mortgage SPEs as it is the primary beneficiary of each of these entities. These SPEs include the Nationstar HECM Loan Trusts. A summary of the assets and liabilities of the Company’s transactions with VIEs included in the Company’s consolidated financial statements is presented below: September 30, 2020 December 31, 2019 Consolidated transactions with VIEs Transfers Reverse Secured Borrowings Transfers Reverse Secured Borrowings Assets Restricted cash $ 44 $ 25 $ 66 $ 42 Reverse mortgage interests, net (1) — 4,603 — 5,230 Advances and other receivables, net 430 — 540 — Total assets $ 474 $ 4,628 $ 606 $ 5,272 Liabilities Advance facilities (2) $ 347 $ — $ 359 $ — Payables and other liabilities — — 1 1 Participating interest financing — 3,664 — 4,284 HECM Securitizations (HMBS) Trust 2020-1 — 516 — — Trust 2019-2 — 259 — 333 Trust 2019-1 — 226 — 302 Trust 2018-3 — — — 209 Trust 2018-2 — — — 148 Total liabilities $ 347 $ 4,665 $ 360 $ 5,277 (1) Amounts include net purchase discount of $62 a nd $46 as of September 30, 2020 and December 31, 2019, respectively. (2) Refer to advance facilities in Note 9, Indebtedness , for additional information. The following table shows a summary of the outstanding collateral and certificate balances for securitization trusts for which the Company was the transferor, including any retained beneficial interests and MSRs, that were not consolidated by the Company: Unconsolidated securitization trusts September 30, 2020 December 31, 2019 Total collateral balances - UPB $ 1,378 $ 1,503 Total certificate balances $ 1,378 $ 1,512 The Company has not retained any variable interests in the unconsolidated securitization trusts that were outstanding as of September 30, 2020 and December 31, 2019 and therefore does not have a significant maximum exposure to loss related to these unconsolidated VIEs. A summary of mortgage loans transferred by the Company to unconsolidated securitization trusts that are 60 days or more past due are presented below: Principal Amount of Transferred Loans 60 Days or More Past Due September 30, 2020 December 31, 2019 Unconsolidated securitization trusts $ 179 $ 193 |
Earnings Per Share
Earnings Per Share | 9 Months Ended |
Sep. 30, 2020 | |
Earnings Per Share [Abstract] | |
Earnings per share | 11. Earnings Per Share The Company computes earnings per share using the two-class method, which is an earnings allocation formula that determines earnings per share for common stock and any participating securities according to dividends declared (whether paid or unpaid) and participation rights in undistributed earnings. The Series A Preferred Stock is considered participating securities because it has dividend rights determined on an as-converted basis in the event of Company’s declaration of a dividend or distribution for common shares. The following table sets forth the computation of basic and diluted net income (loss) per common share (amounts in millions, except per share amounts): Three Months Ended September 30, Nine Months Ended September 30, Computation of earnings per share 2020 2019 2020 2019 Net income (loss) attributable to Mr. Cooper $ 209 $ 84 $ 114 $ (189) Less: Undistributed earnings attributable to participating stockholders 2 1 1 — Net income (loss) attributable to common stockholders $ 207 $ 83 $ 113 $ (189) Net income (loss) per common share attributable to Mr. Cooper: Basic $ 2.26 $ 0.91 $ 1.23 $ (2.08) Diluted $ 2.18 $ 0.90 $ 1.20 $ (2.08) Weighted average shares of common stock outstanding (in thousands): Basic 91,682 91,080 91,688 91,012 Dilutive effect of stock awards (1) 2,563 117 1,529 — Dilutive effect of participating securities (1) 839 839 839 — Diluted 95,084 92,036 94,056 91,012 (1) For periods with net loss, the Company excluded potential common shares from the computation of diluted EPS because inclusion would be antidilutive. |
Income Taxes
Income Taxes | 9 Months Ended |
Sep. 30, 2020 | |
Income Tax Disclosure [Abstract] | |
Income taxes | 12. Income Taxes For the three and nine months ended September 30, 2020, the effective tax rate was 24.0% and 23.9%, respectively, which differed from the statutory federal rate of 21% primarily due to state income taxes, as well as unfavorable permanent differences including executive compensation disallowed under Internal Revenue Code Section 162(m). The effective tax rate increased during the three and nine months ended September 30, 2020 compared to the same periods in 2019, primarily due to the relative unfavorable tax impacts of the permanent differences on the annual effective rate. For the three and nine months ended September 30, 2019, the effective tax rate was 22.3% and 21.5%, respectively, which differed from the statutory federal rate of 21% primarily due to permanent differences including executive compensation disallowed under Internal Revenue Code Section 162(m) and nondeductible meals and entertainment expenses, as well as other recurring items such as the state tax benefit. |
Fair Value Measurements
Fair Value Measurements | 9 Months Ended |
Sep. 30, 2020 | |
Fair Value Disclosures [Abstract] | |
Fair value measurements | 13. Fair Value Measurements Fair value is a market-based measurement, not an entity-specific measurement, and should be determined based on the assumptions that market participants would use in pricing the asset or liability. As a basis for considering market participant assumptions in fair value measurements, a three-tiered fair value hierarchy has been established based on the level of observable inputs used in the measurement of fair value (e.g., Level 1 representing quoted prices for identical assets or liabilities in an active market; Level 2 representing values using observable inputs other than quoted prices included within Level 1; and Level 3 representing estimated values based on significant unobservable inputs). There have been no significant changes to the valuation techniques and inputs used by the Company in estimating fair values of Level 2 and Level 3 assets and liabilities as disclosed in the Company’s Annual Reports on Form 10-K for the year ended December 31, 2019, with the exception of the following: Derivative Financial Instruments (Level 2 and Level 3) – During the three months ended June 30, 2020, the Company changed the fair value classification of its IRLCs and LPCs derivatives from Level 2 to Level 3. IRLCs and LPCs are carried at fair value primarily based on secondary market prices for underlying mortgage loans, which is observable data, with adjustments made to such observable data for the inherent value of servicing, which is an unobservable input. The fair value is also subject to adjustments for the estimated pull-through rate. The impact of the unobservable input to the overall valuation of IRLCs and LPCs was previously much less significant, resulting in a classification of Level 2 in the fair value hierarchy as of December 31, 2019. During the three months ended June 30,2020, market interest rates continued to decline and fell to record lows, which drove an increase in the volume of the Company’s IRLCs and LPCs and increased the impact of the unobservable input on the overall valuation of IRLCs and LPCs. Such increased impact of the unobservable input on the overall valuation resulted in a classification of Level 3 in the fair value hierarchy as of June 30, 2020. For other derivatives, they are exchange-traded or traded within highly active dealer markets. In order to determine the fair value of these instruments, the Company utilizes the exchange price or dealer market price for the particular derivative contract; therefore, the Company classifies these contracts as Level 2 in the fair value disclosure. Derivative financial instruments are recorded in other assets and payables and other liabilities within the consolidated balance sheets. See Note 8, Derivative Financial Instruments , for more information. The following tables present the estimated carrying amount and fair value of the Company’s financial instruments and other assets and liabilities measured at fair value on a recurring basis: September 30, 2020 Recurring Fair Value Measurements Fair value - Recurring basis Total Fair Value Level 1 Level 2 Level 3 Assets Mortgage loans held for sale $ 3,817 $ — $ 3,817 $ — Forward mortgage servicing rights 2,663 — — 2,663 Derivative financial instruments IRLCs 414 — — 414 Forward MBS trades 23 — 23 — LPCs 38 — — 38 Liabilities Derivative financial instruments Forward MBS trades $ 42 $ — $ 42 $ — LPCs 2 — — 2 Mortgage servicing rights financing 47 — — 47 Excess spread financing 1,044 — — 1,044 December 31, 2019 Recurring Fair Value Measurements Fair value - Recurring basis Total Fair Value Level 1 Level 2 Level 3 Assets Mortgage loans held for sale $ 4,077 $ — $ 4,077 $ — Forward mortgage servicing rights 3,496 — — 3,496 Derivative financial instruments IRLCs 135 — 135 — Forward MBS trades 7 — 7 — LPCs 12 — 12 — Liabilities Derivative financial instruments Forward MBS trades $ 12 $ — $ 12 $ — LPCs 3 — 3 — Mortgage servicing rights financing 37 — — 37 Excess spread financing 1,311 — — 1,311 The tables below present a reconciliation for all of the Company’s Level 3 assets and liabilities measured at fair value on a recurring basis: Nine Months Ended September 30, 2020 Assets Liabilities Fair value - Level 3 assets and liabilities Forward mortgage servicing rights IRLCs LPCs Excess spread financing Mortgage servicing rights financing Balance - beginning of period $ 3,496 $ 135 $ 12 $ 1,311 $ 37 Total gains or losses included in earnings (1,275) 279 26 (132) 10 Purchases, issuances, sales, repayments and settlements Purchases 30 — — — — Issuances 412 — — 24 — Settlements and repayments — — — (159) — Balance - end of period $ 2,663 $ 414 $ 38 $ 1,044 $ 47 Nine Months Ended September 30, 2019 Assets Liabilities Fair value - Level 3 assets and liabilities Forward mortgage servicing rights Mortgage loans held for investment Excess spread financing Mortgage servicing rights financing Balance - beginning of period $ 3,665 $ 119 $ 1,184 $ 32 Total gains or losses included in earnings (1,039) 3 (190) 15 Payments received from borrowers — (11) — — Purchases, issuances, sales, repayments and settlements Purchases 732 — 469 — Issuances 298 — — — Sales (317) (94) — — Settlements and repayments — — (182) — Transfers to mortgage loans held for sale — (12) — — Transfers to real estate owned — (5) — — Balance - end of period $ 3,339 $ — $ 1,281 $ 47 The Company had LPCs liabilities of $2 and $3 as of September 30, 2020 and December 31, 2019, respectively. During the nine months ended September 30, 2020, the Company had an immaterial change in LPCs liabilities. No transfers were made in or out of Level 3 fair value assets and liabilities for the Company during the nine months ended September 30, 2020, with the exception of the change in classification for IRLCs and LPCs from Level 2 fair value assets to Level 3 fair value assets as discussed above. No transfers were made into Level 3 fair value assets and liabilities for the Company during the nine months ended September 30, 2019. During the nine months ended September 30, 2019, $12 was transferred from mortgage loans held for investment, a Level 3 fair value asset, to mortgage loans held for sale, a Level 2 fair value asset, in connection with the collapse of Trust 2009-A, the Company’s legacy portfolio, and sale of the loans held in the trust. The tables below present the quantitative information for significant unobservable inputs used in the fair value measurement of Level 3 assets and liabilities: September 30, 2020 Range Weighted Average Level 3 inputs Min Max Forward MSR Discount rate 8.3 % 12.0 % 9.5 % Prepayment speed 12.6 % 19.2 % 14.4 % Cost to service per loan (1) $ 68 $ 295 $ 105 IRLCs Value of servicing (basis points per loan) (0.4) 2.1 1.2 Excess spread financing Discount rate 9.8 % 15.5 % 11.9 % Prepayment speed 13.4 % 14.0 % 13.6 % Recapture rate 17.1 % 23.5 % 19.1 % Average life 5.2 years 5.5 years 5.3 years Mortgage servicing rights financing Advance financing and counterparty fee rates 6.4 % 9.4 % 8.2 % Annual advance recovery rates 18.6 % 22.6 % 20.2 % (1) Presented in whole dollar amounts. The tables below present a summary of the estimated carrying amount and fair value of the Company’s financial instruments not carried at fair value: September 30, 2020 Carrying Fair Value Financial instruments Level 1 Level 2 Level 3 Financial assets Cash and cash equivalents $ 946 $ 946 $ — $ — Restricted cash 229 229 — — Advances and other receivables, net 745 — — 745 Reverse mortgage interests, net 5,460 — — 5,574 Financial liabilities Unsecured senior notes (1) 2,167 2,237 — — Advance and warehouse facilities (1) 4,851 — 4,851 — Participating interest financing (1) 3,676 — — 3,679 HECM Securitization (HMBS) (1) Trust 2020-1 513 — — 513 Trust 2019-2 257 — — 257 Trust 2019-1 225 — — 225 (1) The amounts are presented net of unamortized debt issuance costs, premium and discount. December 31, 2019 Carrying Fair Value Financial instruments Level 1 Level 2 Level 3 Financial assets Cash and cash equivalents $ 329 $ 329 $ — $ — Restricted cash 283 283 — — Advances and other receivables, net 988 — — 988 Reverse mortgage interests, net 6,279 — — 6,318 Financial liabilities Unsecured senior notes (1) 2,366 2,505 — — Advance and warehouse facilities (1) 4,997 — 4,997 — Participating interest financing (1) 4,299 — — 4,299 HECM Securitization (HMBS) (1) Trust 2019-2 331 — — 331 Trust 2019-1 300 — — 300 Trust 2018-3 208 — — 208 Trust 2018-2 148 — — 148 (1) The amounts are presented net of unamortized debt issuance costs, premium and discount. |
Capital Requirements
Capital Requirements | 9 Months Ended |
Sep. 30, 2020 | |
Mortgage Banking [Abstract] | |
Capital requirements | 14. Capital Requirements Certain of the Company’s secondary market investors require minimum net worth (“capital”) requirements, as specified in the respective selling and servicing agreements. In addition, these investors may require capital ratios in excess of the stated requirements to approve large servicing transfers. To the extent that these requirements are not met, the Company’s secondary market investors may utilize a range of remedies ranging from sanctions, suspension or ultimately termination of the Company’s selling and servicing agreements, which would prohibit the Company from further originating or securitizing these specific types of mortgage loans or being an approved servicer. The Company’s various capital requirements related to its outstanding selling and servicing agreements are measured based on the Company’s operating subsidiary, Nationstar Mortgage LLC. As of September 30, 2020, the Company was in compliance with its selling and servicing capital requirements. |
Commitments and Contingencies
Commitments and Contingencies | 9 Months Ended |
Sep. 30, 2020 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and contingencies | 15. Commitments and Contingencies Litigation and Regulatory The Company and its subsidiaries are routinely and currently involved in a significant number of legal proceedings, including, but not limited to, judicial, arbitration, regulatory and governmental proceedings related to matters that arise in connection with the conduct of the Company’s business. The legal proceedings are at varying stages of adjudication, arbitration or investigation and are generally based on alleged violations of consumer protection, securities, employment, contract, tort, common law fraud and other numerous laws, including, without limitation, the Equal Credit Opportunity Act, Fair Debt Collection Practices Act, Fair Credit Reporting Act, Real Estate Settlement Procedures Act, National Housing Act, Homeowners Protection Act, Service Member’s Civil Relief Act, Telephone Consumer Protection Act, Truth in Lending Act, Financial Institutions Reform, Recovery, and Enforcement Act of 1989, unfair, deceptive or abusive acts or practices in violation of the Dodd-Frank Act, the Securities Act of 1933, the Securities Exchange Act of 1934, the Home Mortgage Disclosure Act, Title 11 of the United States Code (aka the “Bankruptcy Code”), False Claims Act and Making Home Affordable loan modification programs. In addition, along with others in its industry, the Company is subject to repurchase and indemnification claims and may continue to receive claims in the future, regarding alleged breaches of representations and warranties relating to the sale of mortgage loans, the placement of mortgage loans into securitization trusts or the servicing of mortgage loans securitizations. The Company is also subject to legal actions or proceedings related to loss sharing and indemnification provisions of its various acquisitions. Certain of the pending or threatened legal proceedings include claims for substantial compensatory, punitive and/or statutory damages or claims for an indeterminate amount of damages. The Company’s business is also subject to extensive examinations, investigations and reviews by various federal, state and local governmental, regulatory and enforcement agencies. The Company has historically had a number of open investigations with these agencies and that trend continues. The Company is currently the subject of various governmental or regulatory investigations, subpoenas, examinations and inquiries related to its residential loan servicing and origination practices, bankruptcy and collections practices, its financial reporting and other aspects of its businesses. These matters include investigations by the Consumer Financial Protection Bureau (the “CFPB”), the Securities and Exchange Commission, the Executive Office of the United States Trustees, the Department of Justice, the Office of the Special Inspector General for the Troubled Asset Relief Program, the U.S. Department of Housing and Urban Development, the multi-state committee of mortgage banking regulators and various State Attorneys General. These specific matters and other pending or potential future investigations, subpoenas, examinations or inquiries may lead to administrative, civil or criminal proceedings or settlements, and possibly result in remedies including fines, penalties, restitution, or alterations in the Company’s business practices, and additional expenses and collateral costs. The Company is cooperating fully in these matters. Responding to these matters requires the Company to devote substantial resources, resulting in higher costs and lower net cash flows. Adverse results in any of these matters could further increase the Company’s operating expenses and reduce its revenues, require it to change business practices and limit its ability to grow and otherwise materially and adversely affect its business, reputation, financial condition or results of operation. In particular, the Company continues to progress towards resolution of certain legacy regulatory matters with (i) the CFPB, (ii) the multi-state committee of mortgage banking regulators and various State Attorneys General and (iii) the Executive Office of the United States Trustee, all of which involve examination findings in prior years for alleged violations of certain laws related to the Company’s business practices. The Company believes that it has reached a settlement in principle to resolve these matters with each of these parties. Accordingly, the Company believes that it has fully accrued for these matters as of September 30, 2020. The Company seeks to resolve all legal proceedings and other matters in the manner management believes is in the best interest of the Company and contests liability, allegations of wrongdoing and, where applicable, the amount of damages or scope of any penalties or other relief sought as appropriate in each pending matter. The Company has entered into agreements with a number of entities and regulatory agencies that toll applicable limitations periods with respect to their claims. On at least a quarterly basis, the Company assesses its liabilities and contingencies in connection with outstanding legal and regulatory and governmental proceedings utilizing the latest information available. Where available information indicates that it is probable, a liability has been incurred, and the Company can reasonably estimate the amount of the loss, an accrued liability is established. The actual costs of resolving these proceedings may be substantially higher or lower than the amounts accrued. As a legal matter develops, the Company, in conjunction with any outside counsel handling the matter, evaluates on an ongoing basis whether such matter presents a loss contingency that is both probable and estimable. If, at the time of evaluation, the loss contingency is not both probable and reasonably estimable, the matter will continue to be monitored for further developments that would make such loss contingency both probable and reasonably estimable. Once the matter is deemed to be both probable and reasonably estimable, the Company will establish an accrued liability and record a corresponding amount to legal-related expense. The Company will continue to monitor the matter for further developments that could affect the amount of the accrued liability that has been previously established. Legal-related expense for the Company, which includes legal settlements and the fees paid to external legal service providers, of $9 and $36 for the three and nine months ended September 30, 2020, respectively and $24 and $56 for the three and nine months ended September 30, 2019, respectively, was included in general and administrative expenses on the consolidated statements of operations. For a number of matters for which a loss is probable or reasonably possible in future periods, whether in excess of a related accrued liability or where there is no accrued liability, the Company may be able to estimate a range of possible loss. In determining whether it is possible to provide an estimate of loss or range of possible loss, the Company reviews and evaluates its material legal matters on an ongoing basis, in conjunction with any outside counsel handling the matter. For those matters for which an estimate is possible, management currently believes the aggregate range of reasonably possible loss is $3 to $20 in excess of the accrued liability (if any) related to those matters as of September 30, 2020. This estimated range of possible loss is based upon currently available information and is subject to significant judgment, numerous assumptions and known and unknown uncertainties. The matters underlying the estimated range will change from time to time, and actual results may vary substantially from the current estimate. Those matters for which an estimate is not possible are not included within the estimated range. Therefore, this estimated range of possible loss represents what management believes to be an estimate of possible loss only for certain matters meeting these criteria. It does not represent the Company’s maximum loss exposure and the Company cannot provide assurance that its litigations reserves will not need to be adjusted in the future. Thus, the Company’s exposure and ultimate losses may be higher, possibly significantly so, than the amounts accrued or this aggregate amount. In the Company’s experience, legal proceedings are inherently unpredictable. One or more of the following factors frequently contribute to this inherent unpredictability: the proceeding is in its early stages; the damages sought are unspecified, unsupported or uncertain; it is unclear whether a case brought as a class action will be allowed to proceed on that basis or, if permitted to proceed as a class action, how the class will be defined; the other party is seeking relief other than or in addition to compensatory damages (including, in the case of regulatory and governmental investigations and inquiries, the possibility of fines and penalties); the matter presents meaningful legal uncertainties, including novel issues of law; the Company has not engaged in meaningful settlement discussions; discovery has not started or is not complete; there are significant facts in dispute; predicting possible outcomes depends on making assumptions about future decisions of courts or governmental or regulatory bodies or the behavior of other parties; and there are a large number of parties named as defendants (including where it is uncertain how damages or liability, if any, will be shared among multiple defendants). Generally, the less progress that has been made in the proceedings or the broader the range of potential results, the harder it is for the Company to estimate losses or ranges of losses that is reasonably possible the Company could incur. Based on current knowledge, and after consultation with counsel, management believes that the current legal accrued liability within payables and accrued liabilities, is appropriate, and the amount of any incremental liability arising from these matters is not expected to have a material adverse effect on the consolidated financial condition of the Company, although the outcome of such proceedings could be material to the Company’s operating results and cash flows for a particular period depending, on among other things, the level of the Company’s revenues or income for such period. However, in the event of significant developments on existing cases, it is possible that the ultimate resolution, if unfavorable, may be material to the Company’s consolidated financial statements. Other Loss Contingencies As part of the Company’s ongoing operations, it acquires servicing rights of forward and reverse mortgage loan portfolios that are subject to indemnification based on the representations and warranties of the seller. From time to time, the Company will seek recovery under these representations and warranties for incurred costs. The Company believes all balances sought from sellers recorded in advances and other receivables and reverse mortgage interests represent valid claims. However, the Company acknowledges that the claims process can be prolonged due to the required time to perfect claims at the loan level. Because of the required time to perfect or remediate these claims, management relies on the sufficiency of documentation supporting the claim, current negotiations with the counterparty and other evidence to evaluate whether a reserve is required for non-recoverable balances. In the absence of successful negotiations with the seller, all amounts claimed may not be recovered. Balances may be written-off and charged against earnings when management identifies amounts where recoverability from the seller is not likely. As of September 30, 2020, the Company believes all recorded balances for which recovery is sought from the seller are valid claims, and no evidence suggests additional reserves are warranted. Loan and Other Commitments The Company enters into IRLCs with prospective borrowers whereby the Company commits to lend a certain loan amount under specific terms and interest rates to the borrower. The Company also enters into LPCs with prospective sellers. These loan commitments are treated as derivatives and are carried at fair value. See Note 8, Derivative Financial Instruments , for more information. The Company had certain reverse MSRs, reverse MSLs and reverse mortgage loans related to approximately $20,006 and $22,725 of UPB in reverse mortgage loans as of September 30, 2020 and December 31, 2019, respectively. As a servicer for these reverse mortgage loans, among other things, the Company is obligated to fund borrowers’ draws to the loan customers as required in accordance with the loan agreement. As of September 30, 2020 and December 31, 2019, the Company’s maximum unfunded advance obligation to fund borrower draws related to these reverse MSRs and loans was approximately $2,304 and $2,617, respectively. Upon funding any portion of these draws, the Company expects to securitize and sell the advances in transactions that will be accounted for as secured borrowings. |
Business Segment Reporting
Business Segment Reporting | 9 Months Ended |
Sep. 30, 2020 | |
Segment Reporting [Abstract] | |
Business segment reporting | 16. Business Segment Reporting The Company’s segments are based upon the Company’s organizational structure, which focuses primarily on the services offered. Corporate functional expenses are allocated to individual segments based on the actual cost of services performed based on direct resource utilization, estimate of percentage use for shared services or headcount percentage for certain functions. Facility costs are allocated to individual segments based on cost per headcount for specific facilities utilized. Group insurance costs are allocated to individual segments based on global cost per headcount. Non-allocated corporate expenses include the administrative costs of executive management and other corporate functions that are not directly attributable to Company’s operating segments. Revenues generated on inter-segment services performed are valued based on similar services provided to external parties. In the second quarter of 2020, the Company updated its presentation of segment assets to be aligned with a change in the reporting package provided to the Chief Operating Decision Maker. The presentation change had no impact on the segments' operations. Assets allocated to the Servicing segment include MSRs; advances and other receivables, except for co-issue MSR holdback; Servicing related mortgage loans held for sale; and other assets including property, plant and equipment, lease-related assets, prepaid assets, and goodwill. Assets allocated to Originations segment include co-issue MSR holdback in advances and other receivables; Originations related mortgage loans held for sale; derivative assets; and other assets including property, plant and equipment, lease-related assets, prepaid assets, and goodwill. Assets allocated to the Xome segment include cash and cash equivalents; tax-related assets; receivables; and other assets including property, plant and equipment, lease-related assets, prepaid assets, goodwill, and other intangible assets. All assets that are not specifically identified or allocated to a reporting segment are reported as part of Corporate/Other and include cash and cash equivalents; tax-related assets; and intangibles assets excluding goodwill and assets allocated to Xome. Eliminations are also included in Corporate/Other. Prior year financial information has been adjusted retrospectively to reflect the updated presentation. The following tables present financial information by segment: Three Months Ended September 30, 2020 Financial information by segment Servicing Originations Xome Corporate/Other Consolidated Revenues Service related, net (1) $ 92 $ 27 $ 108 $ — $ 227 Net gain on mortgage loans held for sale 40 605 — — 645 Total revenues 132 632 108 — 872 Total expenses 99 195 94 43 431 Interest income 40 16 — — 56 Interest expense (105) (15) — (45) (165) Other income (expenses), net — — 1 (52) (51) Total other (expenses) income, net (65) 1 1 (97) (160) (Loss) income before income tax (benefit) expense $ (32) $ 438 $ 15 $ (140) $ 281 Depreciation and amortization for property and equipment and intangible assets $ 6 $ 5 $ 5 $ 3 $ 19 Total assets $ 14,707 $ 4,250 $ 135 $ 2,663 $ 21,755 Three Months Ended September 30, 2019 Financial information by segment Servicing Originations Xome Corporate/Other Consolidated Revenues Service related, net (1) $ 126 $ 22 $ 112 $ (2) $ 258 Net gain on mortgage loans held for sale 37 312 — 11 360 Total revenues 163 334 112 9 618 Total expenses 171 155 101 51 478 Interest income 137 24 — 2 163 Interest expense (120) (24) — (52) (196) Other (expense) income, net — (1) 3 (2) — Total other income (expenses), net 17 (1) 3 (52) (33) Income (loss) before income tax expense (benefit) $ 9 $ 178 $ 14 $ (94) $ 107 Depreciation and amortization for property and equipment and intangible assets $ 5 $ 4 $ 4 $ 9 $ 22 Total assets $ 12,065 $ 4,386 $ 172 $ 1,855 $ 18,478 Nine Months Ended September 30, 2020 Financial information by segment Servicing Originations Xome Corporate/Other Consolidated Revenues Service related, net (1) $ (202) $ 68 $ 320 $ — $ 186 Net gain on mortgage loans held for sale 119 1,475 — — 1,594 Total revenues (83) 1,543 320 — 1,780 Total expenses 370 528 285 111 1,294 Interest income 180 69 — 1 250 Interest expense (335) (55) — (144) (534) Other income (expense), net — — 3 (53) (50) Total other (expenses) income, net (155) 14 3 (196) (334) (Loss) income before income tax (benefit) expense $ (608) $ 1,029 $ 38 $ (307) $ 152 Depreciation and amortization for property and equipment and intangible assets $ 14 $ 12 $ 11 $ 19 $ 56 Total assets $ 14,707 $ 4,250 $ 135 $ 2,663 $ 21,755 Nine Months Ended September 30, 2019 Financial information by segment Servicing Originations Xome Corporate/Other Consolidated Revenues Service related, net (1) $ 108 $ 57 $ 316 $ (2) $ 479 Net gain on mortgage loans held for sale 90 687 — 11 788 Total revenues 198 744 316 9 1,267 Total expenses 555 404 301 153 1,413 Interest income 388 64 — 7 459 Interest expense (343) (67) — (162) (572) Other income (expense), net — 4 14 (2) 16 Total other income (expenses), net 45 1 14 (157) (97) (Loss) income before income tax (benefit) expense $ (312) $ 341 $ 29 $ (301) $ (243) Depreciation and amortization for property and equipment and intangible assets $ 13 $ 13 $ 11 $ 30 $ 67 Total assets $ 12,065 $ 4,386 $ 172 $ 1,855 $ 18,478 (1) Service related, net revenues for Corporate/Other include intersegment eliminations. |
Nature of Business and Basis _2
Nature of Business and Basis of Presentation (Policies) | 9 Months Ended |
Sep. 30, 2020 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Basis of presentation | Basis of Presentation The consolidated interim financial statements of the Company have been prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) for interim financial information and in accordance with the instructions to Form 10-Q and Article 10 of Regulation S-X as promulgated by the SEC. Accordingly, the financial statements do not include all of the information and footnotes required by GAAP for complete financial statements and should be read in conjunction with the audited consolidated financial statements and notes thereto included in the Company’s Annual Reports on Form 10-K for the year ended December 31, 2019. The interim consolidated financial statements are unaudited; however, in the opinion of management, all adjustments, consisting of normal recurring items, considered necessary for a fair presentation of the results of the interim periods have been included. Dollar amounts are reported in millions, except per share data and other key metrics, unless otherwise noted. |
Basis of consolidation | Basis of Consolidation The consolidated financial statements include the accounts of the Company, its wholly-owned subsidiaries, other entities in which the Company has a controlling financial interest and those variable interest entities (“VIE”) where the Company’s wholly-owned subsidiaries are the primary beneficiaries. Assets and liabilities of VIEs and their respective results of operations are consolidated from the date that the Company became the primary beneficiary through the date the Company ceases to be the primary beneficiary. The Company applies the equity method of accounting to investments where it is able to exercise significant influence, but not control, over the policies and procedures of the entity and owns less than 50% of the voting interests. Investments in certain companies over which the Company does not exert significant influence are accounted for as cost method investments. Intercompany balances and transactions on consolidated entities have been eliminated. Business combinations are included in the consolidated financial statements from their respective dates of acquisition. |
Use of estimates | Use of Estimates The preparation of the consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts reported in the consolidated financial statements and accompanying notes. Actual results could differ from these estimates due to factors such as adverse changes in the economy, changes in interest rates, secondary market pricing for loans held for sale and derivatives, strength of underwriting and servicing practices, changes in prepayment assumptions, declines in home prices or discrete events adversely affecting specific borrowers, uncertainties in the economy from the COVID-19 pandemic, and such differences could be material. |
Recent accounting guidance adopted and not yet adopted | Recent Accounting Guidance Adopted Accounting Standards Update No. 2016-13, Financial Instruments - Credit Losses (Topic 326), (“ASU 2016-13”) requires expected credit losses for financial instruments held at the reporting date to be measured based on historical experience, current conditions and reasonable and supportable forecasts, which is referred to as the current expected credit loss (“CECL”) methodology. The update eliminates the initial recognition of credit losses on an incurred basis in current GAAP and instead reflects an entity’s current estimate of all expected credit losses over the life of the asset. Previously, when credit losses were measured under GAAP, an entity generally only considered past events and current conditions in measuring the incurred loss. The new standard will reflect management’s best estimate of all expected credit losses for the Company’s financial assets that are recognized at amortized cost. The guidance was effective for the Company as of January 1, 2020, with a cumulative-effect adjustment to retained earnings as of that date. Based upon management’s scoping analysis, the Company determined that reverse mortgage interests, net of reserves, advances and other receivables, net of reserves, and certain financial instruments included in other assets are within the scope of ASU 2016-13. Certain financial instruments within these respective line items have been determined to have limited expected credit-related losses due to the contractual servicing agreements with agencies and loan product guarantees. For advances and other receivables, net, the Company determined that the majority of estimated losses are due to servicing operational errors and credit-related losses are not significant because of the contractual relationships with the agencies. For reverse mortgage interests the Company determined that the guarantee from Federal Housing Administration (“FHA”) on Home Equity Conversion Mortgage (“HECM”) loan products limits credit-related losses to an immaterial amount with substantially all losses related to servicing operational errors. For other assets, primarily trade receivables, the Company determined that these are short-term in nature (less than one year), and the estimated credit-related losses over the life of these receivables are similar to those resulting from the Company’s existing loss reserve process. For each of the aforementioned financial instruments carried at amortized cost, the Company enhanced its processes to consider and include the requirements of ASU 2016-13, as applicable, into the determination of credit-related losses. On January 1, 2020, the Company adopted ASU 2016-13 In connection with adoption of ASU 2016-13, the Company updated its accounting policies as follows: For certain financial instruments included in advances and other receivables, net, and certain trade receivables and accrued revenues included in other assets that are within the scope of ASU 2016-13, the reserve methodology was revised to consider CECL losses. The revised CECL methodology considers expected lifetime loss rates calculated from historical data using a weighted average life to determine the current expected credit loss required. Due to the nature of the financial instrument, reverse mortgage interests, net of reserves, and advances and other receivables had limited impact from the adoption of CECL to the reserve methodology. See Note 3, Advances and Other Receivables, Net , and Note 4, Reverse Mortgage Interests, Net, for additional information. Factors that influenced management’s current estimate of expected credit losses for certain advances and other receivables and certain trade receivables and accrued revenues included the following: historical collection and loss rates, passage of time, weighted average life of receivables, and various qualitative factors including current economic conditions. Factors that influenced management’s current estimate of expected credit related losses for certain reverse mortgage interests included the following: historical collection and loss rates, foreclosure timelines, and values of underlying collateral. Accounting Standards Update No. 2018-13, Fair Value Measurement (Topic 820) - Changes to the Disclosure Requirements for Fair Value Measurement , (“ASU 2018-13”) removes the requirement to disclose the amount of and reasons for transfers between Level 1 and Level 2 fair value measurement methodologies, the policy for timing of transfers between levels and the valuation processes for Level 3 fair value measurements. It also adds a requirement to disclose changes in unrealized gains and losses for the period included in other comprehensive income for recurring Level 3 fair value measurements held at the end of the reporting period and the range and weighted average of significant unobservable inputs used to develop Level 3 measurements. For certain unobservable inputs, entities may disclose other quantitative information in lieu of the weighted average if the other quantitative information would be a more reasonable and rational method to reflect the distribution of unobservable inputs used to develop Level 3 fair value measurements. The Company adopted ASU 2018-13 on January 1, 2020. The guidance does not have a material impact to the disclosures currently provided by the Company. |
Fair value measurement | Fair value is a market-based measurement, not an entity-specific measurement, and should be determined based on the assumptions that market participants would use in pricing the asset or liability. As a basis for considering market participant assumptions in fair value measurements, a three-tiered fair value hierarchy has been established based on the level of observable inputs used in the measurement of fair value (e.g., Level 1 representing quoted prices for identical assets or liabilities in an active market; Level 2 representing values using observable inputs other than quoted prices included within Level 1; and Level 3 representing estimated values based on significant unobservable inputs). There have been no significant changes to the valuation techniques and inputs used by the Company in estimating fair values of Level 2 and Level 3 assets and liabilities as disclosed in the Company’s Annual Reports on Form 10-K for the year ended December 31, 2019, with the exception of the following: Derivative Financial Instruments (Level 2 and Level 3) – During the three months ended June 30, 2020, the Company changed the fair value classification of its IRLCs and LPCs derivatives from Level 2 to Level 3. IRLCs and LPCs are carried at fair value primarily based on secondary market prices for underlying mortgage loans, which is observable data, with adjustments made to such observable data for the inherent value of servicing, which is an unobservable input. The fair value is also subject to adjustments for the estimated pull-through rate. The impact of the unobservable input to the overall valuation of IRLCs and LPCs was previously much less significant, resulting in a classification of Level 2 in the fair value hierarchy as of December 31, 2019. During the three months ended June 30,2020, market interest rates continued to decline and fell to record lows, which drove an increase in the volume of the Company’s IRLCs and LPCs and increased the impact of the unobservable input on the overall valuation of IRLCs and LPCs. Such increased impact of the unobservable input on the overall valuation resulted in a classification of Level 3 in the fair value hierarchy as of June 30, 2020. For other derivatives, they are exchange-traded or traded within highly active dealer markets. In order to determine the fair value of these instruments, the Company utilizes the exchange price or dealer market price for the particular derivative contract; therefore, the Company classifies these contracts as Level 2 in the fair value disclosure. Derivative financial instruments are recorded in other assets and payables and other liabilities within the consolidated balance sheets. See Note 8, Derivative Financial Instruments , for more information. |
Business Segment Reporting | In the second quarter of 2020, the Company updated its presentation of segment assets to be aligned with a change in the reporting package provided to the Chief Operating Decision Maker. The presentation change had no impact on the segments' operations. Assets allocated to the Servicing segment include MSRs; advances and other receivables, except for co-issue MSR holdback; Servicing related mortgage loans held for sale; and other assets including property, plant and equipment, lease-related assets, prepaid assets, and goodwill. Assets allocated to Originations segment include co-issue MSR holdback in advances and other receivables; Originations related mortgage loans held for sale; derivative assets; and other assets including property, plant and equipment, lease-related assets, prepaid assets, and goodwill. Assets allocated to the Xome segment include cash and cash equivalents; tax-related assets; receivables; and other assets including property, plant and equipment, lease-related assets, prepaid assets, goodwill, and other intangible assets. All assets that are not specifically identified or allocated to a reporting segment are reported as part of Corporate/Other and include cash and cash equivalents; tax-related assets; and intangibles assets excluding goodwill and assets allocated to Xome. Eliminations are also included in Corporate/Other. Prior year financial information has been adjusted retrospectively to reflect the updated presentation. |
Mortgage Servicing Rights and R
Mortgage Servicing Rights and Related Liabilities (Tables) | 9 Months Ended |
Sep. 30, 2020 | |
Transfers and Servicing [Abstract] | |
Schedule of servicing assets at fair value | The following table sets forth the carrying value of the Company’s mortgage servicing rights (“MSRs”) and the related liabilities. In estimating the fair value of all servicing rights and related liabilities, the impact of the COVID-19 pandemic was considered in the determination of key assumptions. MSRs and Related Liabilities September 30, 2020 December 31, 2019 Forward MSRs - fair value $ 2,663 $ 3,496 Reverse MSRs - amortized cost 6 6 Mortgage servicing rights $ 2,669 $ 3,502 Mortgage servicing liabilities - amortized cost $ 44 $ 61 Excess spread financing - fair value $ 1,044 $ 1,311 Mortgage servicing rights financing - fair value 47 37 MSR related liabilities - nonrecourse at fair value $ 1,091 $ 1,348 The following table sets forth the activities of forward MSRs: Nine Months Ended September 30, Forward MSRs - Fair Value 2020 2019 Fair value - beginning of period $ 3,496 $ 3,665 Additions: Servicing retained from mortgage loans sold 412 298 Purchases of servicing rights (1) 30 732 Dispositions: Sales of servicing assets — (317) Changes in fair value: Changes in valuation inputs or assumptions used in the valuation model (782) (716) Other changes in fair value (493) (323) Fair value - end of period $ 2,663 $ 3,339 (1) Purchases of servicing rights during the nine months ended September 30, 2019 includes $271 of mortgage servicing rights that were acquired from Pacific Union. See Note 1, Nature of Business and Basis of Presentation , for further discussion. In addition, in 2019, the Company entered into a subservicing contract, resulting in additional $253 servicing rights in the second quarter of 2019. The following table provides a breakdown of UPB and fair value for the Company’s forward MSRs: September 30, 2020 December 31, 2019 Forward MSRs - UPB and fair value breakdown UPB Fair Value UPB Fair Value Acquisition Pools Credit sensitive $ 122,422 $ 1,206 $ 147,895 $ 1,613 Interest sensitive 144,245 1,457 148,887 1,883 Total $ 266,667 $ 2,663 $ 296,782 $ 3,496 Investor Pools Agency (1) $ 220,139 $ 2,234 $ 240,688 $ 2,944 Non-agency (2) 46,528 429 56,094 552 Total $ 266,667 $ 2,663 $ 296,782 $ 3,496 (1) Agency investors primarily consist of government sponsored enterprises (“GSE”), such as the Federal National Mortgage Association (“Fannie Mae” or “FNMA”) and the Federal Home Loan Mortgage Corp (“Freddie Mac” or “FHLMC”), and the Government National Mortgage Association (“Ginnie Mae” or “GNMA”). (2) Non-agency investors consist of investors in private-label securitizations. |
Schedule of assumptions for fair value of mortgage service rights | The Company used the following key weighted-average inputs and assumptions in estimating the fair value of forward MSRs: Forward MSRs - Key inputs and assumptions September 30, 2020 December 31, 2019 Total MSR Portfolio Discount rate 9.5 % 9.7 % Prepayment speeds 14.4 % 13.1 % Average life 5.2 years 5.8 years Acquisition Pools Credit Sensitive Discount rate 10.0 % 10.4 % Prepayment speeds 12.6 % 12.7 % Average life 5.6 years 6.0 years Interest Sensitive Discount rate 9.0 % 9.1 % Prepayment speeds 15.9 % 13.5 % Average life 4.9 years 5.7 years Investor Pools Agency Discount rate 8.9 % 9.0 % Prepayment speeds 14.5 % 13.0 % Average life 5.1 years 5.8 years Non-agency Discount rate 12.0 % 12.6 % Prepayment speeds 13.9 % 13.8 % Average life 5.5 years 6.2 years The Company used the following key weighted-average assumptions in the Company’s valuation of excess spread financing: Excess Spread Financing Key Assumptions September 30, 2020 December 31, 2019 Discount rate 11.9 % 11.6 % Prepayment speeds 13.6 % 12.6 % Recapture rate 19.1 % 20.1 % Average life 5.3 years 5.8 years The following table sets forth the key weighted-average assumptions used in the valuation of the MSR financing liability: Mortgage Servicing Rights Financing Key Assumptions September 30, 2020 December 31, 2019 Advance financing and counterparty fee rates 8.2 % 8.9 % Annual advance recovery rates 20.2 % 18.8 % |
Schedule of sensitivity analysis of fair value, transferor's interests in transferred financial assets | The following table shows the hypothetical effect on the fair value of the Company’s forward MSRs when applying certain unfavorable variations of key assumptions to these assets for the dates indicated: Discount Rate Total Prepayment Speeds Forward MSRs - Hypothetical Sensitivities 100 bps Adverse Change 200 bps Adverse Change 10% Adverse Change 20% Adverse Change September 30, 2020 Mortgage servicing rights $ (87) $ (179) $ (157) $ (321) December 31, 2019 Mortgage servicing rights $ (127) $ (245) $ (165) $ (317) The following table shows the hypothetical effect on the Company’s excess spread financing fair value when applying certain unfavorable variations of key assumptions to these liabilities for the dates indicated: Discount Rate Prepayment Speeds Excess Spread Financing - Hypothetical Sensitivities 100 bps Adverse Change 200 bps Adverse Change 10% Adverse Change 20% Adverse Change September 30, 2020 Excess spread financing $ 35 $ 72 $ 44 $ 92 December 31, 2019 Excess spread financing $ 46 $ 95 $ 46 $ 96 |
Schedule of reverse mortgage servicing rights and liabilities - amortized cost | The following table sets forth the activities of reverse MSRs and mortgage servicing liabilities (“MSL”): Nine Months Ended September 30, 2020 2019 Reverse MSRs and Liabilities - Amortized Cost Assets Liabilities Assets Liabilities Balance - beginning of period $ 6 $ 61 $ 11 $ 71 Amortization/accretion — (17) 2 (39) Adjustments (1) — — (6) 37 Balance - end of the period $ 6 $ 44 $ 7 $ 69 Fair value - end of period $ 6 $ 7 $ 7 $ 41 |
Schedule of fees earned in exchange for servicing financial assets | The following table sets forth the items comprising total revenues for the Servicing segment: Three Months Ended September 30, Nine Months Ended September 30, Total Revenues - Servicing 2020 2019 2020 2019 Contractually specified servicing fees (1) $ 282 $ 305 $ 864 $ 893 Other service-related income (1) 59 51 170 133 Incentive and modification income (1) 12 12 30 29 Late fees (1) 18 30 65 82 Reverse servicing fees 6 7 19 24 Mark-to-market adjustments (2) (29) (83) (673) (607) Counterparty revenue share (3) (104) (86) (268) (204) Amortization, net of accretion (4) (112) (73) (290) (152) Total revenues - Servicing $ 132 $ 163 $ (83) $ 198 (1) The Company recognizes revenue on an earned basis for services performed. Amounts include subservicing related revenues. (2) Mark-to-market (“MTM”) adjustments include fair value adjustments on MSR, excess spread financing and MSR financing liabilities. The amount of MSR MTM includes the impact of negative modeled cash flows which have been transferred to reserves on advances and other receivables. The negative modeled cash flows relate to advances and other receivables associated with inactive and liquidated loans that are no longer part of the MSR portfolio. The impact of negative modeled cash flows was $7 and $18 during the three months ended September 30, 2020 and 2019, and $20 and $46 during the nine months ended September 30, 2020 and 2019, respectively. (3) Counterparty revenue share represents the excess servicing fee that the Company pays to the counterparties under the excess spread financing arrangements and the payments made associated with MSR financing arrangements. (4) Amortization is net of excess spread accretion of $96 and $77 and MSL accretion of $4 and $10 during the three months ended September 30, 2020 and 2019, respectively. During the nine months ended September 30, 2020 and 2019, amortization is net of excess spread accretion of $243 and $172 and MSL accretion of $17 and $39, respectively. |
Advances and Other Receivable_2
Advances and Other Receivables, Net (Tables) | 9 Months Ended |
Sep. 30, 2020 | |
Receivables [Abstract] | |
Schedule of accounts receivable | Advances and other receivables, net, consists of the following: Advances and Other Receivables, Net September 30, 2020 December 31, 2019 Servicing advances, net of $92 and $131 purchase discount, respectively $ 746 $ 970 Receivables from agencies, investors and prior servicers, net of $21 and $21 purchase discount, respectively 190 193 Reserves (191) (175) Total advances and other receivables, net $ 745 $ 988 The following table sets forth the activities of the servicing reserves for advances and other receivables: Three Months Ended September 30, Nine Months Ended September 30, Reserves for Advances and Other Receivables 2020 2019 2020 2019 Balance - beginning of period $ 216 $ 98 $ 168 $ 47 Provision and other additions (1) 13 35 72 102 Write-offs (38) (3) (49) (19) Balance - end of period $ 191 $ 130 $ 191 $ 130 (1) The Company recorded a provision of $7 and $18 through the MTM adjustments in revenues - service related, net, in the consolidated statements of operations during the three months ended September 30, 2020 and 2019, respectively, and $20 and $46 during the nine months ended September 30, 2020 and 2019, respectively, for inactive and liquidated l oans that are no longer part of the MSR portfolio. Other additions represent reclassifications of required reserves provisioned within other balance sheet accounts as associated serviced loans become inactive or liquidate. The following tables set forth the activities of the purchase discounts for advances and other receivables: Three Months Ended September 30, 2020 Three Months Ended September 30, 2019 Purchase Discount for Advances and Other Receivables Servicing Advances Receivables from Agencies, Investors and Prior Servicers Servicing Advances Receivables from Agencies, Investors and Prior Servicers Balance - beginning of period $ 117 $ 21 $ 156 $ 48 Utilization of purchase discounts (25) — (8) — Balance - end of period $ 92 $ 21 $ 148 $ 48 Nine Months Ended September 30, 2020 Nine Months Ended September 30, 2019 Purchase Discount for Advances and Other Receivables Servicing Advances Receivables from Agencies, Investors and Prior Servicers Servicing Advances Receivables from Agencies, Investors and Prior Servicers Balance - beginning of period $ 131 $ 21 $ 205 $ 48 Addition from acquisition — — 19 — Utilization of purchase discounts (39) — (76) — Balance - end of period $ 92 $ 21 $ 148 $ 48 |
Reverse Mortgage Interests, N_2
Reverse Mortgage Interests, Net (Tables) | 9 Months Ended |
Sep. 30, 2020 | |
Reverse Mortgage Interests [Abstract] | |
Schedule of reverse mortgage interest | Reverse mortgage interests, net, consists of the following: Reverse Mortgage Interests, Net September 30, 2020 December 31, 2019 Participating interests in HECM mortgage-backed securities (“HMBS”) $ 3,663 $ 4,282 Other interests securitized 1,002 994 Unsecuritized interests 920 1,117 Purchase discount, net (125) (114) Total reverse mortgage interests, net $ 5,460 $ 6,279 Unsecuritized interests in reverse mortgages consist of the following: Unsecuritized interests September 30, 2020 December 31, 2019 Repurchased HECM loans (exceeds 98% of their Max Claim Amount (“MCA”)) $ 634 $ 789 HECM related receivables (1) 213 250 Funded borrower draws not yet securitized 56 64 Real estate owned (“REO”) related receivables 17 14 Total unsecuritized interests $ 920 $ 1,117 (1) HECM related receivables consist primarily of receivables from FNMA for corporate advances and service fees and claims receivables from the U.S. Department of Housing and Urban Development (“HUD”) on reverse mortgage interests. The following table sets forth the activities of the purchase discounts, net, for reverse mortgage interests: Three Months Ended September 30, Nine Months Ended September 30, Purchase discount, net, for reverse mortgage interests (1) 2020 2019 2020 2019 Balance - beginning of period $ (127) $ (163) $ (114) $ (164) Adjustments (2) — — — (24) Utilization of purchase discounts (3) 8 40 27 80 Amortization, net of accretion (6) (1) (38) (16) Balance - end of period $ (125) $ (124) $ (125) $ (124) (1) Net position as certain items are in a premium/(discount) position, based on the characteristics of underlying tranches of loans. (2) Adjustments during the nine months ended September 30, 2019 due to revised cost to service assumption utilized in the valuation of reverse mortgage assets and liabilities acquired from the Merger. (3) Utilization of purchase discounts on liquidated loans, for which the remaining receivable was written off. |
Mortgage Loans Held for Sale (T
Mortgage Loans Held for Sale (Tables) | 9 Months Ended |
Sep. 30, 2020 | |
Mortgage Loans Held for Sale and Investment [Abstract] | |
Schedule of mortgage loans held-for-sale | Mortgage loans held for sale are recorded at fair value as set forth below: Mortgage Loans Held for Sale September 30, 2020 December 31, 2019 Mortgage loans held for sale – UPB $ 3,642 $ 3,949 Mark-to-market adjustment (1) 175 128 Total mortgage loans held for sale $ 3,817 $ 4,077 (1) The mark-to-market adjustment includes net change in unrealized gain/loss, premium on correspondent loans and fees on direct-to-consumer loans. The mark-to-market adjustment is recorded in net gain on mortgage loans held for sale in the consolidated statements of operations. The following table sets forth the activities of mortgage loans held for sale: Nine Months Ended September 30, Mortgage Loans Held for Sale 2020 2019 Balance - beginning of period $ 4,077 $ 1,631 Loans sold (42,185) (27,413) Mortgage loans originated and purchased, net of fees 38,709 28,209 Repurchase of loans out of Ginnie Mae securitizations 3,173 1,823 Net change in unrealized gain (loss) of loans held for sale 36 2 Net transfers of mortgage loans held for sale (1) 7 15 Balance - end of period $ 3,817 $ 4,267 (1) Amount reflects transfers to other assets for loans transitioning into REO status and transfers to advances and other receivables, net, for claims made on certain government insurance mortgage loans. Transfers out are net of transfers in upon receipt of proceeds from an REO sale or claim filing. The total UPB and fair value of mortgage loans held for sale on non-accrual status was as follows: September 30, 2020 December 31, 2019 Mortgage Loans Held for Sale UPB Fair Value UPB Fair Value Non-accrual (1) $ 49 $ 39 $ 29 $ 22 (1) Non-accrual UPB includes $37 and $25 of UPB related to Ginnie Mae repurchased loans as of September 30, 2020 and December 31, 2019, respectively. |
Derivative Financial Instrume_2
Derivative Financial Instruments (Tables) | 9 Months Ended |
Sep. 30, 2020 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
Schedule of derivative instruments | The following tables provide the outstanding notional balances, fair values of outstanding positions and recorded gains/(losses) for the derivative financial instruments: September 30, 2020 Nine Months Ended September 30, 2020 Derivative Financial Instruments Expiration Outstanding Fair Gains/(Losses) Assets Mortgage loans held for sale Loan sale commitments 2020 $ 1,908 $ 75 $ 43 Derivative financial instruments IRLCs 2020-2021 10,967 414 279 LPCs 2020 5,217 38 26 Forward MBS trades 2020-2021 11,452 23 17 Total derivative financial instruments - assets $ 27,636 $ 475 $ 322 Liabilities Derivative financial instruments IRLCs 2020 $ 2 $ — $ — LPCs 2020 598 2 (1) Forward MBS trades 2020-2021 15,974 42 30 Total derivative financial instruments - liabilities $ 16,574 $ 44 $ 29 September 30, 2019 Nine Months Ended September 30, 2019 Derivative Financial Instruments Expiration Outstanding Fair Gains/(Losses) Assets Mortgage loans held for sale Loan sale commitments 2019 $ 1,508 $ 35 $ 9 Derivative financial instruments IRLCs 2019 4,964 144 84 LPCs 2019 1,397 18 17 Forward MBS trades 2019 3,054 8 6 Eurodollar futures 2019-2021 6 — — Total derivative financial instruments - assets $ 9,421 $ 170 $ 107 Liabilities Derivative financial instruments IRLCs 2019 $ 15 $ — $ — LPCs 2019 547 3 3 Forward MBS trades 2019 5,667 16 (8) Eurodollar futures 2019-2021 8 — — Total derivative financial instruments - liabilities $ 6,237 $ 19 $ (5) |
Indebtedness (Tables)
Indebtedness (Tables) | 9 Months Ended |
Sep. 30, 2020 | |
Debt Disclosure [Abstract] | |
Schedule of notes payable | Notes Payable September 30, 2020 December 31, 2019 Interest Rate Maturity Date Collateral Capacity Amount Outstanding Collateral Pledged Outstanding Collateral Pledged Advance Facilities $875 advance facility (1) CP+2.5% to 6.5% April 2021 Servicing advance receivables $ 875 $ 144 $ 169 $ 37 $ 88 $640 advance facility (2) LIBOR+3.9% August 2022 Servicing advance receivables 640 144 196 — — $425 advance facility (3) LIBOR+2.8% to 6.5% October 2021 Servicing advance receivables 425 206 261 224 285 $250 advance facility (4) LIBOR+1.5% to 2.6% December 2020 Servicing advance receivables 250 — — 98 167 $100 advance facility LIBOR+2.5% January 2021 Servicing advance receivables 100 75 102 63 125 Advance facilities principal amount 569 728 422 665 Warehouse Facilities $1,500 warehouse facility LIBOR+1.7% June 2021 Mortgage loans or MBS 1,500 666 634 759 733 $1,200 warehouse facility LIBOR+1.5% to 3.0% November 2020 Mortgage loans or MBS 1,200 564 610 683 724 $1,050 warehouse facility (5) LIBOR+1.8% to 3.9% September 2022 Mortgage loans or MBS 1,050 627 679 589 656 September 30, 2020 December 31, 2019 Interest Rate Maturity Date Collateral Capacity Amount Outstanding Collateral Pledged Outstanding Collateral Pledged $750 warehouse facility LIBOR+1.8% August 2021 Mortgage loans or MBS 750 574 591 — — $750 warehouse facility LIBOR+1.7% to 2.8% October 2021 Mortgage loans or MBS 750 472 481 411 425 $750 warehouse facility (6) LIBOR+2.3% September 2022 Mortgage loans or MBS 750 105 135 54 78 $700 warehouse facility (7) LIBOR+1.3% to 2.2% November 2020 Mortgage loans or MBS 700 488 505 469 488 $600 warehouse facility LIBOR+2.2% February 2021 Mortgage loans or MBS 600 156 185 174 202 $500 warehouse facility LIBOR+2.5% to 4.0% May 2021 Mortgage loans or MBS 500 — — 336 349 $300 warehouse facility LIBOR+1.4% January 2021 Mortgage loans or MBS 300 258 258 136 136 $250 warehouse facility (8) LIBOR+1.4% to 2.3% December 2020 Mortgage loans or MBS 250 — — 762 783 $200 warehouse facility LIBOR+1.8% April 2021 Mortgage loans or MBS 200 72 74 27 27 $200 warehouse facility LIBOR+1.3% November 2020 Mortgage loans or MBS 200 — — — — $50 warehouse facility LIBOR+1.8% to 4.8% April 2021 Mortgage loans or MBS 50 43 45 11 15 $40 warehouse facility LIBOR+3.3% January 2021 Mortgage loans or MBS 40 3 4 5 6 Warehouse facilities principal amount 4,028 4,201 4,416 4,622 MSR Facilities $450 warehouse facility (9) LIBOR+5.1% May 2021 MSR 450 — — 150 945 $260 warehouse facility (2) LIBOR+3.9% August 2022 MSR 260 256 659 — — $200 warehouse facility (10) LIBOR+3.5% August 2021 MSR 200 — 187 — 200 $150 warehouse facility (5) LIBOR+3.8% September 2022 MSR 150 — 149 — 130 $50 warehouse facility LIBOR+2.8% November 2020 MSR 50 10 80 10 84 MSR facilities principal amount 266 1,075 160 1,359 Advance, warehouse and MSR facilities principal amount 4,863 $ 6,004 4,998 $ 6,646 Unamortized debt issuance costs (12) (1) Advance and warehouse facilities, net $ 4,851 $ 4,997 Pledged Collateral for warehouse and MSR facilities: Mortgage loans held for sale $ 3,560 $ 3,637 $ 3,826 $ 3,931 Reverse mortgage interests 468 564 590 691 MSR 266 1,075 160 1,359 (1) The capacity amount for this advance facility increased from $125 to $875 in April 2020. (2) Total capacity for this facility is $900, of which $640 is internally allocated for Advance financing and $260 is internally allocated for MSR financing; capacity is fully fungible and is not restricted by these allocations. (3) The capacity amount for this advance facility increased from $325 to $425 in April 2020. (4) This advance facility was terminated and transferred to another advance facility in April 2020. (5) Total capacity amount for this facility is $1,200 , of which $150 is a sublimit for MSR financing. The capacity amount increased from $800 to $1,200 in September 2020. (6) The capacity amount for this warehouse facility increased from $200 to $750 in September 2020. (7) The capacity amount for this warehouse facility was subsequently increased to $1,500 in October 2020 with a maturity date of October 2021. (8) The capacity amount for this warehouse facility decreased from $1,000 to $250 in May 2020. (9) This MSR facility was terminated in August 2020. (10) The capacity amount for this MSR facility decreased from $400 to $200 in August 2020. |
Schedule of unsecured senior notes | Unsecured senior notes consist of the following: Unsecured senior notes September 30, 2020 December 31, 2019 $850 face value, 5.500% interest rate payable semi-annually, due August 2028 (1) $ 850 $ — $750 face value, 9.125% interest rate payable semi-annually, due July 2026 750 750 $600 face value, 6.000% interest rate payable semi-annually, due January 2027 (2) 600 — $600 face value, 6.500% interest rate payable semi-annually, due July 2021 (3) — 492 $300 face value, 6.500% interest rate payable semi-annually, due June 2022 (3) — 206 $950 face value, 8.125% interest rate payable semi-annually, due July 2023 (4) — 950 Unsecured senior notes principal amount 2,200 2,398 Unamortized debt issuance costs, premium and discount (33) (32) Unsecured senior notes, net $ 2,167 $ 2,366 (1) On August 6, 2020, the Company completed an offering of $850 aggregate principal amount of 5.500% Senior Notes due 2028 (the “2028 Notes”) (2) On January 16, 2020, the Company completed an offering of $600 aggregate principal amount of 6.000% Senior Notes due 2027 (the “2027 Notes”). (3) This note was redeemed in full on February 15, 2020 using the net proceeds of the 2027 Notes offering, together with cash on hand. (4) This note was redeemed in full on August 13, 2020 using the net proceeds of the 2028 Notes offering, together with cash on hand. |
Schedule of maturities of long-term debt | As of September 30, 2020, the expected maturities of the Company’s unsecured senior notes based on contractual maturities are as follows: Year Ending December 31, Amount 2020 through 2024 $ — Thereafter 2,200 Total unsecured senior notes principal amount $ 2,200 |
Schedule of other nonrecourse debt | Other nonrecourse debt consists of the following: September 30, 2020 December 31, 2019 Other nonrecourse debt Issue Date Maturity Date Interest Rate Class of Note Collateral Amount Outstanding Outstanding Participating interest financing (1) — — 0.3%-5.6% — $ — $ 3,664 $ 4,284 Securitization of nonperforming HECM loans Trust 2020-1 September 2020 September 2030 1.3%-7.5% A, M1, M2, M3, M4, M5 519 516 — Trust 2019-2 November 2019 November 2029 2.3%-6.0% A, M1, M2, M3, M4, M5 275 259 333 Trust 2019-1 June 2019 June 2029 2.7%-6.0% A, M1, M2, M3, M4, M5 248 226 302 Trust 2018-3 (2) November 2018 November 2028 3.6%-6.0% A, M1, M2, M3, M4, M5 — — 209 Trust 2018-2 (2) July 2018 July 2028 3.2%-6.0% A, M1, M2, M3, M4, M5 — — 148 Other nonrecourse debt principal amount 4,665 5,276 Unamortized debt issuance costs, premium and discount 6 10 Other nonrecourse debt, net $ 4,671 $ 5,286 (1) Amounts represent the Company’s participating interest in GNMA HMBS securitized portfolios. (2) As discussed in Note 4, Reverse Mortgage Interests, Net , Trust 2018-3 and Trust 2018-2 were collapsed and the related debt was extinguished during the nine months ended September 30, 2020. |
Securitizations and Financings
Securitizations and Financings (Tables) | 9 Months Ended |
Sep. 30, 2020 | |
Variable Interest Entities and Securitizations [Abstract] | |
Schedule of assets and liabilities of VIEs included in financial statements | A summary of the assets and liabilities of the Company’s transactions with VIEs included in the Company’s consolidated financial statements is presented below: September 30, 2020 December 31, 2019 Consolidated transactions with VIEs Transfers Reverse Secured Borrowings Transfers Reverse Secured Borrowings Assets Restricted cash $ 44 $ 25 $ 66 $ 42 Reverse mortgage interests, net (1) — 4,603 — 5,230 Advances and other receivables, net 430 — 540 — Total assets $ 474 $ 4,628 $ 606 $ 5,272 Liabilities Advance facilities (2) $ 347 $ — $ 359 $ — Payables and other liabilities — — 1 1 Participating interest financing — 3,664 — 4,284 HECM Securitizations (HMBS) Trust 2020-1 — 516 — — Trust 2019-2 — 259 — 333 Trust 2019-1 — 226 — 302 Trust 2018-3 — — — 209 Trust 2018-2 — — — 148 Total liabilities $ 347 $ 4,665 $ 360 $ 5,277 (1) Amounts include net purchase discount of $62 a nd $46 as of September 30, 2020 and December 31, 2019, respectively. (2) Refer to advance facilities in Note 9, Indebtedness , for additional information. The following table shows a summary of the outstanding collateral and certificate balances for securitization trusts for which the Company was the transferor, including any retained beneficial interests and MSRs, that were not consolidated by the Company: Unconsolidated securitization trusts September 30, 2020 December 31, 2019 Total collateral balances - UPB $ 1,378 $ 1,503 Total certificate balances $ 1,378 $ 1,512 A summary of mortgage loans transferred by the Company to unconsolidated securitization trusts that are 60 days or more past due are presented below: Principal Amount of Transferred Loans 60 Days or More Past Due September 30, 2020 December 31, 2019 Unconsolidated securitization trusts $ 179 $ 193 |
Earnings Per Share (Tables)
Earnings Per Share (Tables) | 9 Months Ended |
Sep. 30, 2020 | |
Earnings Per Share [Abstract] | |
Schedule of earnings per share | The following table sets forth the computation of basic and diluted net income (loss) per common share (amounts in millions, except per share amounts): Three Months Ended September 30, Nine Months Ended September 30, Computation of earnings per share 2020 2019 2020 2019 Net income (loss) attributable to Mr. Cooper $ 209 $ 84 $ 114 $ (189) Less: Undistributed earnings attributable to participating stockholders 2 1 1 — Net income (loss) attributable to common stockholders $ 207 $ 83 $ 113 $ (189) Net income (loss) per common share attributable to Mr. Cooper: Basic $ 2.26 $ 0.91 $ 1.23 $ (2.08) Diluted $ 2.18 $ 0.90 $ 1.20 $ (2.08) Weighted average shares of common stock outstanding (in thousands): Basic 91,682 91,080 91,688 91,012 Dilutive effect of stock awards (1) 2,563 117 1,529 — Dilutive effect of participating securities (1) 839 839 839 — Diluted 95,084 92,036 94,056 91,012 (1) For periods with net loss, the Company excluded potential common shares from the computation of diluted EPS because inclusion would be antidilutive. |
Fair Value Measurements (Tables
Fair Value Measurements (Tables) | 9 Months Ended |
Sep. 30, 2020 | |
Fair Value Disclosures [Abstract] | |
Schedule of fair value, assets and liabilities measured on recurring basis | The following tables present the estimated carrying amount and fair value of the Company’s financial instruments and other assets and liabilities measured at fair value on a recurring basis: September 30, 2020 Recurring Fair Value Measurements Fair value - Recurring basis Total Fair Value Level 1 Level 2 Level 3 Assets Mortgage loans held for sale $ 3,817 $ — $ 3,817 $ — Forward mortgage servicing rights 2,663 — — 2,663 Derivative financial instruments IRLCs 414 — — 414 Forward MBS trades 23 — 23 — LPCs 38 — — 38 Liabilities Derivative financial instruments Forward MBS trades $ 42 $ — $ 42 $ — LPCs 2 — — 2 Mortgage servicing rights financing 47 — — 47 Excess spread financing 1,044 — — 1,044 December 31, 2019 Recurring Fair Value Measurements Fair value - Recurring basis Total Fair Value Level 1 Level 2 Level 3 Assets Mortgage loans held for sale $ 4,077 $ — $ 4,077 $ — Forward mortgage servicing rights 3,496 — — 3,496 Derivative financial instruments IRLCs 135 — 135 — Forward MBS trades 7 — 7 — LPCs 12 — 12 — Liabilities Derivative financial instruments Forward MBS trades $ 12 $ — $ 12 $ — LPCs 3 — 3 — Mortgage servicing rights financing 37 — — 37 Excess spread financing 1,311 — — 1,311 |
Schedule of fair value, assets and liabilities measured on recurring basis, unobservable input reconciliation | The tables below present a reconciliation for all of the Company’s Level 3 assets and liabilities measured at fair value on a recurring basis: Nine Months Ended September 30, 2020 Assets Liabilities Fair value - Level 3 assets and liabilities Forward mortgage servicing rights IRLCs LPCs Excess spread financing Mortgage servicing rights financing Balance - beginning of period $ 3,496 $ 135 $ 12 $ 1,311 $ 37 Total gains or losses included in earnings (1,275) 279 26 (132) 10 Purchases, issuances, sales, repayments and settlements Purchases 30 — — — — Issuances 412 — — 24 — Settlements and repayments — — — (159) — Balance - end of period $ 2,663 $ 414 $ 38 $ 1,044 $ 47 Nine Months Ended September 30, 2019 Assets Liabilities Fair value - Level 3 assets and liabilities Forward mortgage servicing rights Mortgage loans held for investment Excess spread financing Mortgage servicing rights financing Balance - beginning of period $ 3,665 $ 119 $ 1,184 $ 32 Total gains or losses included in earnings (1,039) 3 (190) 15 Payments received from borrowers — (11) — — Purchases, issuances, sales, repayments and settlements Purchases 732 — 469 — Issuances 298 — — — Sales (317) (94) — — Settlements and repayments — — (182) — Transfers to mortgage loans held for sale — (12) — — Transfers to real estate owned — (5) — — Balance - end of period $ 3,339 $ — $ 1,281 $ 47 |
Fair value measurement inputs and valuation techniques | The tables below present the quantitative information for significant unobservable inputs used in the fair value measurement of Level 3 assets and liabilities: September 30, 2020 Range Weighted Average Level 3 inputs Min Max Forward MSR Discount rate 8.3 % 12.0 % 9.5 % Prepayment speed 12.6 % 19.2 % 14.4 % Cost to service per loan (1) $ 68 $ 295 $ 105 IRLCs Value of servicing (basis points per loan) (0.4) 2.1 1.2 Excess spread financing Discount rate 9.8 % 15.5 % 11.9 % Prepayment speed 13.4 % 14.0 % 13.6 % Recapture rate 17.1 % 23.5 % 19.1 % Average life 5.2 years 5.5 years 5.3 years Mortgage servicing rights financing Advance financing and counterparty fee rates 6.4 % 9.4 % 8.2 % Annual advance recovery rates 18.6 % 22.6 % 20.2 % (1) Presented in whole dollar amounts. |
Schedule of fair value, by balance sheet grouping | The tables below present a summary of the estimated carrying amount and fair value of the Company’s financial instruments not carried at fair value: September 30, 2020 Carrying Fair Value Financial instruments Level 1 Level 2 Level 3 Financial assets Cash and cash equivalents $ 946 $ 946 $ — $ — Restricted cash 229 229 — — Advances and other receivables, net 745 — — 745 Reverse mortgage interests, net 5,460 — — 5,574 Financial liabilities Unsecured senior notes (1) 2,167 2,237 — — Advance and warehouse facilities (1) 4,851 — 4,851 — Participating interest financing (1) 3,676 — — 3,679 HECM Securitization (HMBS) (1) Trust 2020-1 513 — — 513 Trust 2019-2 257 — — 257 Trust 2019-1 225 — — 225 (1) The amounts are presented net of unamortized debt issuance costs, premium and discount. December 31, 2019 Carrying Fair Value Financial instruments Level 1 Level 2 Level 3 Financial assets Cash and cash equivalents $ 329 $ 329 $ — $ — Restricted cash 283 283 — — Advances and other receivables, net 988 — — 988 Reverse mortgage interests, net 6,279 — — 6,318 Financial liabilities Unsecured senior notes (1) 2,366 2,505 — — Advance and warehouse facilities (1) 4,997 — 4,997 — Participating interest financing (1) 4,299 — — 4,299 HECM Securitization (HMBS) (1) Trust 2019-2 331 — — 331 Trust 2019-1 300 — — 300 Trust 2018-3 208 — — 208 Trust 2018-2 148 — — 148 (1) The amounts are presented net of unamortized debt issuance costs, premium and discount. |
Business Segment Reporting (Tab
Business Segment Reporting (Tables) | 9 Months Ended |
Sep. 30, 2020 | |
Segment Reporting [Abstract] | |
Schedule of segment reporting information | The following tables present financial information by segment: Three Months Ended September 30, 2020 Financial information by segment Servicing Originations Xome Corporate/Other Consolidated Revenues Service related, net (1) $ 92 $ 27 $ 108 $ — $ 227 Net gain on mortgage loans held for sale 40 605 — — 645 Total revenues 132 632 108 — 872 Total expenses 99 195 94 43 431 Interest income 40 16 — — 56 Interest expense (105) (15) — (45) (165) Other income (expenses), net — — 1 (52) (51) Total other (expenses) income, net (65) 1 1 (97) (160) (Loss) income before income tax (benefit) expense $ (32) $ 438 $ 15 $ (140) $ 281 Depreciation and amortization for property and equipment and intangible assets $ 6 $ 5 $ 5 $ 3 $ 19 Total assets $ 14,707 $ 4,250 $ 135 $ 2,663 $ 21,755 Three Months Ended September 30, 2019 Financial information by segment Servicing Originations Xome Corporate/Other Consolidated Revenues Service related, net (1) $ 126 $ 22 $ 112 $ (2) $ 258 Net gain on mortgage loans held for sale 37 312 — 11 360 Total revenues 163 334 112 9 618 Total expenses 171 155 101 51 478 Interest income 137 24 — 2 163 Interest expense (120) (24) — (52) (196) Other (expense) income, net — (1) 3 (2) — Total other income (expenses), net 17 (1) 3 (52) (33) Income (loss) before income tax expense (benefit) $ 9 $ 178 $ 14 $ (94) $ 107 Depreciation and amortization for property and equipment and intangible assets $ 5 $ 4 $ 4 $ 9 $ 22 Total assets $ 12,065 $ 4,386 $ 172 $ 1,855 $ 18,478 Nine Months Ended September 30, 2020 Financial information by segment Servicing Originations Xome Corporate/Other Consolidated Revenues Service related, net (1) $ (202) $ 68 $ 320 $ — $ 186 Net gain on mortgage loans held for sale 119 1,475 — — 1,594 Total revenues (83) 1,543 320 — 1,780 Total expenses 370 528 285 111 1,294 Interest income 180 69 — 1 250 Interest expense (335) (55) — (144) (534) Other income (expense), net — — 3 (53) (50) Total other (expenses) income, net (155) 14 3 (196) (334) (Loss) income before income tax (benefit) expense $ (608) $ 1,029 $ 38 $ (307) $ 152 Depreciation and amortization for property and equipment and intangible assets $ 14 $ 12 $ 11 $ 19 $ 56 Total assets $ 14,707 $ 4,250 $ 135 $ 2,663 $ 21,755 Nine Months Ended September 30, 2019 Financial information by segment Servicing Originations Xome Corporate/Other Consolidated Revenues Service related, net (1) $ 108 $ 57 $ 316 $ (2) $ 479 Net gain on mortgage loans held for sale 90 687 — 11 788 Total revenues 198 744 316 9 1,267 Total expenses 555 404 301 153 1,413 Interest income 388 64 — 7 459 Interest expense (343) (67) — (162) (572) Other income (expense), net — 4 14 (2) 16 Total other income (expenses), net 45 1 14 (157) (97) (Loss) income before income tax (benefit) expense $ (312) $ 341 $ 29 $ (301) $ (243) Depreciation and amortization for property and equipment and intangible assets $ 13 $ 13 $ 11 $ 30 $ 67 Total assets $ 12,065 $ 4,386 $ 172 $ 1,855 $ 18,478 (1) Service related, net revenues for Corporate/Other include intersegment eliminations. |
Nature of Business and Basis _3
Nature of Business and Basis of Presentation - Additional Information (Details) - USD ($) $ in Millions | Feb. 01, 2019 | Sep. 30, 2020 | Dec. 31, 2019 | Jun. 30, 2020 | Jan. 01, 2020 | Sep. 30, 2019 | Jun. 30, 2019 | Dec. 31, 2018 |
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||||||||
Accounting standards update | us-gaap:AccountingStandardsUpdate201613Member | us-gaap:AccountingStandardsUpdate201613Member | ||||||
Total stockholders’ equity | $ 2,341 | $ 2,231 | $ 2,145 | $ 1,767 | $ 1,678 | $ 1,945 | ||
Pacific union | ||||||||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||||||||
Cash consideration | $ 116 | |||||||
Cumulative effect, period of adoption, adjustment | ||||||||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||||||||
Total stockholders’ equity | 7 | |||||||
Cumulative effect, period of adoption, adjustment | Advances and other receivables reserve | ||||||||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||||||||
Allowance for credit losses | $ 7 | |||||||
Cumulative effect, period of adoption, adjustment | Other assets | ||||||||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||||||||
Allowance for credit losses | 2 | |||||||
Retained Earnings | ||||||||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||||||||
Total stockholders’ equity | $ 1,243 | 1,122 | $ 1,034 | $ 659 | $ 575 | $ 848 | ||
Retained Earnings | Cumulative effect, period of adoption, adjustment | ||||||||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||||||||
Total stockholders’ equity | $ 7 | 9 | ||||||
Retained Earnings | Cumulative effect, period of adoption, adjustment after tax | ||||||||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||||||||
Total stockholders’ equity | $ 7 |
Mortgage Servicing Rights and_2
Mortgage Servicing Rights and Related Liabilities - MSRs and Related Liabilities (Details) - USD ($) $ in Millions | Sep. 30, 2020 | Dec. 31, 2019 |
Mortgage Servicing Rights [Line Items] | ||
Forward MSRs - fair value | $ 2,663 | $ 3,496 |
Mortgage servicing rights | 2,669 | 3,502 |
Mortgage servicing liabilities - amortized cost | 44 | 61 |
Excess spread financing - fair value | 1,044 | 1,311 |
Mortgage servicing rights financing - fair value | 47 | 37 |
MSR related liabilities - nonrecourse at fair value | 1,091 | 1,348 |
Mortgage servicing rights | ||
Mortgage Servicing Rights [Line Items] | ||
Forward MSRs - fair value | 2,663 | 3,496 |
Reverse MSRs - amortized cost | 6 | 6 |
Mortgage servicing rights | 2,669 | 3,502 |
Mortgage servicing liabilities - amortized cost | $ 44 | $ 61 |
Mortgage Servicing Rights and_3
Mortgage Servicing Rights and Related Liabilities - MSR's at Fair Value (Details) - USD ($) $ in Millions | 9 Months Ended | |||
Sep. 30, 2020 | Sep. 30, 2019 | Jun. 30, 2019 | Feb. 01, 2019 | |
Servicing Asset at Fair Value, Amount [Roll Forward] | ||||
Fair value - beginning of period | $ 3,496 | |||
Fair value - end of period | 2,663 | |||
Mortgage servicing rights | ||||
Servicing Asset at Fair Value, Amount [Roll Forward] | ||||
Fair value - beginning of period | 3,496 | $ 3,665 | ||
Servicing retained from mortgage loans sold | 412 | 298 | ||
Purchases of servicing rights | 30 | 732 | ||
Sales of servicing assets | 0 | (317) | ||
Changes in valuation inputs or assumptions used in the valuation model | (782) | (716) | ||
Other changes in fair value | (493) | (323) | ||
Fair value - end of period | $ 2,663 | $ 3,339 | ||
Mortgage servicing rights | $ 253 | |||
Mortgage servicing rights | Pacific union | ||||
Servicing Asset at Fair Value, Amount [Roll Forward] | ||||
Mortgage servicing rights | $ 271 |
Mortgage Servicing Rights and_4
Mortgage Servicing Rights and Related Liabilities - Narrative (Details) - USD ($) | 9 Months Ended | ||
Sep. 30, 2020 | Dec. 31, 2019 | Sep. 30, 2019 | |
Servicing Asset at Amortized Cost [Line Items] | |||
Mortgage servicing rights financing - fair value | $ 47,000,000 | $ 37,000,000 | |
Forward MSRs Sold | |||
Servicing Asset at Amortized Cost [Line Items] | |||
UPB | 94,000,000 | $ 25,639,000,000 | |
Forward MSRs Sold, Subservicing Retained | |||
Servicing Asset at Amortized Cost [Line Items] | |||
UPB | 0 | $ 20,560,000,000 | |
Reverse Mortgage Servicing Rights | |||
Servicing Asset at Amortized Cost [Line Items] | |||
Impairment | 0 | ||
HECM | |||
Servicing Asset at Amortized Cost [Line Items] | |||
UPB | $ 20,006,000,000 | $ 22,725,000,000 |
Mortgage Servicing Rights and_5
Mortgage Servicing Rights and Related Liabilities - UPB related to owned MSRs (Details) - USD ($) $ in Millions | Sep. 30, 2020 | Dec. 31, 2019 |
Owned Service Loans [Line Items] | ||
Fair Value | $ 2,663 | $ 3,496 |
Mortgage servicing rights | ||
Owned Service Loans [Line Items] | ||
UPB | 266,667 | 296,782 |
Fair Value | 2,663 | 3,496 |
Credit sensitive | Mortgage servicing rights | ||
Owned Service Loans [Line Items] | ||
UPB | 122,422 | 147,895 |
Fair Value | 1,206 | 1,613 |
Interest sensitive | Mortgage servicing rights | ||
Owned Service Loans [Line Items] | ||
UPB | 144,245 | 148,887 |
Fair Value | 1,457 | 1,883 |
Agency | Mortgage servicing rights | ||
Owned Service Loans [Line Items] | ||
UPB | 220,139 | 240,688 |
Fair Value | 2,234 | 2,944 |
Non-agency | Mortgage servicing rights | ||
Owned Service Loans [Line Items] | ||
UPB | 46,528 | 56,094 |
Fair Value | $ 429 | $ 552 |
Mortgage Servicing Rights and_6
Mortgage Servicing Rights and Related Liabilities - Fair Value Assumptions (Details) - Weighted-average | 9 Months Ended | 12 Months Ended |
Sep. 30, 2020 | Dec. 31, 2019 | |
Mortgage servicing rights | ||
Assumption for Fair Value of Mortgage Servicing Rights | ||
Discount rate | 9.50% | 9.70% |
Prepayment speeds | 14.40% | 13.10% |
Average life | 5 years 2 months 12 days | 5 years 9 months 18 days |
Mortgage servicing rights | Credit sensitive | ||
Assumption for Fair Value of Mortgage Servicing Rights | ||
Discount rate | 10.00% | 10.40% |
Prepayment speeds | 12.60% | 12.70% |
Average life | 5 years 7 months 6 days | 6 years |
Mortgage servicing rights | Interest sensitive | ||
Assumption for Fair Value of Mortgage Servicing Rights | ||
Discount rate | 9.00% | 9.10% |
Prepayment speeds | 15.90% | 13.50% |
Average life | 4 years 10 months 24 days | 5 years 8 months 12 days |
Excess spread financing | ||
Assumption for Fair Value of Mortgage Servicing Rights | ||
Discount rate | 11.90% | 11.60% |
Prepayment speeds | 13.60% | 12.60% |
Recapture rate | 19.10% | 20.10% |
Average life | 5 years 3 months 18 days | 5 years 9 months 18 days |
MSR financing liability | ||
Assumption for Fair Value of Mortgage Servicing Rights | ||
Advance financing and counterparty fee rates | 8.20% | 8.90% |
Annual advance recovery rates | 20.20% | 18.80% |
Agency | Mortgage servicing rights | ||
Assumption for Fair Value of Mortgage Servicing Rights | ||
Discount rate | 8.90% | 9.00% |
Prepayment speeds | 14.50% | 13.00% |
Average life | 5 years 1 month 6 days | 5 years 9 months 18 days |
Non-agency | Mortgage servicing rights | ||
Assumption for Fair Value of Mortgage Servicing Rights | ||
Discount rate | 12.00% | 12.60% |
Prepayment speeds | 13.90% | 13.80% |
Average life | 5 years 6 months | 6 years 2 months 12 days |
Mortgage Servicing Rights and_7
Mortgage Servicing Rights and Related Liabilities - Fair Value Sensitivity Analysis (Details) - USD ($) $ in Millions | Sep. 30, 2020 | Dec. 31, 2019 |
Mortgage servicing rights | ||
Excess Spread Financing - Hypothetical Sensitivities | ||
10% Adverse Change | $ (157) | $ (165) |
20% Adverse Change | (321) | (317) |
Excess spread financing | ||
Excess Spread Financing - Hypothetical Sensitivities | ||
10% Adverse Change | 44 | 46 |
20% Adverse Change | 92 | 96 |
100 bps Adverse Change | Mortgage servicing rights | ||
Excess Spread Financing - Hypothetical Sensitivities | ||
Discount Rate | (87) | (127) |
100 bps Adverse Change | Excess spread financing | ||
Excess Spread Financing - Hypothetical Sensitivities | ||
Discount Rate | 35 | 46 |
200 bps Adverse Change | Mortgage servicing rights | ||
Excess Spread Financing - Hypothetical Sensitivities | ||
Discount Rate | (179) | (245) |
200 bps Adverse Change | Excess spread financing | ||
Excess Spread Financing - Hypothetical Sensitivities | ||
Discount Rate | $ 72 | $ 95 |
Mortgage Servicing Rights and_8
Mortgage Servicing Rights and Related Liabilities - Reverse MSRs and Liabilities - Amortized Cost (Details) - USD ($) $ in Millions | 9 Months Ended | |
Sep. 30, 2020 | Sep. 30, 2019 | |
Servicing Asset at Amortized Cost, Balance [Roll Forward] | ||
Fair value - end of period | $ 2,663 | |
Servicing Liability at Amortized Cost [Roll Forward] | ||
Balance - beginning of period | 61 | |
Balance - end of the period | 44 | |
Assets | ||
Servicing Asset at Amortized Cost, Balance [Roll Forward] | ||
Balance - beginning of period | 6 | $ 11 |
Amortization/accretion | 0 | 2 |
Servicing asset, adjustments | 0 | (6) |
Balance - end of the period | 6 | 7 |
Fair value - end of period | 6 | 7 |
Mortgage servicing rights financing | ||
Servicing Liability at Amortized Cost [Roll Forward] | ||
Balance - beginning of period | 61 | 71 |
Amortization/accretion | (17) | (39) |
Servicing liability, adjustments | 0 | 37 |
Balance - end of the period | 44 | 69 |
Fair value - end of period | $ 7 | $ 41 |
Mortgage Servicing Rights and_9
Mortgage Servicing Rights and Related Liabilities - Servicing Revenue (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | |
Transfers and Servicing [Abstract] | ||||
Contractually specified servicing fees | $ 282 | $ 305 | $ 864 | $ 893 |
Other service-related income | 59 | 51 | 170 | 133 |
Incentive and modification income | 12 | 12 | 30 | 29 |
Late fees | 18 | 30 | 65 | 82 |
Reverse servicing fees | 6 | 7 | 19 | 24 |
Mark-to-market adjustments | (29) | (83) | (673) | (607) |
Counterparty revenue share | (104) | (86) | (268) | (204) |
Amortization, net of accretion | (112) | (73) | (290) | (152) |
Total revenues - Servicing | 132 | 163 | (83) | 198 |
Cumulative incurred losses related to advances and other receivables associated with inactive and liquidated loans | 7 | 18 | 20 | 46 |
Servicing fee income accretion expense | 96 | 77 | 243 | 172 |
Accretion of MSL | $ 4 | $ 10 | $ 17 | $ 39 |
Advances and Other Receivable_3
Advances and Other Receivables, Net - Schedule of Accounts Receivable (Details) - USD ($) $ in Millions | Sep. 30, 2020 | Jun. 30, 2020 | Dec. 31, 2019 | Sep. 30, 2019 | Jun. 30, 2019 | Dec. 31, 2018 |
Receivables [Abstract] | ||||||
Servicing advances, net of $92 and $131 purchase discount, respectively | $ 746 | $ 970 | ||||
Receivables from agencies, investors and prior servicers, net of $21 and $21 purchase discount, respectively | 190 | 193 | ||||
Reserves | (191) | (175) | ||||
Total advances and other receivables, net | 745 | 988 | ||||
Servicing advances discount | 92 | $ 117 | 131 | $ 148 | $ 156 | $ 205 |
Receivables discount | $ 21 | $ 21 | $ 21 | $ 48 | $ 48 | $ 48 |
Advances and Other Receivable_4
Advances and Other Receivables, Net - Advances and Other Receivables Roll Forward (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | |
Advances And Other Receivables, Reserves [Roll Forward] | ||||
Balance - beginning of period | $ 216 | $ 98 | $ 168 | $ 47 |
Provision and other additions | 13 | 35 | 72 | 102 |
Write-offs | (38) | (3) | (49) | (19) |
Balance - end of period | 191 | 130 | 191 | 130 |
Cumulative incurred losses related to advances and other receivables associated with inactive and liquidated loans | $ (7) | $ (18) | $ (20) | $ (46) |
Advances and Other Receivable_5
Advances and Other Receivables, Net - Narrative (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | 12 Months Ended |
Sep. 30, 2020 | Sep. 30, 2020 | Dec. 31, 2019 | |
Accounts, Notes, Loans and Financing Receivable [Line Items] | |||
Accounting standards update | us-gaap:AccountingStandardsUpdate201613Member | us-gaap:AccountingStandardsUpdate201613Member | |
Financing receivable, allowance for credit loss | $ 44 | $ 44 | |
Financial instruments collection period | 39 months | ||
Advances and other receivables reserve | |||
Accounts, Notes, Loans and Financing Receivable [Line Items] | |||
Provision for credit loss | 13 | $ 27 | |
Financing receivable, allowance for credit loss | 27 | 27 | |
Purchase Discount | |||
Accounts, Notes, Loans and Financing Receivable [Line Items] | |||
Financing receivable, allowance for credit loss | $ 17 | $ 17 |
Advances and Other Receivable_6
Advances and Other Receivables, Net - Purchase Discount (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | |
Servicing Advances | ||||
Balance - beginning of period | $ 117 | $ 156 | $ 131 | $ 205 |
Addition from acquisition | 0 | 19 | ||
Utilization of purchase discounts | (25) | (8) | (39) | (76) |
Balance - end of period | 92 | 148 | 92 | 148 |
Receivables from Agencies, Investors and Prior Servicers | ||||
Balance - beginning of period | 21 | 48 | 21 | 48 |
Addition from acquisition | 0 | 0 | ||
Utilization of purchase discounts | 0 | 0 | 0 | 0 |
Balance - end of period | $ 21 | $ 48 | $ 21 | $ 48 |
Reverse Mortgage Interests, N_3
Reverse Mortgage Interests, Net - Schedule of Reverse Mortgage Interest (Details) - USD ($) $ in Millions | Sep. 30, 2020 | Jun. 30, 2020 | Dec. 31, 2019 | Sep. 30, 2019 | Jun. 30, 2019 | Dec. 31, 2018 |
Reverse Mortgage Interests [Abstract] | ||||||
Participating interests in HECM mortgage-backed securities (“HMBS”) | $ 3,663 | $ 4,282 | ||||
Other interests securitized | 1,002 | 994 | ||||
Unsecuritized interests | 920 | 1,117 | ||||
Purchase discount, net | (125) | $ (127) | (114) | $ (124) | $ (163) | $ (164) |
Total reverse mortgage interests, net | $ 5,460 | $ 6,279 |
Reverse Mortgage Interests, N_4
Reverse Mortgage Interests, Net - Narrative (Details) - USD ($) | 3 Months Ended | 9 Months Ended | 12 Months Ended | ||
Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | Dec. 31, 2019 | |
Accounts, Notes, Loans and Financing Receivable [Line Items] | |||||
Accounting standards update | us-gaap:AccountingStandardsUpdate201613Member | us-gaap:AccountingStandardsUpdate201613Member | |||
Interest earned on HECM loans | $ 158,000,000 | $ 241,000,000 | |||
Unsecuritized HECM | |||||
Accounts, Notes, Loans and Financing Receivable [Line Items] | |||||
Interest earned on HECM loans | $ 41,000,000 | $ 74,000,000 | |||
Participating Interests in HMBS | |||||
Accounts, Notes, Loans and Financing Receivable [Line Items] | |||||
UPB securitized | 134,000,000 | 211,000,000 | |||
Government National Mortgage Association (GNMA) Insured Loans | |||||
Accounts, Notes, Loans and Financing Receivable [Line Items] | |||||
UPB securitized | 0 | 61,000,000 | |||
Trust 2020-1 | |||||
Accounts, Notes, Loans and Financing Receivable [Line Items] | |||||
UPB securitized | 516,000,000 | ||||
2018-02 and 2018-03 | |||||
Accounts, Notes, Loans and Financing Receivable [Line Items] | |||||
UPB securitized | 337,000,000 | ||||
Trust 2019-1 | |||||
Accounts, Notes, Loans and Financing Receivable [Line Items] | |||||
UPB securitized | 398,000,000 | ||||
Trust 2017-2 | |||||
Accounts, Notes, Loans and Financing Receivable [Line Items] | |||||
UPB called | 249,000,000 | ||||
Trust 2018-3 | |||||
Accounts, Notes, Loans and Financing Receivable [Line Items] | |||||
UPB sold | 20,000,000 | ||||
Reverse mortgage interests, unsecuritized | HECM | |||||
Accounts, Notes, Loans and Financing Receivable [Line Items] | |||||
Repurchase of HECM loans | 912,000,000 | 2,132,000,000 | |||
Repurchase of HECM loans funded by prior servicer | 244,000,000 | 561,000,000 | |||
Housing and urban development, home equity conversion mortgage loans | |||||
Accounts, Notes, Loans and Financing Receivable [Line Items] | |||||
Unsecuritized interests | $ 630,000,000 | $ 1,458,000,000 |
Reverse Mortgage Interests, N_5
Reverse Mortgage Interests, Net - Unsecuritized Interest (Details) - USD ($) $ in Millions | Sep. 30, 2020 | Dec. 31, 2019 |
Reverse Mortgage Interest [Abstract] | ||
Repurchased HECM loans (exceeds 98% of their Max Claim Amount (“MCA”)) | $ 634 | $ 789 |
HECM related receivables | 213 | 250 |
Funded borrower draws not yet securitized | 56 | 64 |
Real estate owned (“REO”) related receivables | 17 | 14 |
Total unsecuritized interests | $ 920 | $ 1,117 |
Reverse Mortgage Interests, N_6
Reverse Mortgage Interests, Net - Purchase Discount Rollforward (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | |
Purchase discount, net, for reverse mortgage interests | ||||
Balance - beginning of period | $ (127) | $ (163) | $ (114) | $ (164) |
Adjustments | 0 | 0 | 0 | (24) |
Utilization of purchase discounts | 8 | 40 | 27 | 80 |
Amortization, net of accretion | (6) | (1) | (38) | (16) |
Balance - end of period | $ (125) | $ (124) | $ (125) | $ (124) |
Mortgage Loans Held for Sale -
Mortgage Loans Held for Sale - Mortgage Loans Held for Sale (Details) - USD ($) $ in Millions | Sep. 30, 2020 | Dec. 31, 2019 |
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Mortgage loans held for sale – UPB | $ 3,642 | $ 3,949 |
Mark-to-market adjustment | 175 | 128 |
Total mortgage loans held for sale | 3,817 | 4,077 |
UPB | 49 | 29 |
Fair Value | 39 | 22 |
Ginnie mae repurchased loans | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
UPB | $ 37 | $ 25 |
Mortgage Loans Held for Sale _2
Mortgage Loans Held for Sale - Reconciliation to Cash Flow (Details) - USD ($) $ in Millions | 9 Months Ended | |
Sep. 30, 2020 | Sep. 30, 2019 | |
Loans Receivable Held-for-sale, Net, Reconciliation to Cash Flow [Roll Forward] | ||
Balance - beginning of period | $ 4,077 | $ 1,631 |
Loans sold | (42,185) | (27,413) |
Mortgage loans originated and purchased, net of fees | 38,709 | 28,209 |
Repurchase of loans out of Ginnie Mae securitizations | 3,173 | 1,823 |
Net change in unrealized gain (loss) of loans held for sale | 36 | 2 |
Net transfers of mortgage loans held for sale from REO in other assets and transfer from mortgage loans held for investment | 7 | 15 |
Balance - end of period | $ 3,817 | $ 4,267 |
Mortgage Loans Held for Sale _3
Mortgage Loans Held for Sale - Narrative (Details) - USD ($) $ in Millions | 9 Months Ended | ||
Sep. 30, 2020 | Sep. 30, 2019 | Dec. 31, 2019 | |
Mortgage Loans Held for Sale and Investment [Abstract] | |||
Sale of mortgage loans held for sale | $ 43,040 | $ 27,778 | |
Gain on sale of mortgage loans held for sale | 855 | $ 365 | |
Mortgage loans held for sale in foreclosure | $ 20 | $ 21 |
Loans Subject to Repurchase f_2
Loans Subject to Repurchase from Ginnie Mae (Details) - USD ($) $ in Millions | Sep. 30, 2020 | Dec. 31, 2019 |
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Loans subject to repurchase | $ 5,395 | $ 560 |
Financial Asset, Equal to or Greater than 90 Days Past Due | Payment Deferral | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Loans subject to repurchase | $ 5,095 |
Goodwill and Intangible Assets
Goodwill and Intangible Assets (Details) - USD ($) $ in Millions | Sep. 30, 2020 | Dec. 31, 2019 |
Goodwill and Intangible Assets Disclosure [Abstract] | ||
Goodwill | $ 120 | $ 120 |
Intangible assets | $ 45 | $ 74 |
Derivative Financial Instrume_3
Derivative Financial Instruments - Derivative Instruments (Details) - USD ($) $ in Millions | 9 Months Ended | |
Sep. 30, 2020 | Sep. 30, 2019 | |
Assets | ||
Derivatives, Fair Value [Line Items] | ||
Outstanding Notional | $ 27,636 | $ 9,421 |
Fair Value | 475 | 170 |
Gains/(Losses) | 322 | 107 |
Assets | Loan sale commitments | ||
Derivatives, Fair Value [Line Items] | ||
Outstanding Notional | 1,908 | 1,508 |
Fair Value | 75 | 35 |
Gains/(Losses) | 43 | 9 |
Assets | IRLCs | ||
Derivatives, Fair Value [Line Items] | ||
Outstanding Notional | 10,967 | 4,964 |
Fair Value | 414 | 144 |
Gains/(Losses) | 279 | 84 |
Assets | LPCs | ||
Derivatives, Fair Value [Line Items] | ||
Outstanding Notional | 5,217 | 1,397 |
Fair Value | 38 | 18 |
Gains/(Losses) | 26 | 17 |
Assets | Forward MBS trades | ||
Derivatives, Fair Value [Line Items] | ||
Outstanding Notional | 11,452 | 3,054 |
Fair Value | 23 | 8 |
Gains/(Losses) | 17 | 6 |
Assets | Eurodollar futures | ||
Derivatives, Fair Value [Line Items] | ||
Outstanding Notional | 6 | |
Fair Value | 0 | |
Gains/(Losses) | 0 | |
Liabilities | ||
Derivatives, Fair Value [Line Items] | ||
Outstanding Notional | 16,574 | 6,237 |
Derivative financial instruments | 44 | 19 |
Gains/(Losses) | 29 | (5) |
Liabilities | IRLCs | ||
Derivatives, Fair Value [Line Items] | ||
Outstanding Notional | 2 | 15 |
Derivative financial instruments | 0 | 0 |
Gains/(Losses) | 0 | 0 |
Liabilities | LPCs | ||
Derivatives, Fair Value [Line Items] | ||
Outstanding Notional | 598 | 547 |
Derivative financial instruments | 2 | 3 |
Gains/(Losses) | (1) | 3 |
Liabilities | Forward MBS trades | ||
Derivatives, Fair Value [Line Items] | ||
Outstanding Notional | 15,974 | 5,667 |
Derivative financial instruments | 42 | 16 |
Gains/(Losses) | $ 30 | (8) |
Liabilities | Eurodollar futures | ||
Derivatives, Fair Value [Line Items] | ||
Outstanding Notional | 8 | |
Derivative financial instruments | 0 | |
Gains/(Losses) | $ 0 |
Derivative Financial Instrume_4
Derivative Financial Instruments - Narrative (Details) - USD ($) $ in Millions | Sep. 30, 2020 | Dec. 31, 2019 |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | ||
Collateral deposit assets (liabilities) | $ 14 | $ 6 |
Indebtedness - Notes Payable Su
Indebtedness - Notes Payable Summary (Details) - USD ($) | 9 Months Ended | ||||||
Sep. 30, 2020 | Oct. 31, 2020 | Jun. 30, 2020 | May 31, 2020 | Apr. 30, 2020 | Mar. 31, 2020 | Dec. 31, 2019 | |
Debt Instrument [Line Items] | |||||||
Debt Outstanding | $ 4,851,000,000 | $ 4,997,000,000 | |||||
Originations | Mortgage loans held for sale | |||||||
Debt Instrument [Line Items] | |||||||
Collateral Pledged | 3,637,000,000 | 3,931,000,000 | |||||
Debt Outstanding | 3,560,000,000 | 3,826,000,000 | |||||
Originations | Reverse mortgage interests | |||||||
Debt Instrument [Line Items] | |||||||
Collateral Pledged | 564,000,000 | 691,000,000 | |||||
Debt Outstanding | 468,000,000 | 590,000,000 | |||||
Originations | MSR | |||||||
Debt Instrument [Line Items] | |||||||
Collateral Pledged | 1,075,000,000 | 1,359,000,000 | |||||
Debt Outstanding | 266,000,000 | 160,000,000 | |||||
Advance Facilities | Servicing | |||||||
Debt Instrument [Line Items] | |||||||
Debt outstanding, gross | 569,000,000 | 422,000,000 | |||||
Collateral Pledged | 728,000,000 | 665,000,000 | |||||
Advance Facilities | Servicing | Loans payable | $875 advance facility | |||||||
Debt Instrument [Line Items] | |||||||
Capacity Amount | 875,000,000 | $ 875,000,000 | $ 125,000,000 | ||||
Debt outstanding, gross | 144,000,000 | 37,000,000 | |||||
Collateral Pledged | $ 169,000,000 | 88,000,000 | |||||
Advance Facilities | Servicing | Loans payable | $875 advance facility | CP rate | Minimum | |||||||
Debt Instrument [Line Items] | |||||||
Basis spread on rate | 2.50% | ||||||
Advance Facilities | Servicing | Loans payable | $875 advance facility | CP rate | Maximum | |||||||
Debt Instrument [Line Items] | |||||||
Basis spread on rate | 6.50% | ||||||
Advance Facilities | Servicing | Loans payable | $425 advance facility | |||||||
Debt Instrument [Line Items] | |||||||
Capacity Amount | $ 425,000,000 | $ 425,000,000 | 325,000,000 | ||||
Debt outstanding, gross | 206,000,000 | 224,000,000 | |||||
Collateral Pledged | $ 261,000,000 | 285,000,000 | |||||
Advance Facilities | Servicing | Loans payable | $425 advance facility | LIBOR | Minimum | |||||||
Debt Instrument [Line Items] | |||||||
Basis spread on rate | 2.80% | ||||||
Advance Facilities | Servicing | Loans payable | $425 advance facility | LIBOR | Maximum | |||||||
Debt Instrument [Line Items] | |||||||
Basis spread on rate | 6.50% | ||||||
Advance Facilities | Servicing | Loans payable | $250 advance facility | |||||||
Debt Instrument [Line Items] | |||||||
Capacity Amount | $ 250,000,000 | ||||||
Debt outstanding, gross | 0 | 98,000,000 | |||||
Collateral Pledged | $ 0 | 167,000,000 | |||||
Advance Facilities | Servicing | Loans payable | $250 advance facility | LIBOR | Minimum | |||||||
Debt Instrument [Line Items] | |||||||
Basis spread on rate | 1.50% | ||||||
Advance Facilities | Servicing | Loans payable | $250 advance facility | LIBOR | Maximum | |||||||
Debt Instrument [Line Items] | |||||||
Basis spread on rate | 2.60% | ||||||
Advance Facilities | Servicing | Notes payable to banks | $100 advance facility | |||||||
Debt Instrument [Line Items] | |||||||
Capacity Amount | $ 100,000,000 | ||||||
Debt outstanding, gross | 75,000,000 | 63,000,000 | |||||
Collateral Pledged | $ 102,000,000 | 125,000,000 | |||||
Advance Facilities | Servicing | Notes payable to banks | $100 advance facility | LIBOR | |||||||
Debt Instrument [Line Items] | |||||||
Basis spread on rate | 2.50% | ||||||
Warehouse Facilities | Originations | |||||||
Debt Instrument [Line Items] | |||||||
Debt outstanding, gross | $ 4,028,000,000 | 4,416,000,000 | |||||
Collateral Pledged | 4,201,000,000 | 4,622,000,000 | |||||
Warehouse Facilities | Originations | Notes payable to banks | $1,500 warehouse facility | |||||||
Debt Instrument [Line Items] | |||||||
Capacity Amount | 1,500,000,000 | ||||||
Debt outstanding, gross | 666,000,000 | 759,000,000 | |||||
Collateral Pledged | $ 634,000,000 | 733,000,000 | |||||
Warehouse Facilities | Originations | Notes payable to banks | $1,500 warehouse facility | LIBOR | |||||||
Debt Instrument [Line Items] | |||||||
Basis spread on rate | 1.70% | ||||||
Warehouse Facilities | Originations | Notes payable to banks | $1,200 warehouse facility | |||||||
Debt Instrument [Line Items] | |||||||
Capacity Amount | $ 1,200,000,000 | ||||||
Debt outstanding, gross | 564,000,000 | 683,000,000 | |||||
Collateral Pledged | $ 610,000,000 | 724,000,000 | |||||
Warehouse Facilities | Originations | Notes payable to banks | $1,200 warehouse facility | LIBOR | Minimum | |||||||
Debt Instrument [Line Items] | |||||||
Basis spread on rate | 1.50% | ||||||
Warehouse Facilities | Originations | Notes payable to banks | $1,200 warehouse facility | LIBOR | Maximum | |||||||
Debt Instrument [Line Items] | |||||||
Basis spread on rate | 3.00% | ||||||
Warehouse Facilities | Originations | Notes payable to banks | $1.050 warehouse facility | |||||||
Debt Instrument [Line Items] | |||||||
Capacity Amount | $ 1,050,000,000 | ||||||
Debt outstanding, gross | 627,000,000 | 589,000,000 | |||||
Collateral Pledged | $ 679,000,000 | 656,000,000 | |||||
Warehouse Facilities | Originations | Notes payable to banks | $1.050 warehouse facility | LIBOR | Minimum | |||||||
Debt Instrument [Line Items] | |||||||
Basis spread on rate | 1.80% | ||||||
Warehouse Facilities | Originations | Notes payable to banks | $1.050 warehouse facility | LIBOR | Maximum | |||||||
Debt Instrument [Line Items] | |||||||
Basis spread on rate | 3.90% | ||||||
Warehouse Facilities | Originations | Notes payable to banks | $750 warehouse facility | |||||||
Debt Instrument [Line Items] | |||||||
Capacity Amount | $ 750,000,000 | ||||||
Debt outstanding, gross | 574,000,000 | 0 | |||||
Collateral Pledged | $ 591,000,000 | 0 | |||||
Warehouse Facilities | Originations | Notes payable to banks | $750 warehouse facility | LIBOR | |||||||
Debt Instrument [Line Items] | |||||||
Basis spread on rate | 1.80% | ||||||
Warehouse Facilities | Originations | Notes payable to banks | $750 warehouse facility | |||||||
Debt Instrument [Line Items] | |||||||
Capacity Amount | $ 750,000,000 | ||||||
Debt outstanding, gross | 472,000,000 | 411,000,000 | |||||
Collateral Pledged | $ 481,000,000 | 425,000,000 | |||||
Warehouse Facilities | Originations | Notes payable to banks | $750 warehouse facility | LIBOR | Minimum | |||||||
Debt Instrument [Line Items] | |||||||
Basis spread on rate | 1.70% | ||||||
Warehouse Facilities | Originations | Notes payable to banks | $750 warehouse facility | LIBOR | Maximum | |||||||
Debt Instrument [Line Items] | |||||||
Basis spread on rate | 2.80% | ||||||
Warehouse Facilities | Originations | Notes payable to banks | $750 million warehouse | |||||||
Debt Instrument [Line Items] | |||||||
Capacity Amount | $ 750,000,000 | $ 200,000,000 | |||||
Debt outstanding, gross | 105,000,000 | 54,000,000 | |||||
Collateral Pledged | $ 135,000,000 | 78,000,000 | |||||
Warehouse Facilities | Originations | Notes payable to banks | $750 million warehouse | LIBOR | |||||||
Debt Instrument [Line Items] | |||||||
Basis spread on rate | 2.30% | ||||||
Warehouse Facilities | Originations | Notes payable to banks | $700 warehouse facility | |||||||
Debt Instrument [Line Items] | |||||||
Capacity Amount | $ 700,000,000 | ||||||
Debt outstanding, gross | 488,000,000 | 469,000,000 | |||||
Collateral Pledged | $ 505,000,000 | 488,000,000 | |||||
Warehouse Facilities | Originations | Notes payable to banks | $700 warehouse facility | Subsequent Event | |||||||
Debt Instrument [Line Items] | |||||||
Capacity Amount | $ 1,500,000,000 | ||||||
Warehouse Facilities | Originations | Notes payable to banks | $700 warehouse facility | LIBOR | Minimum | |||||||
Debt Instrument [Line Items] | |||||||
Basis spread on rate | 1.30% | ||||||
Warehouse Facilities | Originations | Notes payable to banks | $700 warehouse facility | LIBOR | Maximum | |||||||
Debt Instrument [Line Items] | |||||||
Basis spread on rate | 2.20% | ||||||
Warehouse Facilities | Originations | Notes payable to banks | $600 warehouse facility | |||||||
Debt Instrument [Line Items] | |||||||
Capacity Amount | $ 600,000,000 | ||||||
Debt outstanding, gross | 156,000,000 | 174,000,000 | |||||
Collateral Pledged | $ 185,000,000 | 202,000,000 | |||||
Warehouse Facilities | Originations | Notes payable to banks | $600 warehouse facility | LIBOR | |||||||
Debt Instrument [Line Items] | |||||||
Basis spread on rate | 2.20% | ||||||
Warehouse Facilities | Originations | Notes payable to banks | $500 warehouse facility | |||||||
Debt Instrument [Line Items] | |||||||
Capacity Amount | $ 500,000,000 | ||||||
Debt outstanding, gross | 0 | 336,000,000 | |||||
Collateral Pledged | $ 0 | 349,000,000 | |||||
Warehouse Facilities | Originations | Notes payable to banks | $500 warehouse facility | LIBOR | Minimum | |||||||
Debt Instrument [Line Items] | |||||||
Basis spread on rate | 2.50% | ||||||
Warehouse Facilities | Originations | Notes payable to banks | $500 warehouse facility | LIBOR | Maximum | |||||||
Debt Instrument [Line Items] | |||||||
Basis spread on rate | 4.00% | ||||||
Warehouse Facilities | Originations | Notes payable to banks | $300 warehouse facility | |||||||
Debt Instrument [Line Items] | |||||||
Capacity Amount | $ 300,000,000 | ||||||
Debt outstanding, gross | 258,000,000 | 136,000,000 | |||||
Collateral Pledged | $ 258,000,000 | 136,000,000 | |||||
Warehouse Facilities | Originations | Notes payable to banks | $300 warehouse facility | LIBOR | |||||||
Debt Instrument [Line Items] | |||||||
Basis spread on rate | 1.40% | ||||||
Warehouse Facilities | Originations | Notes payable to banks | $250 warehouse facility | |||||||
Debt Instrument [Line Items] | |||||||
Capacity Amount | $ 250,000,000 | $ 250,000,000 | $ 1,000,000,000 | ||||
Debt outstanding, gross | 0 | 762,000,000 | |||||
Collateral Pledged | $ 0 | 783,000,000 | |||||
Warehouse Facilities | Originations | Notes payable to banks | $250 warehouse facility | LIBOR | Minimum | |||||||
Debt Instrument [Line Items] | |||||||
Basis spread on rate | 1.40% | ||||||
Warehouse Facilities | Originations | Notes payable to banks | $250 warehouse facility | LIBOR | Maximum | |||||||
Debt Instrument [Line Items] | |||||||
Basis spread on rate | 2.30% | ||||||
Warehouse Facilities | Originations | Notes payable to banks | $200 warehouse facility | |||||||
Debt Instrument [Line Items] | |||||||
Capacity Amount | $ 200,000,000 | ||||||
Debt outstanding, gross | 72,000,000 | 27,000,000 | |||||
Collateral Pledged | $ 74,000,000 | 27,000,000 | |||||
Warehouse Facilities | Originations | Notes payable to banks | $200 warehouse facility | LIBOR | |||||||
Debt Instrument [Line Items] | |||||||
Basis spread on rate | 1.80% | ||||||
Warehouse Facilities | Originations | Notes payable to banks | $200 warehouse facility | |||||||
Debt Instrument [Line Items] | |||||||
Capacity Amount | $ 200,000,000 | ||||||
Debt outstanding, gross | 0 | 0 | |||||
Collateral Pledged | $ 0 | 0 | |||||
Warehouse Facilities | Originations | Notes payable to banks | $200 warehouse facility | LIBOR | |||||||
Debt Instrument [Line Items] | |||||||
Basis spread on rate | 1.30% | ||||||
Warehouse Facilities | Originations | Notes payable to banks | $50 warehouse facility | |||||||
Debt Instrument [Line Items] | |||||||
Capacity Amount | $ 50,000,000 | ||||||
Debt outstanding, gross | 43,000,000 | 11,000,000 | |||||
Collateral Pledged | $ 45,000,000 | 15,000,000 | |||||
Warehouse Facilities | Originations | Notes payable to banks | $50 warehouse facility | LIBOR | Minimum | |||||||
Debt Instrument [Line Items] | |||||||
Basis spread on rate | 1.80% | ||||||
Warehouse Facilities | Originations | Notes payable to banks | $50 warehouse facility | LIBOR | Maximum | |||||||
Debt Instrument [Line Items] | |||||||
Basis spread on rate | 4.80% | ||||||
Warehouse Facilities | Originations | Notes payable to banks | $40 warehouse facility | |||||||
Debt Instrument [Line Items] | |||||||
Capacity Amount | $ 40,000,000 | ||||||
Debt outstanding, gross | 3,000,000 | 5,000,000 | |||||
Collateral Pledged | $ 4,000,000 | 6,000,000 | |||||
Warehouse Facilities | Originations | Notes payable to banks | $40 warehouse facility | LIBOR | |||||||
Debt Instrument [Line Items] | |||||||
Basis spread on rate | 3.30% | ||||||
Warehouse Facilities | Originations | Notes payable to banks | $1,200 warehouse facility | |||||||
Debt Instrument [Line Items] | |||||||
Capacity Amount | $ 1,200,000,000 | 800,000,000 | |||||
MSR Facilities | Originations | Notes payable to banks | |||||||
Debt Instrument [Line Items] | |||||||
Debt outstanding, gross | 266,000,000 | 160,000,000 | |||||
Collateral Pledged | 1,075,000,000 | 1,359,000,000 | |||||
MSR Facilities | Originations | Notes payable to banks | $450 warehouse facility | |||||||
Debt Instrument [Line Items] | |||||||
Capacity Amount | 450,000,000 | ||||||
Debt outstanding, gross | 0 | 150,000,000 | |||||
Collateral Pledged | $ 0 | 945,000,000 | |||||
MSR Facilities | Originations | Notes payable to banks | $450 warehouse facility | LIBOR | |||||||
Debt Instrument [Line Items] | |||||||
Basis spread on rate | 5.10% | ||||||
MSR Facilities | Originations | Notes payable to banks | $200 warehouse facility | |||||||
Debt Instrument [Line Items] | |||||||
Capacity Amount | $ 200,000,000 | $ 400,000,000 | |||||
Debt outstanding, gross | 0 | 0 | |||||
Collateral Pledged | $ 187,000,000 | 200,000,000 | |||||
MSR Facilities | Originations | Notes payable to banks | $200 warehouse facility | LIBOR | |||||||
Debt Instrument [Line Items] | |||||||
Basis spread on rate | 3.50% | ||||||
MSR Facilities | Originations | Notes payable to banks | $150 warehouse facility | |||||||
Debt Instrument [Line Items] | |||||||
Capacity Amount | $ 150,000,000 | ||||||
Debt outstanding, gross | 0 | 0 | |||||
Collateral Pledged | $ 149,000,000 | 130,000,000 | |||||
MSR Facilities | Originations | Notes payable to banks | $150 warehouse facility | LIBOR | |||||||
Debt Instrument [Line Items] | |||||||
Basis spread on rate | 3.80% | ||||||
MSR Facilities | Originations | Notes payable to banks | $50 warehouse facility | |||||||
Debt Instrument [Line Items] | |||||||
Capacity Amount | $ 50,000,000 | ||||||
Debt outstanding, gross | 10,000,000 | 10,000,000 | |||||
Collateral Pledged | $ 80,000,000 | 84,000,000 | |||||
MSR Facilities | Originations | Notes payable to banks | $50 warehouse facility | LIBOR | |||||||
Debt Instrument [Line Items] | |||||||
Basis spread on rate | 2.80% | ||||||
MSR Facilities | Originations | Notes payable to banks | $900 warehouse facility | |||||||
Debt Instrument [Line Items] | |||||||
Capacity Amount | $ 900,000,000 | ||||||
Advance Financing, Internally Allocated | Servicing | Loans payable | $640 advance facility | |||||||
Debt Instrument [Line Items] | |||||||
Capacity Amount | 640,000,000 | ||||||
Debt outstanding, gross | 144,000,000 | 0 | |||||
Collateral Pledged | $ 196,000,000 | 0 | |||||
Advance Financing, Internally Allocated | Servicing | Loans payable | $640 advance facility | LIBOR | |||||||
Debt Instrument [Line Items] | |||||||
Basis spread on rate | 3.90% | ||||||
MSR Financing, Internally Allocated | Originations | Notes payable to banks | $500 warehouse facility | |||||||
Debt Instrument [Line Items] | |||||||
Capacity Amount | $ 260,000,000 | ||||||
Debt outstanding, gross | 256,000,000 | 0 | |||||
Collateral Pledged | $ 659,000,000 | 0 | |||||
MSR Financing, Internally Allocated | Originations | Notes payable to banks | $500 warehouse facility | LIBOR | |||||||
Debt Instrument [Line Items] | |||||||
Basis spread on rate | 3.90% | ||||||
Advance, Warehouse and MSR Facilities | Originations | Notes payable to banks | |||||||
Debt Instrument [Line Items] | |||||||
Debt outstanding, gross | $ 4,863,000,000 | 4,998,000,000 | |||||
Collateral Pledged | 6,004,000,000 | 6,646,000,000 | |||||
Unamortized debt issuance costs | (12,000,000) | (1,000,000) | |||||
Debt Outstanding | $ 4,851,000,000 | $ 4,997,000,000 |
Indebtedness - Summary of Unsec
Indebtedness - Summary of Unsecured Senior Notes (Details) - USD ($) | Sep. 30, 2020 | Dec. 31, 2019 |
Debt Instrument [Line Items] | ||
Unsecured senior notes, net | $ 2,167,000,000 | $ 2,366,000,000 |
Unsecured senior notes | ||
Debt Instrument [Line Items] | ||
Unsecured senior notes principal amount | 2,200,000,000 | 2,398,000,000 |
Unamortized debt issuance costs, premium and discount | (33,000,000) | (32,000,000) |
Unsecured senior notes, net | 2,167,000,000 | 2,366,000,000 |
Unsecured senior notes | $850 Face Value, 5.500% interest payable semi-annually, due August 2028 | ||
Debt Instrument [Line Items] | ||
Unsecured senior notes principal amount | 850,000,000 | 0 |
Face value | $ 850,000,000 | |
Interest Rate | 5.50% | |
Unsecured senior notes | $750 face value, 9.125% interest rate payable semi-annually, due July 2026 | ||
Debt Instrument [Line Items] | ||
Unsecured senior notes principal amount | $ 750,000,000 | 750,000,000 |
Face value | $ 750,000,000 | |
Interest Rate | 9.125% | |
Unsecured senior notes | $600 face value, 6.000% interest rate payable semi-annually, due January 2027 | ||
Debt Instrument [Line Items] | ||
Unsecured senior notes principal amount | $ 600,000,000 | 0 |
Face value | $ 600,000,000 | |
Interest Rate | 6.00% | |
Unsecured senior notes | $600 face value, 6.500% interest rate payable semi-annually, due July 2021 | ||
Debt Instrument [Line Items] | ||
Unsecured senior notes principal amount | $ 0 | 492,000,000 |
Face value | $ 600,000,000 | |
Interest Rate | 6.50% | |
Unsecured senior notes | $300 face value, 6.500% interest rate payable semi-annually, due June 2022 | ||
Debt Instrument [Line Items] | ||
Unsecured senior notes principal amount | $ 0 | 206,000,000 |
Face value | $ 300,000,000 | |
Interest Rate | 6.50% | |
Unsecured senior notes | $950 face value, 8.125% interest rate payable semi-annually, due July 2023(4) | ||
Debt Instrument [Line Items] | ||
Unsecured senior notes principal amount | $ 0 | $ 950,000,000 |
Face value | $ 950,000,000 | |
Interest Rate | 8.125% |
Indebtedness - Narrative (Detai
Indebtedness - Narrative (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | |
Sep. 30, 2020 | Sep. 30, 2020 | Sep. 30, 2019 | |
Debt Instrument [Line Items] | |||
Loss on redemption of unsecured senior notes | $ 52 | $ 0 | |
Unsecured senior Notes | |||
Debt Instrument [Line Items] | |||
Maximum percentage redeemable on unsecured debt | 40.00% | ||
Unsecured senior Notes | |||
Debt Instrument [Line Items] | |||
Repayments of debt | $ 100 | ||
Amount of principal amount outstanding repaid | $ 950 | 1,548 | |
Loss on redemption of unsecured senior notes | $ 53 | $ 52 |
Indebtedness - Schedule of Note
Indebtedness - Schedule of Notes Maturity (Details) - Unsecured senior notes - USD ($) $ in Millions | Sep. 30, 2020 | Dec. 31, 2019 |
Debt Instrument [Line Items] | ||
2020 through 2024 | $ 0 | |
Thereafter | 2,200 | |
Total unsecured senior notes principal amount | $ 2,200 | $ 2,398 |
Indebtedness - Summary of Other
Indebtedness - Summary of Other Non-Recourse Debt (Details) - USD ($) $ in Millions | Sep. 30, 2020 | Dec. 31, 2019 |
Debt Instrument [Line Items] | ||
Other nonrecourse debt principal amount | $ 4,671 | $ 5,286 |
Participating interest financing | Minimum | ||
Debt Instrument [Line Items] | ||
Interest Rate | 0.30% | |
Participating interest financing | Maximum | ||
Debt Instrument [Line Items] | ||
Interest Rate | 5.60% | |
Trust 2020-1 | Minimum | ||
Debt Instrument [Line Items] | ||
Interest Rate | 1.30% | |
Trust 2020-1 | Maximum | ||
Debt Instrument [Line Items] | ||
Interest Rate | 7.50% | |
Trust 2019-2 | Minimum | ||
Debt Instrument [Line Items] | ||
Interest Rate | 2.30% | |
Trust 2019-2 | Maximum | ||
Debt Instrument [Line Items] | ||
Interest Rate | 6.00% | |
Trust 2019-1 | Minimum | ||
Debt Instrument [Line Items] | ||
Interest Rate | 2.70% | |
Trust 2019-1 | Maximum | ||
Debt Instrument [Line Items] | ||
Interest Rate | 6.00% | |
Trust 2018-3 | Minimum | ||
Debt Instrument [Line Items] | ||
Interest Rate | 3.60% | |
Trust 2018-3 | Maximum | ||
Debt Instrument [Line Items] | ||
Interest Rate | 6.00% | |
Trust 2018-2 | Minimum | ||
Debt Instrument [Line Items] | ||
Interest Rate | 3.20% | |
Trust 2018-2 | Maximum | ||
Debt Instrument [Line Items] | ||
Interest Rate | 6.00% | |
Nonrecourse debt–legacy assets | ||
Debt Instrument [Line Items] | ||
Other nonrecourse debt principal amount | $ 4,671 | 5,286 |
Unamortized debt issuance costs, premium and discount | 6 | 10 |
Nonrecourse debt–legacy assets | Participating interest financing | ||
Debt Instrument [Line Items] | ||
Collateral Amount | 0 | |
Other nonrecourse debt principal amount | 3,664 | 4,284 |
Nonrecourse debt–legacy assets | Trust 2020-1 | ||
Debt Instrument [Line Items] | ||
Collateral Amount | 519 | |
Other nonrecourse debt principal amount | 516 | 0 |
Nonrecourse debt–legacy assets | Trust 2019-2 | ||
Debt Instrument [Line Items] | ||
Collateral Amount | 275 | |
Other nonrecourse debt principal amount | 259 | 333 |
Nonrecourse debt–legacy assets | Trust 2019-1 | ||
Debt Instrument [Line Items] | ||
Collateral Amount | 248 | |
Other nonrecourse debt principal amount | 226 | 302 |
Nonrecourse debt–legacy assets | Trust 2018-3 | ||
Debt Instrument [Line Items] | ||
Collateral Amount | 0 | |
Other nonrecourse debt principal amount | 0 | 209 |
Nonrecourse debt–legacy assets | Trust 2018-2 | ||
Debt Instrument [Line Items] | ||
Collateral Amount | 0 | |
Other nonrecourse debt principal amount | 0 | 148 |
Nonrecourse debt–legacy assets | Other | ||
Debt Instrument [Line Items] | ||
Other nonrecourse debt principal amount | $ 4,665 | $ 5,276 |
Securitizations and Financing_2
Securitizations and Financings - Assets and Liabilities of Consolidated VIEs (Details) - USD ($) $ in Millions | Sep. 30, 2020 | Dec. 31, 2019 |
Assets and Associated Liabilities of Transfers Accounted for as Secured Borrowings [Line Items] | ||
Purchase discount | $ 62 | $ 46 |
Residential mortgage | ||
Assets and Associated Liabilities of Transfers Accounted for as Secured Borrowings [Line Items] | ||
Assets - transfers accounted for as secured borrowings | 474 | 606 |
Assets - reverse secured borrowings | 4,628 | 5,272 |
Liabilities - transfers accounted for as secured borrowings | 347 | 360 |
Liabilities - reverse secured borrowings | 4,665 | 5,277 |
Residential mortgage | Restricted cash | ||
Assets and Associated Liabilities of Transfers Accounted for as Secured Borrowings [Line Items] | ||
Assets - transfers accounted for as secured borrowings | 44 | 66 |
Assets - reverse secured borrowings | 25 | 42 |
Residential mortgage | Reverse mortgage interests | ||
Assets and Associated Liabilities of Transfers Accounted for as Secured Borrowings [Line Items] | ||
Assets - transfers accounted for as secured borrowings | 0 | 0 |
Assets - reverse secured borrowings | 4,603 | 5,230 |
Residential mortgage | Advances and other receivables, net | ||
Assets and Associated Liabilities of Transfers Accounted for as Secured Borrowings [Line Items] | ||
Assets - transfers accounted for as secured borrowings | 430 | 540 |
Assets - reverse secured borrowings | 0 | 0 |
Residential mortgage | Advance facilities | ||
Assets and Associated Liabilities of Transfers Accounted for as Secured Borrowings [Line Items] | ||
Liabilities - transfers accounted for as secured borrowings | 347 | 359 |
Liabilities - reverse secured borrowings | 0 | 0 |
Residential mortgage | Payables and other liabilities | ||
Assets and Associated Liabilities of Transfers Accounted for as Secured Borrowings [Line Items] | ||
Liabilities - transfers accounted for as secured borrowings | 0 | 1 |
Liabilities - reverse secured borrowings | 0 | 1 |
Residential mortgage | Participating interest financing | ||
Assets and Associated Liabilities of Transfers Accounted for as Secured Borrowings [Line Items] | ||
Liabilities - transfers accounted for as secured borrowings | 0 | 0 |
Liabilities - reverse secured borrowings | 3,664 | 4,284 |
Residential mortgage | Trust 2020-1 | HECM Securitizations (HMBS) | ||
Assets and Associated Liabilities of Transfers Accounted for as Secured Borrowings [Line Items] | ||
Liabilities - transfers accounted for as secured borrowings | 0 | 0 |
Liabilities - reverse secured borrowings | 516 | 0 |
Residential mortgage | Trust 2019-2 | HECM Securitizations (HMBS) | ||
Assets and Associated Liabilities of Transfers Accounted for as Secured Borrowings [Line Items] | ||
Liabilities - transfers accounted for as secured borrowings | 0 | 0 |
Liabilities - reverse secured borrowings | 259 | 333 |
Residential mortgage | Trust 2019-1 | HECM Securitizations (HMBS) | ||
Assets and Associated Liabilities of Transfers Accounted for as Secured Borrowings [Line Items] | ||
Liabilities - transfers accounted for as secured borrowings | 0 | 0 |
Liabilities - reverse secured borrowings | 226 | 302 |
Residential mortgage | Trust 2018-3 | HECM Securitizations (HMBS) | ||
Assets and Associated Liabilities of Transfers Accounted for as Secured Borrowings [Line Items] | ||
Liabilities - transfers accounted for as secured borrowings | 0 | 0 |
Liabilities - reverse secured borrowings | 0 | 209 |
Residential mortgage | Trust 2018-2 | HECM Securitizations (HMBS) | ||
Assets and Associated Liabilities of Transfers Accounted for as Secured Borrowings [Line Items] | ||
Liabilities - transfers accounted for as secured borrowings | 0 | 0 |
Liabilities - reverse secured borrowings | $ 0 | $ 148 |
Securitizations and Financing_3
Securitizations and Financings - Securitization Trusts (Details) - USD ($) $ in Millions | Sep. 30, 2020 | Dec. 31, 2019 |
Variable Interest Entities and Securitizations [Abstract] | ||
Total collateral balances - UPB | $ 1,378 | $ 1,503 |
Total certificate balances | 1,378 | 1,512 |
Unconsolidated securitization trusts | $ 179 | $ 193 |
Earnings Per Share (Details)
Earnings Per Share (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | |
Earnings Per Share [Abstract] | ||||
Net income (loss) attributable to Mr. Cooper | $ 209 | $ 84 | $ 114 | $ (189) |
Less: Undistributed earnings attributable to participating stockholders | 2 | 1 | 1 | 0 |
Net income (loss) attributable to common stockholders | $ 207 | $ 83 | $ 113 | $ (189) |
Net income (loss) per common share attributable to Mr. Cooper: | ||||
Basic (in dollars per share) | $ 2.26 | $ 0.91 | $ 1.23 | $ (2.08) |
Diluted (in dollars per share) | $ 2.18 | $ 0.90 | $ 1.20 | $ (2.08) |
Weighted average shares of common stock outstanding (in thousands): | ||||
Basic (in shares) | 91,682 | 91,080 | 91,688 | 91,012 |
Dilutive effect of stock awards (in shares) | 2,563 | 117 | 1,529 | 0 |
Dilutive effect of participating securities (in shares) | 839 | 839 | 839 | 0 |
Diluted (in shares) | 95,084 | 92,036 | 94,056 | 91,012 |
Income Taxes - Schedule of Inco
Income Taxes - Schedule of Income Taxes (Details) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | |
Income Tax Disclosure [Abstract] | ||||
Effective tax rate | 24.00% | 22.30% | 23.90% | 21.50% |
Fair Value Measurements - Measu
Fair Value Measurements - Measured on a Recurring Basis (Details) - USD ($) $ in Millions | Sep. 30, 2020 | Dec. 31, 2019 |
Assets | ||
Mortgage loans held for sale | $ 3,817 | $ 4,077 |
Forward mortgage servicing rights | 2,663 | 3,496 |
Liabilities | ||
Mortgage servicing rights financing | 47 | 37 |
Recurring Fair Value Measurements | ||
Assets | ||
Mortgage loans held for sale | 3,817 | 4,077 |
Forward mortgage servicing rights | 2,663 | 3,496 |
Liabilities | ||
Mortgage servicing rights financing | 47 | 37 |
Excess spread financing | 1,044 | 1,311 |
Recurring Fair Value Measurements | IRLCs | ||
Assets | ||
Derivative asset, fair value | 414 | 135 |
Recurring Fair Value Measurements | Forward MBS trades | ||
Assets | ||
Derivative asset, fair value | 23 | 7 |
Liabilities | ||
Derivative financial instruments | 42 | 12 |
Recurring Fair Value Measurements | LPCs | ||
Assets | ||
Derivative asset, fair value | 38 | 12 |
Liabilities | ||
Derivative financial instruments | 2 | 3 |
Recurring Fair Value Measurements | Level 1 | ||
Assets | ||
Mortgage loans held for sale | 0 | 0 |
Forward mortgage servicing rights | 0 | 0 |
Liabilities | ||
Mortgage servicing rights financing | 0 | 0 |
Excess spread financing | 0 | 0 |
Recurring Fair Value Measurements | Level 1 | IRLCs | ||
Assets | ||
Derivative asset, fair value | 0 | 0 |
Recurring Fair Value Measurements | Level 1 | Forward MBS trades | ||
Assets | ||
Derivative asset, fair value | 0 | 0 |
Liabilities | ||
Derivative financial instruments | 0 | 0 |
Recurring Fair Value Measurements | Level 1 | LPCs | ||
Assets | ||
Derivative asset, fair value | 0 | 0 |
Liabilities | ||
Derivative financial instruments | 0 | 0 |
Recurring Fair Value Measurements | Level 2 | ||
Assets | ||
Mortgage loans held for sale | 3,817 | 4,077 |
Forward mortgage servicing rights | 0 | 0 |
Liabilities | ||
Mortgage servicing rights financing | 0 | 0 |
Excess spread financing | 0 | 0 |
Recurring Fair Value Measurements | Level 2 | IRLCs | ||
Assets | ||
Derivative asset, fair value | 0 | 135 |
Recurring Fair Value Measurements | Level 2 | Forward MBS trades | ||
Assets | ||
Derivative asset, fair value | 23 | 7 |
Liabilities | ||
Derivative financial instruments | 42 | 12 |
Recurring Fair Value Measurements | Level 2 | LPCs | ||
Assets | ||
Derivative asset, fair value | 0 | 12 |
Liabilities | ||
Derivative financial instruments | 0 | 3 |
Recurring Fair Value Measurements | Level 3 | ||
Assets | ||
Mortgage loans held for sale | 0 | 0 |
Forward mortgage servicing rights | 2,663 | 3,496 |
Liabilities | ||
Mortgage servicing rights financing | 47 | 37 |
Excess spread financing | 1,044 | 1,311 |
Recurring Fair Value Measurements | Level 3 | IRLCs | ||
Assets | ||
Derivative asset, fair value | 414 | 0 |
Recurring Fair Value Measurements | Level 3 | Forward MBS trades | ||
Assets | ||
Derivative asset, fair value | 0 | 0 |
Liabilities | ||
Derivative financial instruments | 0 | 0 |
Recurring Fair Value Measurements | Level 3 | LPCs | ||
Assets | ||
Derivative asset, fair value | 38 | 0 |
Liabilities | ||
Derivative financial instruments | $ 2 | $ 0 |
Fair Value Measurements - Level
Fair Value Measurements - Level 3 Reconciliation (Details) - Recurring Fair Value Measurements - USD ($) $ in Millions | 9 Months Ended | ||
Sep. 30, 2020 | Sep. 30, 2019 | Dec. 31, 2019 | |
Excess spread financing | |||
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward] | |||
Balance - beginning of period | $ 1,311 | $ 1,184 | |
Total gains or losses included in earnings | (132) | (190) | |
Payments received from borrowers | 0 | ||
Purchases | 0 | 469 | |
Issuances | 24 | 0 | |
Sales | 0 | ||
Settlements and repayments | (159) | (182) | |
Transfers to mortgage loans held for sale | 0 | ||
Transfers to real estate owned | 0 | ||
Balance - end of period | 1,044 | 1,281 | |
Mortgage servicing rights financing | |||
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward] | |||
Balance - beginning of period | 37 | 32 | |
Total gains or losses included in earnings | 10 | 15 | |
Payments received from borrowers | 0 | ||
Purchases | 0 | 0 | |
Issuances | 0 | 0 | |
Sales | 0 | ||
Settlements and repayments | 0 | 0 | |
Transfers to mortgage loans held for sale | 0 | ||
Transfers to real estate owned | 0 | ||
Balance - end of period | 47 | 47 | |
LPCs | |||
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward] | |||
Derivative financial instruments | 2 | $ 3 | |
Mortgage servicing rights | |||
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward] | |||
Balance - beginning of period | 3,496 | 3,665 | |
Total gains or losses included in earnings | (1,275) | (1,039) | |
Payments received from borrowers | 0 | ||
Purchases | 30 | 732 | |
Issuances | 412 | 298 | |
Sales | (317) | ||
Settlements and repayments | 0 | 0 | |
Transfers to mortgage loans held for sale | 0 | ||
Transfers to real estate owned | 0 | ||
Balance - end of period | 2,663 | 3,339 | |
IRLCs | |||
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward] | |||
Balance - beginning of period | 135 | ||
Total gains or losses included in earnings | 279 | ||
Purchases | 0 | ||
Issuances | 0 | ||
Settlements and repayments | 0 | ||
Balance - end of period | 414 | ||
Mortgage loans held for investment | |||
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward] | |||
Balance - beginning of period | 119 | ||
Total gains or losses included in earnings | 3 | ||
Payments received from borrowers | (11) | ||
Purchases | 0 | ||
Issuances | 0 | ||
Sales | (94) | ||
Settlements and repayments | 0 | ||
Transfers to mortgage loans held for sale | 12 | ||
Transfers to real estate owned | (5) | ||
Balance - end of period | $ 0 | ||
LPCs | |||
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward] | |||
Balance - beginning of period | 12 | ||
Total gains or losses included in earnings | 26 | ||
Purchases | 0 | ||
Issuances | 0 | ||
Settlements and repayments | 0 | ||
Balance - end of period | $ 38 |
Fair Value Measurements - Unobs
Fair Value Measurements - Unobservable Inputs (Details) - USD ($) | 9 Months Ended | 12 Months Ended |
Sep. 30, 2020 | Dec. 31, 2019 | |
Minimum | Forward MSR | ||
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | ||
Discount rate | 8.30% | |
Prepayment speeds | 12.60% | |
Cost to service per loan | $ 68 | |
Minimum | IRLCs | ||
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | ||
Value of servicing (basis points per loan) | (0.00004) | |
Minimum | Excess spread financing | ||
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | ||
Discount rate | 9.80% | |
Prepayment speeds | 13.40% | |
Recapture rate | 17.10% | |
Average life | 5 years 2 months 12 days | |
Minimum | MSR financing liability | ||
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | ||
Advance financing and counterparty fee rates | 6.40% | |
Annual advance recovery rates | 18.60% | |
Maximum | Forward MSR | ||
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | ||
Discount rate | 12.00% | |
Prepayment speeds | 19.20% | |
Cost to service per loan | $ 295 | |
Maximum | IRLCs | ||
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | ||
Value of servicing (basis points per loan) | 0.00021 | |
Maximum | Excess spread financing | ||
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | ||
Discount rate | 15.50% | |
Prepayment speeds | 14.00% | |
Recapture rate | 23.50% | |
Average life | 5 years 6 months | |
Maximum | MSR financing liability | ||
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | ||
Advance financing and counterparty fee rates | 9.40% | |
Annual advance recovery rates | 22.60% | |
Weighted-average | Forward MSR | ||
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | ||
Discount rate | 9.50% | |
Prepayment speeds | 14.40% | |
Cost to service per loan | $ 105 | |
Weighted-average | IRLCs | ||
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | ||
Value of servicing (basis points per loan) | 0.00012 | |
Weighted-average | Excess spread financing | ||
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | ||
Discount rate | 11.90% | 11.60% |
Prepayment speeds | 13.60% | 12.60% |
Recapture rate | 19.10% | 20.10% |
Average life | 5 years 3 months 18 days | 5 years 9 months 18 days |
Weighted-average | MSR financing liability | ||
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | ||
Advance financing and counterparty fee rates | 8.20% | 8.90% |
Annual advance recovery rates | 20.20% | 18.80% |
Fair Value Measurements - Fair
Fair Value Measurements - Fair Value by Balance Sheet Line Item (Details) - USD ($) $ in Millions | Sep. 30, 2020 | Dec. 31, 2019 |
Financial assets | ||
Reverse mortgage interests, net | $ 5,460 | $ 6,279 |
Financial liabilities | ||
Unsecured senior notes | 2,167 | 2,366 |
Advance facilities | 4,851 | 4,997 |
Other nonrecourse debt | 4,671 | 5,286 |
Recurring Fair Value Measurements | ||
Financial assets | ||
Cash and cash equivalents | 946 | 329 |
Restricted cash | 229 | 283 |
Advances and other receivables, net | 745 | 988 |
Financial liabilities | ||
Advance facilities | 4,851 | 4,997 |
Recurring Fair Value Measurements | Level 1 | ||
Financial assets | ||
Cash and cash equivalents | 946 | 329 |
Restricted cash | 229 | 283 |
Advances and other receivables, net | 0 | 0 |
Financial liabilities | ||
Advance facilities | 0 | 0 |
Recurring Fair Value Measurements | Level 2 | ||
Financial assets | ||
Cash and cash equivalents | 0 | 0 |
Restricted cash | 0 | 0 |
Advances and other receivables, net | 0 | 0 |
Financial liabilities | ||
Advance facilities | 4,851 | 4,997 |
Recurring Fair Value Measurements | Level 3 | ||
Financial assets | ||
Cash and cash equivalents | 0 | 0 |
Restricted cash | 0 | 0 |
Advances and other receivables, net | 745 | 988 |
Financial liabilities | ||
Advance facilities | 0 | 0 |
Nonrecurring fair value measurements | ||
Financial assets | ||
Reverse mortgage interests, net | 5,460 | 6,279 |
Financial liabilities | ||
Unsecured senior notes | 2,167 | 2,366 |
Nonrecurring fair value measurements | Participating interest financing | ||
Financial liabilities | ||
Other nonrecourse debt | 3,676 | 4,299 |
Nonrecurring fair value measurements | Trust 2020-1 | ||
Financial liabilities | ||
Other nonrecourse debt | 513 | |
Nonrecurring fair value measurements | Trust 2019-2 | ||
Financial liabilities | ||
Other nonrecourse debt | 257 | 331 |
Nonrecurring fair value measurements | Trust 2019-1 | ||
Financial liabilities | ||
Other nonrecourse debt | 225 | 300 |
Nonrecurring fair value measurements | Trust 2018-3 | ||
Financial liabilities | ||
Other nonrecourse debt | 208 | |
Nonrecurring fair value measurements | Trust 2018-2 | ||
Financial liabilities | ||
Other nonrecourse debt | 148 | |
Nonrecurring fair value measurements | Level 1 | ||
Financial assets | ||
Reverse mortgage interests, net | 0 | 0 |
Financial liabilities | ||
Unsecured senior notes | 2,237 | 2,505 |
Nonrecurring fair value measurements | Level 1 | Participating interest financing | ||
Financial liabilities | ||
Other nonrecourse debt | 0 | 0 |
Nonrecurring fair value measurements | Level 1 | Trust 2020-1 | ||
Financial liabilities | ||
Other nonrecourse debt | 0 | |
Nonrecurring fair value measurements | Level 1 | Trust 2019-2 | ||
Financial liabilities | ||
Other nonrecourse debt | 0 | 0 |
Nonrecurring fair value measurements | Level 1 | Trust 2019-1 | ||
Financial liabilities | ||
Other nonrecourse debt | 0 | 0 |
Nonrecurring fair value measurements | Level 1 | Trust 2018-3 | ||
Financial liabilities | ||
Other nonrecourse debt | 0 | |
Nonrecurring fair value measurements | Level 1 | Trust 2018-2 | ||
Financial liabilities | ||
Other nonrecourse debt | 0 | |
Nonrecurring fair value measurements | Level 2 | ||
Financial assets | ||
Reverse mortgage interests, net | 0 | 0 |
Financial liabilities | ||
Unsecured senior notes | 0 | 0 |
Nonrecurring fair value measurements | Level 2 | Participating interest financing | ||
Financial liabilities | ||
Other nonrecourse debt | 0 | 0 |
Nonrecurring fair value measurements | Level 2 | Trust 2020-1 | ||
Financial liabilities | ||
Other nonrecourse debt | 0 | |
Nonrecurring fair value measurements | Level 2 | Trust 2019-2 | ||
Financial liabilities | ||
Other nonrecourse debt | 0 | 0 |
Nonrecurring fair value measurements | Level 2 | Trust 2019-1 | ||
Financial liabilities | ||
Other nonrecourse debt | 0 | 0 |
Nonrecurring fair value measurements | Level 2 | Trust 2018-3 | ||
Financial liabilities | ||
Other nonrecourse debt | 0 | |
Nonrecurring fair value measurements | Level 2 | Trust 2018-2 | ||
Financial liabilities | ||
Other nonrecourse debt | 0 | |
Nonrecurring fair value measurements | Level 3 | ||
Financial assets | ||
Reverse mortgage interests, net | 5,574 | 6,318 |
Financial liabilities | ||
Unsecured senior notes | 0 | 0 |
Nonrecurring fair value measurements | Level 3 | Participating interest financing | ||
Financial liabilities | ||
Other nonrecourse debt | 3,679 | 4,299 |
Nonrecurring fair value measurements | Level 3 | Trust 2020-1 | ||
Financial liabilities | ||
Other nonrecourse debt | 513 | |
Nonrecurring fair value measurements | Level 3 | Trust 2019-2 | ||
Financial liabilities | ||
Other nonrecourse debt | 257 | 331 |
Nonrecurring fair value measurements | Level 3 | Trust 2019-1 | ||
Financial liabilities | ||
Other nonrecourse debt | $ 225 | 300 |
Nonrecurring fair value measurements | Level 3 | Trust 2018-3 | ||
Financial liabilities | ||
Other nonrecourse debt | 208 | |
Nonrecurring fair value measurements | Level 3 | Trust 2018-2 | ||
Financial liabilities | ||
Other nonrecourse debt | $ 148 |
Commitments and Contingencies -
Commitments and Contingencies - Narrative (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | Dec. 31, 2019 | |
Loss Contingencies [Line Items] | |||||
Legal fees | $ 9 | $ 24 | $ 36 | $ 56 | |
Reverse mortgage servicing rights, excluding subservicing | |||||
Loss Contingencies [Line Items] | |||||
UPB | 20,006 | 20,006 | $ 22,725 | ||
Warehouse facilities, net of unamortized debt issuance costs | |||||
Loss Contingencies [Line Items] | |||||
Unfunded advance obligations | 2,304 | 2,304 | $ 2,617 | ||
Litigation and regulatory matters | Minimum | |||||
Loss Contingencies [Line Items] | |||||
Estimate of possible loss | 3 | 3 | |||
Litigation and regulatory matters | Maximum | |||||
Loss Contingencies [Line Items] | |||||
Estimate of possible loss | $ 20 | $ 20 |
Business Segment Reporting - Fi
Business Segment Reporting - Financial Information (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | Dec. 31, 2019 | |
Revenues: | |||||
Service related, net | $ 227 | $ 258 | $ 186 | $ 479 | |
Net gain on mortgage loans held for sale | 645 | 360 | 1,594 | 788 | |
Total revenues | 872 | 618 | 1,780 | 1,267 | |
Total expenses | 431 | 478 | 1,294 | 1,413 | |
Other income (expenses) | |||||
Interest income | 56 | 163 | 250 | 459 | |
Interest expense | (165) | (196) | (534) | (572) | |
Other income (expenses), net | (51) | 0 | (50) | 16 | |
Total other expenses, net | (160) | (33) | (334) | (97) | |
Income (loss) before income tax expense (benefit) | 281 | 107 | 152 | (243) | |
Depreciation and amortization for property and equipment and intangible assets | 19 | 22 | 56 | 67 | |
Total assets | 21,755 | 18,478 | 21,755 | 18,478 | $ 18,305 |
Operating Segments | Servicing | |||||
Revenues: | |||||
Service related, net | 92 | 126 | (202) | 108 | |
Net gain on mortgage loans held for sale | 40 | 37 | 119 | 90 | |
Total revenues | 132 | 163 | (83) | 198 | |
Total expenses | 99 | 171 | 370 | 555 | |
Other income (expenses) | |||||
Interest income | 40 | 137 | 180 | 388 | |
Interest expense | (105) | (120) | (335) | (343) | |
Other income (expenses), net | 0 | 0 | 0 | 0 | |
Total other expenses, net | (65) | 17 | (155) | 45 | |
Income (loss) before income tax expense (benefit) | (32) | 9 | (608) | (312) | |
Depreciation and amortization for property and equipment and intangible assets | 6 | 5 | 14 | 13 | |
Total assets | 14,707 | 12,065 | 14,707 | 12,065 | |
Operating Segments | Originations | |||||
Revenues: | |||||
Service related, net | 27 | 22 | 68 | 57 | |
Net gain on mortgage loans held for sale | 605 | 312 | 1,475 | 687 | |
Total revenues | 632 | 334 | 1,543 | 744 | |
Total expenses | 195 | 155 | 528 | 404 | |
Other income (expenses) | |||||
Interest income | 16 | 24 | 69 | 64 | |
Interest expense | (15) | (24) | (55) | (67) | |
Other income (expenses), net | 0 | (1) | 0 | 4 | |
Total other expenses, net | 1 | (1) | 14 | 1 | |
Income (loss) before income tax expense (benefit) | 438 | 178 | 1,029 | 341 | |
Depreciation and amortization for property and equipment and intangible assets | 5 | 4 | 12 | 13 | |
Total assets | 4,250 | 4,386 | 4,250 | 4,386 | |
Operating Segments | Xome | |||||
Revenues: | |||||
Service related, net | 108 | 112 | 320 | 316 | |
Net gain on mortgage loans held for sale | 0 | 0 | 0 | 0 | |
Total revenues | 108 | 112 | 320 | 316 | |
Total expenses | 94 | 101 | 285 | 301 | |
Other income (expenses) | |||||
Interest income | 0 | 0 | 0 | 0 | |
Interest expense | 0 | 0 | 0 | 0 | |
Other income (expenses), net | 1 | 3 | 3 | 14 | |
Total other expenses, net | 1 | 3 | 3 | 14 | |
Income (loss) before income tax expense (benefit) | 15 | 14 | 38 | 29 | |
Depreciation and amortization for property and equipment and intangible assets | 5 | 4 | 11 | 11 | |
Total assets | 135 | 172 | 135 | 172 | |
Corporate/Other | |||||
Revenues: | |||||
Service related, net | 0 | (2) | 0 | (2) | |
Net gain on mortgage loans held for sale | 0 | 11 | 0 | 11 | |
Total revenues | 0 | 9 | 0 | 9 | |
Total expenses | 43 | 51 | 111 | 153 | |
Other income (expenses) | |||||
Interest income | 0 | 2 | 1 | 7 | |
Interest expense | (45) | (52) | (144) | (162) | |
Other income (expenses), net | (52) | (2) | (53) | (2) | |
Total other expenses, net | (97) | (52) | (196) | (157) | |
Income (loss) before income tax expense (benefit) | (140) | (94) | (307) | (301) | |
Depreciation and amortization for property and equipment and intangible assets | 3 | 9 | 19 | 30 | |
Total assets | $ 2,663 | $ 1,855 | $ 2,663 | $ 1,855 |