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NATIONSTAR MORTGAGE LLC | NATIONSTAR CAPITAL CORPORATION | |
(Exact name of registrant as specified in its charter) | (Exact name of registrant as specified in its charter) | |
Delaware | Delaware | |
(State or other jurisdiction of incorporation or organization) | (State or other jurisdiction of incorporation or organization) | |
6162 | 6162 | |
(Primary standard industrial classification code number) | (Primary standard industrial classification code number) | |
75-2921540 (I.R.S. Employer Identification No.) | 27-1996157 (I.R.S. Employer Identification No.) | |
350 Highland Drive Lewisville, Texas 75067 (469) 549-2000 | 350 Highland Drive Lewisville, Texas 75067 (469) 549-2000 | |
(Address, including zip code, and telephone number, including area code, of principal executive offices) | (Address, including zip code, and telephone number, including area code, of principal executive offices) |
Anne Sutherland, Esq. | Duane McLaughlin, Esq. | |
Executive Vice President and General Counsel | Cleary Gottlieb Steen & Hamilton LLP | |
Nationstar Mortgage LLC | One Liberty Plaza | |
350 Highland Drive | New York, New York 10006 | |
Lewisville, Texas, 75067 | (212) 225-2000 | |
(469) 549-2000 | ||
(Name, address, including zip code, and telephone number, including area code, of agent for service) | (Copies of all communications, including communications sent to agent for service) | |
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Name | Jurisdiction | I.R.S. Employer ID # | Address and Telephone # | ||||||
Centex Land Vista Ridge Lewisville III General Partner, LLC | Delaware | 75-2921540 | 350 Highland Drive Lewisville, Texas 75067 (469) 549-2000 | ||||||
Centex Land Vista Ridge Lewisville III, L.P. | Delaware | 20-3437712 | 350 Highland Drive Lewisville, Texas 75067 (469) 549-2000 | ||||||
Harwood Service Company LLC | Delaware | 75-2925375 | 350 Highland Drive Lewisville, Texas 75067 (469) 549-2000 | ||||||
Harwood Insurance Services, LLC | California | 75-2921540 | 350 Highland Drive Lewisville, Texas 75067 (469) 549-2000 | ||||||
Harwood Service Company Of Georgia, LLC | Georgia | 73-1643246 | 350 Highland Drive Lewisville, Texas 75067 (469) 549-2000 | ||||||
Harwood Service Company Of New Jersey, LLC | New Jersey | 74-3047401 | 350 Highland Drive Lewisville, Texas 75067 (469) 549-2000 | ||||||
Homeselect Settlement Solutions, LLC | Delaware | 20-1356314 | 350 Highland Drive Lewisville, Texas 75067 (469) 549-2000 | ||||||
Nationstar 2009 Equity Corporation | Delaware | 27-1285662 | 350 Highland Drive Lewisville, Texas 75067 (469) 549-2000 | ||||||
Nationstar Equity Corporation | Nevada | 75-2711305 | 350 Highland Drive Lewisville, Texas 75067 (469) 549-2000 | ||||||
Nationstar Industrial Loan Company | Tennessee | 75-2786875 | 350 Highland Drive Lewisville, Texas 75067 (469) 549-2000 | ||||||
Nationstar Industrial Loan Corporation | Minnesota | 75-2903483 | 350 Highland Drive Lewisville, Texas 75067 (469) 549-2000 | ||||||
NSM Recovery Services Inc. | Delaware | 27-3275696 | 350 Highland Drive Lewisville, Texas 75067 (469) 549-2000 | ||||||
NSM Foreclosure Services Inc. | Delaware | 27-3916074 | 350 Highland Drive Lewisville, Texas 75067 (469) 549-2000 | ||||||
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The information in this preliminary prospectus is not complete and may be changed. These securities may not be sold until the registration statement filed with the Securities and Exchange Commission is effective. This preliminary prospectus is neither an offer to sell nor a solicitation of an offer to purchase these securities in any jurisdiction where the offer or sale is not permitted. |
for $250,000,000 aggregate principal amount of our new 10.875% Senior Notes due 2015
that have been registered under the Securities Act of 1933, as amended
Terms of the Exchange Offer
• | We are offering to exchange any and all of our outstanding 10.875% Senior Notes due 2015 that were issued on March 26, 2010 (the “Old Notes”) for an equal amount of new 10.875% Senior Notes 2015 (the “New Notes”, and together with the Old Notes, the “Notes”). | |
• | The exchange offer expires at 5:00 p.m., New York City time, on , 2011 (such date and time, the “Expiration Date”, unless we extend or terminate the exchange offer, in which case the “Expiration Date” will mean the latest date and time to which we extend the exchange offer). | |
• | Tenders of Old Notes may be withdrawn at any time prior to the Expiration Date. | |
• | All Old Notes that are validly tendered and not validly withdrawn will be exchanged. | |
• | The exchange of Old Notes for New Notes generally will not be a taxable exchange for U.S. federal income tax purposes. | |
• | We will not receive any proceeds from the exchange offer. | |
• | The terms of the New Notes to be issued in the exchange offer are substantially the same as the terms of the Old Notes, except that the offer of the New Notes is registered under the Securities Act of 1933, as amended (the “Securities Act”), and the New Notes have no transfer restrictions, rights to additional interest or registration rights. | |
• | The New Notes will be senior unsecured obligations of each of Nationstar Mortgage LLC and Nationstar Capital Corporation, jointly and severally, and will be unconditionally guaranteed, jointly and severally, by each of our existing and future domestic subsidiaries other than non-guarantor subsidiaries as defined by the indenture governing the New Notes. See “Description of the New Notes.” | |
• | The New Notes will not be listed on any securities exchange. A public market for the New Notes may not develop, which could make selling the New Notes difficult. |
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• | Consumer Direct Retail Channel—through which we market refinancing and purchase money mortgage loans directly to selected consumers from our centralized call center; | |
• | Distributed Retail Channel—through which we market refinancing and purchase money mortgage loans directly to consumers from local branches; and | |
• | Wholesale Channel—through which we market our refinancing and purchase money mortgage loans to third party mortgage brokers. |
• | providing us with an organic source of new loans to service as existing loans are repaid or otherwise liquidated as originated loans serviced by us typically generate higher returns than comparable mortgage servicing rights that we would acquire from a third party; | |
• | providing an attractive supplementation to our servicing loss mitigation strategies by allowing us to modify and refinance mortgage loans, including loans that we service; | |
• | creating a diversified source of revenue; and | |
• | building brand recognition. |
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Background | On March 26, 2010, we issued $250,000,000 aggregate principal amount of Old Notes in an unregistered offering. In connection with that offering, we entered into a registration rights agreement on March 26, 2010 (the “Registration Rights Agreement”) in which we agreed, among other things, to complete this exchange offer. Under the terms of the exchange offer, you are entitled to exchange Old Notes for New Notes evidencing the same indebtedness and with substantially similar terms. You should read the discussion under the heading “Description of the Notes” for further information regarding the New Notes. | |
The Exchange Offer | We are offering to exchange, for each $1,000 aggregate principal amount of our Old Notes validly tendered and accepted, $1,000 aggregate principal amount of our New Notes. | |
We will not pay any accrued and unpaid interest on the Old Notes that we acquire in the exchange offer. Instead, interest on the notes will accrue from the most recent date to which interest has been paid or, if no interest has been paid, from and including March 26, 2010, the date on which we issued the Old Notes. | ||
As of the date of this prospectus, approximately $250,000,000 aggregate principal amount of the Old Notes are outstanding. | ||
Denominations of New Notes | Tendering holders of Old Notes must tender Old Notes in minimum denominations of $2,000 and integral multiples of $1,000 in excess thereof. New Notes will be issued in minimum denominations of $2,000 and integral multiples of $1,000 in excess thereof. | |
Expiration Date | The exchange offer will expire at 5:00 p.m., New York City time, on , 2011, unless we extend or terminate the exchange offer in which case the “Expiration Date” will mean the latest date and time to which we extend the exchange offer. | |
Settlement Date | The settlement date of the exchange offer will be as soon as practicable after the Expiration Date of the exchange offer. | |
Withdrawal of Tenders | Tenders of Old Notes may be withdrawn at any time prior to the Expiration Date. | |
Conditions to the Exchange Offer | Our obligation to consummate the exchange offer is subject to certain customary conditions, which we may assert or waive. See “Description of the Exchange Offer—Conditions to the Exchange Offer.” | |
Procedures for Tendering | To participate in the exchange offer, you must follow the automatic tender offer program (“ATOP”), procedures established by The Depository Trust Company (“DTC”), for tendering Old Notes held in book-entry form. The ATOP procedures require that the exchange agent receive, prior to the Expiration Date of the exchange offer, a computer- |
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generated message known as an “agent’s message” that is transmitted through ATOP and that DTC confirm that: | ||
• DTC has received instructions to exchange your Old Notes; and | ||
• you agree to be bound by the terms of the letter of transmittal. | ||
For more details, please read “Description of the Exchange Offer—Terms of the Exchange Offer” and “Description of the Exchange Offer—Procedures for Tendering.” If you elect to have Old Notes exchanged pursuant to this exchange offer, you must properly tender your Old Notes prior to 5:00 p.m., New York City time, on the Expiration Date. All Old Notes validly tendered and not properly withdrawn will be accepted for exchange. Old Notes may be exchanged only in minimum denominations of $2,000 and integral multiples of $1,000 in excess thereof. | ||
Consequences of Failure to Exchange | If we complete the exchange offer and you do not participate in it, then: | |
• your Old Notes will continue to be subject to the existing restrictions upon their transfer; | ||
• we will have no further obligation to provide for the registration under the Securities Act of those Old Notes except under certain limited circumstances; and | ||
• the liquidity of the market for your Old Notes could be adversely affected. | ||
Taxation | The exchange pursuant to the exchange offer generally will not be a taxable event for U.S. federal income tax purposes. See “Certain U.S. Federal Income Tax Considerations” in this prospectus. | |
Use of Proceeds | We will not receive any cash proceeds from the issuance of the New Notes in this exchange offer. | |
Exchange Agent | Wells Fargo Bank, National Association is the exchange agent for the exchange offer. |
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Issuers | Nationstar Mortgage LLC, a Delaware limited liability company, and Nationstar Capital Corporation, a Delaware corporation. | |
Securities Offered | $250,000,000 aggregate principal amount of 10.875% Senior Notes due April 1, 2015. | |
Maturity Date | April 1, 2015. |
Interest Rate | 10.875% per annum, payable semi-annually in arrears on April 1 and October 1 of each year, commencing October 1, 2010. Interest on the New Notes will accrue from the most recent date to which interest has been paid or, if no interest has been paid, from and including March 26, 2010. |
Guarantees | The New Notes will be guaranteed on an unsecured senior basis by each of our existing and future domestic subsidiaries, other than our securitization and certain finance subsidiaries and subsidiaries that in the future we designate as excluded restricted and unrestricted subsidiaries. | |
Ranking | The New Notes and the guarantees will be our and the guarantors’ general unsecured senior indebtedness, respectively, and will: | |
• rank equally in right of payment to all of our and the guarantors’ existing and future indebtedness and other obligations that are not, by their terms, expressly subordinated in right of payment to the notes and the guarantees; | ||
• rank senior in right of payment to any of our and the guarantors’ existing and future senior subordinated and subordinated indebtedness and other obligations that are, by their terms, expressly subordinated in right of payment to the notes and the subsidiary guarantees; and | ||
• be effectively junior in right of payment to all of our and the guarantors’ existing and future senior secured indebtedness and other obligations to the extent of the value of the assets securing such indebtedness and other obligations. | ||
Form and Denomination | The New Notes will be issued in fully-registered form. The New Notes will be represented by one or more global notes, deposited with the trustee as custodian for DTC and registered in the name of Cede & Co., DTC’s nominee. Beneficial interests in the global notes will be shown on, and any transfers will be effective only through, records maintained by DTC and its participants. | |
The New Notes will be issued in minimum denominations of $2,000 and integral multiples of $1,000 in excess thereof. | ||
Optional Redemption | We may redeem the New Notes, in whole or in part, at any time prior to April 1, 2013, at a price equal to 100% of the aggregate principal amount of the New Notes plus the applicable “make whole” premium, as described in “Description of the New Notes—Redemption—Optional Redemption,” plus accrued and unpaid interest, if any, to the applicable redemption date. |
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We may redeem the New Notes, in whole or in part, at any time on or after April 1, 2013, at the applicable redemption price specified in “Description of the New Notes—Redemption—Optional Redemption,” plus accrued and unpaid interest, if any, to the applicable redemption date. | ||
In addition, we may redeem up to 35% of the aggregate principal amount of the New Notes at any time on or prior to April 1, 2013 with the net cash proceeds from certain equity offerings at the applicable redemption price specified “Description of the New Notes—Redemption—Optional Redemption,” plus accrued and unpaid interest, if any, to the applicable redemption date. | ||
Change of Control | If certainchange-of-control events occur, we must offer to repurchase all of the New Notes at 101% of their principal amount, plus accrued and unpaid interest, if any, to the repurchase date. | |
Asset Sales | If we sell assets under certain circumstances, we will be required to make an offer to purchase the New Notes at their face amount, plus accrued and unpaid interest, if any, as of the purchase date. | |
Absence of a Public Market | The New Notes are new securities for which there currently is no market and we cannot assure you that any public market for the New Notes will develop or be sustained. | |
Certain Covenants | The indenture governing the New Notes will, among other things, limit our ability and the ability of our subsidiaries to: | |
• incur or guarantee additional indebtedness; | ||
• incur liens; | ||
• pay dividends on or make distributions in respect of our capital stock or make other restricted payments; | ||
• make investments; | ||
• consolidate, merge, sell or otherwise dispose of certain assets; and | ||
• enter into transactions with our affiliates. | ||
These covenants are subject to important exceptions, limitations and qualifications as described in “Description of the New Notes—Certain Covenants.” | ||
Listing | We do not intend to list the New Notes on any securities exchange. | |
Governing Law | The New Notes are governed by, and construed in accordance with, the laws of the State of New York, without regard to conflicts of laws principles thereof. | |
Book-Entry Depository | DTC. | |
Trustee | Wells Fargo Bank, National Association. | |
Risk Factors | You should refer to the section entitled “Risk Factors” for a discussion of material risks you should carefully consider before deciding to invest in the New Notes. |
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Year Ended December 31, | ||||||||||||
2008 | 2009 | 2010 | ||||||||||
(in thousands) | ||||||||||||
Statement of Operations Data: | ||||||||||||
Revenues: | ||||||||||||
Total fee income | $ | 74,007 | $ | 100,218 | $ | 184,084 | ||||||
Gain (loss) on mortgage loans held for sale | (86,663 | ) | (21,349 | ) | 77,344 | |||||||
Total revenues | (12,656 | ) | 78,869 | 261,428 | ||||||||
Total expenses and impairments | 147,777 | 142,367 | 220,976 | |||||||||
Other income (expense): | ||||||||||||
Interest income | 92,060 | 52,518 | 98,895 | |||||||||
Interest expense | (65,548 | ) | (69,883 | ) | (116,163 | ) | ||||||
Loss on interest rate swaps and caps | (23,689 | ) | (14 | ) | (9,801 | ) | ||||||
Fair value changes in ABS securitizations | — | — | (23,297 | ) | ||||||||
Total other income (expense) | 2,823 | (17,379 | ) | (50,366 | ) | |||||||
Net income (loss) | $ | (157,610 | ) | $ | (80,877 | ) | $ | (9,914 | ) | |||
As of December 31, | ||||||||||||
2008 | 2009 | 2010 | ||||||||||
(in thousands) | ||||||||||||
Balance Sheet Data: | ||||||||||||
Cash and cash equivalents | $ | 9,357 | $ | 41,645 | $ | 21,223 | ||||||
Mortgage servicing rights | 110,808 | 114,605 | 145,062 | |||||||||
Total assets | 1,122,001 | 1,280,185 | 1,947,181 | |||||||||
Unsecured senior notes | — | — | 244,061 | |||||||||
Notes payable | 810,041 | 771,857 | 709,758 | |||||||||
Nonrecourse debt—Legacy Assets | — | 177,675 | 138,662 | |||||||||
ABS nonrecourse debt | — | — | 496,692 | |||||||||
Total liabilities | 866,079 | 1,016,362 | 1,690,809 | |||||||||
Total members’ equity | 255,922 | 263,823 | 256,372 |
Year Ended December 31, | ||||||||||||
2008 | 2009 | 2010 | ||||||||||
(in thousands) | ||||||||||||
Other Data: | ||||||||||||
Net cash provided by (used in): | ||||||||||||
Operating activities | $ | 40,212 | $ | (83,641 | ) | $ | (101,653 | ) | ||||
Investing activities | (34,643 | ) | 29,983 | 101,196 | ||||||||
Financing activities | (37,463 | ) | 85,946 | (19,965 | ) | |||||||
Adjusted EBITDA (1) (non-GAAP measure) | 23,141 | 48,644 | 65,306 | |||||||||
Operating Segments: | ||||||||||||
Interest expense from unsecured senior notes | — | — | 24,628 | |||||||||
Change in fair value of mortgage servicing rights | 11,701 | 27,915 | 6,043 | |||||||||
Depreciation and amortization | 1,172 | 1,542 | 1,873 | |||||||||
Share-based compensation | 1,633 | 579 | 8,999 |
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(1) | Adjusted EBITDA is a key performance measure used by management in evaluating the performance of our segments. Adjusted EBITDA represents our Operating Segments’ income (loss), and excludes income and expenses that relate to the financing of the unsecured senior notes, depreciable (or amortizable) asset base of the business, income taxes (if any), exit costs from our 2007 restructuring and certain non-cash items. Adjusted EBITDA excludes results from our legacy asset portfolio and certain securitization trusts that were consolidated upon adoption of the new accounting guidance eliminating the concept of QSPE. | |
Adjusted EBITDA provides us with a key measure of our Operating Segments’ performance as it assists us in comparing our Operating Segments’ performance on a consistent basis. Management believes Adjusted EBITDA is useful in assessing the profitability of our core business and uses Adjusted EBITDA in evaluating our operating performance as follows: |
• Financing arrangements for our Operating Segments are secured by assets that are allocated to these segments. Interest expense that relate to the financing of the unsecured senior notes is not considered in evaluating our operating performance because this obligation is serviced by the excess earnings from our Operating Segments after the debt obligations that are secured by their assets. | ||
• To monitor operating costs of each Operating Segment excluding the impact from depreciation, amortization and fair value change of the asset base, exit costs from our 2007 restructuring and non-cash operating expense, such as share-based compensation. Operating costs are analyzed to manage costs per our operating plan and to assess staffing level, implementation of technology based solutions, rent and other general and administrative costs. |
Management does not assess the growth prospect and profitability of our legacy asset portfolio and certain securitization trusts that were consolidated upon adoption of the new accounting guidance, except to the extent to assess cash flows from the assets in the legacy asset portfolio are sufficient to service its debt obligations. | ||
We also use Adjusted EBITDA (with additional adjustments) to measure our compliance with covenants such as leverage coverage ratios for our unsecured senior notes. | ||
Adjusted EBITDA has limitations as an analytical tool, and should not be considered in isolation, or as a substitute for analysis of our results as reported under generally accepted accounting principles in the United States (“GAAP”). Some of these limitations are: |
• Adjusted EBITDA does not reflect our cash expenditures, or future requirements for capital expenditures or contractual commitments; | ||
• Adjusted EBITDA does not reflect changes in, or cash requirements for, our working capital needs; | ||
• Adjusted EBITDA does not reflect the cash requirements necessary to service principal payments related to the financing of the business. | ||
• Adjusted EBITDA does not reflect the interest expense, or the cash requirements necessary to service interest or principal payments, on our corporate debt; | ||
• although depreciation and amortization and changes in fair value of mortgage servicing rights are non-cash charges, the assets being depreciated and amortized will often have to be replaced in the future, and Adjusted EBITDA does not reflect any cash requirements for such replacements; and | ||
• other companies in our industry may calculate Adjusted EBITDA differently than we do, limiting their usefulness as comparative measures. |
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Because of these and other limitations, Adjusted EBITDA should not be considered as measures of discretionary cash available to us to invest in the growth of our business. Adjusted EBITDA is presented to provide additional information about our operations. Adjusted EBITDA is a non-GAAP measure and should be considered in addition to, but not as a substitute for or superior to, operating income, net income, operating cash flow and other measures of financial performance prepared in accordance with GAAP. We compensate for these limitations by relying primarily on our GAAP results and using Adjusted EBITDA only supplementally. |
Year Ended December 31, | ||||||||||||
2008 | 2009 | 2010 | ||||||||||
(in thousands) | ||||||||||||
Net Income (Loss) to Adjusted EBITDA Reconciliation | ||||||||||||
Net income (loss) | $ | (157,610 | ) | $ | (80,877 | ) | $ | (9,914 | ) | |||
Add: | ||||||||||||
Net (income) loss from Legacy Portfolio and Other | 164,738 | 97,263 | 24,806 | |||||||||
Net income (loss) from Operating Segments | 7,128 | 16,386 | 14,892 | |||||||||
Adjust for: | ||||||||||||
Interest expense from unsecured senior notes | — | — | 24,628 | |||||||||
Depreciation and amortization | 1,172 | 1,542 | 1,873 | |||||||||
Change in fair value of mortgage servicing rights | 11,701 | 27,915 | 6,043 | |||||||||
Exit costs(a) | 1,507 | 2,222 | — | |||||||||
Share-based compensation | 1,633 | 579 | 8,999 | |||||||||
Fair value changes on interest rate swap(b) | — | — | 9,801 | |||||||||
Ineffective portion of cash flow hedge | — | — | (930 | ) | ||||||||
Adjusted EBITDA | $ | 23,141 | $ | 48,644 | $ | 65,306 | ||||||
(a) | Relates to restructuring program initiated in 2007, which included closing several offices and the termination of a portion of our workforce. Restructuring charges for the years ended December 31, 2008 and 2009, are primarily due to reserves on future lease payments. |
(b) | Relates to an interest rate swap agreement which was treated as an economic hedge under ASC 815 since inception to September 30, 2010. |
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• | Revenue. An increase in delinquencies will result in lower revenue for loans that we service for government-sponsored enterprises because we only collect servicing fees from government-sponsored enterprises for performing loans. Additionally, while increased delinquencies generate higher ancillary fees, including late fees, these fees are not likely to be recoverable in the event that the related loan is liquidated. In addition, an increase in delinquencies lowers the interest income we receive on cash held in collection and other accounts. |
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• | Expenses. An increase in delinquencies will result in a higher cost of service due to the increased time and effort required to collect payments from delinquent borrowers. It may also result in an increase in interest expense as a result of an increase in our advancing obligations. |
• | Liquidity. An increase in delinquencies also could negatively impact our liquidity because of an increase in borrowing under our advance facilities. | |
• | Valuation of mortgage servicing rights. We base the price we pay for mortgage servicing rights on, among other things, our projections of the cash flows from the related pool of mortgage loans. Our expectation of delinquencies is a significant assumption underlying those cash flow projections. If delinquencies were significantly greater than expected, the carrying value of our mortgage servicing rights could exceed their estimated fair value, which is based on our cash flow projections. When the carrying value of mortgage servicing rights exceeds their fair value, we would suffer a valuation adjustment, which has a negative impact on our financial results. |
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• | the rates of prepayment and repayment within the underlying pools of mortgage loans; | |
• | projected rates of delinquencies, defaults and liquidations; | |
• | future interest rates; | |
• | our cost to service the loans; | |
• | ancillary fee income; and | |
• | amounts of future servicing advances. |
• | coordinating market functions; | |
• | unanticipated issues in integrating information, communications and other systems; | |
• | unanticipated incompatibility of purchasing, logistics, marketing and administration methods; | |
• | retaining key employees; and | |
• | the diversion of management’s attention from ongoing business concerns. |
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• | limitations imposed on us under the notes and other financing agreements that contain restrictive covenants and borrowing conditions that may limit our ability to raise additional debt; |
• | the decline in liquidity in the credit markets; |
• | prevailing interest rates; | |
• | the strength of the lenders from whom we borrow; | |
• | borrowing on advance facilities is limited by the amount of eligible collateral pledged and may be less than the borrowing capacity of the facility; and | |
• | accounting changes that may impact calculations of covenants in our debt agreements. |
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• | Our representations and warranties concerning loan quality and loan circumstances are inaccurate, including representations concerning the licensing of a mortgage broker; | |
• | We fail to secure adequate mortgage insurance within a certain period after closing; | |
• | A mortgage insurance provider denies coverage; and | |
• | We fail to comply, at the individual loan level or otherwise, with regulatory requirements in the current dynamic regulatory environment. |
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• | our staffing levels and other servicing practices; | |
• | the servicing and ancillary fees that we may charge; | |
• | our modification standards and procedures; and | |
• | the amount of advances reimbursable. |
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• | an increase in prevailing interest rates could generate an increase in delinquency, default and foreclosure rates resulting in an increase in both operating expenses and interest expense and could cause a reduction in the value of our assets; |
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• | a substantial and sustained increase in prevailing interest rates could adversely affect our loan origination volume because refinancing an existing loan would be less attractive for homeowners and qualifying for a loan may be more difficult for consumers; | |
• | an increase in prevailing interest rates would increase the cost of servicing our outstanding debt, including our ability to finance servicing advances and loan originations; | |
• | a decrease in prevailing interest rates may require us to record a decrease in the value of our mortgage servicing rights; and | |
• | a change in prevailing interest rates could impact our earnings from our custodial deposit accounts. |
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• | require us to dedicate a substantial portion of cash flow from operations to the payment of principal and interest on indebtedness, including indebtedness we may incur in the future, thereby reducing the funds available for other purposes; | |
• | make it more difficult for us to satisfy and comply with our obligations with respect to the notes; | |
• | subject us to increased sensitivity to increases in prevailing interest rates; | |
• | place us at a competitive disadvantage to competitors with relatively less debt in economic downturns, adverse industry conditions or catastrophic external events; or | |
• | reduce our flexibility in planning for or responding to changing business, industry and economic conditions. |
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• | incurred the obligations with the intent to hinder, delay or defraud creditors; or | |
• | received less than reasonably equivalent value in exchange for incurring those obligations; and | |
• | was insolvent or rendered insolvent by reason of that incurrence; | |
• | was engaged in a business or transaction for which the subsidiary’s remaining assets constituted unreasonably small capital; or | |
• | intended to incur, or believed that it would incur, debts beyond its ability to pay those debts as they mature. |
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• | the sum of its debts, including contingent liabilities, is greater than the fair saleable value of all of its assets; | |
• | the present fair saleable value of its assets is less than the amount that would be required to pay its probable liabilities on its existing debts, including contingent liabilities, as they become absolute and mature; or | |
• | it cannot pay its debts as they become due. |
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• | prevailing interest rates; | |
• | our operating performance and financial condition; | |
• | the interest of securities dealers in making a market; and | |
• | the market for similar securities. |
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• | the continued deterioration of the residential mortgage market, increase in monthly payments on adjustable rate mortgage loans, adverse economic conditions, decrease in property values or increase in delinquencies and defaults; | |
• | our ability to compete successfully in the mortgage loan servicing and mortgage loan originations industry; | |
• | our ability to maintain the size of our servicing portfolio by successfully identifying attractive acquisition opportunities, including mortgage servicing rights, subservicing contracts, servicing platforms and origination platforms; | |
• | our ability toscale-up appropriately and integrate our acquisitions to realize the anticipated benefits of any such potential future acquisitions; | |
• | our ability to obtain sufficient capital to meet our financing requirements; | |
• | our ability to grow our loan origination volume and develop a distributed retail sales channel; | |
• | the termination of our servicing rights and subservicing contracts; | |
• | changes to federal, state and local laws and regulations concerning loan servicing, loan origination, loan modification or the licensing of entities that engage in these activities; | |
• | changes in accounting standards; | |
• | our ability to meet certain criteria or characteristics under the indentures governing our securitized pools of loans; | |
• | our ability to follow the specific guidelines of government-sponsored enterprises or a significant change in such guidelines; | |
• | delays in our ability to collect or be reimbursed for servicing advances; | |
• | changes to the Home Affordable Modification Program, the Make Home Affordable Plan or other similar government programs; | |
• | loss of our licenses; | |
• | changes in our business relationships with Fannie Mae, Freddie Mac, Ginnie Mae and others that facilitate the issuance of mortgage-backed securities; | |
• | changes to the nature of the guarantees of Fannie Mae and Freddie Mac and the market implications of such changes; | |
• | errors in our financial models or changes in assumptions; |
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• | requirement to write down the value of certain assets; | |
• | changes in prevailing interest rates; | |
• | our ability to successfully mitigate our risks through hedging strategies; | |
• | changes in our servicer ratings; | |
• | the accuracy and completeness of information about borrowers and counterparties; | |
• | our ability to maintain our technology systems and our ability to adapt such systems for future operating environments; | |
• | failure of our internal security measures or breach of our privacy protections; | |
• | failure of our vendors to comply with servicing criteria; | |
• | the loss of the services of our senior managers; | |
• | changes to our income tax status; | |
• | failure to attract and retain a highly skilled workforce; | |
• | increase in legal proceedings and related costs; | |
• | changes in public opinion concerning mortgage originators or debt collectors; | |
• | conflicts of interest with Fortress and the holders of the notes; and | |
• | other risks described in the “Risk Factors” section of this prospectus beginning on page 17. |
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July 11, 2006 | ||||||||||||||||||||
to December | Year Ended December 31, | |||||||||||||||||||
31, 2006 | 2007 | 2008 | 2009 | 2010 | ||||||||||||||||
(in thousands) | ||||||||||||||||||||
Statement of Operations Data: | ||||||||||||||||||||
Revenues: | ||||||||||||||||||||
Total fee income | $ | 14,161 | $ | 46,301 | $ | 74,007 | $ | 100,218 | $ | 184,084 | ||||||||||
Gain (loss) on mortgage loans held for sale | 4,476 | (94,673 | ) | (86,663 | ) | (21,349 | ) | 77,344 | ||||||||||||
Total revenues | 18,637 | (48,372 | ) | (12,656 | ) | 78,869 | 261,428 | |||||||||||||
Total expenses and impairments | 98,837 | 259,222 | 147,777 | 142,367 | 220,976 | |||||||||||||||
Other income (expense): | ||||||||||||||||||||
Interest income | 75,114 | 163,022 | 92,060 | 52,518 | 98,895 | |||||||||||||||
Interest expense | (55,172 | ) | (118,553 | ) | (65,548 | ) | (69,883 | ) | (116,163 | ) | ||||||||||
Loss on interest rate swaps and caps | — | (21,353 | ) | (23,689 | ) | (14 | ) | (9,801 | ) | |||||||||||
Fair value changes in ABS securitizations | — | — | — | — | (23,297 | ) | ||||||||||||||
Total other income (expense) | 19,942 | 23,116 | 2,823 | (17,379 | ) | (50,366 | ) | |||||||||||||
Net income (loss) | $ | (60,258 | ) | $ | (284,478 | ) | $ | (157,610 | ) | $ | (80,877 | ) | $ | (9,914 | ) | |||||
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As of December 31, | ||||||||||||||||||||
2006 | 2007 | 2008 | 2009 | 2010 | ||||||||||||||||
(in thousands) | ||||||||||||||||||||
Balance Sheet Data: | ||||||||||||||||||||
Cash and cash equivalents | $ | 10,335 | $ | 41,251 | $ | 9,357 | $ | 41,645 | $ | 21,223 | ||||||||||
Mortgage servicing rights | 49,783 | 82,634 | 110,808 | 114,605 | 145,062 | |||||||||||||||
Total assets | 2,145,007 | 1,303,221 | 1,122,001 | 1,280,185 | 1,947,181 | |||||||||||||||
Unsecured senior notes | — | — | — | — | 244,061 | |||||||||||||||
Notes payable | 1,966,368 | 967,307 | 810,041 | 771,857 | 709,758 | |||||||||||||||
Nonrecourse debt—Legacy Assets | — | — | — | 177,675 | 138,662 | |||||||||||||||
ABS nonrecourse debt | — | — | — | — | 496,692 | |||||||||||||||
Total liabilities | 2,005,213 | 1,041,525 | 866,079 | 1,016,362 | 1,690,809 | |||||||||||||||
Total members’ equity | 139,794 | 261,696 | 255,922 | 263,823 | 256,372 |
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July 11, 2006 | ||||||||||||||||||||
to December | Year Ended December 31, | |||||||||||||||||||
31, 2006 | 2007 | 2008 | 2009 | 2010 | ||||||||||||||||
Ratio of earnings to fixed charges | (1) | (1) | (1) | (1) | (1) |
(1) | Earnings for the period from July 11, 2006 to December 31, 2006 and for the years ended December 31, 2007, 2008, 2009 and 2010 were inadequate to cover fixed charges. The coverage deficiencies were $60.3 million, $284.5 million, $157.6 million, $80.9 million and $9.9 million, respectively. |
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• | file a registration statement (“Exchange Offer Registration Statement”) covering an offer to the Holders of Old Notes to exchange all Old Notes for New Notes not later than March 31, 2011; | |
• | have the Exchange Offer Registration Statement remain effective for 90 days after Expiration Date for use by broker-dealers who acquired the Old Notes directly from us; | |
• | commence the Exchange Offer as soon as reasonably practicable after the Exchange Offer Registration Statement is declared effective by the SEC; and | |
• | complete the registered exchange offer not later than 90 days after March 31, 2011. |
(1) | are acquiring the New Notes in the ordinary course of the business of yourself and any beneficial owner; |
(2) | are not participating in, and do not intend to participate in, a distribution of the New Notes within the meaning of the Securities Act and have no arrangement or understanding with any person to participate in a distribution of the New Notes within the meaning of the Securities Act; | |
(3) | are not a broker-dealer who acquired the Old Notes directly from us; and | |
(4) | are not an “affiliate” of ours, within the meaning of Rule 405 of the Securities Act. |
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(1) | we have registered the New Notes under the Securities Act and therefore these notes will not bear legends restricting their transfer; and | |
(2) | specified rights under the Registration Rights Agreement, including the provisions providing for payment of additional interest in specified circumstances relating to the exchange offer, will be eliminated for all the Notes. |
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• | extend the exchange offer; | |
• | terminate the exchange offer if a condition to our obligation to exchange Old Notes for New Notes is not satisfied or waived on or prior to the Expiration Date; and | |
• | amend the exchange offer. |
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• | terminate the exchange offer and return all tendered Old Notes to the respective tendering holders; | |
• | modify, extend or otherwise amend the exchange offer and retain all tendered Old Notes until the Expiration Date, as extended, subject, however, to the withdrawal rights of holders; or | |
• | to the extent lawful, waive the unsatisfied conditions with respect to the exchange offer and accept all Old Notes tendered and not previously validly withdrawn. |
(1) | irrevocably sell, assign and transfer to or upon our order or the order of our nominee all right, title and interest in and to, and any and all claims in respect of or arising or having arisen as a result of the holder’s status as a holder of, all Old Notes tendered thereby, such that thereafter the holder shall have no contractual or other rights or claims in law or equity against us or any fiduciary, trustee, fiscal agent or other person connected with the Old Notes arising under, from or in connection with those Old Notes; |
(2) | waive any and all rights with respect to the Old Notes tendered thereby, including, without limitation, any existing or past defaults and their consequences in respect of those Old Notes; and |
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(3) | release and discharge us and the trustee for the Old Notes from any and all claims the holder may have, now or in the future, arising out of or related to the Old Notes tendered thereby, including, without limitation, any claims that the holder is entitled to receive additional principal or interest payments with respect to the Old Notes tendered thereby, other than as expressly provided in this prospectus and in the letter of transmittal, or to participate in any redemption or defeasance of the Old Notes tendered thereby. |
(1) | it has received and reviewed this prospectus; | |
(2) | it is the beneficial owner (as defined below) of, or a duly authorized representative of one or more beneficial owners of, the Old Notes tendered thereby, and it has full power and authority to execute the letter of transmittal; | |
(3) | the Old Notes being tendered thereby were owned as of the date of tender, free and clear of any liens, charges, claims, encumbrances, interests and restrictions of any kind, and we will acquire good, indefeasible and unencumbered title to those Old Notes, free and clear of all liens, charges, claims, encumbrances, interests and restrictions of any kind, when we accept the same; | |
(4) | it will not sell, pledge, hypothecate or otherwise encumber or transfer any Old Notes tendered thereby from the date of the letter of transmittal, and any purported sale, pledge, hypothecation or other encumbrance or transfer will be void and of no effect; | |
(5) | in evaluating the exchange offer and in making its decision whether to participate in the exchange offer by tendering its Old Notes, it has made its own independent appraisal of the matters referred to in this prospectus and the letter of transmittal and in any related communications and it is not relying on any statement, representation or warranty, express or implied, made to it by us or the exchange agent, other than those contained in this prospectus, as amended or supplemented through the Expiration Date; | |
(6) | the execution and delivery of the letter of transmittal shall constitute an undertaking to execute any further documents and give any further assurances that may be required in connection with any of the foregoing, in each case on and subject to the terms and conditions described or referred to in this prospectus; | |
(7) | the agreement to the terms of the letter of transmittal pursuant to an agent’s message shall, subject to the terms and conditions of the exchange offer, constitute the irrevocable appointment of the exchange agent as its attorney and agent and an irrevocable instruction to that attorney and agent to complete and execute all or any forms of transfer and other documents at the discretion of that attorney and agent in relation to the Old Notes tendered thereby in favor of us or any other person or persons as we may direct and to deliver those forms of transfer and other documents in the attorney’s and agent’s discretion and the certificates and other documents of title relating to the registration of Old Notes and to execute all other documents and to do all other acts and things as may be in the opinion of that attorney or agent necessary or expedient for the purpose of, or in connection with, the acceptance of the exchange offer, and to vest in us or our nominees those Old Notes; | |
(8) | the terms and conditions of the exchange offer shall be deemed to be incorporated in, and form a part of, the letter of transmittal, which shall be read and construed accordingly; |
(9) | it is acquiring the New Notes in the ordinary course of the business of the holder and any beneficial owner; |
(10) | it is not participating in, and does not intend to participate in, a distribution of the New Notes within the meaning of the Securities Act and has no arrangement or understanding |
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with any person to participate in a distribution of the New Notes within the meaning of the Securities Act; |
(11) | it is not a broker-dealer who acquired the Old Notes directly from us; and |
(12) | it is not an “affiliate” of ours, within the meaning of Rule 405 of the Securities Act. |
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• | a book-entry confirmation of such number of Old Notes into the exchange agent’s account at DTC; and | |
• | a properly transmitted agent’s message. |
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Wells Fargo Bank, National Association
By facsimile: (612)-667-6282
For Information or Confirmation by Telephone:(800) 344-5128
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(1) | any change in law or applicable interpretations of the staff of the SEC do not permit us to effect the exchange offer; | |
(2) | for any other reason the Exchange Offer Registration Statement is not filed by March 31, 2011 or the exchange offer is not completed within 90 days after March 31, 2011; | |
(3) | any holder of the Notes notifies us that: |
(a) | it is prohibited by law or SEC policy from participating in the exchange offer; or |
(b) | it may not resell the New Notes acquired by it in the exchange offer to the public without delivering a prospectus and the prospectus contained in the Exchange Offer Registration Statement is not appropriate or available for such resales; or |
(c) | it is a broker-dealer (“Participating Broker-Dealer”) receiving New Notes in the exchange offer and owns Notes acquired directly from us or an affiliate of ours; |
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AND RESULTS OF OPERATIONS
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Year Ended December 31, | ||||||||||||
2010 | 2009 | 2008 | ||||||||||
Revenues: | ||||||||||||
Total fee income | $ | 184,084 | $ | 100,218 | $ | 74,007 | ||||||
Gain (loss) on mortgage loans held for sale | 77,344 | (21,349 | ) | (86,663 | ) | |||||||
Total revenues | 261,428 | 78,869 | (12,656 | ) | ||||||||
Total expenses and impairments | 220,976 | 142,367 | 147,777 | |||||||||
Other income (expense): | ||||||||||||
Interest income | 98,895 | 52,518 | 92,060 | |||||||||
Interest expense | (116,163 | ) | (69,883 | ) | (65,548 | ) | ||||||
Loss on interest rate swaps and caps | (9,801 | ) | (14 | ) | (23,689 | ) | ||||||
Fair value changes in ABS securitizations | (23,297 | ) | — | — | ||||||||
Total other income (expense) | (50,366 | ) | (17,379 | ) | 2,823 | |||||||
Net loss | $ | (9,914 | ) | $ | (80,877 | ) | $ | (157,610 | ) | |||
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Year Ended December 31, | ||||||||||||
2010 | 2009 | 2008 | ||||||||||
Revenues: | ||||||||||||
Servicing fee income | $ | 175,569 | $ | 91,266 | $ | 69,235 | ||||||
Other fee income | 7,273 | 8,867 | 5,366 | |||||||||
Total fee income | 182,842 | 100,133 | 74,601 | |||||||||
Gain (loss) on mortgage loans held for sale | — | — | — | |||||||||
Total revenues | 182,842 | 100,133 | 74,601 | |||||||||
Expenses and impairments: | ||||||||||||
Salaries, wages, and benefits | 78,269 | 56,726 | 41,755 | |||||||||
General and administrative | 24,664 | 10,669 | 9,878 | |||||||||
Occupancy | 4,350 | 3,502 | 3,404 | |||||||||
Total expenses and impairments | 107,283 | 70,897 | 55,037 | |||||||||
Other income (expense): | ||||||||||||
Interest income | 263 | 4,143 | 10,872 | |||||||||
Interest expense | (51,791 | ) | (25,877 | ) | (15,718 | ) | ||||||
Loss on interest rate swaps and caps | (9,801 | ) | — | — | ||||||||
Total other income (expense) | (61,329 | ) | (21,734 | ) | (4,846 | ) | ||||||
Net income from Servicing Segment | $ | 14,230 | $ | 7,502 | $ | 14,718 | ||||||
Year Ended December 31, | ||||||||||||
2010 | 2009 | 2008 | ||||||||||
(dollars in millions, except for average loan amount) | ||||||||||||
Unpaid principal balance (by investor): | ||||||||||||
Special Servicing | $ | 4,885 | $ | 1,554 | $ | 1,218 | ||||||
Government-sponsored enterprises | 52,202 | 24,235 | 10,709 | |||||||||
ABS | 7,089 | 7,875 | 9,415 | |||||||||
Total unpaid principal balance | $ | 64,176 | $ | 33,664 | $ | 21,342 | ||||||
Loan count—servicing | 389,172 | 230,615 | 159,336 | |||||||||
Average Servicing Portfolio | $ | 38,653 | $ | 25,799 | $ | 12,775 | ||||||
Average loan amount | $ | 164,904 | $ | 145,977 | $ | 133,943 | ||||||
Average coupon | 5.74 | % | 6.76 | % | 7.49 | % | ||||||
Average FICO | 631 | 644 | 588 | |||||||||
60+ delinquent (% of loans)(1) | 17.0 | % | 19.9 | % | 13.1 | % | ||||||
Total prepayment speed (12 month CPR) | 13.3 | % | 16.3 | % | 16.2 | % |
(1) | Loan delinquency is based on the current contractual due date of the loan. In the case of a completed loan modification, delinquency is based on the modified due date of the loan. |
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• | Servicing fee income increased $84.3 million period over period primarily from: |
(a) | Increase of $34.8 million due to higher average unpaid principal balance of $38.7 billion in 2010 compared to $25.8 billion in 2009. The increase in our servicing portfolio was primarily driven by an increase in average unpaid principal balance for loans serviced for government-sponsored enterprises and other subservicing contracts for third party investors of $31.2 billion in 2010 compared to $17.2 billion in 2009. This increase was partially offset by a decrease in average unpaid principal balance for our asset-backed securitizations portfolio, which decreased to $7.4 billion in 2010 compared to $8.7 billion in 2009. | |
(b) | Increase of $8.9 million due to increased loss mitigation and performance-based incentive fees earned from a government-sponsored enterprise. |
(c) | Increase of $17.9 million due to higher fees earned from HAMP and from modification fees earned on non-HAMP modifications. As a high-touch servicer, we use modifications as a key loss mitigation tool. Under HAMP, subject to a program participation cap, we, as a servicer, will receive an initial incentive payment of up to $1,500 for each loan modified in accordance with HAMP subject to the condition that the borrower successfully completes a trial modification period. With this program, the servicer must forego any late fees and may not charge any other fees. In addition, provided that a HAMP modification does not become 90 days or more delinquent, we will receive an incentive of up to $1,000. Initial redefault rates have been favorable, averaging 10% to 20%. The HAMP program has an expiration date of December 31, 2012 and is only eligible for first lien mortgages that were originated on or before January 1, 2009. For non-HAMP modifications, we generally do not waive late fees, and we charge a modification fee. These amounts are collected at the time of the modification. |
(d) | Increase of $21.7 million from change in fair value on mortgage servicing rights which was recognized in servicing fee income. The fair value of our mortgage servicing rights is impacted by expected future cash flows from our MSRs considering prepayment estimates, portfolio characteristics, delinquencies, interest rates and other economic factors. Generally, the value of MSRs increases when interest rates increase and decreases when interest rates decline due to the effect those changes in interest rates have on prepayment estimates. Other factors affecting the MSR value includes the estimated effects of loan modifications on expected cash flows. Such modifications tend to extend the expected life of the affected MSR and have the potential to produce additional revenue opportunities depending on the type of modification. However, given that the fair value of our MSRs is determined using assumptions that are consistent with what other major market participants use in valuing MSRs, the effects of loan modifications are not a significant component of the valuation as most market participants are not high touch servicers. In addition, the number of modifications executed varies with the delinquencies and characteristics of the portfolio. Delinquent portfolios tend to have lower MSR values compared to newly originated servicing rights. Modifications are an even smaller component of the value for newly originated servicing rights as the collateral is less credit sensitive. |
(e) | Increase of $1.0 million due to an increase in ancillary and late fees arising from growth in the servicing portfolio. Late fees are recognized as revenue at collection. |
• | Other fee income decreased $1.6 million for the year ended December 31, 2010 due to lower lender-placed insurance commissions and lower REO sales commissions resulting from a decline in REO sales managed by our internal REO sales group. |
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• | Servicing fee income increased $22.1 million year over year primarily from: |
(a) | Increase of $20.8 million due to higher average unpaid principal balance of $25.8 billion in 2009 compared to $12.8 billion in 2008. The increase in our servicing portfolio was primarily driven by an increase in average unpaid principal balance for loans serviced for government-sponsored enterprises and other subservicing contracts for third party investors in 2009 compared to 2008. This increase was partially offset by a decrease in average unpaid principal balance for our private asset-backed securitizations portfolio, which decreased in 2009 compared to 2008. | |
(b) | Increase of $7.7 million due to increased loss mitigation and performance-based incentive fees earned from a government-sponsored enterprise. | |
(c) | Increase of $3.3 million due to higher modification fees earned from HAMP and from modification fees earned on non-HAMP modifications. | |
(d) | Increase of $7.0 million due to increased collection of late fees, primarily due to higher average unpaid principal balance of our servicing portfolio. Late fees are recognized as revenue at collection. | |
(e) | Decrease of $16.2 million from change in fair value on mortgage servicing rights which was recognized in servicing fee income. |
• | Other fee income increased $3.5 million for the year ended December 31, 2009 from higher lender-placed insurance commissions, which is primarily due to higher delinquency rates in 2009 compared to 2008. |
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• | Interest income decreased $3.8 million due to lower average index rates received on custodial cash deposits associated with mortgage loans serviced combined with lower average outstanding custodial cash deposit balances. | |
• | Interest expense increased $25.9 million primarily due to higher average outstanding debt of $638.6 million in 2010 compared to $313.3 million in 2009, offset by lower interest rates due to declines in the base LIBOR and decreases in the overall index margin on outstanding servicer advance facilities. Additionally, in 2010, we have included the balances related to our outstanding corporate note and senior unsecured debt balances, and the related interest expense thereon, as a component of our Servicing Segment. As a result of the weakening housing market, we continued to carry approximately $368.3 million in residential mortgage loans that we were unable to securitize as mortgage loans held for sale on our balance sheet throughout most of 2009. During this time period, we allocated a portion of our outstanding corporate note balance to Legacy Portfolio and Other to account for the increased capacity and financing costs we incurred while these loans were retained on our balance sheet. For the year ended December 31, 2010, we recorded $21.7 million in interest expense related to our outstanding corporate and senior unsecured notes. | |
• | Loss on interest rate swaps and caps was $9.8 million for the year ended December 31, 2010, with no corresponding gain or loss recognized for the year ended December 31, 2009. The loss for the period was a result of a decline in fair value recognized during the period on outstanding interest rate swaps designed to economically hedge the interest rate risk associated with our2009-ADV1 Servicer Advance Facility. This facility was not executed until the end of the fourth quarter of 2009, so we did not recognize any corresponding fair value adjustments during the year ended December 31, 2009. |
• | Increase of $7.7 million from additional amortization of deferred financing costs resulting from refinancing or renewal of our advance financing facilities. | |
• | Increase of $6.7 million from decline in interest income earned on custodial cash deposits associated with mortgage loans serviced primarily due to lower average deposits and index rates. | |
• | Increase of $1.4 million from compensating interest due to increased average unpaid principal balance. | |
• | Increase of $1.1 million from higher average outstanding debt of $313.3 million in 2009 compared to $259.1 million in 2008, offset by lower interest rates due to declines in the base LIBOR. |
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Year Ended December 31, | ||||||||||||
2010 | 2009 | 2008 | ||||||||||
Revenues: | ||||||||||||
Other fee income | $ | 7,042 | $ | 1,156 | $ | 589 | ||||||
Total fee income | 7,042 | 1,156 | 589 | |||||||||
Gain on mortgage loans held for sale | 77,498 | 54,437 | 21,985 | |||||||||
Total revenues | 84,540 | 55,593 | 22,574 | |||||||||
Expenses and impairments: | ||||||||||||
Salaries, wages, and benefits | 57,852 | 31,497 | 18,357 | |||||||||
General and administrative | 26,761 | 14,586 | 10,864 | |||||||||
Occupancy | 2,307 | 1,449 | 1,574 | |||||||||
Total expenses and impairments | 86,920 | 47,532 | 30,795 | |||||||||
Other income (expense): | ||||||||||||
Interest income | 11,848 | 4,261 | 1,920 | |||||||||
Interest expense | (8,806 | ) | (3,438 | ) | (1,289 | ) | ||||||
Total other income (expense) | 3,042 | 823 | 631 | |||||||||
Net income (loss) from Originations Segment | $ | 662 | $ | 8,884 | $ | (7,590 | ) | |||||
Year Ended December 31, | ||||||||||||
2010 | 2009 | 2008 | ||||||||||
Origination Volume (in millions): | ||||||||||||
Retail | $ | 1,608 | $ | 1,093 | $ | 538 | ||||||
Wholesale | 1,183 | 38 | 4 | |||||||||
Total Originations | $ | 2,791 | $ | 1,479 | $ | 542 | ||||||
• | Other fee income increased $5.8 million primarily due to our election to measure newly originated prime residential mortgage loans held for sale at fair value, effective October 1, 2009. Subsequent to this election, any collected points and fees related to originated mortgage loans held for sale are included in other fee income. Prior to this election, points and fees were recorded as deferred origination income and recognized over the life of the mortgage loan as an adjustment to our interest income yield or, when the related loan was sold to a third-party purchaser, included as a component of gain on mortgage loans held for sale. |
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(a) | Increase of $22.4 million from improved margins and larger volume of originations, which increased from $1.5 billion for the year ended December 31, 2009 to $2.8 billion in originations for the year December 31, 2010. |
(b) | Increase of $17.9 million from capitalized mortgage servicing rights due to the larger volume of originations and subsequent retention of servicing rights. |
(c) | Decrease of $0.7 million from change in unrealized gains/(losses) on derivative financial instruments. These include interest rate lock commitments and forward sales of mortgage-backed securities. | |
(d) | Decrease of $20.2 million from recognition of points and fees earned on mortgage loans held for sale for the year ended December 31, 2009. Effective October 1, 2009, all points and fees are recognized at origination upon the election to apply fair value accounting to newly-originated loans and are recognized as a component of other fee income. |
• | Gain on mortgage loans held for sale increased $32.4 million primarily from: |
(a) | Increase of $24.8 million from larger volume of originations, which increased from $0.5 billion in 2008 to $1.5 billion in 2009. | |
(b) | Increase of $3.8 million from capitalized mortgage servicing rights due to larger volume of origination and subsequent retention of servicing rights. | |
(c) | Increase of $3.8 million from change in unrealized gains/(losses) on derivative financial instruments. These include interest rate lock commitments and forward sales of mortgage-backed securities. |
• | Increase of $26.4 million in salaries, wages and benefits expense from increase in headcount of 452 in 2009 to 688 in 2010 and increases in performance based compensation. Additionally, we recognized $3.9 million in share-based compensation expense from a revised compensation plan for certain of our executives. | |
• | Increase of $13.1 million in general and administrative and occupancy expense primarily due to increase in overhead expenses from the larger volume of originations in 2010 and expenses associated with the settlement of certain claims. |
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• | Increase of $13.1 million in salaries, wages and benefits expense from increase in headcount of 311 in 2008 to 452 in 2009 and increases in performance based compensation. | |
• | Increase of $3.7 million in general and administrative expense primarily due to increase in overhead expenses from larger volume of origination in 2009. |
• | Interest income increased $7.5 million from interest earned from originated loans prior to sale or securitization. The increase is primarily due to the increase in the volume of originations. Loans are typically sold within 30 days of origination. | |
• | Interest expense increased $5.4 million primarily due to an increase in origination volume in 2010 and associated financing required to originate these loans combined with a slight increase in outstanding average days in warehouse on newly originated loans. |
• | Interest income increased $2.4 million primarily due to interest earned from originated loans prior to sale or securitization. Loans are typically sold within 30 days of origination. | |
• | Interest expense increased $2.1 million primarily due to interest expense from warehouse facilities that finance the origination of loans. |
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Year Ended December 31, | ||||||||||||
2010 | 2009 | 2008 | ||||||||||
Revenues: | ||||||||||||
Servicing fee income | $ | 820 | $ | — | $ | — | ||||||
Other fee income | 2,643 | — | — | |||||||||
Total fee income | 3,463 | — | — | |||||||||
Gain (loss) on mortgage loans held for sale | — | (75,786 | ) | (108,648 | ) | |||||||
Total revenues | 3,463 | (75,786 | ) | (108,648 | ) | |||||||
Expenses and impairments: | ||||||||||||
Salaries, wages, and benefits | 13,148 | 3,537 | 2,854 | |||||||||
General and administrative | 7,488 | 5,239 | 1,452 | |||||||||
Loss on mortgage loans held for investment and foreclosed real estate | 3,503 | 7,512 | 2,567 | |||||||||
Occupancy | 2,788 | 1,912 | 1,043 | |||||||||
Loss onavailable-for-sale securities-other-than-temporary | — | 6,809 | 55,212 | |||||||||
Total expenses and impairments | 26,927 | 25,009 | 63,128 | |||||||||
Other income (expense): | ||||||||||||
Interest income | 77,521 | 44,114 | 79,268 | |||||||||
Interest expense | (55,566 | ) | (40,568 | ) | (48,541 | ) | ||||||
Gain (loss) on interest rate swaps and caps | — | (14 | ) | (23,689 | ) | |||||||
Fair value changes in ABS securitizations | (23,297 | ) | — | — | ||||||||
Total other income (expense) | (1,342 | ) | 3,532 | 7,038 | ||||||||
Net loss from Legacy Portfolio & Other | $ | (24,806 | ) | $ | (97,263 | ) | $ | (164,738 | ) | |||
Year Ended December 31, | ||||||||||||
2010(1) | 2009 | 2008 | ||||||||||
Legacy Portfolio and Other Performance: | ||||||||||||
Performing—UPB | $ | 1,037,201 | $ | 345,516 | $ | 627,368 | ||||||
Nonperforming (90+ Delinquency)—UPB | 337,779 | 141,602 | 100,452 | |||||||||
Real Estate Owned—Estimated Fair Value | 27,337 | 10,262 | 21,822 | |||||||||
Total Legacy Portfolio and Other—UPB | $ | 1,402,318 | $ | 497,380 | $ | 749,642 | ||||||
(1) | Amounts include one previously off-balance sheet securitization which was consolidated upon adoption of ASC 810 related to consolidation of certain VIEs. |
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December 31, | December 31, | |||||||
2010 | 2009 | |||||||
Assets | ||||||||
Cash and cash equivalents | $ | 21,223 | $ | 41,645 | ||||
Restricted cash | 91,125 | 52,795 | ||||||
Accounts receivable | 439,071 | 509,974 | ||||||
Mortgage loans held for sale | 371,160 | 203,131 | ||||||
Mortgage loans held for investment, subject to nonrecourse debt—Legacy Assets | 266,840 | 301,910 | ||||||
Mortgage loans held for investment, subject to ABS nonrecourse debt | 538,440 | — | ||||||
Investment in debtsecurities—available-for-sale | — | 2,486 | ||||||
Receivables from affiliates | 8,993 | 12,574 | ||||||
Mortgage servicing rights | 145,062 | 114,605 | ||||||
Property and equipment, net | 8,394 | 6,575 | ||||||
Real estate owned, net (includes $17,509 and $0, respectively, of real estate owned, subject to ABS nonrecourse debt) | 27,337 | 10,262 | ||||||
Other assets | 29,536 | 24,228 | ||||||
Total assets | $ | 1,947,181 | $ | 1,280,185 | ||||
Liabilities and members’ equity | ||||||||
Notes payable | $ | 709,758 | $ | 771,857 | ||||
Unsecured senior notes | 244,061 | — | ||||||
Payables and accrued liabilities | 75,054 | 66,830 | ||||||
Derivative financial instruments | 7,801 | — | ||||||
Derivative financial instruments, subject to ABS nonrecourse debt | 18,781 | — | ||||||
Nonrecourse debt—Legacy Assets | 138,662 | 177,675 | ||||||
ABS nonrecourse debt | 496,692 | — | ||||||
Total liabilities | 1,690,809 | 1,016,362 | ||||||
Total members’ equity | 256,372 | 263,823 | ||||||
Total liabilities and members’ equity | $ | 1,947,181 | $ | 1,280,185 | ||||
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• | Increase of $1,613.9 million attributable to increased proceeds received from sale of loans, offset by decrease in cash attributable to $1,311.1 million increase in origination volume. |
• | Decrease in principal payments/prepayments received and other changes in mortgages loans held for sale of $437.7 million. |
• | Increase of $130.4 million primarily due to increased delinquency advances to investors to cover scheduled payments of principal and interest that are required to be remitted to securitization trusts. | |
• | Increase of $71.0 million attributable to decrease in net loss period over period, primarily a result of increased revenues from our higher servicing portfolio and increased volume in loan originations. |
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2012 | 2014 | After | ||||||||||||||||||
2011 | to 2013 | to 2015 | 2015 | Total | ||||||||||||||||
Senior Unsecured Notes | $ | — | $ | — | $ | 250,000 | — | $ | 250,000 | |||||||||||
Interest expense from Senior Unsecured Notes | 27,188 | 54,375 | 33,985 | — | 115,548 | |||||||||||||||
MBS Advance Financing Facility | 114,562 | — | — | — | 114,562 | |||||||||||||||
ABS Advance Financing Facility | 236,808 | — | — | — | 236,808 | |||||||||||||||
MSR Notes | 5,552 | 10,181 | — | — | 15,733 | |||||||||||||||
$300 Million Warehouse Facility | 209,477 | — | — | 209,477 | ||||||||||||||||
$100 Million Warehouse Facility | 39,014 | — | — | — | 39,014 | |||||||||||||||
$75 Million Warehouse Facility | 43,059 | — | — | — | 43,059 | |||||||||||||||
GSE ASAP+ Short-Term Financing Facility | 51,105 | — | — | — | 51,105 | |||||||||||||||
Operating leases | 7,015 | 13,299 | 7,972 | 1,243 | 29,529 | |||||||||||||||
$ | 733,780 | $ | 77,855 | $ | 291,957 | $ | 1,243 | $ | 1,104,835 | |||||||||||
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Twelve Months Ended | ||||
December 31, 2010 | ||||
Net income (loss) | $ | (9,914 | ) | |
Adjust for: | ||||
Impact from consolidation of securitization trusts(1) | (8,933 | ) | ||
Interest expense from Corporate Indebtedness(2) | 24,628 | |||
Depreciation and amortization | 2,117 | |||
Change in fair value of mortgage servicing rights(3) | 6,458 | |||
Exit costs | 2,287 | |||
Share-based compensation | 12,856 | |||
Fair value changes on interest rate swap | 9,801 | |||
Ineffective portion of cash flow hedge | (930 | ) | ||
(Gain) loss from asset sales and other than temporary impairment of assets | 6,084 | |||
Amortization/write-off of deferred financing cost for debt obligations in existence prior to issuance of unsecured senior notes | 15,944 | |||
Servicing resulting from transfers of financial assets | (26,253 | ) | ||
Other | 6 | |||
Consolidated EBITDA | $ | 34,151 | ||
(1) | Represents impact to net income from the consolidation of certain securitization trusts. Net income, as defined in the Indenture, is based on generally accepted accounting principles in effect as of December 31, 2009, and does not include the impact of the consolidation of identified VIEs where we have both the power to direct the activities that most significantly impact the VIE’s economic performance and the obligation to absorb losses or the right to receive benefits that could potentially be significant to the VIE. | |
(2) | Includes interest expense from the unsecured senior notes and an unsecured line of credit that was paid down with the proceeds from the unsecured senior notes. | |
(3) | Represents change in fair value of mortgage servicing rights after deconsolidation of the securitization trusts as discussed in note (1) above. |
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Transfers | ||||||||||||
Securitization | Accounted for as | |||||||||||
Trusts | Secured Borrowings | Total | ||||||||||
Assets | ||||||||||||
Restricted cash | $ | 1,472 | $ | 32,075 | $ | 33,547 | ||||||
Accounts receivable | 2,392 | 286,808 | 289,200 | |||||||||
Mortgage loans held for investment, subject to nonrecourse debt | — | 261,305 | 261,305 | |||||||||
Mortgage loans held for investment, subject to ABS nonrecourse debt | 538,440 | — | 538,440 | |||||||||
Real estate owned | 17,509 | 9,505 | 27,014 | |||||||||
Total Assets | $ | 559,813 | $ | 589,693 | $ | 1,149,506 | ||||||
Liabilities | ||||||||||||
Notes payable | $ | — | $ | 236,808 | $ | 236,808 | ||||||
Payables and accrued liabilities | 95 | 1,173 | 1,268 | |||||||||
Outstanding servicer advances(1) | 32,284 | — | 32,284 | |||||||||
Derivative financial instruments | — | 7,801 | 7,801 | |||||||||
Derivative financial instruments, subject to ABS nonrecourse debt | 18,781 | — | 18,781 | |||||||||
Nonrecourse debt—Legacy Assets | — | 138,662 | 138,662 | |||||||||
ABS nonrecourse debt | 497,289 | — | 497,289 | |||||||||
Total Liabilities | $ | 548,449 | $ | 384,444 | $ | 932,893 | ||||||
(1) | Outstanding servicer advances consists of principal and interest advances paid by Nationstar to cover scheduled payments and interest that have not been timely paid by borrowers. These outstanding servicer advances are eliminated upon the consolidation of the securitization trusts. |
December 31, | December 31, | |||||||
2010(1) | 2009(2) | |||||||
Total collateral balance | $ | 4,038,978 | $ | 3,240,879 | ||||
Total certificate balance | 4,026,844 | 3,262,995 | ||||||
Total beneficial interests held at fair value | — | 2,486 | ||||||
Total mortgage servicing rights at fair value | 26,419 | 20,505 |
(1) | Unconsolidated securitization trusts as of December 31, 2010 consist of VIE’s where we lack (i) the power to direct the activities that most significantly impact the VIE’s economic performance or (ii) the obligation to absorb losses or the right to receive benefits that could potentially be significant to the VIE. | |
(2) | Unconsolidated securitization trusts as of December 31, 2009 consists of those qualifying for sale treatment under ASC 860. |
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• | Consumer Direct Retail Channel—through which we market refinancing and purchase money mortgage loans directly to selected consumers from our centralized call center; | |
• | Distributed Retail Channel—through which we market refinancing and purchase money mortgage loans directly to consumers from local branches; and | |
• | Wholesale Channel—through which we market our refinancing and purchase money mortgage loans to third party mortgage brokers. |
• | providing us with an organic source of new loans to service as existing loans are repaid or otherwise liquidated as originated loans serviced by us typically generate higher returns than comparable mortgage servicing rights that we would acquire from a third party; | |
• | providing an attractive supplementation to our servicing loss mitigation strategies by allowing us to modify and refinance mortgage loans, including loans that we service; | |
• | creating a diversified source of revenue; and | |
• | building brand recognition. |
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Year Ended December 31, | ||||||||||||
2008 | 2009 | 2010 | ||||||||||
Servicing Portfolio (dollars in millions): | ||||||||||||
Unpaid principal balance (by investor): | ||||||||||||
Special Servicing | $ | 1,218 | $ | 1,554 | $ | 4,893 | ||||||
Government-sponsored enterprises | 10,709 | 24,235 | 48,861 | |||||||||
ABS | 9,415 | 7,875 | 10,422 | |||||||||
Total unpaid principal balance | $ | 21,342 | $ | 33,664 | $ | 64,176 | ||||||
Summary Financial Data (dollars in thousands): | ||||||||||||
Total revenue | $ | 74,601 | $ | 100,133 | $ | 182,842 | ||||||
Net income (loss) | 14,718 | 7,502 | 14,230 |
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December 31, | ||||||||||||
2008 | 2009 | 2010 | ||||||||||
(dollars in millions, except for average loan amount) | ||||||||||||
Loan count—servicing | 159,336 | 230,615 | 389,172 | |||||||||
Ending unpaid principal balance | $ | 21,342 | $ | 33,664 | $ | 64,176 | ||||||
Average unpaid principal balance | $ | 12,775 | $ | 25,799 | $ | 38,653 | ||||||
Average loan amount | $ | 133,943 | $ | 145,977 | $ | 164,904 | ||||||
Average coupon | 7.49 | % | 6.76 | % | 5.74 | % | ||||||
Average FICO | 588 | 644 | 631 | |||||||||
60+ DQ (% of loans) | 13.1 | % | 19.9 | % | 17.0 | % | ||||||
Total prepayment speed (12 month CPR) | 16.2 | % | 16.3 | % | 13.3 | % |
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• | our staffing levels and other servicing practices; | |
• | the servicing and ancillary fees that we may charge; | |
• | our modification standards and procedures; and | |
• | the amount of advances reimbursable. |
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Year Ended December 31, | ||||||||||||
2008 | 2009 | 2010 | ||||||||||
Origination Volume ($ in millions): | ||||||||||||
Retail | $ | 538 | $ | 1,093 | $ | 1,608 | ||||||
Wholesale | 4 | 386 | 1,184 | |||||||||
Total Originations | $ | 542 | $ | 1,479 | $ | 2,792 | ||||||
Summary Financial Data ($ in thousands): | ||||||||||||
Total revenue | $ | 22,574 | $ | 55,593 | $ | 85,540 | ||||||
Net income (loss) | (7,590 | ) | 8,884 | 662 |
• | providing us with an organic source of new loans to service as existing loans are repaid or otherwise liquidated—originated loans serviced by us generate higher returns than comparable mortgage servicing rights that we would acquire from a third party; | |
• | providing an attractive complement to servicing by allowing us to modify and refinance mortgage loans, including loans that we service; | |
• | creating a diversified source of revenue that we believe will remain stable in a variety of interest rate environments; and | |
• | building brand recognition. |
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• | MLS (Marketing Lead System), our proprietary marketing lead system which routes, tracks and delivers leads to our loan officers, who we refer to as our mortgage professionals; | |
• | OPUS, a web-basedpoint-of-sale system that provides product eligibility and pricing to our retail sales force; | |
• | TMO, our loan origination system used for loan processing, underwriting and closing; | |
• | XpressQual, a web-basedpoint-of-sale system that provides product eligibility and pricing to our wholesale brokers and allows them to submit loans to us online; | |
• | www.NationstarBroker com, our website for wholesale brokers to receive information on our products and services; | |
• | CLASS, our proprietary system used to manage our sales relationships and licensing of our wholesale brokers; | |
• | ODE, a rules-based pricing and eligibility engine that is integrated with OPUS, XpressQual and TMO; | |
• | High Cost Fee Engine, our proprietary compliance fee engine that enforces both federal and local high cost and fee limits throughout the loan originations process; and | |
• | CLT (Compliance License Tracker), our proprietary system that maintains and tracks all mortgage professionals locational licensing to ensure that leads and applications are only processed by properly licensed mortgage professionals. |
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• | 60% are in Servicing; | |
• | 35% are in Originations; | |
• | 5% are in support functions, including Human Resources, Accounting and other corporate functions. |
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• | the Gramm-Leach-Bliley Act, which requires us to maintain privacy with respect to certain consumer data in our possession and to periodically communicate with consumers on privacy matters; | |
• | the Fair Debt Collection Practices Act, which regulates the timing and content of debt collection communications; | |
• | the Truth in Lending Act and Regulation Z thereunder, which require certain disclosures to the mortgagors regarding the terms of the mortgage loans; | |
• | the Fair Credit Reporting Act, which regulates the use and reporting of information related to the credit history of consumers; | |
• | the Equal Credit Opportunity Act and Regulation B thereunder, which prohibit discrimination on the basis of age, race and certain other characteristics, in the extension of credit; | |
• | the Homeowners Protection Act, which requires the cancellation of mortgage insurance once certain equity levels are reached; | |
• | the Home Mortgage Disclosure Act and Regulation C thereunder, which require financial institutions to report certain public loan data; | |
• | the Fair Housing Act, which prohibits discrimination in housing on the basis of race, sex, national origin, and certain other characteristics; and | |
• | Regulation AB under the Securities Act, which requires certain registration, disclosure and reporting for mortgage-backed securities. |
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• | an increase in interest rates would increase our costs of servicing our outstanding debt, including our ability to finance servicing advances; | |
• | a decrease (increase) in interest rates would generally increase (decrease) prepayment rates and may require us to report a decrease (increase) in the value of our mortgage servicing rights; | |
• | a change in prevailing interest rates could impact our earnings from our custodial deposit accounts; and | |
• | an increase in interest rates could generate an increase in delinquency, default and foreclosure rates resulting in an increase in both operating expenses and interest expense and could cause a reduction in the value of our assets. |
• | a substantial and sustained increase in prevailing interest rates could adversely affect our loan origination volume because refinancing an existing loan would be less attractive and qualifying for a loan may be more difficult; and | |
• | an increase in interest rates would increase our costs of servicing our outstanding debt, including our ability to finance loan originations; |
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Change in Fair Value | ||||||||
Down | Up | |||||||
25 bps | 25 bps | |||||||
(in thousands) | ||||||||
Increase (decrease) in assets | ||||||||
Mortgage loans held for sale | $4,142 | $(4,303 | ) | |||||
Mortgage loans held for investment, subject to ABS nonrecourse debt | (596 | ) | 809 | |||||
Mortgage servicing rights | (2,636 | ) | 2,809 | |||||
Other assets (derivatives) | ||||||||
IRLCs | 1,694 | (2,163 | ) | |||||
Forward MBS trades | (6,278 | ) | 6,569 | |||||
Total change in assets | (3,674 | ) | 3,720 | |||||
Increase (decrease) in liabilities | ||||||||
Derivative financial instruments | ||||||||
Interest rate swaps and caps | $1,521 | $(1,367 | ) | |||||
Derivative financial instruments, subject to ABS nonrecourse debt | 1,030 | (1,030 | ) | |||||
ABS nonrecourse debt | (1,484 | ) | 1,698 | |||||
Total change in liabilities | 1,067 | (699 | ) | |||||
Total, net change | $(4,741 | ) | $4,420 | |||||
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Name | Age | Position | ||||
Anthony H. Barone | 53 | President, Chief Executive Officer and Manager | ||||
Jay Bray | 44 | Executive Vice President and Chief Financial Officer | ||||
Robert Appel | 49 | Executive Vice President of Servicing | ||||
Amar Patel | 39 | Executive Vice President of Portfolio Investments | ||||
Douglas Krueger | 42 | Executive Vice President of Capital Markets | ||||
Anne E. Sutherland | 50 | Executive Vice President and General Counsel | ||||
Steven L. Hess | 54 | Executive Vice President of Marketing | ||||
Mark O’Brien | 58 | Executive Vice President of Organizational Development |
Name | Age | Position | ||||
Anthony H. Barone | 53 | President, Chief Executive Officer and Manager | ||||
Peter Smith | 43 | Manager |
Name | Age | Position | ||||
Anthony H. Barone | 53 | President, Chief Executive Officer and Director | ||||
Jay Bray | 44 | Executive Vice President, Chief Financial Officer and Director |
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• | Deliver a mix of fixed and at-risk compensation, including through the grants of restricted units and restricted preferred units. | |
• | Through dividend equivalents on grants of restricted units and restricted preferred units, tie a portion of the overall compensation of executive officers to the dividends we pay to our unitholders. | |
• | Encourage the achievement of our short- and long-term goals on both the individual and company levels. |
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Allocable | Target Bonus | |||||||
Percentage of the | As Percent Of | |||||||
Name | Bonus Pool | Salary | ||||||
Anthony H. Barone | 35.6% | N/A | ||||||
Jay Bray | 31.7% | N/A | ||||||
Robert L. Appel | 17.2% | N/A | ||||||
Amar Patel | 15.5% | N/A | ||||||
Douglas Krueger | N/A | 90.0% |
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Non-Stock | ||||||||||||||||||||||||||||
Stock | Incentive Plan | All Other | ||||||||||||||||||||||||||
Salary | Bonus | Awards | Compensation | Compensation | Total | |||||||||||||||||||||||
Name | Year | ($) | ($) | ($)(1) | ($) | ($) | ($) | |||||||||||||||||||||
Anthony H. Barone | 2010 | 424,350 | — | 9,584,458 | 907,862 | (2) | 16,116 | (3) | 10,932,786 | |||||||||||||||||||
2009 | 424,350 | — | — | 706,872 | (4) | 16,116 | (3) | 1,147,338 | ||||||||||||||||||||
Jay Bray | 2010 | 320,000 | — | 9,918,148 | 809,434 | (2) | 11,048 | (5) | 11,058,630 | |||||||||||||||||||
2009 | 289,800 | — | — | 630,235 | (4) | 11,069 | (6) | 931,104 | ||||||||||||||||||||
Robert L. Appel | 2010 | 275,000 | — | 6,467,985 | 439,288 | (2) | 5,500 | (7) | 7,187,746 | |||||||||||||||||||
2009 | 274,999 | — | — | 342,035 | (4) | 5,500 | (7) | 622,534 | ||||||||||||||||||||
Amar Patel | 2010 | 255,000 | — | 4,147,863 | 395,415 | (2) | 6,231 | (7) | 4,804,509 | |||||||||||||||||||
2009 | 255,000 | — | — | 307,875 | (4) | 6,231 | (7) | 569,106 | ||||||||||||||||||||
Douglas Krueger | 2010 | 250,000 | — | — | 425,000 | (8) | 3,125 | (7) | 678,125 | |||||||||||||||||||
2009 | 215,064 | 50,000 | (9) | — | 450,000 | (10) | 41,239 | (11) | 706,303 |
(1) | Represents the aggregate grant date fair value, as computed in accordance with FASB ASC Topic 718, excluding the effect of estimated forfeitures during the applicable vesting periods, of units and RSUs granted to the NEOs. Information with respect to vesting of these awards is disclosed in the Grant of Plan Based Awards table and the accompanying notes. | |
(2) | These amounts will be paid in the first quarter of fiscal year 2011, but represent awards with respect to the Company’s and individual performance in fiscal year 2010. | |
(3) | Represents payment of a life insurance premium equal to $9,216 and a $6,900 contribution to Mr. Barone’s 401(k) account. | |
(4) | These amounts were paid in the first quarter of fiscal 2010, but represent awards with respect to the Company’s and individual performance in fiscal year 2009. | |
(5) | Represents payment of a life insurance premium equal to $5,998 and a $5,050 contribution to Mr. Bray’s 401(k) account. | |
(6) | Represents payment of a life insurance premium equal to $5,998 and a $5,071 contribution to Mr. Bray’s 401(k) account. | |
(7) | Represents a contribution to the named executive officer’s 401(k) account. | |
(8) | Of this amount, $300,000 will be paid in the first quarter of fiscal year 2011, although it represents an award with respect to the Company’s and Mr. Krueger’s individual performance in fiscal year 2010, as described inAnnual Incentive Program for Mr. Krueger. The remaining $125,000 is pursuant to the Long-Term Incentive Plan, described above, and is subject to three-year time-based cliff vesting; this amount will become vested on December 31, 2013 as long as Mr. Krueger remains employed with the Company. | |
(9) | Represents a sign-on bonus Mr. Krueger received pursuant to his employment agreement when he joined the Company. | |
(10) | Of this amount, $225,000 was paid in the first quarter of fiscal year 2010, although it represents an award with respect to the Company’s and Mr. Krueger’s individual performance in fiscal year 2009, as described inAnnual Incentive Program for Mr. Krueger. The remaining $225,000 is pursuant to the Long-Term Incentive Plan, described above, and is subject to three-year time-based cliff vesting; this amount will become vested on December 31, 2012 as long as Mr. Krueger remains employed with the Company. | |
(11) | Represents payment of a relocation expenses equal to $39,469 and a $1,770 contribution to Mr. Krueger’s 401(k) account. |
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Estimated | ||||||||||||||||||||||||||||||||||||
Future | ||||||||||||||||||||||||||||||||||||
Payouts | ||||||||||||||||||||||||||||||||||||
Under | ||||||||||||||||||||||||||||||||||||
Non-Equity | ||||||||||||||||||||||||||||||||||||
Incentive Plan | All Other Stock Awards: | Grant Date Fair Value of | ||||||||||||||||||||||||||||||||||
Awards | Number of Units (#) | Equity Awards ($) | ||||||||||||||||||||||||||||||||||
Name | Grant Date | Target ($) | 1A | 2A | C&D | 1A | 2A | C&D | ||||||||||||||||||||||||||||
Anthony H. Barone | 9/17/2010(1 | ) | 907,862 | 136,993 | 25,607 | 2,494,500 | 6,752,295 | 22,088 | 2,810,075 | |||||||||||||||||||||||||||
Jay Bray | 9/17/2010(2 | ) | 809,434 | 153,212 | 28,637 | 2,078,750 | 7,551,718 | 24,701 | 2,341,729 | |||||||||||||||||||||||||||
Robert L. Appel | 9/17/2010(3 | ) | 439,288 | 102,384 | 19,137 | 1,247,250 | 5,046,440 | 16,507 | 1,405,038 | |||||||||||||||||||||||||||
Amar Patel | 9/17/2010(4 | ) | 395,415 | 64,937 | 12,137 | 831,500 | 3,200,702 | 10,469 | 936,692 | |||||||||||||||||||||||||||
Douglas Krueger | 125,000 | (5) |
(1) | This award is subject to vesting. With respect to the Series 1 Class A, the award vested with respect to 481 Series 1 Class A units on September 17, 2010, and will vest with respect to 68,256 Series 1 Class A units on each of June 30, 2011 and 2012. With respect to the Series 2 Class A, the award vested with respect to 91 Series 2 Class A units on September 17, 2010, and will vest with respect to 12,758 on each of June 30, 2011 and 2012. With respect to the Series 1 Class C and D preferred units, the award vests in equal tranches with respect to 831,500 units on each of September 17, 2010, June 30, 2011 and June 30, 2012. | |
(2) | This award is subject to vesting. With respect to the Series 1 Class A, the award vested with respect to 39,452 Series 1 Class A units on September 17, 2010, and will vest with respect to 56,880 Series 1 Class A units on each of June 30, 2011 and 2012. With respect to the Series 2 Class A, the award vested with respect to 7,373 Series 2 Class A units on September 17, 2010, and will vest with respect to 10,631 on June 30, 2011 and with respect to 10,633 on June 30, 2012. With respect to the Series 1 Class C and D preferred units, the award vests in equal tranches with respect to 692,916 units on September 17, 2010 and 692,917 units on each of June 30, 2011 and June 30, 2012. | |
(3) | This award is subject to vesting. With respect to the Series 1 Class A, the award vests in equal tranches with respect to 34,128 units on each of September 17, 2010, June 30, 2011 and June 30, 2012. With respect to the Series 2 Class A, the award vests in equal tranches with respect to 6,379 units on each of September 17, 2010, June 30, 2011 and June 30, 2012. With respect to the Series 1 Class C and D preferred units, the award vests in equal tranches with respect to 415,750 units on each of September 17, 2010, June 30, 2011 and June 30, 2012. | |
(4) | This award is subject to vesting. With respect to the Series 1 Class A, the award vested with respect to 19,433 Series 1 Class A units on September 17, 2010, and will vest with respect to 22,752 Series 1 Class A units on each of June 30, 2011 and 2012. With respect to the Series 2 Class A, the award vested with respect to 3,631 Series 2 Class A units on September 17, 2010, and will vest with respect to 4,252 on June 30, 2011 and 4,254 on June 30, 2012. With respect to the Series 1 Class C and D preferred units, the award vests in equal tranches with respect to 277,166 units on September 17, 2010 and 277,167 units on each of June 30, 2011 and June 30, 2012. | |
(5) | This bonus under the Long-Term Incentive Plan, described above, is subject to three-year time-based cliff vesting, which will become vested on December 31, 2013 as long as Mr. Krueger remains employed with the Company. |
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Stock Awards | ||||||||||||||||||||||||
Number of Units That Have | Market Value of Units That Have | |||||||||||||||||||||||
Not Vested (#) | Not Vested ($) | |||||||||||||||||||||||
Name | 1A | 2A | C&D | 1A | 2A | C&D | ||||||||||||||||||
Anthony H. Barone(1) | 136,512 | 25,516 | 1,663,000 | 6,715,749 | 22,009 | 1,886,089 | ||||||||||||||||||
Jay Bray(2) | 113,760 | 21,264 | 1,385,834 | 5,596,458 | 18,342 | 1,571,741 | ||||||||||||||||||
Robert L. Appel(3) | 68,256 | 12,758 | 831,500 | 3,357,875 | 11,005 | 943,045 | ||||||||||||||||||
Amar Patel(4) | 45,504 | 8,506 | 554,334 | 2,238,583 | 7,337 | 628,696 | ||||||||||||||||||
Douglas Krueger | — | — | — | — | — | — |
(1) | This award is subject to vesting. With respect to the Series 1 Class A, the award will vest with respect to 68,256 Series 1 Class A units on each of June 30, 2011 and 2012. With respect to the Series 2 Class A, the award will vest with respect to 12,758 on each of June 30, 2011 and 2012. With respect to the Series 1 Class C and D preferred units, the award vests in equal tranches with respect to 831,500 units on each of June 30, 2011 and 2012. | |
(2) | This award is subject to vesting. With respect to the Series 1 Class A, the award will vest with respect to 56,880 Series 1 Class A units on each of June 30, 2011 and 2012. With respect to the Series 2 Class A, the award will vest with respect to 10,631 on June 30, 2011 and with respect to 10,633 on June 30, 2012. With respect to the Series 1 Class C and D preferred units, the award vests in equal tranches with respect to 692,917 units on each of June 30, 2011 and 2012. | |
(3) | This award is subject to vesting. With respect to the Series 1 Class A, the award vests in equal tranches with respect to 34,128 units on each of June 30, 2011 and 2012. With respect to the Series 2 Class A, the award vests in equal tranches with respect to 6,379 units on each of June 30, 2011 and 2012. With respect to the Series 1 Class C and D preferred units, the award vests in equal tranches with respect to 415,750 units on each of June 30, 2011 and 2012. | |
(4) | This award is subject to vesting. With respect to the Series 1 Class A, the award will vest with respect to 22,752 Series 1 Class A units on each of June 30, 2011 and 2012. With respect to the Series 2 Class A, the award will vest with respect to 4,252 on June 30, 2011 and 4,254 on June 30, 2012. With respect to the Series 1 Class C and D preferred units, the award vests in equal tranches with respect to 277,167 units on each of June 30, 2011 and 2012. |
Stock Awards | ||||||||||||||||||||||||
Number of Shares | ||||||||||||||||||||||||
Acquired on Vesting (#) | Value Realized on Vesting ($) | |||||||||||||||||||||||
Name | 1A | 2A | C&D | 1A | 2A | C&D | ||||||||||||||||||
Anthony H. Barone | 19,845 | 3,710 | 831,500 | 1,021,205 | 3,386 | 936,692 | ||||||||||||||||||
Jay Bray | 44,432 | 8,304 | 692,916 | 2,201,098 | 7,210 | 780,576 | ||||||||||||||||||
Robert L. Appel | 34,128 | 6,379 | 415,750 | 1,682,147 | 5,502 | 468,346 | ||||||||||||||||||
Amar Patel | 19,433 | 3,631 | 277,166 | 957,840 | 3,132 | 312,230 | ||||||||||||||||||
Douglas Krueger | — | — | — | — | — | — |
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After | ||||||||||||||||||||
Termination without | Change in | |||||||||||||||||||
Cause Other than | Control, | |||||||||||||||||||
After A Change in | Termination | |||||||||||||||||||
Voluntary | Control or for Good | without | ||||||||||||||||||
Death(1) | Disability(1) | Termination | Reason(1) | Cause(2) | ||||||||||||||||
($) | ($) | ($) | ($) | ($) | ||||||||||||||||
Anthony H. Barone | 4,311,924 | 4,311,924 | 564,630 | 6,015,435 | 10,327,358 | |||||||||||||||
Jay Bray | 3,593,269 | 3,593,269 | 483,278 | 5,052,723 | 8,645,995 | |||||||||||||||
Robert L. Appel | 2,155,962 | 2,155,962 | 0 | 3,454,870 | 5,610,833 | |||||||||||||||
Amar Patel | 1,437,307 | 1,437,307 | 0 | 1,767,324 | 3,204,634 | |||||||||||||||
Douglas Krueger | 0 | 0 | 0 | 33,656 | 33,656 |
(1) | Pursuant to the equity grant agreements granting each of Messrs. Barone, Bray, Appel and Patel Series 1 Class A units, Series 2 Class A units, and RSUs with respect to Series 1 Class C and D preferred units, in the event the named executive officer’s employment terminates as a result of the named executive officer’s death, disability or voluntary resignation for good reason or as a result of the Company terminating the named executive officer’s employment without cause other than in connection with a change in control, an additional tranche of any outstanding and unvested equity awards will become vested. |
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(2) | Pursuant to the equity grant agreements granting each of Messrs. Barone, Bray, Appel and Patel Series 1 Class A units, Series 2 Class A units, and RSUs with respect to Series 1 Class C and D preferred units, in the event the named executive officer’s employment terminates as a result the Company terminating the named executive officer’s employment without cause within 6 months following a change in control, all of the named executive officer’s outstanding and unvested equity awards will become vested. |
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• | each person or group who is known by us to own beneficially more than 5% of Holdings’ issued and outstanding Series 1 Class A units; | |
• | each of our directors; | |
• | each of our named executive officers; and | |
• | all of our directors and executive officers as a group. |
Number of | Percentage of | |||||||
Name of Beneficial Owner | Series 1 Units(2) | Series 1 Units(2) | ||||||
Executive Officers and Directors | ||||||||
Peter Smith | 0 | * | ||||||
Anthony H. Barone | 601,784 | * | ||||||
Jay Bray | 491,722 | * | ||||||
Robert Appel | 292,420 | * | ||||||
Amar Patel | 196,107 | * | ||||||
Douglas Krueger | 0 | * | ||||||
All executive officers, managers and directors as a group (6 persons) | 1,582,033 | 0.9% |
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Number of | Percentage of | |||||||
Series 1 Class A | Series 1 Class A | |||||||
Name of Beneficial Owner | Units(2) | Units(2) | ||||||
5% Interest holders | ||||||||
Fortress Fund III Funds(1) | 6,434,408 | 49.2% | ||||||
Fortress Fund IV Funds(1) | 6,434,411 | 49.2% |
* | Less than 1% | |
(1) | Fortress Fund III Funds represent Fortress Investment Fund III LP, Fortress Investment Fund III (Fund B) LP, Fortress Investment Fund III (Fund C) LP, Fortress Investment Fund III (Fund D) L.P., Fortress Investment Fund III (Fund E) L.P., FIF III B HE BLKR LLC, and FIF III C HE BLKR LLC. Fortress Fund IV Funds represent Fortress Investment Fund IV (Fund A) L.P., Fortress Investment Fund IV (Fund B) L.P., Fortress Investment Fund IV (Fund C) L.P., Fortress Investment Fund IV (Fund D) L.P., Fortress Investment Fund IV (Fund E) L.P., Fortress Investment Fund IV (Fund F) L.P. and Fortress Investment Fund IV (Fund G) L.P., FIF IV B HE BLKR LLC and FIF IV CFG HE BLKR LLC. Fortress Fund III GP LLC is the general partner of each of the Fortress Fund III Funds. The sole managing member of Fortress Fund III GP LLC is Fortress Investment Fund GP (Holdings) LLC. The sole managing member of Fortress Investment Fund III GP (Holdings) LLC is Fortress Operating Entity I LP (“FOE I”). FIG Corp. is the general partner of FOE I, and FIG Corp. is wholly owned by Fortress Investment Group LLC. Fortress Fund IV GP L.P. is the general partner of each of the Fortress Fund IV Funds. Fortress Fund IV GP Holdings Ltd. is the general partner of Fortress Fund IV GP L.P. Fortress Fund IV GP Holdings Ltd. is wholly owned by FOE I. FIG Corp. is the general partner of FOE I. FIG Corp. is wholly owned by Fortress Investment Group LLC. By virtue of his ownership interest in Fortress Investment Group LLC and certain of its affiliates, as well as his role in advising certain investment funds, Wesley R. Edens may be deemed to be the natural person that has sole or shared voting and investment control over the shares listed as beneficially owned by Holdings. Mr. Edens disclaims beneficial ownership of such shares. The address of all persons listed above isc/o Fortress Investment Group LLC, 1345 Avenue of the Americas, 46th Floor, New York, New York 10105. | |
(2) | Holdings issues its equity interests in two series, each of which relate to certain specified assets of the LLC: Series 1 units, which relate to all the issued and outstanding membership interests in Nationstar Mortgage LLC; and Series 2 units, which relate to equity interests in a separate entity, which is neither a subsidiary of Nationstar Mortgage LLC nor a guarantor of the Notes. Certain executive compensation arrangements include equity grants of the Series 2 units of Holdings. See “Compensation Discussion and Analysis.” |
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• | will be general unsecured obligations of the Issuers; | |
• | will bepari passu in right of payment with all existing and any future senior Indebtedness of the Issuers; | |
• | will be effectively junior in right of payment to all existing and future senior secured Indebtedness of the Issuers to the extent of the assets securing such Indebtedness; | |
• | will be senior in right of payment to all existing and future subordinated Indebtedness of the Issuers; | |
• | will be subject to registration with the SEC pursuant to the Registration Rights Agreement; | |
• | will be unconditionally guaranteed on a senior unsecured basis by the Guarantors; and | |
• | will be effectively junior to any existing and future liabilities of our non-Guarantor subsidiaries. |
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• | will be a general unsecured obligation of the Guarantor; | |
• | will bepari passu in right of payment with all existing and future senior Indebtedness of that Guarantor; | |
• | will be effectively junior in right of payment to all existing and future senior secured Indebtedness of that Guarantor to the extent of the assets securing such Indebtedness; and | |
• | will be senior in right of payment to all existing and future subordinated Indebtedness of that Guarantor. |
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(1) | except in the case of a merger entered into solely for the purpose of reincorporating a Guarantor in another jurisdiction, immediately after giving effect to that transaction, no Default or Event of Default shall have occurred and be continuing; and | |
(2) | either: |
(a) | the Person acquiring the property in any such sale or disposition or the Person formed by or surviving any such consolidation or merger (if not the Guarantor) assumes all the obligations of that Guarantor under the Indenture, its Note Guarantee and the Registration Rights Agreement pursuant to a supplemental indenture satisfactory to the trustee; or | |
(b) | the Net Proceeds of such sale or other disposition are either (i) applied in accordance with the applicable provisions of the Indenture or (ii) not required to be applied in accordance with any provision of the Indenture. |
(1) | in connection with any sale, transfer or other disposition of all or substantially all of the assets of that Guarantor (including by way of merger or consolidation) to a Person that is not (either before or after giving effect to such transaction) the Company or a Restricted Subsidiary of the Company, if the sale or other disposition does not violate the “Asset Sale” provisions of the Indenture; | |
(2) | in connection with any sale, transfer or other disposition of all of the Capital Stock of that Guarantor (including by way of merger or consolidation) to a Person that is not (either before or after giving effect to such transaction) the Company or a Restricted Subsidiary of the Company, if the sale or other disposition does not violate the “Asset Sale” provisions of the Indenture; |
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(3) | if the Company designates any Restricted Subsidiary that is a Guarantor to be an Unrestricted Subsidiary in accordance with the applicable provisions of the Indenture; or | |
(4) | upon legal defeasance or satisfaction and discharge of the Indenture as provided below under the captions “—Legal Defeasance and Covenant Defeasance” and “—Satisfaction and Discharge.” |
Year | Percentage | |||
2013 | 105.438 | % | ||
2014 and thereafter | 100.000 | % |
(1) | the present value at such redemption date of the sum of (i) the redemption price of such note at April 1, 2013 (such redemption price being set forth in the table appearing above under “—Optional Redemption”) plus (ii) all required interest payments due on such note through April 1, 2013 (excluding accrued but unpaid interest), such present value to be computed using a discount rate equal to the Treasury Rate as of such redemption date plus 50 basis points; over | |
(2) | the then outstanding principal amount of such note. |
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1. | at least 65.0% of the principal amount of all notes issued under the Indenture remains outstanding immediately after any such redemption; and | |
2. | the Issuers makes such redemption not more than 90 days after the consummation of any such Equity Offering. |
1. | in compliance with the requirements of the principal national securities exchange, if any, on which the notes are listed; or | |
2. | on a pro rata basis, by lot or by such method as the Trustee shall deem fair and appropriate. |
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(1) | the Company (or the Restricted Subsidiary, as the case may be) receives consideration at the time of the Asset Sale at least equal to the Fair Market Value of the assets or Equity Interests issued or sold or otherwise disposed of; and | |
(2) | at least 75.0% of the consideration received in the Asset Sale by the Company or such Restricted Subsidiary is in the form of cash or Cash Equivalents. For purposes of this provision, each of the following will be deemed to be cash: |
(a) | any liabilities, as shown on the Company’s or such Restricted Subsidiary’s most recent consolidated balance sheet, of the Company or any Restricted Subsidiary (other than contingent liabilities and liabilities that are by their terms subordinated to the notes or any Note Guarantee) that are assumed by the transferee of any such assets (or a third party on behalf of such transferee) pursuant to a customary innovation or other agreement that releases the Company or such Restricted Subsidiary from further liability; | |
(b) | any securities, notes or other obligations or assets received by the Company or any such Restricted Subsidiary from such transferee that are converted by the Company or such Restricted Subsidiary into cash within 180 days of the receipt thereof, to the extent of the cash received in that conversion; and | |
(c) | any Designated Noncash Consideration received by the Company or any of its Restricted Subsidiaries in such Asset Sale having an aggregate Fair Market Value, taken together with all other Designated Noncash Consideration received pursuant to this clause (c) that is at that time outstanding, not to exceed the greater of (x) $25.0 million and (y) 2.5% of Total Assets, at the time of the receipt of such Designated Noncash Consideration (with the Fair Market Value of each item of Designated Noncash Consideration being measured at the time received and without giving effect to subsequent changes in value). |
(1) | to prepay or repay Secured Debt or Indebtedness of any Restricted Subsidiary of the Company that is not a Guarantor, and, if the Indebtedness repaid is revolving credit Indebtedness, to correspondingly reduce commitments with respect thereto;provided, however, that, except in the case of Net Proceeds from a Legacy Loan Portfolio Sale, Net Proceeds, may not be applied to the prepayment or repayment of Non-Recourse Indebtedness, Indebtedness under Existing Facilities or Permitted Funding Indebtedness, |
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other than Non-Recourse Indebtedness, Indebtedness under Existing Facilities or Permitted Funding Indebtedness secured by a Lien on the asset or assets that were subject to such Asset Sale; |
(2) | to prepay or repay Pari Passu Debt permitted to be incurred pursuant to the Indenture to the extent required by the terms thereof, and, in the case of Pari Passu Debt under revolving credit facilities or other similar Indebtedness, to correspondingly reduce commitments with respect thereto; | |
(3) | to make one or more offers to the holders of the notes (and, at the option of the Company, the holders of Pari Passu Debt) to purchase notes (and such other Pari Passu Debt) pursuant to and subject to the conditions applicable to Asset Sale Offers described below; | |
(4) | to acquire all or substantially all of the assets of, or any Capital Stock of, another Permitted Business, if, after giving effect to any such acquisition of Capital Stock, the Permitted Business is or becomes a Restricted Subsidiary of the Company; or | |
(5) | to acquire other assets (including, without limitation, MSRs and Securitization Assets) that are used or useful in a Permitted Business. |
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• | “Repurchase at the Option of Holders—Asset Sales;” | |
• | “—Certain Covenants—Limitation on Incurrence of Indebtedness and Issuance of Preferred Stock;” | |
• | “—Certain Covenants—Limitation on Restricted Payments;” | |
• | “—Certain Covenants—Limitation on Dividend and Other Payment Restrictions Affecting Restricted Subsidiaries;” | |
• | clause (2) of the covenant described under “—Certain Covenants—Merger, Consolidation and Sale of Assets;” | |
• | “—Certain Covenants—Limitation on Transactions with Affiliates;” | |
• | “—Certain Covenants—Limitation on Guarantees by Restricted Subsidiaries;” and | |
• | “—Certain Covenants—Conduct of Business” |
1. | the Corporate Indebtedness to Tangible Net Worth Ratio of the Company is less than 1.1 to 1.0; and | |
2. | the Consolidated Leverage Ratio of the Company is less than 4.5 to 1.0. |
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1. | declare or pay any dividend or make any distribution (other than dividends or distributions payable in Qualified Capital Stock of the Company) on or in respect of shares of the Company’s Capital Stock to holders of such Capital Stock; | |
2. | purchase, redeem or otherwise acquire or retire for value any Capital Stock of the Company or any warrants, rights or options to purchase or acquire shares of any class of such Capital Stock (other than in exchange for Qualified Capital Stock of the Company); | |
3. | make any principal payment on, purchase, defease, redeem, prepay, decrease or otherwise acquire or retire for value, prior to any scheduled final maturity, scheduled repayment or scheduled sinking fund payment, any Indebtedness (other than Indebtedness owed by the Company or any Restricted Subsidiary of the Company to another Restricted Subsidiary of the Company or the Company) of the Company or any Restricted Subsidiary that is subordinate or junior in right of payment to the notes; or | |
4. | make any Restricted Investment |
(i) | a Default or an Event of Default shall have occurred and be continuing; or | |
(ii) | immediately after giving effect thereto on apro forma basis, the Company is not able to incur at least $1.00 of additional Indebtedness pursuant to the second paragraph of the covenant described above under the caption “—Limitation on the Incurrence of Indebtedness and Issuance of Preferred Stock;” or | |
(iii) | the aggregate amount of Restricted Payments (including such proposed Restricted Payment) made subsequent to the Issue Date (the amount expended for such purposes, if other than in cash, being the Fair Market Value of such property) shall exceed the sum of: |
(a) | 50.0% of the Consolidated Net Income of the Company for the period (taken as one accounting period) from the beginning of the fiscal quarter in which the Issue Date occurs to the end of the Company’s most recently ended fiscal quarter for which internal financial statements are available at the time of such Restricted Payment (or, if such Consolidated Net Income for such period is a deficit, less 100.0% of such deficit); plus | |
(b) | 100.0% of the aggregate net cash proceeds and the Fair Market Value of marketable securities or other property received by the Company from any Person since the Issue Date including: |
(i) | any contribution to its common equity capital or from the issue or sale of Equity Interests of the Company (other than Disqualified Capital Stock and Excluded Contributions); |
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(ii) | the issuance or sale of convertible or exchangeable Disqualified Capital Stock or convertible or exchangeable debt securities of the Company that have been converted into or exchanged for such Equity Interests (other than Equity Interests (or Disqualified Capital Stock or debt securities) sold to a Subsidiary of the Company); plus |
(c) | to the extent that any Restricted Investment that was made after the Issue Date is sold for cash or otherwise liquidated or repaid for cash, the lesser of (i) the cash return of capital with respect to such Restricted Investment (less the cost of disposition, if any) and (ii) the initial amount of such Restricted Investment; plus | |
(d) | to the extent that any Unrestricted Subsidiary of the Company is designated as a Restricted Subsidiary of the Company after the Issue Date, the Fair Market Value of the Company’s Investment in such Subsidiary as of the date on which such Subsidiary was originally designated as an Unrestricted Subsidiary after the Issue Date. |
1. | the payment of any dividend or the consummation of any irrevocable redemption within 60 days after the date of declaration of such dividend or notice of such redemption if the dividend or payment of the redemption price, as the case may be, would have been permitted on the date of declaration or notice under the Indenture; | |
2. | the making of any Restricted Payment, either (i) solely in exchange for shares of Qualified Capital Stock of the Company, (ii) through the application of net proceeds of a substantially concurrent sale for cash (other than to a Subsidiary of the Company) of shares of Qualified Capital Stock of the Company or (iii) through the application of a substantially concurrent cash capital contribution received by the Company from its shareholders (which capital contribution (to the extent so used) shall be excluded from the calculation of amounts under clause (iii)(b) of the immediately preceding paragraph); | |
3. | the purchase, repurchase, redemption, defeasance or other acquisition or retirement for value of Indebtedness of the Company or any Restricted Subsidiary (including the acquisition of any shares of Disqualified Capital Stock of the Company) that is unsecured or contractually subordinated to the notes or to any Note Guarantee by exchange for, or out of the net cash proceeds from a substantially concurrent incurrence of Refinancing Indebtedness;provided, however, that such purchase, repurchase, redemption, defeasance or other acquisition or retirement for value shall be excluded in the calculation of the amount of Restricted Payments; | |
4. | so long as no Default or Event of Default shall have occurred and be continuing, the repurchase, retirement or other acquisition or retirement for value by the Company of Common Stock (or options, warrants or other rights to acquire Common Stock) of the Company (or payments to any direct or indirect parent company of the Company to permit distributions to repurchase common equity (or options, warrants or other rights to acquire common equity) thereof) of such direct or indirect parent company) from any future, current or former officer, director, manager or employee (or any spouses, successors, executors, administrators, heirs or legatees of any of the foregoing) of the Company, any direct or indirect parent company of the Company, or any of its Subsidiaries or their authorized representatives, in an aggregate amount not to exceed $2.5 million in any calendar yearplus (i) the aggregate net cash proceeds received by the Company after the Issue Date from the issuance of such Equity Interests to, or the exercise of options to purchase such Equity Interests by, any current or former director, officer or employee of the Company or any Restricted Subsidiary of the Company (provided that the amount of such net cash proceeds received by the Company and utilized pursuant to this clause (4)(i) for any such repurchase, redemption, acquisition or retirement will be excluded from clause |
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(iii)(b) of the preceding paragraph) and (ii) the proceeds of “key-man” life insurance policies that are used to make such redemptions or repurchases;provided that amounts available pursuant to this clause (4) to be utilized for Restricted Payments during any twelve-month period may be carried forward and utilized in the next succeeding twelvemonth period andprovided, further, that the cancellation of Indebtedness owing to the Company from any future, current or former officer, director, manager or employee (or any spouses, successors, executors, administrators, heirs or legatees of any of the foregoing) of the Company or any of its Restricted Subsidiaries in connection with any repurchase of Capital Stock of such entities (or warrants or options or rights to acquire such Capital Stock) will not be deemed to constitute a Restricted Payment under the Indenture; |
5. | (a) the repurchase of Equity Interests deemed to occur upon the exercise of stock options or warrants to the extent such Equity Interests represent a portion of the exercise price of those stock options or warrants and (b) repurchases of Equity Interests or options to purchase Equity Interests deemed to occur in connection with the exercise of stock options to the extent necessary to pay applicable withholding taxes; | |
6. | the declaration and payment of dividends by the Company to, or the making of loans to, its direct parent company in amounts required for the Company’s direct or indirect parent companies to pay, without duplication as to amounts of: |
(a) | franchise taxes and other fees, taxes and expenses required to maintain the corporate existence of the Company and its direct and indirect parent entities (including a corporation organized to hold interests in the Company in connection with the public issuance of shares) plus $250,000 per year; | |
(b) | federal, state, and local income taxes on a consolidated or combined tax group of which the direct or indirect parent is the common parent, to the extent such income taxes are attributable to the income of the Company and its Restricted Subsidiaries and not directly payable by the Company or its Restricted Subsidiaries and, to the extent of the amount actually received from any of the Company’s Unrestricted Subsidiaries, in amounts required to pay such taxes to the extent attributable to the income of such Unrestricted Subsidiaries of the Company;provided that (i) in determining such taxes, the effect thereon of any net operating loss carryforwards or other carryforwards or tax attributes, such as alternative minimum tax carryforwards, shall be taken into account, (ii) if there is an adjustment in the amount of Taxable Income for any periods, an appropriate positive or negative adjustment shall be made to the amount of distributions or loans permitted pursuant to this Section 6(b), and if the adjustment is negative, then the permitted distribution on loan for succeeding periods shall be reduced (without duplication of reductions due to clause 6(b)(i) hereof) to take into account such negative amount until such negative amount is reduced to zero, (iii) any distribution or loan in respect of such taxes other than amounts relating to estimated payments shall be computed by a nationally recognized accounting firm and (iv) in no event will such dividends and loans exceed the amounts that the Company and its Restrictedand/or Unrestricted Subsidiaries (as applicable) would have paid a stand-alone group; | |
(c) | so long as the Company is treated for income tax purposes as a disregarded entity or a partnership, distributions to equity holders or partners of the Company in an amount not to exceed the Tax Amount for such period; provided that a distribution of the Tax Amount shall be made no earlier than 10 days prior to the due date of the tax payable by equityholders or partners of the Company to which such Tax Amount relates; | |
(d) | customary salary, bonus and other benefits payable to officers and employees of any direct or indirect parent of the Company to the extent such salaries, bonuses and other |
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benefits are attributable to the ownership or operations of the Company and its Restricted Subsidiaries; and |
(e) | general corporate overhead expenses of any direct or indirect parent company of the Company to the extent such expenses are attributable to the ownership or operation of the Company and its Restricted Subsidiaries; |
7. | so long as no Default or Event of Default shall have occurred and be continuing, the declaration and payment of regularly scheduled or accrued dividends to holders of any class or series of Disqualified Capital Stock of the Company or any Restricted Subsidiary of the Company issued on or after the Issue Date in accordance with the second paragraph of the covenant described above under the caption “—Limitation on the Incurrence of Indebtedness and Issuance of Preferred Stock”; | |
8. | the payment of any dividend (or, in the case of any partnership or limited liability company, any similar distribution) by a Restricted Subsidiary of the Company to the holders of its Equity Interests on apro rata basis; | |
9. | any repricing or issuance of employee stock options or the adoption of bonus arrangements, in each case in connection with the issuance of the notes, and payments pursuant to such arrangements; | |
10. | Restricted Payments that are made with Excluded Contributions; | |
11. | Restricted Payments made with Net Cash Proceeds from Asset Sales remaining after application thereof as required by the “Asset Sale” provisions of the Indenture (including after the making by the Issuers of any Asset Sale Offer required to be made by the Issuers pursuant to such covenant and the purchase of all notes tendered therein); | |
12. | upon occurrence of a Change of Control and within 60 days after the completion of the Change of Control Offer pursuant to the “Change of Control” provisions of the Indenture (including the purchase of all notes tendered), any purchase or redemption of Obligations of the Company that are subordinate or junior in right of payment to the notes required pursuant to the terms thereof as a result of such Change of Control at a purchase or redemption price not to exceed 101.0% of the outstanding principal amount thereof, plus accrued and unpaid interest thereon, if any;provided, however, that (A) at the time of such purchase or redemption, no Default or Event of Default shall have occurred and be continuing (or would result therefrom) and (B) such purchase or redemption is not made, directly or indirectly, from the proceeds of (or made in anticipation of) any issuance of Indebtedness by the Company or any Restricted Subsidiary of the Company; and | |
13. | Restricted Payments in an amount not to exceed $17.5 million. |
1. | pay dividends or make any other distributions on or in respect of its Capital Stock to the Company or any of its Restricted Subsidiaries; | |
2. | make loans or advances or to pay any Indebtedness or other obligation owed to the Company or any Restricted Subsidiary of the Company; or |
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3. | transfer any of its property or assets to the Company or any other Restricted Subsidiary of the Company, except, with respect to clauses (1), (2) and (3), for such encumbrances or restrictions existing under or by reason of: |
(a) | applicable law, rule, regulation or order; | |
(b) | the Indenture and the notes; | |
(c) | customary non-assignment provisions of any contract or any lease of any Restricted Subsidiary of the Company; | |
(d) | any instrument governing Acquired Indebtedness, which encumbrance or restriction is not applicable to any Person, or the properties or assets of any Person, other than the Person or the properties or assets of the Person so acquired; | |
(e) | the Existing Facilities as each exists on the Issue Date and any amendments, modifications, restatements, renewals, increases, supplements, refundings, replacements or refinancings thereof;provided that any restrictions imposed pursuant to any such amendment, modification, restatement, renewal, increase, supplement, refunding, replacement or refinancing are ordinary and customary with respect to facilities similar to the Existing Facilities (under the relevant circumstances) and will not materially affect the Company’s ability to make anticipated principal and interest payments on the notes (as determined in good faith by the Board of Directors of the Company); | |
(f) | agreements existing on the Issue Date to the extent and in the manner such agreements are in effect on the Issue Date; | |
(g) | restrictions on the transfer of assets (other than cash) held in a Restricted Subsidiary of the Company imposed under any agreement governing Indebtedness incurred in accordance with the Indenture; | |
(h) | provisions in agreements evidencing Permitted Funding Indebtedness that impose restrictions on the collateral securing such Indebtedness; | |
(i) | restrictions on the transfer of assets subject to any Lien permitted under the Indenture imposed by the holder of such Lien; | |
(j) | restrictions imposed by any agreement to sell assets or Capital Stock permitted under the Indenture to any Person pending the closing of such sale; | |
(k) | any agreement or instrument governing Capital Stock of any Person that is acquired; | |
(l) | the requirements of any Securitization, Warehouse Facility or MSR Facility that are exclusively applicable to any Securitization Entity, Warehouse Facility Trust, MSR Facility Trust or special purpose Subsidiary of the Company formed in connection therewith; | |
(m) | customary provisions in joint venture and other similar agreements relating solely to such joint venture; | |
(n) | customary provisions in leases, licenses and other agreements entered into in the ordinary course of business; | |
(o) | restrictions on cash or other deposits or net worth imposed by customers under contracts entered into in the ordinary course of business; | |
(p) | other Indebtedness, Disqualified Capital Stock or Preferred Stock of Foreign Subsidiaries of the Company permitted to be incurred subsequent to the Issue Date pursuant to the provisions of the covenant described under “—Limitation on the Incurrence of Indebtedness and Issuance of Preferred Stock” that impose restrictions solely on the Foreign Subsidiaries party thereto;provided that the restrictions will not materially |
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affect the ability of the Issuers to pay the principal, interest and premium and Additional Interest, if any, on the Notes, as determined in good faith by the Company; and |
(q) | any encumbrances or restrictions imposed by any amendments, modifications, restatements, renewals, increases, supplements, refundings, replacements or refinancings of the contracts, instruments or obligations referred to in clauses (b) through (d), (f) through (n) above;provided that such amendments, modifications, restatements, renewals, increases, supplements, refundings, replacements or refinancings are, in the good faith judgment of the Company’s Board of Directors whose judgment shall be conclusively binding, not materially more restrictive with respect to such dividend and other payment restrictions, taken as a whole, than those contained in the dividend or other payment restrictions prior to such amendment, modification, restatement, renewal, increase, supplement, refunding, replacement or refinancing. |
1. | in the case of Liens securing Indebtedness of the Company that is expressly subordinate or junior in right of payment to the notes, the notes are secured by a Lien on such property, assets or proceeds that is senior in priority to such Liens; and | |
2. | in all other cases, the notes are equally and ratably secured except for: |
(a) | Liens existing as of the Issue Date to the extent and in the manner such Liens are in effect on the Issue Date; | |
(b) | Liens securing the notes and the Note Guarantees; | |
(c) | Liens securing Non-Recourse Indebtedness; | |
(d) | Liens securing Permitted Funding Indebtedness so long as any such Lien shall encumber only (i) the assets acquired or originated with the proceeds of such Indebtedness, assets that consist of Servicing Advances, MSRs, loans, mortgage related securities and other mortgage related receivables, REO Assets, Residual Assets and other similar assets subject to and pledged to secure such Indebtedness and (ii) any intangible contract rights and proceeds of, and other, related documents, records and assets directly related to the assets set forth in clause (i); | |
(e) | Liens securing Refinancing Indebtedness that is incurred to Refinance any Indebtedness that has been secured by a Lien permitted under the Indenture and that has been incurred in accordance with the provisions of the Indenture;provided, however, that such Liens: (i) are no less favorable to the Holders than the Liens in respect of the Indebtedness being Refinanced; and (ii) do not extend to or cover any property or assets of the Company or its Restricted Subsidiaries not securing the Indebtedness so Refinanced (or property of the same type and value); and | |
(f) | Permitted Liens. |
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(1) | the Company or that Restricted Subsidiary, as applicable, could have (a) incurred Indebtedness in an amount equal to the Attributable Debt relating to such sale and leaseback transaction pursuant to the covenant described above under the caption “—Limitation on Incurrence of Indebtedness and Issuance of Preferred Stock” and (b) incurred a Lien to secure such Indebtedness pursuant to the covenant described above under the caption “—Limitation on Liens;” | |
(2) | the consideration of that sale and leaseback transaction is at least equal to the Fair Market Value of the property that is the subject of that sale and leaseback transaction; and | |
(3) | the transfer of assets in that sale and leaseback transaction is permitted by, and the Company applies the proceeds of such transaction in compliance with, the covenant described above under the caption “—Repurchase at the Option of Holders—Asset Sales.” |
(1) | either: |
(a) | the Company, or such Issuer, as the case may be, shall be the surviving or continuing entity; or | |
(b) | the Person (if other than the Company or such Issuer, as the case may be) formed by such consolidation or into which the Company or such Issuer, as the case may be, is merged or the Person which acquires by sale, assignment, transfer, lease, conveyance or other disposition the properties and assets of the Company or such Issuer, as the case may be, and of the Company’s Subsidiaries substantially as an entirety (the “Surviving Entity”): |
(i) | shall be a Person organized and validly existing under the laws of the United States or any State thereof or the District of Columbia;provided that in the case where the Surviving Entity is not a corporation, a co-obligor of the notes is a corporation; and | |
(ii) | shall expressly assume, by supplemental indenture (in form and substance reasonably satisfactory to the Trustee), executed and delivered to the Trustee, the due and punctual payment of the principal of, and premium, if any, and interest on all of the notes and the performance of every covenant of the notes, the Indenture and the Registration Rights Agreement on the part of the Company or such Issuer, as the case may be, to be performed or observed; |
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(2) | immediately after giving effect to such transaction and the assumption contemplated by clause (1)(b)(ii) above (including giving effect to any Indebtedness and Acquired Indebtedness incurred or anticipated to be incurred in connection with or in respect of such transaction), the Company, such Issuer, or such Surviving Entity, as the case may be, shall either (x) be able to incur at least $1.00 of additional Indebtedness pursuant to the second paragraph of the covenant described above under the caption “—Limitation on Incurrence of Indebtedness and Issuance of Preferred Stock” or (y) have a pro forma Consolidated Leverage Ratio and a pro forma Corporate Indebtedness to Tangible Net Worth Ratio that would not be more than the actual Consolidated Leverage Ratio and Corporate Indebtedness to Tangible Net Worth Ratio of the Company, as applicable, immediately prior to such transaction; | |
(3) | immediately before and immediately after giving effect to such transaction and the assumption contemplated by clause (1)(b)(ii) above (including, without limitation, giving effect to any Indebtedness and Acquired Indebtedness incurred or anticipated to be incurred and any Lien granted in connection with or in respect of the transaction), no Default or Event of Default shall have occurred or be continuing; and | |
(4) | the Company, such Issuer or the Surviving Entity shall have delivered to the Trustee an officers’ certificate and an opinion of counsel, each stating that such consolidation, merger, sale, assignment, transfer, lease, conveyance or other disposition and, if a supplemental indenture is required in connection with such transaction, such supplemental indenture comply with the applicable provisions of the Indenture and that all conditions precedent in the Indenture relating to such transaction have been satisfied. |
(1) | a merger of the Company or such Issuer, as the case may be, with an Affiliate solely for the purpose of reorganizing the Company in another jurisdiction or converting the Company into a corporation; | |
(2) | any consolidation or merger, or any sale, assignment, transfer, conveyance, lease or other disposition of assets between or among the Company and its Restricted Subsidiaries; or | |
(3) | any Required Asset Sale or Legacy Loan Portfolio Sale that complies with the covenant described above under the caption “—Repurchase at the Option of Holders—Asset Sales.” |
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1. | any employment or consulting agreement, employee benefit plan, officer or director indemnification agreement or any similar arrangement entered into by the Company or any of its Restricted Subsidiaries in the ordinary course of business or approved in good faith by the Board of Directors of the Company and payments pursuant thereto and the issuance of Equity Interests of the Company (other than Disqualified Capital Stock) to directors and employees pursuant to stock option or stock ownership plans; | |
2. | transactions between or among the Company and any of its Restricted Subsidiaries or between or among such Restricted Subsidiaries; | |
3. | transactions between the Company or one of its Restricted Subsidiaries and any Person in which the Company or one of its Restricted Subsidiaries has made an Investment in the ordinary course of business and such Person is an Affiliate solely because of such Investment; | |
4. | transactions between the Company or one of its Restricted Subsidiaries and any Person in which the Company or one of its Restricted Subsidiaries holds an interest as a joint venture partner and such Person is an Affiliate solely because of such interest; | |
5. | any agreement as in effect as of the Issue Date or any amendment thereto or any transactions or payments contemplated thereby (including pursuant to any amendment thereto) in any replacement agreement thereto so long as any such amendment or replacement agreement is not more disadvantageous to the Holders in any material respect than the original agreement as in effect on the Issue Date (as determined by the Board of Directors of the Company in good faith); | |
6. | Restricted Payments permitted by the Indenture; | |
7. | sales of Qualified Capital Stock and capital contributions to the Company from one or more holders of its Capital Stock; | |
8. | the existence of, or the performance by the Company or any of its Restricted Subsidiaries of its obligations under the terms of, any stockholders’ agreement (including any registration rights agreement or purchase agreement related thereto) to which it is a party as of the Issue Date and any similar agreements which it may enter into thereafter;provided, however, that the existence of, or the performance by the Company or any of its Restricted Subsidiaries of obligations under any future amendment to any such existing agreement or under any similar agreement entered into after the Issue Date shall only be permitted by this clause (8) to the extent that the terms of any such amendment or new agreement, taken as a whole, are not disadvantageous to the Holders of the Notes in any material respect (as determined by the Board of Directors of the Company in good faith); | |
9. | transactions in which the Company or any Restricted Subsidiary of the Company, as the case may be, receives an opinion from a nationally recognized investment banking, appraisal or accounting firm that such Affiliate Transaction is either fair, from a financial |
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standpoint, to the Company or such Restricted Subsidiary or is on terms not materially less favorable than those that might reasonably have been obtained in a comparable transaction at such time on an arm’s length basis from a Person that is not an Affiliate of the Company; |
10. | (i) the provision of mortgage servicing and similar services to Affiliates in the ordinary course of business and otherwise not prohibited by the Indenture that are fair to the Company and its Restricted Subsidiaries (as determined by the Company in good faith) or are on terms at least as favorable as might reasonably have been obtained at such time from an unaffiliated party (as determined by the Company in good faith) and (ii) transactions with customers, clients, suppliers, contractors, joint venture partners or purchasers or sellers of goods or services that are Affiliates, in each case in the ordinary course of business and otherwise in compliance with the terms of the Indenture that are fair to the Company and its Restricted Subsidiaries, in the reasonable determination of the Board of Directors of the Company or the senior management thereof, or are on terms at least as favorable as might reasonably have been obtained at such time from an unaffiliated party; | |
11. | payments or loans (or cancellation of loans) to employees of the Company, any of its direct or indirect parent entities or any Restricted Subsidiary of the Company (as determined by the Board of Directors of the Company in good faith); | |
12. | Guarantees by the Sponsor or any direct and indirect parent of the Company for Obligations of the Company and its Restricted Subsidiaries; and | |
13. | investments by the Sponsor in securities of the Company or any Restricted Subsidiary of the Company so long as the investment is being offered generally to other investors on the same or more favorable terms or the securities are acquired in market transactions. |
1. | such Restricted Subsidiary within 30 days executes and delivers a supplemental indenture to the Indenture, providing a guarantee (“Guarantee”) of payment of the notes by such Subsidiary; and | |
2. | if such assumption, guarantee or other liability of such Restricted Subsidiary is provided in respect of Indebtedness that is expressly subordinated to the notes, the guarantee or other instrument provided by such Restricted Subsidiary in respect of such subordinated Indebtedness shall be subordinated to the Guarantee pursuant to subordination provisions no less favorable to the Holders of the notes than those contained in the Indenture. |
1. | the unconditional release of such Restricted Subsidiary from its liability in respect of the Indebtedness in connection with which such Guarantee was executed and delivered pursuant to the preceding paragraph; or | |
2. | sale or other disposition (by merger or otherwise) to any Person that is not a Restricted Subsidiary of the Company of all of the Company’s Capital Stock in, or all or substantially all of the assets of, such Restricted Subsidiary;provided that: (a) such sale or disposition of such Capital Stock or assets is otherwise in compliance with the terms of the Indenture; |
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and (b) such assumption, guarantee or other liability of such Restricted Subsidiary has been released by the holders of the other Indebtedness so guaranteed. |
(1) | all quarterly and annual reports that would be required to be filed with the SEC onForms 10-Q and10-K if the Company were required to file such reports; and | |
(2) | all current reports that would be required to be filed with the SEC on Form8-K if the Company were required to file such reports. |
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1. | the failure to pay interest, or Additional Interest, if any, on any notes when the same becomes due and payable and the default continues for a period of 30 days; | |
2. | the failure to pay the principal on any notes, when such principal becomes due and payable, at maturity, upon redemption or otherwise (including the failure to make a payment to purchase notes tendered pursuant to a Change of Control Offer); | |
3. | a default in the observance or performance of any other covenant or agreement contained in the Indenture and such default continues for a period of 60 days after the Company receives written notice specifying the default (and demanding that such default be remedied) from the Trustee or the Holders of at least 25.0% of the then outstanding principal amount of all notes issued under the Indenture; | |
4. | the failure to pay at final maturity (giving effect to any applicable grace periods and any extensions thereof) the principal amount of any Indebtedness (other than Non-Recourse Indebtedness) of the Company or any Restricted Subsidiary of the Company, or the acceleration of the final stated maturity of any such Indebtedness (which acceleration is not rescinded, annulled or otherwise cured within 20 days of receipt by the Company or such Restricted Subsidiary of notice of any such acceleration) if the aggregate principal amount of such Indebtedness, together with the principal amount of any other such Indebtedness in default for failure to pay principal at final maturity or which has been accelerated, aggregates $25.0 million or more at any time; | |
5. | one or more judgments in an aggregate amount in excess of $25.0 million shall have been rendered against the Company or any of its Restricted Subsidiaries and such judgments remain undischarged, unpaid or unstayed for a period of 60 days after such judgment or judgments become final and non-appealable (other than any judgments as to which, and only to the extent, a reputable insurance company has acknowledged coverage of such judgments in writing); | |
6. | certain events of bankruptcy or insolvency affecting the Company or any of its Significant Subsidiaries; or | |
7. | the Guarantee of any Significant Subsidiary of the Company shall for any reason cease to be in full force and effect or be declared null and void or any responsible officer of any Guarantor that is a Significant Subsidiary of the Company, as the case may be, denies that it has any further liability under its Guarantee or gives notice to such effect, other than by reason of the termination of the Indenture or the release of any such Guarantee in accordance with the Indenture. |
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1. | if the rescission would not conflict with any judgment or decree; | |
2. | if all existing Events of Default have been cured or waived except nonpayment of principal or interest that has become due solely because of the acceleration; | |
3. | to the extent the payment of such interest is lawful, interest on overdue installments of interest and overdue principal, which has become due otherwise than by such declaration of acceleration, has been paid; | |
4. | if the Company has paid the Trustee (including its agents and counsel) its reasonable compensation and reimbursed the Trustee for its expenses, disbursements and advances; and | |
5. | in the event of the cure or waiver of an Event of Default of the type described in clause (6) of the description above of Events of Default, the Trustee shall have received an officers’ certificate and an opinion of counsel that such Event of Default has been cured or waived. |
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1. | the rights of Holders to receive payments in respect of the principal of, premium, if any, and interest (including Additional Interest, if any) on the notes when such payments are due; | |
2. | the Issuers’ obligations with respect to the notes concerning issuing temporary notes, registration of notes, mutilated, destroyed, lost or stolen notes and the maintenance of an office or agency for payments; | |
3. | the rights, powers, trusts, duties and immunities of the Trustee and the Issuers’ obligations in connection therewith; and | |
4. | the Legal Defeasance provisions of the Indenture. |
1. | on the Issuers must irrevocably deposit with the Trustee, in trust, for the benefit of the Holders cash in Dollars, non-callable U.S. government obligations, or a combination thereof, in such amounts as will be sufficient, in the opinion of a nationally recognized firm of independent public accountants, to pay the principal of, premium, if any, and interest (including Additional Interest, if any) on the notes on the stated date for payment thereof or on the applicable redemption date, as the case may be, and any other amounts owing under the Indenture (in the case of an optional redemption date prior to electing to exercise either Legal Defeasance or Covenant Defeasance, the Issuers have delivered to the Trustee an irrevocable notice to redeem all of the outstanding notes on such redemption date); | |
2. | in the case of Legal Defeasance, the Issuers shall have delivered to the Trustee an opinion of counsel in the United States reasonably acceptable to the Trustee confirming that, subject to customary assumptions and exclusions: |
(a) | the Issuers have received from, or there has been published by, the Internal Revenue Service a ruling; or | |
(b) | since the date of the Indenture, there has been a change in the applicable federal income tax law, in either case to the effect that, and based thereon such opinion of counsel shall confirm that, subject to customary assumptions and exclusions, the Holders will not recognize income, gain or loss for U.S. federal income tax purposes as a result of such Legal Defeasance and will be subject to U.S. federal income tax on the same amounts, in the same manner and at the same times as would have been the case if such Legal Defeasance had not occurred; |
3. | in the case of Covenant Defeasance, the Issuers shall have delivered to the Trustee an opinion of counsel in the United States reasonably acceptable to the Trustee confirming that, subject to customary assumptions and exclusions, the Holders will not recognize |
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income, gain or loss for federal income tax purposes as a result of such Covenant Defeasance and will be subject to federal income tax on the same amounts, in the same manner and at the same times as would have been the case if such Covenant Defeasance had not occurred; |
4. | no Default or Event of Default shall have occurred and be continuing on the date of such deposit (other than Default or Event of Default resulting from the borrowing of funds to be applied to such deposit (and the incurrence of Liens associated with any such borrowings)); | |
5. | such Legal Defeasance or Covenant Defeasance shall not result in a breach or violation of, or constitute a default under the Indenture or any other material agreement or instrument to which the Company or any of its Restricted Subsidiaries is a party or by which the Company or any of its Restricted Subsidiaries is bound; | |
6. | the Issuers shall have delivered to the Trustee an officers’ certificate stating that the deposit was not made by the Issuers with the intent of preferring the Holders over any other creditors of the Issuers or with the intent of defeating, hindering, delaying or defrauding any other creditors of the Issuers or others; and | |
7. | the Issuers shall have delivered to the Trustee an officers’ certificate and an opinion of counsel, each stating that all conditions precedent provided for or relating to the Legal Defeasance or the Covenant Defeasance have been complied with. |
1. | either: |
(a) | all the notes theretofore authenticated and delivered (except lost, stolen or destroyed notes that have been replaced or paid and notes for whose payment money has theretofore been deposited in trust or segregated and held in trust by the Issuers and thereafter repaid to the Issuers or discharged from such trust) have been delivered to the Trustee for cancellation; or | |
(b) | all notes not theretofore delivered to the Trustee for cancellation have become due and payable, will become due and payable within one year or are to be called for redemption within one year under irrevocable arrangements satisfactory to the trustee for the giving of notice of redemption by the trustee in the name and at the expense of the Issuers, and the Issuers have irrevocably deposited or caused to be deposited with the Trustee funds in an amount sufficient to pay and discharge the entire Indebtedness on the notes not theretofore delivered to the Trustee for cancellation, for principal of, premium, if any, and interest on (including Additional Interest, if any) the notes to the date of deposit together with irrevocable instructions from the Issuers directing the Trustee to apply such funds to the payment thereof at maturity or redemption, as the case may be; |
2. | the Issuers have paid all other sums payable under the Indenture by the Issuers; and |
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3. | the Issuers have delivered to the Trustee an officers’ certificate and an opinion of counsel stating that all conditions precedent under the Indenture relating to the satisfaction and discharge of the Indenture have been complied with. |
1. | cure any mistakes, ambiguities, defects or inconsistencies; | |
2. | provide for uncertificated notes in addition to or in place of certificated notes or to alter the provisions of the Indenture relating to the form of the notes (including the related definitions) in a manner that does not materially adversely affect any Holder; | |
3. | provide for the assumption of the Issuers’ or a Guarantor’s obligations to the Holders of the notes by a successor to the Company or a Guarantor pursuant to the “Merger, Consolidation and Sale of Assets” covenant; | |
4. | make any change that would provide any additional rights or benefits to the Holders of the notes or that does not materially adversely affect the legal rights under the Indenture of any Holder of the notes or to add covenants for the benefit of the Holders or to surrender any right or power conferred upon the Issuers or any Guarantor; | |
5. | comply with requirements of the SEC in order to effect or maintain the qualification of the Indenture under the TIA; | |
6. | provide for the issuance of notes issued after the Issue Date in accordance with the limitations set forth in this Indenture; | |
7. | allow any Guarantor to execute a supplemental indentureand/or a Guarantee with respect to the notes or to effect the release of any Guarantor from any of its obligations under its Note Guarantee or the Indenture (to the extent permitted by the Indenture); | |
8. | secure the notes; | |
9. | provide for the issuance of exchange notes or private exchange notes; or | |
10. | conform the text of the Indenture, the Guarantees or the notes to any provision of this “Description of the New Notes” to the extent that such provision in this “Description of the New Notes” was intended to be a verbatim recitation of a provision of the Indenture, the Guarantees or the notes. |
1. | reduce the amount of notes whose Holders must consent to an amendment; | |
2. | reduce the rate of or change or have the effect of changing the time for payment of interest, including defaulted interest, on any notes; |
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3. | reduce the principal of or change or have the effect of changing the fixed maturity of any notes, or change the date on which any notes may be subject to redemption or reduce the redemption price therefor; | |
4. | make any notes payable in money other than that stated in the notes; | |
5. | make any change in provisions of the Indenture protecting the right of each Holder to receive payment of principal of and interest on such note on or after the due date thereof or to bring suit to enforce such payment, or permitting Holders of a majority in principal amount of notes issued under the Indenture to waive Defaults or Events of Default; | |
6. | waive a Default or Event of Default in the payment of principal of, or interest or premium, or Additional Interest, if any, on the notes (except a rescission of acceleration of the notes by the holders of at least a majority in aggregate principal amount of the notes and a waiver of the payment default that resulted from such acceleration); | |
7. | after the Issuers’ obligation to purchase notes arises thereunder, amend, change or modify in any material respect the obligation of the Issuers to make and consummate a Change of Control Offer in the event of a Change of Control or modify any of the provisions or definitions with respect thereto; or | |
8. | modify or change any provision of the Indenture or the related definitions affecting the ranking of the notes in a manner which adversely affects the Holders. |
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(1) | the sale, lease (other than operating leases entered in the ordinary course of business), conveyance or other disposition of any assets or rights;provided that the sale, lease (other than operating leases entered in the ordinary course of business), conveyance or other disposition of all or substantially all of the assets of the Company and its Subsidiaries taken as a whole, other than any Required Asset Sale or a Legacy Loan Portfolio Sale, will be governed by the provisions of the Indenture described above under the caption “—Repurchase at the Option of Holders—Change of Control”and/or the provisions described above under the caption “—Certain Covenants—Merger, Consolidation and Sale of Assets” and not by the provisions of the Asset Sale covenant; and | |
(2) | the issuance or sale of Equity Interests in any of the Company’s Restricted Subsidiaries. |
(1) | any single transaction or series of related transactions that involves assets having a Fair Market Value of less than $5.0 million; | |
(2) | a transfer of assets between or among the Company and any Restricted Subsidiary of the Company; | |
(3) | an issuance of Equity Interests by a Restricted Subsidiary of the Company to the Company or to another Restricted Subsidiary of the Company; | |
(4) | the sale of advances, loans, customer receivables, mortgage related securities or other assets in the ordinary course of business, the sale of accounts receivable or other assets that by their terms convert into cash in the ordinary course of business and any sale of MSRs in connection with the origination of the associated mortgage loan in the ordinary course of business; | |
(5) | the sale or other disposition of cash or Cash Equivalents or Investment Grade Securities; | |
(6) | disposition of Investments or other assets and disposition or compromise of receivables, in each case, in connection with the workout, compromise, settlement or collection thereof or exercise of remedies with respect thereto, in the ordinary course of business or in bankruptcy, foreclosure or similar proceedings, including foreclosure, repossession and |
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disposition of REO Assets and other collateral for loans servicedand/or originated by the Company or any of its Subsidiaries; |
(7) | the modification of any loans owned or serviced by the Company or any of its Restricted Subsidiaries in the ordinary course of business; | |
(8) | a Restricted Payment that does not violate the covenant described above under the caption “—Certain Covenants—Limitation on Restricted Payments” or a Permitted Investment; | |
(9) | disposals or replacements of damaged, worn out or obsolete equipment or other assets no longer used or useful in the business of the Company and its Restricted Subsidiaries, in each case the ordinary course of business; | |
(10) | assets sold pursuant to the terms of Permitted Funding Indebtedness; | |
(11) | a sale (in one or more transactions) of Securitization Assets or Residual Interests in the ordinary course of business; | |
(12) | sales, transfers or contributions of Securitization Assets to Securitization Entities, Warehouse Facility Trusts and MSR Facility Trusts in connection with Securitizations in the ordinary course of business; | |
(13) | a sale or other disposition of Equity Interests of an Unrestricted Subsidiary; | |
(14) | the creation of a Lien (but not the sale or other disposition of the property subject to such Lien) permitted by the covenant described above under the caption “—Certain Covenants—Limitation on Liens;” and | |
(15) | transactions pursuant to repurchase agreements entered into in the ordinary course of business. |
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1. | with respect to any Person that is a corporation, any and all shares, interests, participations or other equivalents (however designated and whether or not voting) of corporate stock, including each class of Common Stock and Preferred Stock of such Person; or | |
2. | with respect to any Person that is not a corporation, any and all partnership, membership or other equity interests (whether general or limited) of such Person. |
1. | Dollars; | |
2. | in the case of any Foreign Subsidiary of the Company that is a Restricted Subsidiary of the Company, such local currencies held by such Foreign Subsidiary of the Company from time to time in the ordinary course of business; | |
3. | securities or any evidence of indebtedness issued or directly and fully guaranteed or insured by the United States government or any agency or instrumentality of the United States government (provided that the full faith and credit of the United States is pledged in support of those securities or such evidence of indebtedness); | |
4. | marketable direct obligations issued by any state of the United States of America or any political subdivision of any such state or any public instrumentality thereof maturing within one year from the date of acquisition thereof and, at the time of acquisition, having one of the three highest ratings obtainable from either S&P or Moody’s; | |
5. | certificates of deposit with maturities of twelve months or less from the date of acquisition, bankers’ acceptances with maturities not exceeding twelve months and overnight bank deposits with any domestic commercial bank having capital and surplus in excess of $500.0 million and a Thomson Bank Watch Rating of “B” or better; | |
6. | repurchase obligations with a term of not more than 30 days for underlying securities of the types described in clauses (3) and (5) above entered into with any financial institution meeting the qualifications specified in clause (5) above; | |
7. | commercial paper having one of the two highest ratings obtainable from Moody’s Investors Service, Inc. or Standard & Poor’s Rating Services and in each case maturing within twelve months after the date of acquisition; and | |
8. | money market funds at least 90.0% of the assets of which constitute Cash Equivalents of the kinds described in clauses (1) through (7) of this definition. |
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1. | the sale, lease or transfer, in one or a series of related transactions, of all or substantially all of the assets of the Company and its Subsidiaries, taken as a whole, other than any Required Asset Sales or Legacy Loan Portfolio Sale, to any Person other than a Permitted Holder; or | |
2. | the Company becomes aware of (by way of a report or any other filing pursuant to Section 13(d) of the Exchange Act, proxy, vote, written notice or otherwise) the acquisition by any Person or group (within the meaning of Section 13(d)(3) or Section 14(d)(2) of the Exchange Act, or any successor provision), including any group acting for the purpose of acquiring, holding or disposing of securities (within the meaning ofRule 13d-5(b)(1) under the Exchange Act), other than one or more Permitted Holders, in a single transaction or in a related series of transactions, by way of merger, consolidation or other business combination or purchase of beneficial ownership (within the meaning ofRule 13d-3 under the Exchange Act, or any successor provision) of 50.0% or more of the total voting power of the Voting Stock of the Company or any of its direct or indirect parent companies;provided that for purposes of calculating the “beneficial ownership” of any group, any Voting Stock of which any Permitted Holder is the “beneficial owner” shall not be included in determining the amount of Voting Stock “beneficially owned” by such group. |
1. | Consolidated Net Income; and | |
2. | to the extent Consolidated Net Income has been reduced thereby: |
(a) | Consolidated Taxes; | |
(b) | Consolidated Interest Expense (excluding Consolidated Interest Expense on Indebtedness incurred under clauses (2), (5), (6), (10), (11), (12), (15) and (27) of the definition of Permitted Indebtedness); | |
(c) | depreciation, amortization (including amortization of intangibles but excluding amortization of prepaid cash expenses that were paid in a prior period) and other non-cash expenses (including charges related to the writeoff of goodwill or intangibles as a result of impairment, but excluding any such non-cash expense to the extent that it represents an accrual of or reserve for cash expenses in any future period or amortization of a prepaid cash expense that was paid in a prior period), all as determined on a consolidated basis for such Person and its Restricted Subsidiaries in accordance with GAAP; | |
(d) | (1) customary fees and expenses of the Company and its Restricted Subsidiaries payable in connection with (i) the issuance of the notes and (ii) the initial public offering of the Company’s Common Stock or the Common Stock of any of its direct or indirect parent companies after the Issue Date, (2) costs associated with exit and disposal activities incurred in connection with a restructuring as defined in ASC420-10 (provided that such charges relating to the Company’s restructuring program initiated in 2007 (as described in this prospectus) may not exceed $2.5 million in the aggregate |
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in any Four Quarter Period) and (3) any amortization or write-off of debt issuance costs for Indebtedness incurred prior to the Issue Date; |
(e) | any amortization or write-off of debt issuance costs payable in connection with Corporate Indebtedness incurred concurrent with and after the Issue Date; | |
(f) | recovery ofother-than-temporary loss onavailable-for-sale securities recognized through members’ (or shareholders’) equity; | |
(g) | all other unusual or non-recurring items of loss or expense as approved by the Board of Directors of the Company acting reasonably and in good faith; and | |
(h) | the amount of any expense related to minority interests; and, 3 decreased by (without duplication): |
(a) | non-cash gains pursuant to clause (2) above increasing Consolidated Net Income of such Person for such period, excluding any gains that represent the reversal of any accrual of, or cash reserve for, anticipated cash charges in any prior period (other than such cash charges that have been added back to Consolidated Net Income in calculating Consolidated EBITDA in accordance with this definition); | |
(b) | all other unusual or non-recurring gains or revenue as approved by the Board of Directors of the Company acting reasonably and in good faith; | |
(c) | all interest income to the extent a matching interest expense has been added back to clause (2) above; and | |
(d) | fair market value of MSRs capitalized by the Company and its Restricted Subsidiaries; |
1. | the aggregate of the interest expense on Indebtedness of such Person and its Restricted Subsidiaries for such period determined on a consolidated basis in accordance with GAAP, including without limitation: (a) any amortization of debt discount; (b) the net costs under Permitted Hedging Transactions; (c) all capitalized interest; and (d) the interest portion of any deferred payment obligation; | |
2. | to the extent not already included in clause (1), the interest component of Capitalized Lease Obligations paid, accruedand/or scheduled to be paid or accrued by such Person and its Restricted Subsidiaries during such period as determined on a consolidated basis in accordance with GAAP; | |
3. | the imputed interest with respect to Attributable Debt created after the Issue Date; and | |
4. | the product of (a) all dividends, whether paid or accrued and whether or not in cash, on any series of Disqualified Capital of such Person or preferred stock of any of its Restricted Subsidiaries, other than dividends on Equity Interests payable solely in Equity Interests of the Company (other than Disqualified Capital Stock) or to the Company or a Restricted Subsidiary of the Company, times (b) a fraction, the numerator of which is one and the denominator of which is one minus the then current combined federal, state and local statutory tax rate of such Person, expressed as a decimal, in each case, determined on a consolidated basis in accordance with GAAP. |
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1. | the incurrence or repayment of any Indebtedness of such Person or any of its Restricted Subsidiaries (and the application of the proceeds thereof) giving rise to the need to make such calculation and any incurrence or repayment of other Indebtedness (and the application of the proceeds thereof), other than the incurrence or repayment of Indebtedness in the ordinary course of business for working capital purposes pursuant to working capital facilities, occurring during the Four Quarter Period or at any time subsequent to the last day of the Four Quarter Period and on or prior to the Transaction Date, as if such incurrence or repayment, as the case may be (and the application of the proceeds thereof), occurred on the first day of the Four Quarter Period; and | |
2. | any asset sales or other dispositions or any asset originations, asset purchases, Investments and Asset Acquisitions (including, without limitation, any Asset Acquisition giving rise to the need to make such calculation as a result of such Person or one of its Subsidiaries (including any Person who becomes a Restricted Subsidiary as a result of the Asset Acquisition) incurring, assuming or otherwise being liable for Indebtedness that is Acquired Indebtedness and also including any Consolidated EBITDA (including anypro forma expense and cost reductions) attributable to the assets which are originated or purchased, the Investments that are made and the assets that are the subject of the Asset Acquisition or asset sale or other disposition during the Four Quarter Period) occurring during the Four Quarter Period or at any time subsequent to the last day of the Four Quarter Period and on or prior to the Transaction Date, as if such asset sale or other disposition or asset origination, asset purchase, Investment or Asset Acquisition (including the incurrence, assumption or liability for any such Acquired Indebtedness) occurred on the first day of the Four Quarter Period. If such Person or any of its Restricted Subsidiaries directly or indirectly guarantees Indebtedness of a third Person, the preceding sentence shall give effect to the incurrence of such guaranteed Indebtedness as if such Person or any Restricted Subsidiary of such Person had directly incurred or otherwise assumed such guaranteed Indebtedness. |
1. | after-tax gains and losses from asset sales or abandonments or reserves relating thereto; | |
2. | after-tax items classified as extraordinary gains or losses and direct impairment charges or the reversal of such charges on the Person’s assets; | |
3. | the net income (but not loss) of any Restricted Subsidiary of the referent Person to the extent that the declaration of dividends or similar distributions by that Subsidiary of that income is restricted by a contract, operation of law or otherwise, except for such restrictions permitted by clauses (g) and (h) of the “Limitation on Dividend and Other |
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Payment Restrictions Affecting Restricted Subsidiaries” covenant, whether such permitted restrictions exist on the Issue Date or are created thereafter, except to the extent (in the case of net income) of cash dividends or distributions paid to the referent Person, or to a Wholly Owned Restricted Subsidiary of the referent Person (other than a Restricted Subsidiary also subject to such restrictions), by such other Person; |
4. | the net income or loss of any other Person, other than a Restricted Subsidiary of the referent Person, except: |
(a) | to the extent (in the case of net income) of cash dividends or distributions paid to the referent Person, or to a Wholly Owned Restricted Subsidiary of the referent Person (other than a Restricted Subsidiary described in clause (3) above), by such other Person; or | |
(b) | that the referent Person’s share of any net income or loss of such other Person under the equity method of accounting for Affiliates shall not be excluded; |
5. | any restoration to income of any contingency reserve of an extraordinary, nonrecurring or unusual nature, except to the extent that provision for such reserve was made out of Consolidated Net Income accrued at any time following the Issue Date; | |
6. | income or loss attributable to discontinued operations (including, without limitation, operations disposed of during such period whether or not such operations were classified as discontinued); | |
7. | in the case of a successor to the referent Person by consolidation or merger or as a transferee of the referent Person’s assets, any earnings of the successor corporation prior to such consolidation, merger or transfer of assets; | |
8. | any valuation allowance for mortgage loansheld-for-investmentand/or any change in fair value of mortgage loans held for sale and corresponding debt in relation to securitized loans in accordance with GAAP that require no additional capital or equity contributions to the Company; | |
9. | change in fair value of MSRs or the amortization of MSRs pursuant to such Person’s accounting policy; and | |
10. | an amount equal to all distributions during such period pursuant to clause (6)(c) of the second paragraph of the covenant described above under the caption “—Limitation on Restricted Payments.” |
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(1) | Nationstar Equity Corporation, Centex Land Vista Ridge Lewisville III General Partner, LLC, Centex Land Vista Ridge Lewisville III, L.P., Nationstar Industrial Loan Company, Nationstar Industrial Loan Corporation, Harwood Insurance Services, LLC, Harwood Service Company of Georgia, LLC, Harwood Service Company of New Jersey, LLC, Harwood Service Company LLC, Homeselect Settlement Solutions, LLC, Nationstar 2009 Equity Corporation; and | |
(2) | any other Subsidiary of the Company that executes a Note Guarantee in accordance with the provisions of the Indenture, |
1. | all Obligations of such Person for borrowed money; | |
2. | all Obligations of such Person evidenced by bonds, debentures, notes or other similar instruments; | |
3. | all Capitalized Lease Obligations of such Person; | |
4. | all Obligations of such Person issued or assumed as the deferred purchase price of property, all conditional sale obligations and all Obligations under any title retention agreement (but excluding trade accounts payable and other accrued liabilities arising in the ordinary course of business that are not overdue by 90 days or more or are being contested in good faith by appropriate proceedings promptly instituted and diligently conducted); | |
5. | all Obligations for the reimbursement of any obligor on any letter of credit, banker’s acceptance or similar credit transaction; | |
6. | guarantees and other contingent obligations in respect of Indebtedness referred to in clauses (1) through (5) above and clauses (8) or (9) below; | |
7. | Obligations of any other Person of the type referred to in clauses (1) through (6) above and clause (9) below which are secured by any lien on any property or asset of such Person, the amount of such Obligation being deemed to be the lesser of the Fair Market Value of such property or asset and the amount of the Obligation so secured; | |
8. | all Obligations under currency agreements and interest swap agreements of such Person; |
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9. | all Attributable Debt of such Person; and | |
10. | all Disqualified Capital Stock issued by such Person with the amount of Indebtedness represented by such Disqualified Capital Stock being equal to the greater of its voluntary or involuntary liquidation preference and its maximum fixed repurchase price, but excluding accrued dividends, if any. |
(1) | the accreted value thereof, in the case of any Indebtedness issued at a discount to par; | |
(2) | with respect to any Obligations under currency agreements and interest swap agreements, the net amount payable if such agreements terminated at that time due to default by such Person; | |
(3) | in respect of Indebtedness of another Person secured by a Lien on the assets of the specified Person, the lesser of: |
(a) | the Fair Market Value of such assets at the date of determination; and | |
(b) | the amount of the Indebtedness of the other Person; or |
(4) | except as provided above, the principal amount or liquidation preference thereof, in the case of any other Indebtedness. |
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1. | specifically advanced to finance the acquisition of investment assets and secured only by the assets to which such Indebtedness relates without recourse to such Person or any of its Restricted Subsidiaries (other than subject to such customary carve-out matters for which such Person or its Restricted Subsidiaries acts as a guarantor in connection with such Indebtedness, such as fraud, misappropriation, breach of representation and warranty and misapplication, unless, until and for so long as a claim for payment or performance has been made thereunder (which has not been satisfied) at which time the obligations with respect to any such customary carve-out shall not be considered Non-Recourse Indebtedness, to the extent that such claim is a liability of such Person for GAAP purposes); | |
2. | advanced to (i) such Person or its Restricted Subsidiaries that holds investment assets or (ii) any of such Person’s Subsidiaries or group of such Person’s Subsidiaries formed for the sole purpose of acquiring or holding investment assets, in each case, against which a loan is obtained that is made without recourse to, and with no cross-collateralization against, such Person’s or any of such Person’s Restricted Subsidiaries’ other assets (other than: (A) cross-colateralization against assets which serve as collateral for other Non-Recourse Indebtedness; and (B) subject to such customary carve-out matters for which such Person or its Restricted Subsidiaries acts as a guarantor in connection with such Indebtedness, such as fraud, misappropriation, breach of representation and warranty and misapplication, unless, until and for so long as a claim for payment or performance has been made thereunder (which has not been satisfied) at which time the obligations with respect to any such customary carve-out shall not be considered Non-Recourse Indebtedness, to the extent that such claim is a liability of such Person for GAAP purposes) and upon complete or partial liquidation of which the loan must be correspondingly completely or partially repaid, as the case may be; or | |
3. | specifically advanced to finance the acquisition of real property and secured by only the real property to which such Indebtedness relates without recourse to such Person or any of its Restricted Subsidiaries (other than subject to such customary carve-out matters for which such Person or any of its Restricted Subsidiaries acts as a guarantor in connection with such Indebtedness, such as fraud, misappropriation, breach of representation and warranty and misapplication, unless, until and for so long as a claim for payment or performance has been made thereunder (which has not been satisfied) at which time the obligations with respect to any such customary carve-out shall not be considered Non-Recourse Indebtedness, to the extent that such claim is a liability of such Person for GAAP purposes) |
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1. | Indebtedness under the notes issued in this offering and exchange notes issued in exchange for such notes pursuant to the Registration Rights Agreement and exchange notes issued in exchange for any additional notes issued under the Indenture and the Note Guarantees; | |
2. | Indebtedness incurred pursuant to the Existing Facilities in an aggregate principal amount at any time outstanding not to exceed the maximum amount available under each Existing Facility as in effect on the Issue Date reduced by any required permanent repayments (which are accompanied by a corresponding permanent commitment reduction) thereunder; | |
3. | Indebtedness of the Company or any Guarantor under the Working Capital Facility in an aggregate principal amount at any one time outstanding (with letters of credit being |
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deemed to have a principal amount equal to the maximum potential liability of the Company and its Restricted Subsidiaries thereunder) in an amount not to exceed $35.0 million; |
4. | other Indebtedness of the Company and its Restricted Subsidiaries outstanding on the Issue Date (other than Indebtedness described in clauses (1) and (2) above); | |
5. | Permitted Hedging Transactions; | |
6. | Indebtedness under Currency Agreements;provided that in the case of Currency Agreements which relate to Indebtedness, such Currency Agreements do not increase the Indebtedness of the Company and its Subsidiaries outstanding other than as a result of fluctuations in foreign currency exchange rates or by reason of fees, indemnities and compensation payable thereunder; | |
7. | Indebtedness owed to and held by the Company or a Restricted Subsidiary,provided, however, that (a) any subsequent issuance or transfer of any Capital Stock which results in any such Restricted Subsidiary ceasing to be a Restricted Subsidiary of the Company or any transfer of such Indebtedness (other than to the Company or a Restricted Subsidiary of the Company) shall be deemed, in each case, to constitute the incurrence of such Indebtedness by the obligor thereon and (b) if the Company is the obligor on such Indebtedness, such Indebtedness is expressly subordinated to the prior payment in full in cash of all obligations with respect to the notes; | |
8. | Indebtedness of the Company or any Guarantor to a Restricted Subsidiary of the Company for so long as such Indebtedness is held by a Wholly Owned Restricted Subsidiary of the Company, in each case subject to no Lien;provided that: (a) any Indebtedness of the Company or any Guarantor to any Restricted Subsidiary of the Company that is not a Guarantor is unsecured and subordinated in right of payment, pursuant to a written agreement, to the Company’s obligations under the Indenture and the notes; and (b) if as of any date any Person other than a Restricted Subsidiary of the Company owns or holds, directly or indirectly, any such Indebtedness or any Person holds a Lien in respect of such Indebtedness, such date shall be deemed the incurrence of Indebtedness not constituting Permitted Indebtedness by the Company; | |
9. | [reserved]; | |
10. | Indebtedness of the Company or any of its Subsidiaries represented by letters of credit for the account of the Company or such Subsidiary, as the case may be, in order to provide security for workers’ compensation claims, payment obligations in connection with self-insurance or similar requirements in the ordinary course of business; | |
11. | Permitted Funding Indebtedness; | |
12. | Permitted Securitization Indebtedness and Indebtedness under Credit Enhancement Agreements; | |
13. | Refinancing Indebtedness; | |
14. | (A) any guarantee by the Company or a Guarantor of Indebtedness or other obligations of any Restricted Subsidiary of the Company (other than Non-Recourse Indebtedness) so long as the incurrence of such Indebtedness incurred by such Restricted Subsidiary of the Company is permitted under the terms of the Indenture, or (B) any guarantee by a Restricted Subsidiary of Indebtedness of the Company (other than Non-Recourse Indebtedness);provided that such guarantee is incurred in accordance with the covenant described below under “—Limitation on Guarantees by Restricted Subsidiaries”; | |
15. | Non-Recourse Indebtedness; |
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16. | Indebtedness incurred by the Company or any of the Guarantors in connection with the acquisition of a Permitted Business;provided that on the date of the incurrence of such Indebtedness, after giving effect to the incurrence thereof and the use of proceeds therefrom, either |
(a) | the Company would be permitted to incur at least $1.00 of additional Indebtedness pursuant to the second paragraph of the covenant described above under the caption “—Limitation on Incurrence of Indebtedness and Issuance of Preferred Stock;” or | |
(b) | the Consolidated Leverage Ratio and the Corporate Indebtedness to Tangible Net Worth Ratio of the Company would not be more than the Consolidated Leverage Ratio and the Corporate Indebtedness to Tangible Net Worth Ratio of the Company, as applicable, immediately prior to the incurrence of such Indebtedness; |
17. | Indebtedness (including Capitalized Lease Obligations) incurred to finance the development, construction, purchase, lease, repairs, maintenance or improvement of assets (including MSRs and related Servicing Advances) by the Company or any Restricted Subsidiary,provided that the Liens securing such Indebtedness may not extend to any other property owned by the Company or any of its Restricted Subsidiaries at the time the Lien is incurred and the Indebtedness secured by the Lien may not be incurred more than 180 days after the latter of the acquisition or completion of the construction of the property subject to the Lien,provided, further that the amount of such Indebtedness does not exceed the Fair Market Value of the assets purchased or constructed with the proceeds of such Indebtedness; | |
18. | Indebtedness arising from agreements of the Company or any of its Restricted Subsidiaries providing for indemnification, adjustment of purchase price, amounts or similar obligations, in each case, incurred or assumed in connection with the disposition of any business, assets or a Subsidiary, other than guarantees of Indebtedness incurred by any Person acquiring all or any portion of such business, assets or a Subsidiary for the purpose of financing such acquisition;provided that such Indebtedness is not reflected on the balance sheet of the Company or any Restricted Subsidiary of the Company (contingent obligations referred to in a footnote to financial statements and not otherwise reflected on the balance sheet will not be deemed to be reflected on such balance sheet for purposes of this clause (18)); | |
19. | Indebtedness consisting of Indebtedness from the repurchase, retirement or other acquisition or retirement for value by the Company of Common Stock (or options, warrants or other rights to acquire Common Stock) of the Company (or payments to any direct or indirect parent company of the Company to permit distributions to repurchase common equity (or options, warrants or other rights to acquire common equity) thereof) from any future, current or former officer, director, manager or employee (or any spouses, successors, executors, administrators, heirs or legatees of any of the foregoing) of the Company, any direct or indirect parent company of the Company, or any of its Subsidiaries or their authorized representatives to the extent described in clause (4) of the second paragraph under “—Limitation on Restricted Payments;” | |
20. | Indebtedness in respect of overdraft protections and otherwise in connection with customary deposit accounts maintained by the Company or any Restricted Subsidiary with banks and other financial institutions as part of its ordinary cash management program; | |
21. | the incurrence of Indebtedness by a Foreign Subsidiary in an amount not to exceed at any one time outstanding, together with any other Indebtedness incurred under this clause (21), 5.0% of Foreign Subsidiary Total Assets; | |
22. | shares of Preferred Stock of a Restricted Subsidiary of the Company issued to the Company or another Restricted Subsidiary;provided that any subsequent issuance or transfer of any |
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Capital Stock or any other event which results in any such Restricted Subsidiary ceasing to be a Restricted Subsidiary or any other subsequent transfer of any such share of Preferred Stock (except to the Company or another Restricted Subsidiary) shall be deemed in each case to be an issuance of such shares or Preferred Stock not permitted by this clause (22); |
23. | Indebtedness of the Company and its Restricted Subsidiary consisting of the financing of insurance premiums in the ordinary course of business; | |
24. | Obligations in respect of performance, bid, surety bonds and completion guarantees provided by the Company and its Restricted Subsidiaries in the ordinary course of business; | |
25. | [reserved]; | |
26. | to the extent otherwise constituting Indebtedness, obligations arising from agreements providing for indemnification, adjustment of purchase price or similar obligations, in each case, incurred or assumed in connection with the disposition of Residual Interests or other loans and other mortgage-related receivables purchased or originated by the Company or any of its Restricted Subsidiaries arising in the ordinary course of business; | |
27. | Guarantees by the Company and its Restricted Subsidiaries of Indebtedness that is otherwise Permitted Indebtedness; | |
28. | Indebtedness or Disqualified Capital Stock of the Company and Indebtedness, Disqualified Capital Stock or Preferred Stock of any of the Company’s Restricted Subsidiaries in an aggregate principal amount or liquidation preference up to 100.0% of the net cash proceeds received by the Company since immediately after the Issue Date from the issue or sale of Equity Interests of the Company or cash contributed to the capital of the Company (in each case, other than proceeds of Disqualified Capital Stock or sales of Equity Interests to the Company or any of its Subsidiaries) to the extent that such net cash proceeds or cash have not been applied to the covenant “—Limitation on Restricted Payments”;provided, however, that the aggregate amount of Indebtedness, Disqualified Stock and Preferred Stock incurred by Restricted Subsidiaries (other than Guarantors) pursuant to this clause (28) may not exceed $15.0 million in the aggregate at any one time outstanding; | |
29. | Indebtedness arising out of or to fund purchases of all remaining outstanding asset-backed securities of any Securitization Entity for the purpose of relieving the Company or a Subsidiary of the Company of the administrative expense of servicing such Securitization Entity; | |
30. | Indebtedness, Disqualified Stock or Preferred Stock of a Restricted Subsidiary incurred to finance or assumed in connection with an acquisition in a principal amount not to exceed $10.0 million in the aggregate at any one time outstanding together with all other Indebtedness, Disqualified Stockand/or Preferred Stock issued under this clause (30); | |
31. | Guarantees by the Company and the Restricted Subsidiaries of the Company to owners of servicing rights in the ordinary course of business; and | |
32. | additional Indebtedness of the Company and its Subsidiaries in an aggregate principal amount not to exceed $12.5 million at any one time outstanding. |
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1. | any Investment in the Company or in a Restricted Subsidiary; | |
2. | any Investment in cash or Cash Equivalents; | |
3. | any Investment by the Company or any Restricted Subsidiary of the Company in a Person, if as a result of such Investment (i) such Person becomes a Restricted Subsidiary of the Company that is engaged in a Permitted Business or (ii) such Person is merged, consolidated or amalgamated with or into, or transfers or conveys substantially all of its assets to, or is liquidated into, the Company or a Restricted Subsidiary of the Company; | |
4. | Investments by the Company or any Restricted Subsidiary in Securitization Entities, Warehouse Facility Trusts, MSR Facility Trusts, Investments in mortgage related securities or charge-off receivables in the ordinary course of business; | |
5. | Investments arising out of purchases of all remaining outstanding asset-backed securities of any Securitization Entity for the purpose of relieving the Company or a Subsidiary of the Company of the administrative expense of servicing such Securitization Entity; | |
6. | Investments in MSRs; | |
7. | Investments in Residual Interests in connection with any Securitization, Warehouse Facility or MSR Facility; | |
8. | Investments by the Company or any Restricted Subsidiary in the form of loans extended to non-Affiliate borrowers in connection with any loan origination business of the Company or such Restricted Subsidiary in the ordinary course of business; | |
9. | any Restricted Investment made as a result of the receipt of securities or other assets of non-cash consideration from an Asset Sale that was made pursuant to and in compliance with the covenant described above under the caption “—Repurchase at the Option of Holders—Asset Sales,” or any other disposition of assets not constituting an Asset Sale; | |
10. | Investments made solely in exchange for the issuance of Equity Interests (other than Disqualified Capital Stock) of the Company, or any of its direct or indirect parent entities, or any Unrestricted Subsidiary; | |
11. | any Investments received in compromise or resolution of (A) obligations of trade creditors or customers that were incurred in the ordinary course of business of the Company or any of its Restricted Subsidiaries, including pursuant to any plan of reorganization or similar arrangement upon the bankruptcy or insolvency of any trade creditor or customer; or (B) litigation, arbitration or other disputes with Persons who are not Affiliates; | |
12. | Investments in connection with Permitted Hedging Transactions; | |
13. | repurchases of the notes; | |
14. | Investments in and making of Servicing Advances, residential or commercial mortgage loans and Securitization Assets (whether or not made in conjunction with the acquisition of MSRs); | |
15. | guarantees of Indebtedness permitted under the covenant described in “—Certain covenants—Limitation on Incurrence of Indebtedness and Issuance of Preferred Stock”; | |
16. | any transaction to the extent it constitutes an investment that is permitted and made in accordance with the provisions of the third paragraph of the covenant described under |
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“—Limitation on Transactions with Affiliates” (except transactions described in clauses (6) and (9) of such paragraph); |
17. | Investments consisting of purchases and acquisitions of inventory, supplies, material or equipment or the licensing or contribution of intellectual property pursuant to joint marketing arrangements with other Persons; | |
18. | endorsements for collection or deposit in the ordinary course of business; | |
19. | any Investment existing on the Issue Date or made pursuant to binding commitments in effect on the Issue Date or an Investment consisting of any extension, modification or renewal of any Investment existing on the Issue Date;provided that the amount of any such Investment may only be increased pursuant to this clause (19) to the extent required by the terms of such Investment as in existence on the Issue Date; | |
20. | any Investment by the Company or any Restricted Subsidiary of the Company in any Person where such Investment was acquired by the Company or any Restricted Subsidiary of the Company (a) in exchange for any other Investment or accounts receivable held by the Company or any such Restricted Subsidiary in connection with or as a result of a bankruptcy, workout, reorganization or recapitalization of the issuer of such other Investment or accounts receivable or (b) as a result of a foreclosure by the Company or any Restricted Subsidiary of the Company with respect to any secured Investment or other transfer of title with respect to any secured Investment in default; | |
21. | any Investment by the Company or any Restricted Subsidiary of the Company in a joint venture not to exceed the greater of (x) $5.0 million and (y) 1.0% of Total Assets; and | |
22. | other Investments having an aggregate Fair Market Value, taken together with all other Investments made pursuant to this clause (22) that are at that time outstanding (without giving effect to the sale of an Unrestricted Subsidiary to the extent the proceeds of such sale do not consist of cashand/or marketable securities), not to exceed the greater of (x) $30.0 million and (y) 1.0% of Total Assets at the time of such Investment (with the Fair Market Value of each Investment being measured at the time made and without giving effect to subsequent changes in value). |
1. | Liens for taxes, assessments or governmental charges or claims either: (a) not delinquent for a period of more than 30 days; or (b) contested in good faith by appropriate proceedings and as to which the Company or its Subsidiaries shall have set aside on its books such reserves as may be required pursuant to GAAP; | |
2. | statutory Liens of landlords and Liens of carriers, warehousemen, mechanics, suppliers, materialmen, repairmen and other Liens imposed by law incurred in the ordinary course of business for sums not yet delinquent or being contested in good faith, if such reserve or other appropriate provision, if any, as shall be required by GAAP shall have been made in respect thereof; | |
3. | Liens incurred or deposits made in the ordinary course of business in connection with workers’ compensation laws, unemployment insurance laws or similar legislation and other types of social security or obtaining of insurance, including any Lien securing letters of credit issued in the ordinary course of business consistent with past practice in connection therewith, or to secure the performance of tenders, statutory obligations, surety and appeal bonds, bids, leases, government contracts, performance andreturn-of-money bonds and other similar obligations (exclusive of obligations for the payment of borrowed money); | |
4. | Liens existing on the Issue Date; |
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5. | Liens on assets, property or shares of stock of a Person at the time such Person becomes a Restricted Subsidiary;provided, however, that such Liens are not created or incurred in connection with, or in contemplation of, such other Person becoming such a Restricted Subsidiary;provided, further, however, that such Liens may not extend to any other property owned by the Company or any Restricted Subsidiary; | |
6. | Liens on assets or property at the time the Company or a Restricted Subsidiary acquired the assets or property or within 360 days of such acquisition, including any acquisition by means of a merger, amalgamation or consolidation with or into the Company or any Restricted Subsidiary;provided that the Liens may not extend to any other property owned by the Company or any Restricted Subsidiary (other than assets and property affixed or appurtenant thereto);provided, further that the aggregate amount of obligations secured thereby does not exceed $15.0 million at any time outstanding and no such Lien may secure obligations in an amount that exceeds the Fair Market Value of the assets or property acquired as of the date of acquisition; | |
7. | Liens securing Indebtedness or other obligations of a Restricted Subsidiary of the Company owing to the Company or another Restricted Subsidiary of the Company; | |
8. | leases, subleases, licenses or sublicenses granted to others which do not materially interfere with the ordinary conduct of the business of the Company or any of its Restricted Subsidiaries; | |
9. | Liens arising from Uniform Commercial Code financing statement filings regarding operating leases entered into by the Company and its Restricted Subsidiaries in the ordinary course of business; | |
10. | Liens securing Indebtedness permitted to be incurred under the Working Capital Facility, including any letter of credit facility relating thereto, that was permitted to be Incurred pursuant to clause (3) of the definition of Permitted Indebtedness; | |
11. | Liens in favor of the Issuers or any Guarantor; | |
12. | Liens on the Equity Interests of any Unrestricted Subsidiary securing Non-Recourse Indebtedness of such Unrestricted Subsidiary; | |
13. | grants of software and other technology licenses in the ordinary course of business; | |
14. | Liens to secure any refinancing, refunding, extension, renewal or replacement (or successive refinancing, refundings, extensions, renewals or replacements) as a whole, or in part, of any Indebtedness secured by any Lien referred to in clauses (4), (5), (6), (28) and (34) of this definition;provided, however, that (x) such new Lien shall be limited to all or part of the same property that secured the original Lien (plus improvements on such property), and (y) the Indebtedness secured by such Lien at such time is not increased to any amount greater than the sum of (A) the outstanding principal amount or, if greater, committed amount of the Indebtedness described under clauses (4), (5), (6), (28) and (34) of this definition at the time the original Lien became a Permitted Lien under this Indenture, and (B) an amount necessary to pay any fees and expenses, including premiums, related to such refinancing, refunding, extension, renewal or replacement; | |
15. | Liens arising out of conditional sale, title retention, consignment or similar arrangements for the sale or purchase of goods entered into in the ordinary course of business; | |
16. | Liens incurred to secure cash management services or to implement cash pooling arrangements in the ordinary course of business and Liens arising by virtue of any statutory or common law provisions relating to banker’s Liens, rights of set-off or similar rights and remedies as to deposit accounts or other funds maintained with a depository or financial institution; |
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17. | any encumbrance or restriction (including put and call arrangements) with respect to Capital Stock of any joint venture or similar arrangement pursuant to any joint venture or similar agreement; | |
18. | any amounts held by a trustee in the funds and accounts under an indenture securing any revenue bonds issued for the benefit of the Issuer or any Restricted Subsidiary; | |
19. | judgment Liens not giving rise to an Event of Default so long as such Lien is adequately bonded and any appropriate legal proceedings which may have been duly initiated for the review of such judgment shall not have been finally terminated or the period within which such proceedings may be initiated shall not have expired; | |
20. | minor survey exceptions, minor encumbrances, easements or reservations of, or rights of other for, licenses,rights-of-way, sewers, electric lines, telegraph and telephone lines and other similar purposes or zoning or other restrictions as to the use of real property or Liens incidental to the conduct of the Permitted Business of the Company and its Subsidiaries and other similar charges or encumbrances in respect of real property not interfering, in the aggregate, in any material respect with the ordinary conduct of the business of the Company or any of its Subsidiaries; | |
21. | any interest or title of a lessor under any Capitalized Lease Obligation;provided that such Liens do not extend to any property or assets which is not leased property subject to such Capitalized Lease Obligation; | |
22. | Liens upon specific items of inventory or other goods and proceeds of any Person securing such Person’s obligations in respect of bankers’ acceptances issued or created for the account of such Person to facilitate the purchase, shipment or storage of such inventory or other goods; | |
23. | Liens securing reimbursement obligations with respect to commercial letters of credit which encumber documents and other property relating to such letters of credit and products and proceeds thereof; | |
24. | Liens encumbering deposits made to secure obligations arising from statutory, regulatory, contractual, or warranty requirements of the Company or any of its Subsidiaries, including rights of offset and set-off; | |
25. | Liens securing Permitted Hedging Transactions and the costs thereof; | |
26. | Liens securing Indebtedness under Currency Agreements; | |
27. | Liens with respect to obligations at any one time outstanding that do not exceed the greater of (x) $25.0 million and (y) 1.0% of Total Assets; | |
28. | Liens securing Indebtedness incurred to finance the construction or purchase of assets (excluding MSR Assets) by the Company or any of its Restricted Subsidiaries (including any acquisition of Capital Stock or by means of a merger, amalgamation or consolidation with or into the Company or any Restricted Subsidiary),provided that any such Lien may not extend to any other property owned by the Company or any of its Restricted Subsidiaries at the time the Lien is incurred and the Indebtedness secured by the Lien may not be incurred more than 180 days after the acquisition or completion of the construction of the property subject to the Lien,provided further that the amount of Indebtedness secured by such Liens does not exceed the purchase price of the assets purchased or constructed with the proceeds of such Indebtedness; | |
29. | Liens on Securitization Assets and the proceeds thereof incurred in connection with Permitted Securitization Indebtedness or permitted guarantees thereof; |
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30. | Liens on spread accounts and credit enhancement assets, Liens on the stock of Restricted Subsidiaries of the Company substantially all of which are spread accounts and credit enhancement assets and Liens on interests in Securitization Entities, in each case incurred in connection with Credit Enhancement Agreements; | |
31. | Liens to secure Indebtedness of any Foreign Subsidiary of the Company or Excluded Restricted Subsidiary securing Indebtedness of such Foreign Subsidiary of the Company or any Excluded Restricted Subsidiary that is permitted by the terms of the Indenture to be incurred; | |
32. | Liens (i) of a collection bank arising underSection 4-210 of the Uniform Commercial Code, or any comparable or successor provision, on items in the course of collection and (ii) in favor of banking institutions arising as a matter of law encumbering deposits (including the right of set-off) and which are within the general parameters customary in the banking industry; | |
33. | Liens solely on any cash earnest money deposits made by the Issuer or any of its Restricted Subsidiaries in connection with any letter of intent or purchase agreement; and | |
34. | Liens securing Indebtedness incurred to finance the purchase of MSR Assets (“Acquired MSR Assets”) by the Company or any of its Restricted Subsidiaries (including any acquisition of Capital Stock or by means of a merger, amalgamation or consolidation with or into the Company or any Restricted Subsidiary),provided that (x) any such Lien may not extend to any other property owned by the Company or any of its Restricted Subsidiaries at the time the Lien is incurred and the Indebtedness secured by the Lien may not be incurred more than 180 days after the acquisition of the property subject to the Lien and (y) the aggregate amount of Indebtedness secured by the Acquired MSR Assets in such purchase does not exceed the greater of $50.0 million and 35.0% of the purchase price of such Acquired MSR Assets less the amount necessary to pay any fees and expenses related to such acquisition (the purchase price of the Acquired MSR Assets shall be determined by the terms of the contract governing such purchase or, if not specified in such contract, management in good faith). |
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1. | result in an increase in the aggregate principal amount of Indebtedness of such Person as of the date of such proposed Refinancing (plus the amount of any premium required to be paid under the terms of the instrument governing such Indebtedness and plus the amount of reasonable expenses incurred by the Company in connection with such Refinancing and amounts of Indebtedness otherwise permitted to be incurred under the Indenture); or |
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2. | create Indebtedness with a Weighted Average Life to Maturity that is less than the Weighted Average Life to Maturity of the Indebtedness being Refinanced; or a final maturity earlier than the final maturity of the Indebtedness being Refinanced;provided that (i) such Indebtedness is incurred either (a) by the Company or any Guarantor or (b) by the Restricted Subsidiary that is the obligor on the Indebtedness being Refinanced and (ii) if such Indebtedness being Refinanced is subordinate or junior to the notes, then such Refinancing Indebtedness shall be subordinate to the notes at least to the same extent and in the same manner as the Indebtedness being Refinanced. |
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1. | any corporation of which the outstanding Capital Stock having at least a majority of the votes entitled to be cast in the election of directors under ordinary circumstances shall at the time be owned, directly or indirectly, by such Person; or | |
2. | any other Person of which at least a majority of the voting interest under ordinary circumstances is at the time, directly or indirectly, owned by such Person. |
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(1) | has no Indebtedness other than Non-Recourse Indebtedness and other Indebtedness that is not recourse to the Company or any Restricted Subsidiary or any of their assets; | |
(2) | except as permitted by the covenant described above under the caption “—CertainCovenants—Transactions with Affiliates,” is not party to any agreement, contract, arrangement or understanding with the Company or any Restricted Subsidiary of the Company unless the terms of any such agreement, contract, arrangement or understanding are no less favorable to the Company or such Restricted Subsidiary than those that might be obtained at the time from Persons who are not Affiliates of the Company; | |
(3) | is a Person with respect to which neither the Company nor any of its Restricted Subsidiaries has any direct or indirect obligation (a) to subscribe for additional Equity Interests or (b) to maintain or preserve such Person’s financial condition or to cause such Person to achieve any specified levels of operating results; and | |
(4) | has not guaranteed or otherwise directly or indirectly provided credit support for any Indebtedness of the Company or any of its Restricted Subsidiaries. |
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• | a limited purpose trust company organized under the New York State Banking Law; | |
• | a “banking organization” within the meaning of the New York State Banking Law; | |
• | a member of the U.S. Federal Reserve System; | |
• | a “clearing corporation” within the meaning of the New York Uniform Commercial Code; and | |
• | a “clearing agency” registered under Section 17A of the Exchange Act. |
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• | any aspect of DTC’s records or any participant’s or indirect participant’s records relating to or payments made on account of beneficial ownership interests in the global notes, or for maintaining, supervising or reviewing any of DTC’s records or any participant’s or indirect participant’s records relating to the beneficial ownership interests in the global notes; or | |
• | any other matter relating to the actions and practices of DTC or any of its participants or indirect participants. |
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192
Audited Financial Statements | ||||
F-2 | ||||
F-3 | ||||
F-4 | ||||
F-5 | ||||
F-6 | ||||
F-8 |
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F-2
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December 31, | ||||||||
2010 | 2009 | |||||||
(in thousands) | ||||||||
Assets | ||||||||
Cash and cash equivalents | $ | 21,223 | $ | 41,645 | ||||
Restricted cash (includes $1,472 and $0, respectively, of restricted cash, subject to ABS nonrecourse debt) | 91,125 | 52,795 | ||||||
Accounts receivable, net (includes $2,392 and $0, respectively, of accrued interest, subject to ABS nonrecourse debt) | 439,071 | 509,974 | ||||||
Mortgage loans held for sale | 371,160 | 203,131 | ||||||
Mortgage loans held for investment, subject to nonrecourse debt—Legacy Assets, net | 266,840 | 301,910 | ||||||
Mortgage loans held for investment, subject to ABS nonrecourse debt (at fair value) | 538,440 | — | ||||||
Investment in debtsecurities—available-for-sale | — | 2,486 | ||||||
Receivables from affiliates | 8,993 | 12,574 | ||||||
Mortgage servicing rights | 145,062 | 114,605 | ||||||
Property and equipment, net | 8,394 | 6,575 | ||||||
Real estate owned, net (includes $17,509 and $0, respectively, of real estate owned, subject to ABS nonrecourse debt) | 27,337 | 10,262 | ||||||
Other assets | 29,536 | 24,228 | ||||||
Total assets | $ | 1,947,181 | $ | 1,280,185 | ||||
Liabilities and members’ equity | ||||||||
Notes payable | $ | 709,758 | $ | 771,857 | ||||
Unsecured senior notes | 244,061 | — | ||||||
Payables and accrued liabilities (includes $95 and $0, respectively, of accrued interest payable, subject to ABS nonrecourse debt) | 75,054 | 66,830 | ||||||
Derivative financial instruments | 7,801 | — | ||||||
Derivative financial instruments, subject to ABS nonrecourse debt | 18,781 | — | ||||||
Nonrecourse debt—Legacy Assets | 138,662 | 177,675 | ||||||
ABS nonrecourse debt (at fair value) | 496,692 | — | ||||||
Total liabilities | 1,690,809 | 1,016,362 | ||||||
Commitments and contingencies (Note 14) | ||||||||
Total members’ equity | 256,372 | 263,823 | ||||||
Total liabilities and members’ equity | $ | 1,947,181 | $ | 1,280,185 | ||||
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Year Ended December 31 | ||||||||||||
2010 | 2009 | 2008 | ||||||||||
(in thousands) | ||||||||||||
Revenues: | ||||||||||||
Servicing fee income | $ | 167,126 | $ | 90,195 | $ | 68,052 | ||||||
Other fee income | 16,958 | 10,023 | 5,955 | |||||||||
Total fee income | 184,084 | 100,218 | 74,007 | |||||||||
Gain/(loss) on mortgage loans held for sale | 77,344 | (21,349 | ) | (86,663 | ) | |||||||
Total revenues | 261,428 | 78,869 | (12,656 | ) | ||||||||
Expenses and impairments: | ||||||||||||
Salaries, wages, and benefits | 149,115 | 90,689 | 61,783 | |||||||||
General and administrative | 58,913 | 30,494 | 22,194 | |||||||||
Loss on mortgage loans held for investment and foreclosed real estate | 3,503 | 7,512 | 2,567 | |||||||||
Occupancy | 9,445 | 6,863 | 6,021 | |||||||||
Loss onavailable-for-salesecurities—other-than-temporary | — | 6,809 | 55,212 | |||||||||
Total expenses and impairments | 220,976 | 142,367 | 147,777 | |||||||||
Other income (expense): | ||||||||||||
Interest income | 98,895 | 52,518 | 92,060 | |||||||||
Interest expense | (116,163 | ) | (69,883 | ) | (65,548 | ) | ||||||
Loss on interest rate swaps and caps | (9,801 | ) | (14 | ) | (23,689 | ) | ||||||
Fair value changes in ABS securitizations | (23,297 | ) | — | — | ||||||||
Total other income (expense) | (50,366 | ) | (17,379 | ) | 2,823 | |||||||
Net loss | $ | (9,914 | ) | $ | (80,877 | ) | $ | (157,610 | ) | |||
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Accumulated | ||||||||||||
Other | Total | |||||||||||
Member | Comprehensive | Members’ | ||||||||||
Units | Loss | Equity | ||||||||||
(in thousands) | ||||||||||||
Balance at January 1, 2008 | $ | 265,599 | $ | (3,903 | ) | $ | 261,696 | |||||
Capital contributions | 145,600 | — | 145,600 | |||||||||
Share-based compensation | 2,333 | — | 2,333 | |||||||||
Comprehensive loss: | ||||||||||||
Net loss | (157,610 | ) | — | (157,610 | ) | |||||||
Reclassification of loss on investment in debt securities due toother-than-temporary impairments | — | 3,903 | 3,903 | |||||||||
Total comprehensive loss | (153,707 | ) | ||||||||||
Balance at December 31, 2008 | 255,922 | — | 255,922 | |||||||||
Capital contributions | 87,951 | — | 87,951 | |||||||||
Share-based compensation | 827 | — | 827 | |||||||||
Net loss and comprehensive loss | (80,877 | ) | — | (80,877 | ) | |||||||
Balance at December 31, 2009 | 263,823 | — | 263,823 | |||||||||
Cumulative effect of change in accounting principles as of January 1, 2010 related to adoption of new accounting guidance on consolidation of variable interest entities | (8,068 | ) | — | (8,068 | ) | |||||||
Share-based compensation | 12,856 | — | 12,856 | |||||||||
Tax related share-based settlement of units by members | (3,396 | ) | — | (3,396 | ) | |||||||
Comprehensive loss: | ||||||||||||
Net loss | (9,914 | ) | — | (9,914 | ) | |||||||
Change in value of cash flow hedge | — | 1,071 | 1,071 | |||||||||
Total comprehensive loss | (8,843 | ) | ||||||||||
Balance at December 31, 2010 | $ | 255,301 | $ | 1,071 | $ | 256,372 | ||||||
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Year Ended December 31 | ||||||||||||
2010 | 2009 | 2008 | ||||||||||
(in thousands) | ||||||||||||
Operating activities | ||||||||||||
Net loss | $ | (9,914 | ) | $ | (80,877 | ) | (157,610 | ) | ||||
Adjustments to reconcile net loss to net cash provided by (used in) operating activities: | ||||||||||||
Share-based compensation | 12,856 | 827 | 2,333 | |||||||||
Loss/(gain) on mortgage loans held for sale | (77,344 | ) | 21,349 | 86,663 | ||||||||
Loss on mortgage loans held for investment and foreclosed real estate | 3,503 | 7,512 | 2,567 | |||||||||
Depreciation and amortization | 2,117 | 1,767 | 1,309 | |||||||||
Accretion of discount on securities | — | — | (4,422 | ) | ||||||||
Impairment of investments in debt securities | — | 6,809 | 55,212 | |||||||||
Fair value changes in ABS securitizations | 23,297 | — | — | |||||||||
Loss on interest rate swaps and caps | 8,872 | 14 | 23,689 | |||||||||
Unrealized gains/losses on derivative financial instruments | — | (2,436 | ) | 2,077 | ||||||||
Change in fair value of mortgage servicing rights | 6,043 | 27,915 | 11,701 | |||||||||
Amortization of debt discount | 18,731 | 21,287 | 8,879 | |||||||||
Amortization of premiums/discounts | (4,526 | ) | (1,394 | ) | (85 | ) | ||||||
Mortgage loans originated and purchased, net of fees | (2,791,639 | ) | (1,480,549 | ) | (545,860 | ) | ||||||
Cost of loans sold, net of fees | 2,621,275 | 1,007,369 | 513,924 | |||||||||
Principal payments/prepayments received and other changes in mortgage loans originated as held for sale | 32,415 | 470,072 | 201,184 | |||||||||
Changes in assets and liabilities: | ||||||||||||
Accounts receivable, net | 39,388 | (154,000 | ) | (165,566 | ) | |||||||
Receivables from affiliates | 3,958 | 66,940 | 2,452 | |||||||||
Other assets | 1,152 | (9,115 | ) | 38,363 | ||||||||
Payables and accrued liabilities | 8,163 | 12,869 | (36,598 | ) | ||||||||
Net cash provided by (used in) operating activities | (101,653 | ) | (83,641 | ) | 40,212 | |||||||
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Year Ended December 31 | ||||||||||||
2010 | 2009 | 2008 | ||||||||||
(in thousands) | ||||||||||||
Investing activities | ||||||||||||
Principal payments received and other changes on mortgage loans held for investment, subject to ABS nonrecourse debt | $ | 48,838 | $ | — | $ | — | ||||||
Proceeds from sales of real estate owned | 74,107 | 34,181 | 29,276 | |||||||||
Purchase of mortgage servicing rights, net of liabilities incurred | (17,812 | ) | (1,169 | ) | (19,013 | ) | ||||||
Interest rate swap settlements | — | — | (51,570 | ) | ||||||||
Property and equipment additions, net of disposals | (3,936 | ) | (3,029 | ) | (1,772 | ) | ||||||
Principal payments received on debt securities | — | — | 8,436 | |||||||||
Net cash provided by (used in) investing activities | 101,197 | 29,983 | (34,643 | ) | ||||||||
Financing activities | ||||||||||||
Transfers to restricted cash, net | (33,731 | ) | (31,763 | ) | (9,871 | ) | ||||||
Issuance of non-recourse debt, net | — | 191,272 | — | |||||||||
Issuance of unsecured notes, net of issue discount | 243,013 | — | — | |||||||||
Repayment of nonrecourse debt—Legacy assets | (45,364 | ) | (15,809 | ) | — | |||||||
Repayment of ABS nonrecourse debt | (103,466 | ) | — | — | ||||||||
Decrease in notes payable, net | (62,099 | ) | (60,395 | ) | (157,266 | ) | ||||||
Debt financing costs | (14,923 | ) | (18,059 | ) | (15,926 | ) | ||||||
Tax related share-based settlement of units by members | (3,396 | ) | — | — | ||||||||
Capital contributions from members | — | 20,700 | 145,600 | |||||||||
Net cash provided by (used in) financing activities | (19,966 | ) | 85,946 | (37,463 | ) | |||||||
Net increase (decrease) in cash and cash equivalents | (20,422 | ) | 32,288 | (31,894 | ) | |||||||
Cash and cash equivalents at beginning of year | 41,645 | 9,357 | 41,251 | |||||||||
Cash and cash equivalents at end of year | $ | 21,223 | $ | 41,645 | $ | 9,357 | ||||||
Supplemental disclosures of noncash activities | ||||||||||||
Transfer of mortgage loans held for sale to real estate owned | $ | 827 | $ | 73,264 | $ | 65,304 | ||||||
Mortgage servicing rights resulting from sale or securitization of mortgage loans | 26,253 | 8,332 | 4,522 | |||||||||
Transfer of mortgage loans held for investment to real estate owned | 53,408 | 12,990 | — | |||||||||
Transfer of mortgage loans held for investment, subject to ABS nonrecourse debt, to real estate owned | 111,865 | — | — | |||||||||
Transfer of mortgage loans held for sale to mortgage loans held for investment | — | 319,183 | — | |||||||||
Contribution of intercompany payable from parent | — | 67,251 | — | |||||||||
Financing of acquisition of mortgage servicing rights | — | 22,211 | — | |||||||||
Change in value of cash flow hedge—accumulated other comprehensive income | 1,071 | — | — | |||||||||
See accompanying notes. |
F-7
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1. | Description of the Companies and Basis of Presentation |
2. | Significant Accounting Policies |
F-8
Table of Contents
2. | Significant Accounting Policies (continued) |
F-9
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2. | Significant Accounting Policies (continued) |
F-10
Table of Contents
2. | Significant Accounting Policies (continued) |
F-11
Table of Contents
2. | Significant Accounting Policies (continued) |
F-12
Table of Contents
2. | Significant Accounting Policies (continued) |
F-13
Table of Contents
2. | Significant Accounting Policies (continued) |
F-14
Table of Contents
2. | Significant Accounting Policies (continued) |
F-15
Table of Contents
2. | Significant Accounting Policies (continued) |
3. | Variable Interest Entities and Securitizations |
F-16
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3. | Variable Interest Entities and Securitizations (continued) |
Ending Balance | Beginning Balance | |||||||||||
Sheet | Net Increase/ | Sheet | ||||||||||
December 31, 2009 | (Decrease) | January 1, 2010 | ||||||||||
Assets | ||||||||||||
Cash and cash equivalents | $ | 41,645 | $ | — | $ | 41,645 | ||||||
Restricted cash | 52,795 | 6,183 | 58,978 | |||||||||
Accounts receivable | 509,974 | (39,612 | ) | 470,362 | ||||||||
Mortgage loans held for sale | 203,131 | — | 203,131 | |||||||||
Mortgage loans held for investment, subject to nonrecourse debt—Legacy Assets | 301,910 | — | 301,910 | |||||||||
Mortgage loans held for investment, subject to ABS nonrecourse debt | — | 928,891 | 928,891 | |||||||||
Investment in debtsecurities—available-for-sale | 2,486 | (2,486 | ) | — | ||||||||
Receivables from affiliates | 12,574 | — | 12,574 | |||||||||
Mortgage servicing rights | 114,605 | (10,431 | ) | 104,174 | ||||||||
Property and equipment, net | 6,575 | — | 6,575 | |||||||||
Real estate owned, net | 10,262 | 22,970 | 33,232 | |||||||||
Other assets | 24,228 | — | 24,228 | |||||||||
Total assets | $ | 1,280,185 | $ | 905,515 | $ | 2,185,700 | ||||||
Liabilities and members’ equity | ||||||||||||
Notes payable | $ | 771,857 | $ | — | $ | 771,857 | ||||||
Payables and accrued liabilities | 66,830 | 123 | 66,953 | |||||||||
Derivative financial instruments, subject to ABS nonrecourse debt | — | 28,614 | 28,614 | |||||||||
Nonrecourse debt—Legacy Assets | 177,675 | — | 177,675 | |||||||||
ABS nonrecourse debt | — | 884,846 | 884,846 | |||||||||
Total liabilities | 1,016,362 | 913,583 | 1,929,945 | |||||||||
Total members’ equity | 263,823 | (8,068 | ) | 255,755 | ||||||||
Total liabilities and members’ equity | $ | 1,280,185 | $ | 905,515 | $ | 2,185,700 | ||||||
F-17
Table of Contents
3. | Variable Interest Entities and Securitizations (continued) |
F-18
Table of Contents
3. | Variable Interest Entities and Securitizations (continued) |
Transfers | ||||||||||||
Accounted for as | ||||||||||||
Securitization | Secured | |||||||||||
Trusts | Borrowings | Total | ||||||||||
Assets | ||||||||||||
Restricted cash | $ | 1,472 | $ | 32,075 | $ | 33,547 | ||||||
Accounts receivable | 2,392 | 286,808 | 289,200 | |||||||||
Mortgage loans held for investment, subject to nonrecourse debt | — | 261,305 | 261,305 | |||||||||
Mortgage loans held for investment, subject to ABS nonrecourse debt | 538,440 | — | 538,440 | |||||||||
Real estate owned | 17,509 | 9,505 | 27,014 | |||||||||
Total Assets | $ | 559,813 | $ | 589,693 | $ | 1,149,506 | ||||||
Liabilities | ||||||||||||
Notes payable | $ | — | $ | 236,808 | $ | 236,808 | ||||||
Payables and accrued liabilities | 95 | 1,173 | 1,268 | |||||||||
Outstanding servicer advances(1) | 32,284 | — | 32,284 | |||||||||
Derivative financial instruments | — | 7,801 | 7,801 | |||||||||
Derivative financial instruments, subject to ABS nonrecourse debt | 18,781 | — | 18,781 | |||||||||
Nonrecourse debt—Legacy Assets | — | 138,662 | 138,662 | |||||||||
ABS nonrecourse debt | 497,289 | — | 497,289 | |||||||||
Total Liabilities | $ | 548,449 | $ | 384,444 | $ | 932,893 | ||||||
(1) | Outstanding servicer advances consists of principal and interest advances paid by Nationstar to cover scheduled payments and interest that have not been timely paid by borrowers. These outstanding servicer advances are eliminated upon the consolidation of the securitization trusts. |
F-19
Table of Contents
3. | Variable Interest Entities and Securitizations (continued) |
Transfers | ||||
Accounted for as | ||||
Secured | ||||
Borrowings | ||||
Assets | ||||
Restricted cash | $ | 11,318 | ||
Accounts receivable | 294,973 | |||
Mortgage loans held for investment, subject to nonrecourse debt | 297,737 | |||
Real estate owned | 10,262 | |||
Total Assets | $ | 614,290 | ||
Liabilities | ||||
Notes payable | $ | 240,935 | ||
Payables and accrued liabilities | 1,393 | |||
Nonrecourse debt—Legacy Assets | 177,675 | |||
Total Liabilities | $ | 420,003 | ||
December 31 | ||||||||
2010(1) | 2009 | |||||||
Total collateral balance | $ | 4,038,978 | $ | 3,240,879 | ||||
Total certificate balance | 4,026,844 | 3,262,995 | ||||||
Total beneficial interests held at fair value | — | 2,486 | ||||||
Total mortgage servicing rights at fair value | 26,419 | 20,505 |
(1) | Unconsolidated securitization trusts as of December 31, 2010 consist of VIE’s where Nationstar does not have both the power to direct the activities that most significantly impact the VIE’s economic performance and the obligation to absorb losses or the right to receive benefits that could potentially be significant to the VIE. |
F-20
Table of Contents
3. | Variable Interest Entities and Securitizations (continued) |
Year Ended | Year Ended | Year Ended | ||||||||||||||||||||||
December 31, 2010 | December 31, 2009 | December 31, 2008 | ||||||||||||||||||||||
Principal Amount of | Principal Amount of | Principal Amount of | ||||||||||||||||||||||
Loans 60 Days or | Credit | Loans 60 Days or | Credit | Loans 60 Days or | Credit | |||||||||||||||||||
More Past Due | Losses | More Past Due | Losses | More Past Due | Losses | |||||||||||||||||||
Total securitization Trusts | $ | 830,953 | $ | 18,341 | $ | 1,172,822 | $ | 27,734 | $ | 979,556 | $ | 16,708 |
December 31, 2010 | December 31, 2009 | December 31, 2008 | ||||||||||||||||||||||
Servicing | Servicing | Servicing | ||||||||||||||||||||||
Fees | Loan | Fees | Loan | Fees | Loan | |||||||||||||||||||
Received | Repurchases | Received | Repurchases | Received | Repurchases | |||||||||||||||||||
Total securitization trusts | $ | 29,129 | $ | — | $ | 32,593 | $ | — | $ | 25,535 | $ | — |
4. | Accounts Receivable |
December 31 | ||||||||
2010 | 2009 | |||||||
Delinquency advances | $ | 148,752 | $ | 206,446 | ||||
Corporate and escrow advances | 233,432 | 275,001 | ||||||
Insurance deposits | 6,390 | 6,025 | ||||||
Accrued interest (includes $2,392 and $0, respectively, subject to ABS nonrecourse debt) | 4,302 | 3,353 | ||||||
Receivable from trusts | 30,095 | 1,779 | ||||||
Other | 16,100 | 17,370 | ||||||
Total accounts receivable | $ | 439,071 | $ | 509,974 | ||||
F-21
Table of Contents
5. | Mortgage Loans Held for Sale and Investment |
December 31 | ||||||||
2010 | 2009 | |||||||
Mortgage loans held for sale—unpaid principal balance | $ | 366,880 | $ | 201,121 | ||||
Mark-to-market adjustment | 4,280 | 2,010 | ||||||
Total mortgage loans held for sale | $ | 371,160 | $ | 203,131 | ||||
December 31, | ||||||||||||
2010 | 2009 | 2008 | ||||||||||
Mortgage loans held for sale | $ | 2,016 | $ | 920 | $ | 101,418 |
December 31 | ||||||||
2010 | 2009 | |||||||
Mortgage loans held for sale—beginning balance | $ | 203,131 | $ | 560,354 | ||||
Mortgage loans originated and purchased, net of fees | 2,791,639 | 1,480,549 | ||||||
Cost of loans sold, net of fees | (2,621,275 | ) | (1,007,369 | ) | ||||
Principal payments/prepayments received on mortgage loans held for sale and other changes (including fair valuemark-to-market adjustments from adoption of ASC 825 and other lower of cost or market valuation adjustments) | (1,508 | ) | (437,956 | ) | ||||
Transfer of mortgage loans held for sale to mortgage loans held for investment | — | (319,183 | ) | |||||
Transfer of mortgage loans held for sale to real estate owned | (827 | ) | (73,264 | ) | ||||
Mortgage loans held for sale—ending balance | $ | 371,160 | $ | 203,131 | ||||
F-22
Table of Contents
5. | Mortgage Loans Held for Sale and Investment (continued) |
December 31 | ||||||||
2010 | 2009 | |||||||
Mortgage loans held for investment, subject to nonrecourse debt—Legacy Assets, net—unpaid principal balance | $ | 412,398 | $ | 490,610 | ||||
Transfer discount | ||||||||
Accretable | (25,219 | ) | (22,040 | ) | ||||
Non-accretable | (117,041 | ) | (166,660 | ) | ||||
Allowance for loan losses | (3,298 | ) | — | |||||
Total mortgage loans held for investment, subject to nonrecourse debt—Legacy Assets, net | $ | 266,840 | $ | 301,910 | ||||
December 31, | ||||||||
2010 | 2009 | |||||||
Balance at the beginning of the period | $ | 22,040 | $ | — | ||||
Additions | — | 23,331 | ||||||
Accretion | (4,082 | ) | (1,291 | ) | ||||
Reclassifications from (to) nonaccretable discount | 7,261 | — | ||||||
Disposals | — | — | ||||||
Balance at the end of the period | $ | 25,219 | $ | 22,040 | ||||
F-23
Table of Contents
5. | Mortgage Loans Held for Sale and Investment (continued) |
December 31, 2010 | ||||||||||||
Non- | ||||||||||||
Performing | Performing | Total | ||||||||||
Balance at the beginning of the period | $ | — | $ | — | $ | — | ||||||
Provision for loan losses | 829 | 2,469 | 3,298 | |||||||||
Recoveries on loans previously charged-off | — | — | — | |||||||||
Charge-offs | — | — | — | |||||||||
Balance at the end of the period | $ | 829 | $ | 2,469 | $ | 3,298 | ||||||
Ending balance: Collectively evaluated for impairment | $ | 311,122 | $ | 101,276 | $ | 412,398 |
2010 | ||||
(In thousands) | ||||
Credit Quality by Delinquency Status | ||||
Performing | $ | 311,122 | ||
Non-Performing | 101,276 | |||
Total | $ | 412,398 | ||
Credit Quality byLoan-to-Value Ratio | ||||
Less than 60 | $ | 47,627 | ||
Less than 70 and more than 60 | 17,498 | |||
Less than 80 and more than 70 | 26,805 | |||
Less than 90 and more than 80 | 36,125 | |||
Less than 100 and more than 90 | 37,599 | |||
Greater than 100 | 246,744 | |||
Total | $ | 412,398 | ||
F-24
Table of Contents
5. | Mortgage Loans Held for Sale and Investment (continued) |
Mortgage loans held for investment, subject to ABS nonrecourse debt—unpaid principal balance | $ | 983,106 | ||
Fair value adjustment | (444,666 | ) | ||
Mortgage loans held for investment, subject to ABS nonrecourse debt, net | $ | 538,440 | ||
6. | Investment in Debt Securities |
December 31, 2009 | ||||||||||||
Outstanding | Accreted | Fair | ||||||||||
Face | Cost | Value | ||||||||||
Retained bonds security rating | ||||||||||||
BBs | $ | 68,432 | $ | 2,486 | $ | 2,486 | ||||||
Bs | — | — | — | |||||||||
Total retained bonds | 68,432 | 2,486 | 2,486 | |||||||||
Retained net interest margin securities | 11,950 | — | — | |||||||||
Total investment in debt securities | $ | 80,382 | $ | 2,486 | $ | 2,486 | ||||||
F-25
Table of Contents
6. | Investment in Debt Securities (continued) |
Year Ended December 31, 2009 | Year Ended December 31, 2008 | |||||||||||||||
Unrealized | Unrealized | |||||||||||||||
Other-than- | Gains | Other-than- | Gains | |||||||||||||
Temporary | (Losses)(1) | Temporary(2) | (Losses)(1) | |||||||||||||
Retained bonds security rating | ||||||||||||||||
BBs | $ | (5,505 | ) | $ | — | $ | (40,901 | ) | $ | — | ||||||
Bs | (1,214 | ) | — | (3,670 | ) | — | ||||||||||
Total retained bonds | (6,719 | ) | — | (44,571 | ) | — | ||||||||||
Retained net interest margin securities | (90 | ) | — | (10,641 | ) | — | ||||||||||
Total investment in debt securities | $ | (6,809 | ) | $ | — | $ | (55,212 | ) | $ | — | ||||||
(1) | Unrealized gains (losses) are recorded as a component of other comprehensive income (loss). | |
(2) | As part of the 2008 impairment charges, Nationstar reclassified approximately $3.9 million in unrealized losses from other comprehensive income (loss). |
7. | Mortgage Servicing Rights |
December 31 | ||||||||
2010 | 2009 | |||||||
Discount rate | 9.7% to 30.0% | 15.0% | ||||||
Total prepayment speeds | 10.57% to 28.71% | 12.89% to 25.40% | ||||||
Expected weighted-average life | 3.49 to 6.75��years | 3.50 to 6.37 years | ||||||
Credit losses | 5.82% to 60.19% | 12.50% to 64.62% |
F-26
Table of Contents
7. | Mortgage Servicing Rights (continued) |
December 31 | ||||||||
2010 | 2009 | |||||||
Fair value at the beginning of the period | $ | 114,605 | $ | 110,808 | ||||
Additions: | ||||||||
Servicing resulting from transfers of financial assets | 26,253 | 8,332 | ||||||
Recognition of MSRs from derecognition of variable interest entities | 2,866 | — | ||||||
Purchases of servicing assets | 17,812 | 23,380 | ||||||
Deductions: | ||||||||
Derecognition of servicing assets due to new accounting guidance on consolidation of variable interest entities | (10,431 | ) | — | |||||
Changes in fair value: | ||||||||
Due to changes in valuation inputs or assumptions used in the valuation model | 9,455 | (9,355 | ) | |||||
Other changes in fair value | (15,498 | ) | (18,560 | ) | ||||
Fair value at the end of the period | $ | 145,062 | $ | 114,605 | ||||
Unpaid principal balance of loans serviced for others | ||||||||
Originated or purchased mortgage loans | $ | 31,686,641 | $ | 32,109,547 | ||||
Subserviced for others | 30,649,472 | 793,428 | ||||||
Total unpaid principal balance of loans serviced for others | $ | 62,336,113 | $ | 32,902,975 | ||||
Total Prepayment | ||||||||||||||||||||||||
Discount Rate | Speeds | Credit Losses | ||||||||||||||||||||||
100 bps | 200 bps | 10% | 20% | 10% | 20% | |||||||||||||||||||
Adverse | Adverse | Adverse | Adverse | Adverse | Adverse | |||||||||||||||||||
Change | Change | Change | Change | Change | Change | |||||||||||||||||||
December 31, 2010 | ||||||||||||||||||||||||
Mortgage servicing rights | $ | (3,828 | ) | $ | (7,458 | ) | $ | (8,175 | ) | $ | (16,042 | ) | $ | (4,310 | ) | $ | (9,326 | ) |
F-27
Table of Contents
7. | Mortgage Servicing Rights (continued) |
For the Years Ended | ||||||||||||
December 31, | ||||||||||||
2010 | 2009 | 2008 | ||||||||||
Servicing fees | $ | 103,690 | $ | 89,893 | $ | 60,021 | ||||||
Ancillary fees | 70,130 | 28,642 | 19,734 | |||||||||
Total servicing and ancillary fees | $ | 173,820 | $ | 118,535 | $ | 79,755 | ||||||
8. | Other Assets |
December 31, | ||||||||
2010 | 2009 | |||||||
Deferred financing costs | $ | 14,396 | $ | 11,786 | ||||
Derivative financial instruments | 8,666 | 7,236 | ||||||
Prepaid expenses | 3,379 | 2,791 | ||||||
Other | 3,095 | 2,415 | ||||||
Total other assets | $ | 29,536 | $ | 24,228 | ||||
9. | Derivative Financial Instruments |
F-28
Table of Contents
9. | Derivative Financial Instruments (continued) |
Recorded | ||||||||||||||
Expiration | Outstanding | Fair | Gains / | |||||||||||
Dates | Notional | Value | Losses | |||||||||||
Year-ended December 31, 2010 | ||||||||||||||
MORTGAGE LOANS HELD FOR SALE | ||||||||||||||
Loan sale commitments | 2011 | $ | 28,641 | $ | 42 | $ | (1,397 | ) | ||||||
Other Assets | ||||||||||||||
IRLCs | 2011 | 391,990 | 4,703 | 2,289 | ||||||||||
Forward MBS trades | 2011 | 546,500 | 3,963 | 580 | ||||||||||
LIABILITIES | ||||||||||||||
Interest rate swaps and caps | 2011-2013 | 429,000 | 7,801 | 8,872 | ||||||||||
Interest rate swap,subject to ABS nonrecourse debt | 2013 | 245,119 | 18,781 | 2,049 | ||||||||||
Year-ended December 31, 2009 | ||||||||||||||
Other Assets | ||||||||||||||
IRLCs | 2010 | $ | 278,181 | $ | 2,414 | $ | 1,207 | |||||||
Forward MBS trades | 2010 | 292,553 | 3,383 | (210 | ) | |||||||||
Loan sale commitments | 2010 | 56,131 | 1,439 | 1,439 | ||||||||||
Interest rate cap agreements | 2011 | 344,075 | — | (14 | ) | |||||||||
Interest rate swap | 2013 | 220,000 | — | — |
F-29
Table of Contents
10. | Indebtedness |
December 31, 2010 | December 31, 2009 | |||||||||||||||
Collateral | Collateral | |||||||||||||||
Outstanding | Pledged | Outstanding | Pledged | |||||||||||||
Financial institutions repurchase facility (2010) | $ | 43,059 | $ | 45,429 | $ | — | $ | — | ||||||||
Financial services company repurchase facility | 209,477 | 223,119 | 149,449 | 159,281 | ||||||||||||
Financial services company unsecured line of credit | — | N/A | 88,915 | N/A | ||||||||||||
Financial institutions repurchase facility (2009) | 39,014 | 40,640 | 31,582 | 33,245 | ||||||||||||
Financial services company2009-ADV1 advance facility | 236,808 | 285,226 | 240,935 | 291,462 | ||||||||||||
Financial institutions2010-ADV1 advance facility | — | — | — | — | ||||||||||||
GSE MSR facility | 15,733 | 18,951 | 21,286 | 23,185 | ||||||||||||
GSE ASAP+ facility | 51,105 | 53,230 | 7,755 | 7,803 | ||||||||||||
GSE EAF facility | 114,562 | 142,327 | 231,935 | 252,034 | ||||||||||||
Total notes payable | $ | 709,758 | $ | 808,922 | $ | 771,857 | $ | 767,010 | ||||||||
F-30
Table of Contents
10. | Indebtedness (continued) |
F-31
Table of Contents
10. | Indebtedness (continued) |
11. | Repurchase Reserves |
F-32
Table of Contents
11. | Repurchase Reserves (continued) |
December 31, | ||||||||||||
2010 | 2009 | 2008 | ||||||||||
Repurchase reserves, beginning of period | $ | 3,648 | $ | 3,965 | $ | 4,196 | ||||||
Additions | 4,649 | 820 | 1,164 | |||||||||
Charge-offs | (976 | ) | (1,137 | ) | (1,395 | ) | ||||||
Repurchase reserves, end of period | $ | 7,321 | $ | 3,648 | $ | 3,965 | ||||||
12. | General and Administrative |
December 31, | ||||||||||||
2010 | 2009 | 2008 | ||||||||||
Depreciation and amortization | $ | 2,117 | $ | 1,767 | $ | 1,309 | ||||||
Advertising | 4,559 | 3,882 | 3,318 | |||||||||
Equipment | 3,862 | 3,300 | 3,359 | |||||||||
Servicing | 14,122 | 1,951 | 1,739 | |||||||||
Telecommunications | 2,347 | 1,590 | 1,479 | |||||||||
Legal and professional fees | 14,736 | 9,610 | 6,184 | |||||||||
Postage | 4,220 | 2,315 | 1,057 | |||||||||
Stationary and supplies | 2,594 | 1,500 | 903 | |||||||||
Travel | 2,231 | 827 | 740 | |||||||||
Dues and fees | 4,114 | 2,264 | 1,383 | |||||||||
Insurance and taxes | 2,798 | 1,218 | 1,680 | |||||||||
Other | 1,213 | 270 | (957 | ) | ||||||||
Total general and administrative expense | $ | 58,913 | $ | 30,494 | $ | 22,194 | ||||||
13. | Members’ Equity |
F-33
Table of Contents
13. | Members’ Equity (continued) |
September 17, 2010 | June 30, 2011 | June 30, 2012 | Total | |||||
Class A Units | 93,494 | 182,016 | 182,016 | 457,526 | ||||
Class C Units | 1,101,332 | 1,101,334 | 1,101,334 | 3,304,000 | ||||
Class D Units | 1,116,000 | 1,116,000 | 1,116,000 | 3,348,000 |
December 31, | ||||||||||||
2010 | 2009 | 2008 | ||||||||||
Share-based compensation | $ | 12,856 | $ | 827 | $ | 2,333 |
14. | Commitments and Contingencies |
F-34
Table of Contents
14. | Commitments and Contingencies (continued) |
2011 | $ | 7,015 | ||
2012 | 6,756 | |||
2013 | 6,543 | |||
2014 | 4,591 | |||
Thereafter | 4,624 | |||
Total | $ | 29,529 | ||
15. | Employee Benefits |
16. | Fair Value Measurements |
F-35
Table of Contents
16. | Fair Value Measurements (continued) |
F-36
Table of Contents
16. | Fair Value Measurements (continued) |
F-37
Table of Contents
16. | Fair Value Measurements (continued) |
December 31, 2010 | ||||||||||||||||
Total | Recurring Fair Value Measurements | |||||||||||||||
Fair Value | Level 1 | Level 2 | Level 3 | |||||||||||||
Assets | ||||||||||||||||
Mortgage loans held for sale(1) | $ | 371,160 | $ | — | $ | 371,160 | $ | — | ||||||||
Mortgage loans held for investment, subject to ABS nonrecourse debt(1) | 538,440 | — | — | 538,440 | ||||||||||||
Mortgage servicing rights(1) | 145,062 | — | — | 145,062 | ||||||||||||
Other assets: | ||||||||||||||||
IRLCs | 4,703 | — | 4,703 | — | ||||||||||||
Forward MBS trades | 3,963 | — | 3,963 | — | ||||||||||||
Total assets | $ | 1,063,328 | $ | — | $ | 379,826 | $ | 683,502 | ||||||||
Liabilities | ||||||||||||||||
Derivative financial instruments | ||||||||||||||||
Interest rate swaps | $ | 7,801 | $ | — | $ | 7,801 | $ | — | ||||||||
Derivative financial instruments, subject to ABS nonrecourse debt | 18,781 | — | 18,781 | — | ||||||||||||
ABS nonrecourse debt(1) | 496,692 | — | — | 496,692 | ||||||||||||
Total liabilities | $ | 523,274 | $ | — | $ | 26,582 | $ | 496,692 | ||||||||
(1) | Based on the nature and risks of these assets and liabilities, the Company has determined that presenting them as a single class is appropriate. |
December 31, 2009 | ||||||||||||||||
Total | Recurring Fair Value Measurements | |||||||||||||||
Fair Value | Level 1 | Level 2 | Level 3 | |||||||||||||
Assets | ||||||||||||||||
Mortgage loans held for sale(1) | $ | 203,131 | $ | — | $ | 203,131 | $ | — | ||||||||
Investment in debt securities(1) | 2,486 | — | — | 2,486 | ||||||||||||
Mortgage servicing rights(1) | 114,605 | — | — | 114,605 | ||||||||||||
Other assets: | ||||||||||||||||
IRLCs | 2,414 | — | 2,414 | — | ||||||||||||
Forward MBS trades | 3,383 | — | 3,383 | — | ||||||||||||
Loan sale commitments | 1,439 | — | 1,439 | — | ||||||||||||
Total assets | $ | 327,458 | $ | — | $ | 210,367 | $ | 117,091 | ||||||||
(1) | Based on the nature and risks of these assets and liabilities, the Company has determined that presenting them as a single class is appropriate. |
F-38
Table of Contents
16. | Fair Value Measurements (continued) |
Level 3 Recurring Fair Value Measurements | ||||||||||||||||||||||||
Total Gains (Losses) Included in | Purchases, | |||||||||||||||||||||||
Fair Value— | Other | Sale, | Transfers | |||||||||||||||||||||
Beginning of | Net Income | Comprehensive | Issuances, and | In/Out of | Fair Value— | |||||||||||||||||||
Period(1) | (Loss) | Income | Settlements | Level 3 | End of Period | |||||||||||||||||||
Year-ended December 31, 2010 | ||||||||||||||||||||||||
Assets | ||||||||||||||||||||||||
Mortgage loans held for investment, subject to ABS nonrecourse debt | $ | 928,891 | $ | 71,239 | $ | — | $ | (461,690 | ) | $ | — | $ | 538,440 | |||||||||||
Mortgage servicing rights | 104,174 | 20,210 | — | 20,678 | — | 145,062 | ||||||||||||||||||
Total assets | $ | 1,033,065 | $ | 91,449 | $ | — | $ | (441,012 | ) | $ | — | $ | 683,502 | |||||||||||
LIABILITIES | ||||||||||||||||||||||||
ABS nonrecourse debt | $ | 884,846 | $ | (16,937 | ) | $ | — | $ | (371,217 | ) | $ | — | $ | 496,692 | ||||||||||
Year-ended December 31, 2009 | ||||||||||||||||||||||||
Assets | ||||||||||||||||||||||||
Investment in debt securities | $ | 9,294 | $ | (6,808 | ) | $ | — | $ | — | $ | — | $ | 2,486 | |||||||||||
Mortgage servicing rights | 110,808 | (19,583 | ) | — | 23,380 | — | 114,605 | |||||||||||||||||
Total assets | $ | 120,102 | $ | (26,391 | ) | $ | — | $ | 23,380 | $ | — | $ | 117,091 | |||||||||||
(1) | Amounts include derecognition of previously retained beneficial interests and mortgage servicing rights upon adoption of ASC 810 related to consolidation of certain VIEs. |
Total Gains | ||||||||||||||||||||
Nonrecurring Fair Value | Total | (Losses) | ||||||||||||||||||
Measurements | Estimated | Included in | ||||||||||||||||||
Level 1 | Level 2 | Level 3 | Fair Value | Earnings | ||||||||||||||||
Year-ended December 31, 2010 | ||||||||||||||||||||
Assets | ||||||||||||||||||||
Real estate owned(1) | $ | — | $ | — | $ | 27,337 | $ | 27,337 | $ | — | ||||||||||
Total assets | $ | — | $ | — | $ | 27,337 | $ | 27,337 | $ | — | ||||||||||
Year-ended December 31, 2009 | ||||||||||||||||||||
Assets | ||||||||||||||||||||
Real estate owned(1) | $ | — | $ | — | $ | 10,262 | $ | 10,262 | $ | (7,512 | ) | |||||||||
Total assets | $ | — | $ | — | $ | 10,262 | $ | 10,262 | $ | (7,512 | ) | |||||||||
(1) | Based on the nature and risks of these assets and liabilities, the Company has determined that presenting them as a single class is appropriate. |
F-39
Table of Contents
16. | Fair Value Measurements (continued) |
December 31, 2010 | December 31, 2009 | |||||||||||||||
Carrying | Carrying | |||||||||||||||
Amount | Fair Value | Amount | Fair Value | |||||||||||||
Financial assets: | ||||||||||||||||
Cash and cash equivalents | $ | 21,223 | $ | 21,223 | $ | 41,645 | $ | 41,645 | ||||||||
Restricted cash | 91,125 | 91,125 | 52,795 | 52,795 | ||||||||||||
Mortgage loans held for sale | 371,160 | 371,160 | 203,131 | 203,131 | ||||||||||||
Mortgage loans held for investment, subject to nonrecourse debt—Legacy assets | 266,840 | 239,035 | 301,910 | 284,774 | ||||||||||||
Mortgage loans held for investment, subject to ABS nonrecourse debt | 538,440 | 538,440 | — | — | ||||||||||||
Investment in debt securities | — | — | 2,486 | 2,486 | ||||||||||||
Derivative instruments | 8,666 | 8,666 | 7,236 | 7,236 | ||||||||||||
Financial liabilities: | ||||||||||||||||
Notes payable | 709,758 | 709,758 | 771,857 | 771,857 | ||||||||||||
Unsecured senior notes | 244,061 | 244,375 | — | — | ||||||||||||
Derivative financial instruments | 7,801 | 7,801 | — | — | ||||||||||||
Derivative instruments, subject to ABS nonrecourse debt | 18,781 | 18,781 | — | — | ||||||||||||
Nonrecourse debt | 138,662 | 140,197 | 177,675 | 178,161 | ||||||||||||
ABS nonrecourse debt | 496,692 | 496,692 | — | — |
17. | Termination of the Company |
18. | Limited Liability of Members |
19. | Restructuring Charges |
F-40
Table of Contents
19. | Restructuring Charges (continued) |
Liability Balance | Restructuring | Restructuring | Liability Balance | |||||||||||||
at January 1 | Adjustments | Settlements | at December 31 | |||||||||||||
Year-ended December 31, 2008 | ||||||||||||||||
Restructuring charges: | ||||||||||||||||
Employee severance and other | $ | 1,048 | $ | 270 | $ | (1,318 | ) | $ | — | |||||||
Lease terminations | 18,310 | 1,237 | (8,644 | ) | 10,903 | |||||||||||
Total | $ | 19,358 | $ | 1,507 | $ | (9,962 | ) | $ | 10,903 | |||||||
Year-ended December 31, 2009 | ||||||||||||||||
Restructuring charges: | ||||||||||||||||
Lease terminations | $ | 10,903 | $ | 2,222 | $ | (3,660 | ) | $ | 9,465 | |||||||
Total | $ | 10,903 | $ | 2,222 | $ | (3,660 | ) | $ | 9,465 | |||||||
Year-ended December 31, 2010 | ||||||||||||||||
Restructuring charges: | ||||||||||||||||
Lease terminations | $ | 9,465 | $ | 2,287 | $ | (2,569 | ) | $ | 9,183 | |||||||
Total | $ | 9,465 | $ | 2,287 | $ | (2,569 | ) | $ | 9,183 | |||||||
20. | Concentrations of Credit Risk |
December 31, 2010 | December 31, 2009 | |||||||||||||||
Unpaid | % of | Unpaid | % of | |||||||||||||
Principal | Total | Principal | Total | |||||||||||||
State | Balance | Outstanding | Balance | Outstanding | ||||||||||||
Florida | $ | 62,775 | 14.4 | % | $ | 78,331 | 15.1 | % | ||||||||
Texas | 58,815 | 13.4 | % | 65,519 | 12.6 | % | ||||||||||
California | 41,019 | 9.4 | % | 55,785 | 10.7 | % | ||||||||||
All other states(1) | 274,235 | 62.8 | % | 320,010 | 61.6 | % | ||||||||||
$ | 436,844 | 100.0 | % | $ | 519,645 | 100.0 | % | |||||||||
(1) | No other state contains more than 5.0% of the total outstanding. |
F-41
Table of Contents
20. | Concentrations of Credit Risk (continued) |
December 31, | December 31, | |||||||
2010 | 2009 | |||||||
Interest only ARMs | $ | 43,687 | $ | 57,745 | ||||
Amortizing ARMs: | ||||||||
2/28 | 71,614 | 108,052 | ||||||
3/27 | 5,608 | 9,900 | ||||||
All other ARMs | 11,173 | 5,617 | ||||||
$ | 132,082 | $ | 181,314 | |||||
21. | Capital Requirements |
22. | Business Segment Reporting |
F-42
Table of Contents
22. | Business Segment Reporting (continued) |
Year Ended December 31, 2010 | ||||||||||||||||||||||||
Operating | Legacy Portfolio | |||||||||||||||||||||||
Servicing | Originations | Segments | and Other | Eliminations | Consolidated | |||||||||||||||||||
REVENUES: | ||||||||||||||||||||||||
Servicing fee income | $ | 175,569 | $ | — | $ | 175,569 | $ | 820 | $ | (9,263 | ) | $ | 167,126 | |||||||||||
Other fee income | 7,273 | 7,042 | 14,315 | 2,643 | — | 16,958 | ||||||||||||||||||
Total fee income | 182,842 | 7,042 | 189,884 | 3,463 | (9,263 | ) | 184,084 | |||||||||||||||||
Gain (loss) on mortgage loans held for sale | — | 77,498 | 77,498 | — | (154 | ) | 77,344 | |||||||||||||||||
Total revenues | 182,842 | 84,540 | 267,382 | 3,463 | (9,417 | ) | 261,428 | |||||||||||||||||
Total expenses and impairments | 107,283 | 86,920 | 194,203 | 26,927 | (154 | ) | 220,976 | |||||||||||||||||
Other income (expense): | ||||||||||||||||||||||||
Interest income | 263 | 11,848 | 12,111 | 77,521 | 9,263 | 98,895 | ||||||||||||||||||
Interest expense | (51,791 | ) | (8,806 | ) | (60,597 | ) | (55,566 | ) | — | (116,163 | ) | |||||||||||||
Loss on interest rate swaps and caps | (9,801 | ) | — | (9,801 | ) | — | — | (9,801 | ) | |||||||||||||||
Change in fair value on ABS nonrecourse debt | — | — | — | (23,297 | ) | — | (23,297 | ) | ||||||||||||||||
Total other income (expense) | (61,329 | ) | 3,042 | (58,287 | ) | (1,342 | ) | 9,263 | (50,366 | ) | ||||||||||||||
NET INCOME (LOSS) | $ | 14,230 | $ | 662 | $ | 14,892 | $ | (24,806 | ) | $ | — | $ | (9,914 | ) | ||||||||||
Depreciation and amortization | $ | 1,092 | $ | 781 | $ | 1,873 | $ | 244 | $ | — | $ | 2,117 | ||||||||||||
Total assets | 689,923 | 402,627 | 1,092,550 | 854,631 | — | 1,947,181 |
F-43
Table of Contents
22. | Business Segment Reporting (continued) |
Year Ended December 31, 2009 | ||||||||||||||||||||||||
Operating | Legacy Portfolio | |||||||||||||||||||||||
Servicing | Originations | Segments | and Other | Eliminations | Consolidated | |||||||||||||||||||
REVENUES: | ||||||||||||||||||||||||
Servicing fee income | $ | 91,266 | $ | — | $ | 91,266 | $ | — | $ | (1,071 | ) | $ | 90,195 | |||||||||||
Other fee income | 8,867 | 1,156 | 10,023 | — | — | 10,023 | ||||||||||||||||||
Total fee income | 100,133 | 1,156 | 101,289 | — | (1,071 | ) | 100,218 | |||||||||||||||||
Gain (loss) on mortgage loans held for sale | — | 54,437 | 54,437 | (75,786 | ) | — | (21,349 | ) | ||||||||||||||||
Total revenues | 100,133 | 55,593 | 155,726 | (75,786 | ) | (1,071 | ) | 78,869 | ||||||||||||||||
Total expenses and impairments | 70,897 | 47,532 | 118,429 | 25,009 | (1,071 | ) | 142,367 | |||||||||||||||||
Other income (expense): | ||||||||||||||||||||||||
Interest income | 4,143 | 4,261 | 8,404 | 44,114 | — | 52,518 | ||||||||||||||||||
Interest expense | (25,877 | ) | (3,438 | ) | (29,315 | ) | (40,568 | ) | — | (69,883 | ) | |||||||||||||
Loss on interest rate swaps and caps | — | — | — | (14 | ) | — | (14 | ) | ||||||||||||||||
Total other income (expense) | (21,734 | ) | 823 | (20,911 | ) | 3,532 | — | (17,379 | ) | |||||||||||||||
NET INCOME (LOSS) | $ | 7,502 | $ | 8,884 | $ | 16,386 | $ | (97,263 | ) | $ | — | $ | (80,877 | ) | ||||||||||
Depreciation and amortization | $ | 1,004 | $ | 538 | $ | 1,542 | $ | 225 | $ | — | $ | 1,767 | ||||||||||||
Total assets | 681,543 | 239,202 | 920,745 | 359,440 | — | 1,280,185 |
Year Ended December 31, 2008 | ||||||||||||||||||||||||
Operating | Legacy Portfolio | |||||||||||||||||||||||
Servicing | Originations | Segments | and Other | Eliminations | Consolidated | |||||||||||||||||||
REVENUES: | ||||||||||||||||||||||||
Servicing fee income | $ | 69,235 | $ | — | $ | 69,235 | $ | — | $ | (1,183 | ) | $ | 68,052 | |||||||||||
Other fee income | 5,366 | 589 | 5,955 | — | — | 5,955 | ||||||||||||||||||
Total fee income | 74,601 | 589 | 75,190 | — | (1,183 | ) | 74,007 | |||||||||||||||||
Gain (loss) on mortgage loans held for sale | — | 21,985 | 21,985 | (108,648 | ) | — | (86,663 | ) | ||||||||||||||||
Total revenues | 74,601 | 22,574 | 97,175 | (108,648 | ) | (1,183 | ) | (12,656 | ) | |||||||||||||||
Total expenses and impairments | 55,037 | 30,795 | 85,832 | 63,128 | (1,183 | ) | 147,777 | |||||||||||||||||
Other income (expense): | ||||||||||||||||||||||||
Interest income | 10,872 | 1,920 | 12,792 | 79,268 | — | 92,060 | ||||||||||||||||||
Interest expense | (15,718 | ) | (1,289 | ) | (17,007 | ) | (48,541 | ) | — | (65,548 | ) | |||||||||||||
Loss on interest rate swaps and caps | — | — | — | (23,689 | ) | — | (23,689 | ) | ||||||||||||||||
Total other income (expense) | (4,846 | ) | 631 | (4,215 | ) | 7,038 | — | 2,823 | ||||||||||||||||
NET INCOME (LOSS) | $ | 14,718 | $ | (7,590 | ) | $ | 7,128 | $ | (164,738 | ) | — | $ | (157,610 | ) | ||||||||||
Depreciation and amortization | $ | 789 | $ | 383 | $ | 1,172 | $ | 137 | — | $ | 1,309 | |||||||||||||
Total assets | 479,819 | 72,888 | 552,707 | 569,294 | — | 1,122,001 |
F-44
Table of Contents
23. | Guarantor Financial Statement Information |
F-45
Table of Contents
23. | Guarantor Financial Statement Information (continued) |
Non- | ||||||||||||||||||||
Issuer | Guarantor | Guarantor | ||||||||||||||||||
(Parent) | (Subsidiaries) | (Subsidiaries) | Eliminations | Consolidated | ||||||||||||||||
Assets | ||||||||||||||||||||
Cash and cash equivalents | $ | 20,904 | $ | 319 | $ | — | $ | — | $ | 21,223 | ||||||||||
Restricted cash | 57,579 | — | 33,546 | — | 91,125 | |||||||||||||||
Accounts receivable, net | 435,096 | — | 3,975 | — | 439,071 | |||||||||||||||
Mortgage loans held for sale | 371,160 | — | — | — | 371,160 | |||||||||||||||
Mortgage loans held for investment, subject to nonrecourse debt-Legacy Assets, net | 5,536 | — | 261,304 | — | 266,840 | |||||||||||||||
Mortgage loans held for investment, subject to ABS nonrecourse debt (at fair value) | — | — | 538,440 | — | 538,440 | |||||||||||||||
Investment in debtsecurities—available-for-sale | 597 | — | — | (597 | ) | — | ||||||||||||||
Investment in subsidiaries | 158,276 | — | — | (158,276 | ) | — | ||||||||||||||
Receivables from affiliates | — | 62,171 | 132,353 | (185,531 | ) | 8,993 | ||||||||||||||
Mortgage servicing rights | 145,062 | — | — | — | 145,062 | |||||||||||||||
Property and equipment, net | 7,559 | 835 | — | — | 8,394 | |||||||||||||||
Real estate owned, net | 323 | — | 27,014 | — | 27,337 | |||||||||||||||
Other assets | 29,536 | — | — | — | 29,536 | |||||||||||||||
Total assets | $ | 1,231,628 | $ | 63,325 | $ | 996,632 | $ | (344,404 | ) | $ | 1,947,181 | |||||||||
Liabilities and members’ equity | ||||||||||||||||||||
Notes payable | $ | 472,950 | $ | — | $ | 236,808 | $ | — | $ | 709,758 | ||||||||||
Unsecured senior notes | 244,061 | — | — | — | 244,061 | |||||||||||||||
Payables and accrued liabilities | 73,785 | — | 1,269 | — | 75,054 | |||||||||||||||
Payables to affiliates | 185,531 | — | — | (185,531 | ) | — | ||||||||||||||
Derivative financial instruments | — | — | 7,801 | — | 7,801 | |||||||||||||||
Derivative financial instruments, subject to ABS nonrecourse debt | — | — | 18,781 | — | 18,781 | |||||||||||||||
Nonrecourse debt—Legacy Assets | — | — | 138,662 | — | 138,662 | |||||||||||||||
ABS nonrecourse debt (at fair value) | — | — | 497,289 | (597 | ) | 496,692 | ||||||||||||||
Total liabilities | 976,327 | — | 900,610 | (186,128 | ) | 1,690,809 | ||||||||||||||
Total members’ equity | 255,301 | 63,325 | 96,022 | (158,276 | ) | 256,372 | ||||||||||||||
Total liabilities and members’ equity | $ | 1,231,628 | $ | 63,325 | $ | 996,632 | $ | (344,404 | ) | $ | 1,947,181 | |||||||||
F-46
Table of Contents
23. | Guarantor Financial Statement Information (continued) |
Non- | ||||||||||||||||||||
Issuer | Guarantor | Guarantor | ||||||||||||||||||
(Parent) | (Subsidiaries) | (Subsidiaries) | Eliminations | Consolidated | ||||||||||||||||
Revenues: | ||||||||||||||||||||
Servicing fee income | $ | 174,660 | $ | 1,730 | $ | — | $ | (9,264 | ) | $ | 167,126 | |||||||||
Other fee income | 8,259 | 7,551 | 1,148 | — | 16,958 | |||||||||||||||
Total fee income | 182,919 | 9,281 | 1,148 | (9,264 | ) | 184,084 | ||||||||||||||
Gain on mortgage loans held for sale | 77,344 | — | — | — | 77,344 | |||||||||||||||
Total revenues | 260,263 | 9,281 | 1,148 | (9,264 | ) | 261,428 | ||||||||||||||
Expenses and impairments: | ||||||||||||||||||||
Salaries, wages, and benefits | 146,746 | 2,369 | — | — | 149,115 | |||||||||||||||
General and administrative | 57,329 | 1,642 | (58 | ) | — | 58,913 | ||||||||||||||
Loss on mortgage loans held for investment and foreclosed real estate | 1,558 | — | 1,945 | — | 3,503 | |||||||||||||||
Occupancy | 9,289 | 156 | — | — | 9,445 | |||||||||||||||
Total expenses and impairments | 214,922 | 4,167 | 1,887 | — | 220,976 | |||||||||||||||
Other income (expense): | ||||||||||||||||||||
Interest income | 17,019 | 6 | 72,606 | 9,264 | 98,895 | |||||||||||||||
Interest expense | (54,075 | ) | — | (62,088 | ) | — | (116,163 | ) | ||||||||||||
Loss on interest rate swaps and caps | — | — | (9,801 | ) | — | (9,801 | ) | |||||||||||||
Fair value changes in ABS securitizations | — | — | (23,748 | ) | 451 | (23,297 | ) | |||||||||||||
Gain (loss) from subsidiaries | (18,650 | ) | — | — | 18,650 | — | ||||||||||||||
Total other income (expense) | (55,706 | ) | 6 | (23,031 | ) | 28,365 | (50,366 | ) | ||||||||||||
Net income (loss) | $ | (10,365 | ) | $ | 5,120 | $ | (23,770 | ) | $ | 19,101 | $ | (9,914 | ) | |||||||
F-47
Table of Contents
23. | Guarantor Financial Statement Information (continued) |
Non- | ||||||||||||||||||||
Issuer | Guarantor | Guarantor | ||||||||||||||||||
(Parent) | (Subsidiaries) | (Subsidiaries) | Eliminations | Consolidated | ||||||||||||||||
Operating activities | ||||||||||||||||||||
Net income (loss) | $ | (10,365 | ) | $ | 5,120 | $ | (23,770 | ) | $ | 19,101 | $ | (9,914 | ) | |||||||
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities: | ||||||||||||||||||||
Loss from subsidiaries | 18,650 | — | — | (18,650 | ) | — | ||||||||||||||
Share-based compensation | 12,856 | — | — | — | 12,856 | |||||||||||||||
Gain on mortgage loans held for sale | (77,344 | ) | — | — | — | (77,344 | ) | |||||||||||||
Loss on mortgage loans held for investment and foreclosed real estate | 1,558 | — | 1,945 | — | 3,503 | |||||||||||||||
Depreciation and amortization | 2,104 | 13 | — | — | 2,117 | |||||||||||||||
Fair value changes in ABS securitization | — | — | 23,297 | — | 23,297 | |||||||||||||||
Loss on interest rate swaps and caps | — | — | 8,872 | — | 8,872 | |||||||||||||||
Change in fair value of mortgage servicing rights | 6,043 | — | — | — | 6,043 | |||||||||||||||
Amortization of debt discount | 12,380 | — | 6,351 | — | 18,731 | |||||||||||||||
Amortization of premiums/discounts | — | — | (4,526 | ) | — | (4,526 | ) | |||||||||||||
Mortgage loans originated and purchased, net of fees | (2,791,639 | ) | — | — | — | (2,791,639 | ) | |||||||||||||
Cost of loans sold, net of fees | 2,621,275 | — | — | — | 2,621,275 | |||||||||||||||
Principal payments/prepayments received and other changes in mortgage loans originated as held for sale | 49,049 | — | (16,634 | ) | — | 32,415 | ||||||||||||||
Changes in assets and liabilities: | ||||||||||||||||||||
Accounts receivable, net | 71,364 | 3 | (31,979 | ) | — | 39,388 | ||||||||||||||
Payables to affiliates | (52,594 | ) | (5,110 | ) | 61,662 | — | 3,958 | |||||||||||||
Other assets | 1,152 | — | — | — | 1,152 | |||||||||||||||
Payables and accrued liabilities | 8,444 | (96 | ) | (185 | ) | — | 8,163 | |||||||||||||
Net cash provided by (used) in operating activities | (127,067 | ) | (70 | ) | 25,033 | 451 | (101,653 | ) | ||||||||||||
Investing activities | ||||||||||||||||||||
Principal payments received and other changes on mortgage loans held for investment, subject to ABS nonrecourse debt | — | — | 48,838 | — | 48,838 | |||||||||||||||
Proceeds from sales of real estate owned | 504 | — | 73,603 | — | 74,107 | |||||||||||||||
Purchase of mortgage servicing rights, net of liabilities incurred | (17,812 | ) | — | — | — | (17,812 | ) | |||||||||||||
Property and equipment additions, net of disposals | (3,923 | ) | (13 | ) | — | — | (3,936 | ) | ||||||||||||
Net cash provided by (used) in investing activities | (21,231 | ) | (13 | ) | 122,441 | — | 101,197 | |||||||||||||
Financing activities | ||||||||||||||||||||
Transfers to/from restricted cash, net | (38,617 | ) | — | 4,886 | — | (33,731 | ) | |||||||||||||
Issuance of unsecured notes, net of issue discount | 243,013 | — | — | — | 243,013 |
F-48
Table of Contents
23. | Guarantor Financial Statement Information (continued) |
Non- | ||||||||||||||||||||
Issuer | Guarantor | Guarantor | ||||||||||||||||||
(Parent) | (Subsidiaries) | (Subsidiaries) | Eliminations | Consolidated | ||||||||||||||||
Repayment of non-recourse debt—Legacy assets | — | — | (45,364 | ) | — | (45,364 | ) | |||||||||||||
Repayment of ABS nonrecourse debt | (146 | ) | — | (102,869 | ) | (451 | ) | (103,466 | ) | |||||||||||
Decrease in notes payable, net | (57,972 | ) | — | (4,127 | ) | — | (62,099 | ) | ||||||||||||
Debt financing costs | (14,923 | ) | — | — | — | (14,923 | ) | |||||||||||||
Tax related share-based settlement of units by members | (3,396 | ) | — | — | — | (3,396 | ) | |||||||||||||
Net cash provided by (used in) financing activities | 127,959 | — | (147,474 | ) | (451 | ) | (19,966 | ) | ||||||||||||
Net increase (decrease) in cash and cash equivalents | (20,339 | ) | (83 | ) | — | — | (20,422 | ) | ||||||||||||
Cash and cash equivalents at beginning of year | 41,243 | 402 | — | — | 41,645 | |||||||||||||||
Cash and cash equivalents at end of year | $ | 20,904 | $ | 319 | $ | — | $ | — | $ | 21,223 | ||||||||||
F-49
Table of Contents
23. | Guarantor Financial Statement Information (continued) |
Non- | ||||||||||||||||||||
Issuer | Guarantor | Guarantor | ||||||||||||||||||
(Parent) | (Subsidiaries) | (Subsidiaries) | Eliminations | Consolidated | ||||||||||||||||
Assets | ||||||||||||||||||||
Cash and cash equivalents | $ | 41,243 | $ | 402 | $ | — | $ | — | $ | 41,645 | ||||||||||
Restricted cash | 18,962 | — | 33,833 | — | 52,795 | |||||||||||||||
Accounts receivable, net | 506,460 | 3 | 3,511 | — | 509,974 | |||||||||||||||
Mortgage loans held for sale | 203,131 | — | — | — | 203,131 | |||||||||||||||
Mortgage loans held for investment, subject to nonrecourse debt—Legacy Assets, net | 6,413 | — | 295,497 | — | 301,910 | |||||||||||||||
Investment in debtsecurities—available-for-sale | 2,486 | — | — | — | 2,486 | |||||||||||||||
Investment in subsidiaries | 275,661 | — | — | (275,661 | ) | — | ||||||||||||||
Receivables from affiliates | — | 160,645 | 190,772 | (338,843 | ) | 12,574 | ||||||||||||||
Mortgage servicing rights | 114,605 | — | — | — | 114,605 | |||||||||||||||
Property and equipment, net | 5,740 | 835 | — | — | 6,575 | |||||||||||||||
Real estate owned, net | — | — | 10,262 | — | 10,262 | |||||||||||||||
Other assets | 24,228 | — | — | — | 24,228 | |||||||||||||||
Total assets | $ | 1,198,929 | $ | 161,885 | $ | 533,875 | $ | (614,504 | ) | $ | 1,280,185 | |||||||||
Liabilities and members’ equity | ||||||||||||||||||||
Notes payable | $ | 530,922 | $ | — | $ | 240,935 | $ | — | $ | 771,857 | ||||||||||
Payables and accrued liabilities | 65,341 | 96 | 1,393 | — | 66,830 | |||||||||||||||
Payables to affiliates | 338,843 | — | — | (338,843 | ) | — | ||||||||||||||
Nonrecourse debt—Legacy Assets | — | — | 177,675 | — | 177,675 | |||||||||||||||
Total liabilities | 935,106 | 96 | 420,003 | (338,843 | ) | 1,016,362 | ||||||||||||||
Total members’ equity | 263,823 | 161,789 | 113,872 | (275,661 | ) | 263,823 | ||||||||||||||
Total liabilities and members’ equity | $ | 1,198,929 | $ | 161,885 | $ | 533,875 | $ | (614,504 | ) | $ | 1,280,185 | |||||||||
F-50
Table of Contents
23. | Guarantor Financial Statement Information (continued) |
Non- | ||||||||||||||||||||
Issuer | Guarantor | Guarantor | ||||||||||||||||||
(Parent) | (Subsidiaries) | (Subsidiaries) | Eliminations | Consolidated | ||||||||||||||||
Revenues: | ||||||||||||||||||||
Servicing fee income | $ | 89,151 | $ | 1,044 | $ | — | $ | — | $ | 90,195 | ||||||||||
Other fee income | 4,823 | 5,200 | — | — | 10,023 | |||||||||||||||
Total fee income | 93,974 | 6,244 | — | — | 100,218 | |||||||||||||||
Loss on mortgage loans held for sale | (21,349 | ) | — | — | — | (21,349 | ) | |||||||||||||
Total revenues | 72,625 | 6,244 | — | — | 78,869 | |||||||||||||||
Expenses and impairments: | ||||||||||||||||||||
Salaries, wages, and benefits | 88,075 | 2,614 | — | — | 90,689 | |||||||||||||||
General and administrative | 30,111 | 379 | 4 | — | 30,494 | |||||||||||||||
Loss on mortgage loans held for investment and foreclosed real estate | (1,352 | ) | (10,925 | ) | 19,789 | 7,512 | ||||||||||||||
Occupancy | 6,621 | 242 | — | — | 6,863 | |||||||||||||||
Loss onavailable-for-sale securities-other-than-temporary | 6,809 | — | — | — | 6,809 | |||||||||||||||
Total expenses and impairments | 130,264 | (7,690 | ) | 19,793 | 142,367 | |||||||||||||||
Other income (expense): | ||||||||||||||||||||
Interest income | 42,160 | 233 | 10,125 | — | 52,518 | |||||||||||||||
Interest expense | (52,810 | ) | (2,694 | ) | (14,379 | ) | — | (69,883 | ) | |||||||||||
Loss on interest rate swaps and caps | (14 | ) | — | — | — | (14 | ) | |||||||||||||
Gain (loss) from subsidiaries | (12,574 | ) | — | — | 12,574 | — | ||||||||||||||
Total other income (expense) | (23,238 | ) | (2,461 | ) | (4,254 | ) | 12,574 | (17,379 | ) | |||||||||||
Net income/(loss) | $ | (80,877 | ) | $ | 11,473 | $ | (24,047 | ) | $ | 12,574 | $ | (80,877 | ) | |||||||
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23. | Guarantor Financial Statement Information (continued) |
CONSOLIDATING STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED DECEMBER 31, 2009
(In Thousands)
Non- | ||||||||||||||||||||
Issuer | Guarantor | Guarantor | ||||||||||||||||||
(Parent) | (Subsidiaries) | (Subsidiaries) | Eliminations | Consolidated | ||||||||||||||||
Operating activities: | ||||||||||||||||||||
Net income (loss) | $ | (80,877 | ) | $ | 11,473 | $ | (24,047 | ) | $ | 12,574 | $ | (80,877 | ) | |||||||
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities: | ||||||||||||||||||||
Loss from subsidiaries | 12,574 | — | — | (12,574 | ) | — | ||||||||||||||
Share-based compensation | 827 | — | — | — | 827 | |||||||||||||||
Loss on mortgage loans held for sale | 21,349 | — | — | — | 21,349 | |||||||||||||||
Loss on mortgage loans held for investment and foreclosed real estate | (1,352 | ) | (10,925 | ) | 19,789 | — | 7,512 | |||||||||||||
Loss on interest rate swaps and caps | 14 | — | — | — | 14 | |||||||||||||||
Unrealized gain on derivative financial instruments | (2,436 | ) | — | — | — | (2,436 | ) | |||||||||||||
Depreciation and amortization | 1,728 | 39 | — | — | 1,767 | |||||||||||||||
Impairment of investments in debt securities | 6,809 | — | — | — | 6,809 | |||||||||||||||
Change in fair value of mortgage servicing rights | 27,915 | — | — | — | 27,915 | |||||||||||||||
Amortization of debt discount | 19,075 | — | 2,212 | — | 21,287 | |||||||||||||||
Amortization of premiums/discounts | (1,394 | ) | — | — | — | (1,394 | ) | |||||||||||||
Mortgage Loans originated and purchased, net of fees | (1,480,549 | ) | — | — | — | (1,480,549 | ) | |||||||||||||
Cost of loans sold, net of fees | 1,007,369 | — | — | — | 1,007,369 | |||||||||||||||
Principal payments/prepayments received and other changes in mortgage loans originated as held for sale | 403,256 | — | 66,816 | — | 470,072 | |||||||||||||||
Changes in assets and liabilities: | ||||||||||||||||||||
Accounts receivable, net | (151,602 | ) | 1,113 | (3,511 | ) | — | (154,000 | ) | ||||||||||||
Payables to affiliates | 247,676 | (47,397 | ) | (133,339 | ) | — | 66,940 | |||||||||||||
Other assets | (9,115 | ) | — | — | — | (9,115 | ) | |||||||||||||
Payables and accrued liabilities | 11,550 | (12 | ) | 1,331 | — | 12,869 | ||||||||||||||
Net cash provided by (used) in operating activities | 32,817 | (45,709 | ) | (70,749 | ) | — | (83,641 | ) | ||||||||||||
Investing activities: | ||||||||||||||||||||
Proceeds from sales of real estate owned | 1,896 | 32,202 | 83 | — | 34,181 | |||||||||||||||
Purchase of mortgage servicing rights, net of liabilities incurred | (1,169 | ) | — | — | — | (1,169 | ) | |||||||||||||
Property and equipment additions, net of disposals | (2,990 | ) | (39 | ) | — | — | (3,029 | ) | ||||||||||||
Net cash provided by (used) in investing activities | (2,263 | ) | 32,163 | 83 | — | 29,983 |
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23. | Guarantor Financial Statement Information (continued) |
Non- | ||||||||||||||||||||
Issuer | Guarantor | Guarantor | ||||||||||||||||||
(Parent) | (Subsidiaries) | (Subsidiaries) | Eliminations | Consolidated | ||||||||||||||||
Financing activities: | ||||||||||||||||||||
Transfers to/from restricted cash, net | (18,444 | ) | 13,737 | (27,056 | ) | — | (31,763 | ) | ||||||||||||
Issuance of non-recourse debt, net | — | — | 191,272 | — | 191,272 | |||||||||||||||
(Decrease) increase in notes payable, net | 17,346 | — | (77,741 | ) | — | (60,395 | ) | |||||||||||||
Repayment of non-recourse debt—Legacy assets | — | — | (15,809 | ) | — | (15,809 | ) | |||||||||||||
Debt financing costs | (18,059 | ) | — | — | — | (18,059 | ) | |||||||||||||
Capital contributions from members | 20,700 | — | — | — | 20,700 | |||||||||||||||
Net cash provided by financing activities | 1,543 | 13,737 | 70,666 | — | 85,946 | |||||||||||||||
Net increase (decrease) in cash and cash equivalents | 32,097 | 191 | — | — | 32,288 | |||||||||||||||
Cash and cash equivalents at beginning of year | 9,146 | 211 | — | — | 9,357 | |||||||||||||||
Cash and cash equivalents at end of year | $ | 41,243 | $ | 402 | $ | — | $ | — | $ | 41,645 | ||||||||||
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23. | Guarantor Financial Statement Information (continued) |
Non- | ||||||||||||||||||||
Issuer | Guarantor | Guarantor | ||||||||||||||||||
(Parent) | (Subsidiaries) | (Subsidiaries) | Eliminations | Consolidated | ||||||||||||||||
Revenues | ||||||||||||||||||||
Servicing fee income | $ | 67,876 | $ | 74 | $ | 102 | $ | — | $ | 68,052 | ||||||||||
Other fee income | 1,304 | 4,651 | — | — | 5,955 | |||||||||||||||
Total fee income | 69,180 | 4,725 | 102 | — | 74,007 | |||||||||||||||
Loss on mortgage loans held for sale | (86,663 | ) | — | — | — | (86,663 | ) | |||||||||||||
Total revenues | (17,483 | ) | 4,725 | 102 | — | (12,656 | ) | |||||||||||||
Expenses and impairments | ||||||||||||||||||||
Salaries, wages, and benefits | 60,808 | 975 | — | — | 61,783 | |||||||||||||||
General and administrative | 22,059 | 135 | — | — | 22,194 | |||||||||||||||
Loss on mortgage loans held for investment and foreclosed real estate | (1,011 | ) | 3,578 | — | — | 2,567 | ||||||||||||||
Occupancy | 5,989 | 32 | — | — | 6,021 | |||||||||||||||
Loss onavailable-for-sale securities- other-than-temporary | 55,212 | — | — | — | 55,212 | |||||||||||||||
Total expenses and impairments | 143,057 | 4,720 | — | — | 147,777 | |||||||||||||||
Other income (expense) | ||||||||||||||||||||
Interest income | 92,030 | 30 | — | — | 92,060 | |||||||||||||||
Interest expense | (52,931 | ) | (45 | ) | (12,572 | ) | — | (65,548 | ) | |||||||||||
Loss on interest rate swaps and caps | (23,689 | ) | — | — | — | (23,689 | ) | |||||||||||||
Gain (loss) from subsidiaries | (12,480 | ) | — | — | 12,480 | — | ||||||||||||||
Total other income (expense) | 2,930 | (15 | ) | (12,572 | ) | 12,480 | 2,823 | |||||||||||||
Net income (loss) | $ | (157,610 | ) | $ | (10 | ) | $ | (12,470 | ) | $ | 12,480 | $ | (157,610 | ) | ||||||
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23. | Guarantor Financial Statement Information (continued) |
Non- | ||||||||||||||||||||
Issuer | Guarantor | Guarantor | ||||||||||||||||||
(Parent) | (Subsidiaries) | (Subsidiaries) | Eliminations | Consolidated | ||||||||||||||||
Operating activities | ||||||||||||||||||||
Net income (loss) | $ | (157,610 | ) | $ | (10 | ) | $ | (12,470 | ) | $ | 12,480 | $ | (157,610 | ) | ||||||
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities: | ||||||||||||||||||||
Loss from subsidiaries | 12,480 | — | — | (12,480 | ) | — | ||||||||||||||
Share-based compensation | 2,333 | — | — | — | 2,333 | |||||||||||||||
Loss on mortgage loans held for sale | 86,663 | — | — | — | 86,663 | |||||||||||||||
Loss on mortgage loans held for investment and foreclosed real estate | (1,011 | ) | 3,578 | — | — | 2,567 | ||||||||||||||
Loss on interest rate swaps and caps | 23,689 | — | — | — | 23,689 | |||||||||||||||
Unrealized loss on derivative financial instruments | 2,077 | — | — | — | 2,077 | |||||||||||||||
Depreciation and amortization | 1,301 | 8 | — | — | 1,309 | |||||||||||||||
Accretion of discount on securities | (4,422 | ) | — | — | — | (4,422 | ) | |||||||||||||
Impairment of investments in debt securities | 55,212 | — | — | — | 55,212 | |||||||||||||||
Change in fair value of mortgage servicing rights | 11,701 | — | — | — | 11,701 | |||||||||||||||
Amortization of debt discount | 8,879 | — | — | — | 8,879 | |||||||||||||||
Amortization of premiums/discounts | (85 | ) | — | — | — | (85 | ) | |||||||||||||
Mortgage loans originated and purchased, net of fees | (545,860 | ) | — | — | — | (545,860 | ) | |||||||||||||
Cost of loans sold, net of fees | 513,924 | — | — | — | 513,924 | |||||||||||||||
Principal payments/prepayments received and other changes in mortgage loans originated as held for sale | 201,184 | — | — | — | 201,184 | |||||||||||||||
Changes in assets and liabilities: | ||||||||||||||||||||
Accounts receivable, net | (164,961 | ) | (605 | ) | — | — | (165,566 | ) | ||||||||||||
Payables to affiliates | 129,110 | 128,659 | (255,317 | ) | — | 2,452 | ||||||||||||||
Other assets | 38,363 | — | — | — | 38,363 | |||||||||||||||
Payables and accrued liabilities | (36,363 | ) | (297 | ) | 62 | — | (36,598 | ) | ||||||||||||
Net cash provided by (used) in operating activities | 176,604 | 131,333 | (267,725 | ) | — | 40,212 | ||||||||||||||
Investing activities | ||||||||||||||||||||
Proceeds from sales of real estate owned | 52,764 | (23,488 | ) | — | — | 29,276 | ||||||||||||||
Purchase of mortgage servicing rights, net of liabilities incurred | (19,013 | ) | — | — | — | (19,013 | ) | |||||||||||||
Interest rate swap settlements | (51,570 | ) | — | — | — | (51,570 | ) | |||||||||||||
Property and equipment additions, net of disposals | (1,764 | ) | (8 | ) | — | — | (1,772 | ) | ||||||||||||
Principal payments received on debt securities | 8,436 | — | — | — | 8,436 | |||||||||||||||
Net cash used in investing activities | (11,147 | ) | (23,496 | ) | — | — | (34,643 | ) | ||||||||||||
Financing activities | ||||||||||||||||||||
Transfers to/from restricted cash, net | (517 | ) | (8,402 | ) | (952 | ) | — | (9,871 | ) | |||||||||||
(Decrease)/increase in notes payable, net | (325,943 | ) | (100,000 | ) | 268,677 | — | (157,266 | ) |
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23. | Guarantor Financial Statement Information (continued) |
Non- | ||||||||||||||||||||
Issuer | Guarantor | Guarantor | ||||||||||||||||||
(Parent) | (Subsidiaries) | (Subsidiaries) | Eliminations | Consolidated | ||||||||||||||||
Debt financing costs | (15,926 | ) | — | — | — | (15,926 | ) | |||||||||||||
Capital contributions from members | 145,600 | — | — | — | 145,600 | |||||||||||||||
Net cash provided by (used in) financing activities | (196,786 | ) | (108,402 | ) | 267,725 | — | (37,463 | ) | ||||||||||||
Net increase (decrease) in cash and cash equivalents | (31,329 | ) | (565 | ) | — | — | (31,894 | ) | ||||||||||||
Cash and cash equivalents at beginning of year | 40,475 | 776 | — | — | 41,251 | |||||||||||||||
Cash and cash equivalents at end of year | $ | 9,146 | $ | 211 | $ | — | $ | — | $ | 9,357 | ||||||||||
24. | Subsequent Events |
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Corporate Trust Operations
MAC N9303-121
Sixth & Marquette Avenue
Minneapolis, MN 55479
A-1
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• | DTC has received your instructions to tender your Old Notes; and | |
• | You agree to be bound by the terms of this Letter of Transmittal. |
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• | irrevocably sell, assign and transfer to or upon the order of the Issuers or their nominee all right, title and interest in and to, and any and all claims in respect of or arising or having arisen as a result of the undersigned’s status as a holder of, all Old Notes tendered hereby, such that thereafter it shall have no contractual or other rights or claims in law or equity against the |
A-3
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Issuers or any fiduciary, trustee, fiscal agent or other person connected with the Old Notes arising under, from or in connection with such Old Notes; |
• | waive any and all rights with respect to the Old Notes tendered hereby, including, without limitation, any existing or past defaults and their consequences in respect of such Old Notes; and | |
• | release and discharge the Issuers, the Guarantors and Wells Fargo Bank, National Association, as the trustee for the Old Notes from any and all claims the undersigned may have, now or in the future, arising out of or related to the Old Notes tendered hereby, including, without limitation, any claims that the undersigned is entitled to receive additional principal or interest payments with respect to the Old Notes tendered hereby, other than as expressly provided in the Prospectus and in this Letter of Transmittal, or to participate in any redemption or defeasance of the Old Notes tendered hereby. |
• | it has received and reviewed the Prospectus; | |
• | it is the beneficial owner (as defined below) of, or a duly authorized representative of one or more beneficial owners of, the Old Notes tendered hereby, and it has full power and authority to execute this Letter of Transmittal; | |
• | the Old Notes being tendered hereby were owned as of the date of tender, free and clear of any liens, charges, claims, encumbrances, interests and restrictions of any kind, and the Issuers will acquire good, indefeasible and unencumbered title to such Old Notes, free and clear of all liens, charges, claims, encumbrances, interests and restrictions of any kind, when the Issuers accept the same; | |
• | it will not sell, pledge, hypothecate or otherwise encumber or transfer any Old Notes tendered hereby from the date of this Letter of Transmittal, and any purported sale, pledge, hypothecation or other encumbrance or transfer will be void and of no effect; | |
• | in evaluating the Exchange Offer and in making its decision whether to participate in the Exchange Offer by tendering its Old Notes, the undersigned has made its own independent appraisal of the matters referred to in the Prospectus and this Letter of Transmittal and in any related communications and it is not relying on any statement, representation or warranty, express or implied, made to such holder by the Issuers or the Exchange Agent, other than those contained in the Prospectus, as amended or supplemented through the Expiration Date; | |
• | the execution and delivery of this Letter of Transmittal shall constitute an undertaking to execute any further documents and give any further assurances that may be required in connection with any of the foregoing, in each case on and subject to the terms and conditions described or referred to in the Prospectus; | |
• | the agreement to the terms of this Letter of Transmittal pursuant to an agent’s message shall, subject to the terms and conditions of the Exchange Offer, constitute the irrevocable appointment of the Exchange Agent as its attorney and agent and an irrevocable instruction to such attorney and agent to complete and execute all or any forms of transfer and other documents at the discretion of that attorney and agent in relation to the Old Notes tendered hereby in favor of the Issuers or any other person or persons as the Issuers may direct and to deliver such forms of transfer and other documents in the attorney’s and agent’s discretion and |
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the certificates and other documents of title relating to the registration of such Old Notes and to execute all other documents and to do all other acts and things as may be in the opinion of that attorney or agent necessary or expedient for the purpose of, or in connection with, the acceptance of the Exchange Offer, and to vest in the Issuers or their nominees such Old Notes; |
• | the terms and conditions of the Exchange Offer shall be deemed to be incorporated in, and form a part of, this Letter of Transmittal, which shall be read and construed accordingly; | |
• | it is acquiring the New Notes in the ordinary course of the business of such undersigned and any beneficial owner; | |
• | it is not participating in, and does not intend to participate in, a distribution of the New Notes within the meaning of the Securities Act and has no arrangement or understanding with any person to participate in a distribution of the New Notes within the meaning of the Securities Act; | |
• | it is not a broker-dealer who acquired the Old Notes directly from the Issuers; and | |
• | it is not an “affiliate” of the Issuers, within the meaning of Rule 405 of the Securities Act. |
o | CHECK HERE IF YOU ARE A BROKER-DEALER AND WISH TO RECEIVE 10 ADDITIONAL COPIES OF THE PROSPECTUS AND 10 COPIES OF ANY AMENDMENTS OR SUPPLEMENTS THERETO. |
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THE TERMS AND CONDITIONS OF THE EXCHANGE OFFER
1. | Book-Entry Confirmations |
2. | Validity of Tenders |
3. | Waiver of Conditions |
4. | No Conditional Tender |
5. | Request for Assistance or Additional Copies |
6. | Withdrawal |
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7. | Transfer Taxes |
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Item 20. | Indemnification of Directors and Officers. |
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II-2
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II-3
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II-4
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Item 21. | Exhibits and Financial Statement Schedules. |
Exhibit | ||||
Number | Description | |||
3 | .1 | Certificate of Formation of Nationstar Mortgage LLC.(1) | ||
3 | .2 | Operating Agreement of Nationstar Mortgage LLC.(1) |
II-5
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Exhibit | ||||
Number | Description | |||
3 | .3 | Certificate of Incorporation of Nationstar Capital Corporation.(1) | ||
3 | .4 | By-Laws of Nationstar Capital Corporation.(1) | ||
3 | .5 | Certificate of Formation of Centex Land Vista Ridge Lewisville III General Partner, LLC(2) | ||
3 | .6 | Limited Liability Company Agreement of Centex Land Vista Ridge Lewisville III General Partner, LLC(2) | ||
3 | .7 | Certificate of Limited Partnership of Centex Land Vista Ridge Lewisville III, L.P.(2) | ||
3 | .8 | Agreement of Limited Partnership of Centex Land Vista Ridge Lewisville III, L.P.(2) | ||
3 | .9 | Certificate of Formation of Harwood Service Company, LLC(2) | ||
3 | .10 | Limited Liability Company Agreement of Harwood Service Company, LLC(2) | ||
3 | .11 | Limited Liability Company Articles of Organization of Harwood Insurance Services, LLC(2) | ||
3 | .12 | Limited Liability Company Agreement of Harwood Insurance Services, LLC(2) | ||
3 | .13 | Certificate of Organization of Harwood Service Company of Georgia, LLC(2) | ||
3 | .14 | Limited Liability Company Agreement of Harwood Service Company of Georgia, LLC(2) | ||
3 | .15 | Certificate of Formation of Harwood Service Company of New Jersey, LLC(2) | ||
3 | .16 | Limited Liability Company Agreement of Harwood Service Company of New Jersey, LLC(2) | ||
3 | .17 | Certificate of Formation of Homeselect Settlement Solutions, LLC(2) | ||
3 | .18 | Limited Liability Company Agreement of Homeselect Settlement Solutions, LLC(2) | ||
3 | .19 | Certificate of Incorporation of Nationstar 2009 Equity Corporation(2) | ||
3 | .20 | By-Laws of Nationstar 2009 Equity Corporation(2) | ||
3 | .21 | Articles of Incorporation of Nationstar Equity Corporation(2) | ||
3 | .22 | By-Laws of Nationstar Equity Corporation(2) | ||
3 | .23 | Charter of Nationstar Industrial Loan Company(2) | ||
3 | .24 | By-Laws of Nationstar Industrial Loan Company(2) | ||
3 | .25 | Articles of Incorporation of Nationstar Industrial Loan Corporation(2) | ||
3 | .26 | By-Laws of Nationstar Industrial Loan Corporation(2) | ||
3 | .27 | Certificate of Incorporation of NSM Recovery Services Inc.(2) | ||
3 | .28 | By-Laws of NSM Recovery Services Inc.(2) | ||
3 | .29 | Certificate of Incorporation of NSM Foreclosure Services Inc.(2) | ||
3 | .30 | By-Laws of NSM Foreclosure Services Inc.(2) | ||
4 | .1 | Indenture, dated as of March 26, 2010, among Nationstar Mortgage LLC, Nationstar Capital Corporation, and Wells Fargo Bank, N.A., as trustee, including the form of 10.875% Senior Note due 2015 (the “Indenture”).(1) | ||
4 | .2 | Supplemental Indenture dated as of August 31, 2010, among NSM Recovery Services Inc, a subsidiary of Nationstar Mortgage LLC, and Wells Fargo Bank, National Association, as trustee.(1) | ||
4 | .3 | Supplemental Indenture, dated as of December 13, 2010, among NSM Foreclosure Services Inc, a subsidiary of Nationstar Mortgage LLC, and Wells Fargo Bank, National Association, as trustee.(1) | ||
4 | .4 | Registration Rights Agreement, dated as of March 26, 2010, among Nationstar Mortgage LLC, Nationstar Capital Corporation, Barclays Capital Inc., Banc of America Securities LLC, Deutsche Bank Securities Inc. and RBS Securities Inc.(1) | ||
5 | .1 | Opinion of Cleary Gottlieb Steen & Hamilton LLP.(3) | ||
5 | .2 | Opinion of Bass, Berry & Sims PLC.(3) | ||
5 | .3 | Opinion of Greenberg Traurig LLP.(3) | ||
10 | .1 | Amended and Restated Servicer Advance Early Reimbursement Addendum, dated as of August 16, 2010, between Nationstar Mortgage LLC and Fannie Mae.*(1) |
II-6
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Exhibit | ||||
Number | Description | |||
10 | .2 | Fifth Amended and Restated Master Repurchase Agreement, dated as of January 27, 2010, between The Royal Bank of Scotland plc, as buyer, and Nationstar Mortgage LLC, as seller.*(1) | ||
10 | .3 | Amendment Number One to Fifth Amended and Restated Master Repurchase Agreement, and Amendment Number One to Fifth Amended and Restated Pricing Side Letter, both dated as of April 6, 2010, between The Royal Bank of Scotland Plc and Nationstar Mortgage LLC.*(4) | ||
10 | .4 | Amendment Number Two to Fifth Amended and Restated Master Repurchase Agreement, and Amendment Number One to Fifth Amended and Restated Pricing Side Letter, both dated as of February 25, 2011, between The Royal Bank of Scotland Plc and Nationstar Mortgage LLC.*(4) | ||
10 | .5 | Subservicing Agreement, dated as of October 29, 2010, between Fannie Mae and Nationstar Mortgage LLC.*(2) | ||
10 | .6 | Strategic Relationship Agreement, dated as of December 16, 2009, between Fannie Mae and Nationstar Mortgage LLC.*(1) | ||
10 | .7 | Subservicing Agreement, dated as of February 1, 2011, among MorEquity, Inc., American General Financial Services of Arkansas, Inc. and American General Home Equity, Inc. as owners and as servicers, and Nationstar Mortgage LLC, as subservicer.*(3) | ||
10 | .8 | Subservicing Agreement (American General Mortgage Loan Trust 2006-1), dated as of February 1, 2011, between MorEquity, Inc., as servicer, and Nationstar Mortgage LLC, as subservicer.*(3) | ||
10 | .9 | Subservicing Agreement (American General Mortgage Loan Trust 2010-1), dated as of February 1, 2011, between MorEquity, Inc., as servicer, and Nationstar Mortgage LLC, as subservicer.*(3) | ||
10 | .10 | Sale and Servicing Agreement, dated as of April 6, 2010, between The Financial Asset Securities Corp., as Depositor, Centex Home Equity Company, LLC, as Originator and Servicer, Newcastle Mortgage SecuritiesTrust 2006-1, as Issuer, and JPMorgan Chase Bank, N.A.(4) | ||
10 | .11 | Sale and Servicing Agreement, dated as of July 12, 2007, between Bear Stearns Asset-Backed Securities I LLC, as Depositor, Nationstar Mortgage LLC, as Servicer, Newcastle Mortgage SecuritiesTrust 2007-1, as Issuing Entity, Wells Fargo Bank, N.A., as Master Servicer, Securities Administrator and Custodian, and The Bank of New York, as Indenture Trustee.(4) | ||
10 | .12 | Employment Agreement, dated as of January 29, 2008, by and between Nationstar Mortgage LLC and Robert L. Appel.(1) | ||
10 | .13 | Amendment, dated as of September 17, 2010, to Employment Agreement dated January 29, 2008 by and between Nationstar Mortgage LLC and Robert L. Appel.(1) | ||
10 | .14 | Employment Agreement, dated as of February 19, 2009, by and between Nationstar Mortgage LLC and Douglas Krueger.(1) | ||
10 | .15 | Employment Agreement, dated as of September 17, 2010, by and between Nationstar Mortgage LLC and Anthony H. Barone.(1) | ||
10 | .16 | Employment Agreement, dated as of September 17, 2010, by and between the Company and Jay Bray.(1) | ||
10 | .17 | Employment Agreement, dated as of September 17, 2010, by and between Nationstar Mortgage LLC and Amar Patel.(1) | ||
10 | .18 | Form of Restricted Series 1 Preferred Unit Award Agreement under FIF HE Holdings LLC Fifth Amended and Restated Limited Liability Company Agreement.(1) | ||
10 | .19 | Form of Series 1 Class A Unit Award Agreement under FIF HE Holdings LLC Fifth Amended and Restated Limited Liability Company.(1) | ||
10 | .20 | Form of Series 2 Class A Unit Award Agreement under FIF HE Holdings LLC Fifth Amended and Restated Limited Liability Company.(1) | ||
10 | .21 | Nationstar Mortgage LLC Annual Incentive Compensation Plan.(1) | ||
10 | .22 | Nationstar Mortgage LLC Incentive Program for Mr. Krueger.(1) |
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Exhibit | ||||
Number | Description | |||
10 | .23 | Nationstar Mortgage LLC Long-Term Incentive Plan for Mr. Krueger.(1) | ||
12 | .1 | Computation of Ratio of Earnings to Fixed Charges.(3) | ||
21 | .1 | Subsidiaries of the Registrants.(1) | ||
23 | .1 | Consent of Ernst & Young LLP, Independent Registered Public Accounting Firm.(4) | ||
23 | .2 | Consent of Cleary Gottlieb Steen & Hamilton LLP (included in Exhibit 5.1). | ||
23 | .3 | Consent of Bass, Berry & Sims PLC (included in Exhibit 5.2). | ||
23 | .4 | Consent of Greenberg Traurig LLP (included in Exhibit 5.3). | ||
25 | .1 | Form T-1 Statement of Eligibility under the Trust Indenture Act of 1939, as amended, of Wells Fargo Bank, N.A., as trustee under the Indenture.(1) |
* | Certain portions of this exhibit have been omitted and have been filed separately with the SEC pursuant to a request for confidential treatment under Rule 406 as promulgated under the Securities Act of 1933, as amended. |
(1) | Previously filed with Form S-4 on December 22, 2010. |
(2) | Previously filed with Form S-4/A on February 9, 2011. |
(3) | Previously filed with Form S-4/A on March 28, 2011. |
(4) | Filed herewith. |
Item 22. | Undertakings. |
II-8
Table of Contents
II-9
Table of Contents
By: | /s/ Ron L. Fountain |
/s/ Anthony H. Barone Anthony H. Barone | President, Chief Executive Officer and Manager (Principal Executive Officer) | |||
/s/ Jay Bray Jay Bray | Executive Vice President and Chief Financial Officer (Principal Financial and Accounting Officer) | |||
/s/ Peter Smith Peter Smith | Manager |
Table of Contents
By: | /s/ Ron L. Fountain |
/s/ Anthony H. Barone Anthony H. Barone | President, Chief Executive Officer and Director (Principal Executive Officer) | |||
/s/ Jay Bray Jay Bray | Executive Vice President, Chief Financial Officer and Director (Principal Financial and Accounting Officer) |
Table of Contents
GENERAL PARTNER, LLC
By: | /s/ Ron L. Fountain |
/s/ Anthony H. Barone Anthony H. Barone | President and Chief Executive Officer (Principal Executive Officer) | |||
/s/ Jay Bray Jay Bray | Executive Vice President and Chief Financial Officer (Principal Financial and Accounting Officer) |
Table of Contents
By: | CENTEX LAND VISTA RIDGE LEWISVILLE III GENERAL PARTNER, LLC, |
By: | NATIONSTAR MORTGAGE LLC, |
By: | /s/ Ron L. Fountain |
/s/ Anthony H. Barone Anthony H. Barone | President and Chief Executive Officer (Principal Executive Officer) | |||
/s/ Jay Bray Jay Bray | Executive Vice President and Chief Financial Officer (Principal Financial and Accounting Officer) |
Table of Contents
By: | NATIONSTAR MORTGAGE LLC |
By: | /s/ Ron L. Fountain |
/s/ Anthony H. Barone Anthony H. Barone | President and Chief Executive Officer (Principal Executive Officer) | |||
/s/ Jay Bray Jay Bray | Executive Vice President and Chief Financial Officer (Principal Financial and Accounting Officer) |
Table of Contents
By: | NATIONSTAR MORTGAGE LLC |
By: | /s/ Ron L. Fountain |
/s/ Anthony H. Barone Anthony H. Barone | President and Chief Executive Officer (Principal Executive Officer) | |
/s/ Jay Bray Jay Bray | Executive Vice President and Chief Financial Officer (Principal Financial and Accounting Officer) |
Table of Contents
GEORGIA, LLC
By: | NATIONSTAR MORTGAGE LLC |
By: | /s/ Ron L. Fountain |
/s/ Anthony H. Barone Anthony H. Barone | President and Chief Executive Officer (Principal Executive Officer) | |
/s/ Jay Bray Jay Bray | Executive Vice President and Chief Financial Officer (Principal Financial and Accounting Officer) |
Table of Contents
By: | NATIONSTAR MORTGAGE LLC |
By: | /s/ Ron L. Fountain |
/s/ Anthony H. Barone Anthony H. Barone | President and Chief Executive Officer (Principal Executive Officer) | |
/s/ Jay Bray Jay Bray | Executive Vice President and Chief Financial Officer (Principal Financial and Accounting Officer) |
Table of Contents
By: | NATIONSTAR MORTGAGE LLC |
By: | /s/ Ron L. Fountain |
/s/ Anthony H. Barone Anthony H. Barone | President and Chief Executive Officer (Principal Executive Officer) | |
/s/ Jay Bray Jay Bray | Executive Vice President and Chief Financial Officer (Principal Financial and Accounting Officer) |
Table of Contents
By: | /s/ Ron L. Fountain |
/s/ Anthony H. Barone Anthony H. Barone | President, Chief Executive Officer and Director (Principal Executive Officer) | |
/s/ Jay Bray Jay Bray | Executive Vice President, Chief Financial Officer and Director (Principal Financial and Accounting Officer) |
Table of Contents
By: | /s/ Ron L. Fountain |
/s/ Anthony H. Barone Anthony H. Barone | President, Chief Executive Officer and Director (Principal Executive Officer) | |
/s/ Jay Bray Jay Bray | Executive Vice President, Chief Financial Officer and Director (Principal Financial and Accounting Officer) |
Table of Contents
By: | /s/ Ron L. Fountain |
/s/ Anthony H. Barone Anthony H. Barone | President, Chief Executive Officer and Director (Principal Executive Officer) | |
/s/ Jay Bray Jay Bray | Executive Vice President, Chief Financial Officer and Director (Principal Financial and Accounting Officer) |
Table of Contents
By: | /s/ Ron L. Fountain |
/s/ Anthony H. Barone Anthony H. Barone | President, Chief Executive Officer and Director (Principal Executive Officer) | |
/s/ Jay Bray Jay Bray | Executive Vice President, Chief Financial Officer and Director (Principal Financial and Accounting Officer) |
Table of Contents
By: | /s/ Ron L. Fountain |
/s/ Anthony H. Barone Anthony H. Barone | President, Chief Executive Officer and Director (Principal Executive Officer) | |
/s/ Jay Bray Jay Bray | Executive Vice President, Chief Financial Officer and Director (Principal Financial and Accounting Officer) |
Table of Contents
By: | /s/ Ron L. Fountain |
/s/ Anthony H. Barone Anthony H. Barone | President, Chief Executive Officer and Director (Principal Executive Officer) | |
/s/ Jay Bray Jay Bray | Executive Vice President, Chief Financial Officer and Director (Principal Financial and Accounting Officer) |
Table of Contents
Exhibit | ||||
Number | Description | |||
3 | .1 | Certificate of Formation of Nationstar Mortgage LLC.(1) | ||
3 | .2 | Operating Agreement of Nationstar Mortgage LLC.(1) | ||
3 | .3 | Certificate of Incorporation of Nationstar Capital Corporation.(1) | ||
3 | .4 | By-Laws of Nationstar Capital Corporation.(1) | ||
3 | .5 | Certificate of Formation of Centex Land Vista Ridge Lewisville III General Partner, LLC(2) | ||
3 | .6 | Limited Liability Company Agreement of Centex Land Vista Ridge Lewisville III General Partner, LLC(2) | ||
3 | .7 | Certificate of Limited Partnership of Centex Land Vista Ridge Lewisville III, L.P.(2) | ||
3 | .8 | Agreement of Limited Partnership of Centex Land Vista Ridge Lewisville III, L.P.(2) | ||
3 | .9 | Certificate of Formation of Harwood Service Company, LLC(2) | ||
3 | .10 | Limited Liability Company Agreement of Harwood Service Company, LLC(2) | ||
3 | .11 | Limited Liability Company Articles of Organization of Harwood Insurance Services, LLC(2) | ||
3 | .12 | Limited Liability Company Agreement of Harwood Insurance Services, LLC(2) | ||
3 | .13 | Certificate of Organization of Harwood Service Company of Georgia, LLC(2) | ||
3 | .14 | Limited Liability Company Agreement of Harwood Service Company of Georgia, LLC(2) | ||
3 | .15 | Certificate of Formation of Harwood Service Company of New Jersey, LLC(2) | ||
3 | .16 | Limited Liability Company Agreement of Harwood Service Company of New Jersey, LLC(2) | ||
3 | .17 | Certificate of Formation of Homeselect Settlement Solutions, LLC(2) | ||
3 | .18 | Limited Liability Company Agreement of Homeselect Settlement Solutions, LLC(2) | ||
3 | .19 | Certificate of Incorporation of Nationstar 2009 Equity Corporation(2) | ||
3 | .20 | By-Laws of Nationstar 2009 Equity Corporation(2) | ||
3 | .21 | Articles of Incorporation of Nationstar Equity Corporation(2) | ||
3 | .22 | By-Laws of Nationstar Equity Corporation(2) | ||
3 | .23 | Charter of Nationstar Industrial Loan Company(2) | ||
3 | .24 | By-Laws of Nationstar Industrial Loan Company(2) | ||
3 | .25 | Articles of Incorporation of Nationstar Industrial Loan Corporation(2) | ||
3 | .26 | By-Laws of CHEC Industrial Loan Corporation(2) | ||
3 | .27 | Certificate of Incorporation of NSM Recovery Services Inc.(2) | ||
3 | .28 | By-Laws of NSM Recovery Services Inc.(2) | ||
3 | .29 | Certificate of Incorporation of NSM Foreclosure Services Inc.(2) | ||
3 | .30 | By-Laws of NSM Foreclosure Services Inc.(2) | ||
4 | .1 | Indenture, dated as of March 26, 2010, among Nationstar Mortgage LLC, Nationstar Capital Corporation, and Wells Fargo Bank, N.A., as trustee, including the form of 10.875% Senior Note due 2015 (the “Indenture”).(1) | ||
4 | .2 | Supplemental Indenture dated as of August 31, 2010, among NSM Recovery Services Inc, a subsidiary of Nationstar Mortgage LLC, and Wells Fargo Bank, National Association, as trustee.(1) | ||
4 | .3 | Supplemental Indenture, dated as of December 13, 2010, among NSM Foreclosure Services Inc, a subsidiary of Nationstar Mortgage LLC, and Wells Fargo Bank, National Association, as trustee.(1) | ||
4 | .4 | Registration Rights Agreement, dated as of March 26, 2010, among Nationstar Mortgage LLC, Nationstar Capital Corporation, Barclays Capital Inc., Banc of America Securities LLC, Deutsche Bank Securities Inc. and RBS Securities Inc.(1) | ||
5 | .1 | Opinion of Cleary Gottlieb Steen & Hamilton LLP.(3) | ||
5 | .2 | Opinion of Bass, Berry & Sims PLC.(3) | ||
5 | .3 | Opinion of Greenberg Traurig LLP.(3) |
Table of Contents
Exhibit | ||||
Number | Description | |||
10 | .1 | Amended and Restated Servicer Advance Early Reimbursement Addendum, dated as of August 16, 2010, between Nationstar Mortgage LLC and Fannie Mae.*(1) | ||
10 | .2 | Fifth Amended and Restated Master Repurchase Agreement, dated as of January 27, 2010, between The Royal Bank of Scotland plc, as buyer, and Nationstar Mortgage LLC, as seller.*(1) | ||
10 | .3 | Amendment Number One to Fifth Amended and Restated Master Repurchase Agreement, and Amendment Number One to Fifth Amended and Restated Pricing Side Letter, both dated as of April 6, 2010, between The Royal Bank of Scotland Plc and Nationstar Mortgage LLC.*(4) | ||
10 | .4 | Amendment Number Two to Fifth Amended and Restated Master Repurchase Agreement, and Amendment Number One to Fifth Amended and Restated Pricing Side Letter, both dated as of February 25, 2011, between The Royal Bank of Scotland Plc and Nationstar Mortgage LLC.*(4) | ||
10 | .5 | Subservicing Agreement, dated as of October 29, 2010, between Fannie Mae and Nationstar Mortgage LLC.*(2) | ||
10 | .6 | Strategic Relationship Agreement, dated as of December 16, 2009, between Fannie Mae and Nationstar Mortgage LLC.*(1) | ||
10 | .7 | Subservicing Agreement, dated as of February 1, 2011, among MorEquity, Inc., American General Financial Services of Arkansas, Inc. and American General Home Equity, Inc. as owners and as servicers, and Nationstar Mortgage LLC, as subservicer.*(3) | ||
10 | .8 | Subservicing Agreement (American General Mortgage Loan Trust 2006-1), dated as of February 1, 2011, between MorEquity, Inc., as servicer, and Nationstar Mortgage LLC, as subservicer.*(3) | ||
10 | .9 | Subservicing Agreement (American General Mortgage Loan Trust 2010-1), dated as of February 1, 2011, between MorEquity, Inc., as servicer, and Nationstar Mortgage LLC, as subservicer.*(3) | ||
10 | .10 | Sale and Servicing Agreement, dated as of April 6, 2010, between The Financial Asset Securities Corp., as Depositor, Centex Home Equity Company, LLC, as Originator and Servicer, Newcastle Mortgage SecuritiesTrust 2006-1, as Issuer, and JPMorgan Chase Bank, N.A.(4) | ||
10 | .11 | Sale and Servicing Agreement, dated as of July 12, 2007, between Bear Stearns Asset-Backed Securities I LLC, as Depositor, Nationstar Mortgage LLC, as Servicer, Newcastle Mortgage SecuritiesTrust 2007-1, as Issuing Entity, Wells Fargo Bank, N.A., as Master Servicer, Securities Administrator and Custodian, and The Bank of New York, as Indenture Trustee.(4) | ||
10 | .12 | Employment Agreement, dated as of January 29, 2008, by and between Nationstar Mortgage LLC and Robert L. Appel.(1) | ||
10 | .13 | Amendment, dated as of September 17, 2010, to Employment Agreement dated January 29, 2008 by and between Nationstar Mortgage LLC and Robert L. Appel.(1) | ||
10 | .14 | Employment Agreement, dated as of February 19, 2009, by and between Nationstar Mortgage LLC and Douglas Krueger.(1) | ||
10 | .15 | Employment Agreement, dated as of September 17, 2010, by and between Nationstar Mortgage LLC and Anthony H. Barone.(1) | ||
10 | .16 | Employment Agreement, dated as of September 17, 2010, by and between the Company and Jay Bray.(1) | ||
10 | .17 | Employment Agreement, dated as of September 17, 2010, by and between Nationstar Mortgage LLC and Amar Patel.(1) | ||
10 | .18 | Form of Restricted Series 1 Preferred Unit Award Agreement under FIF HE Holdings LLC Fifth Amended and Restated Limited Liability Company Agreement.(1) | ||
10 | .19 | Form of Series 1 Class A Unit Award Agreement under FIF HE Holdings LLC Fifth Amended and Restated Limited Liability Company.(1) | ||
10 | .20 | Form of Series 2 Class A Unit Award Agreement under FIF HE Holdings LLC Fifth Amended and Restated Limited Liability Company.(1) | ||
10 | .21 | Nationstar Mortgage LLC Annual Incentive Compensation Plan.(1) | ||
10 | .22 | Nationstar Mortgage LLC Incentive Program for Mr. Krueger.(1) |
Table of Contents
Exhibit | ||||
Number | Description | |||
10 | .23 | Nationstar Mortgage LLC Long-Term Incentive Plan for Mr. Krueger.(1) | ||
12 | .1 | Computation of Ratio of Earnings to Fixed Charges.(3) | ||
21 | .1 | Subsidiaries of the Registrants.(1) | ||
23 | .1 | Consent of Ernst & Young LLP, Independent Registered Public Accounting Firm.(4) | ||
23 | .2 | Consent of Cleary Gottlieb Steen & Hamilton LLP (included in Exhibit 5.1). | ||
23 | .3 | Consent of Bass, Berry & Sims PLC (included in Exhibit 5.2). | ||
23 | .4 | Consent of Greenberg Traurig LLP (included in Exhibit 5.3). | ||
25 | .1 | Form T-1 Statement of Eligibility under the Trust Indenture Act of 1939, as amended, of Wells Fargo Bank, National Association, as trustee under the Indenture.(1) |
* | Certain portions of this exhibit have been omitted and have been filed separately with the SEC pursuant to a request for confidential treatment under Rule 406 as promulgated under the Securities Act of 1933, as amended. |
(1) | Previously filed with Form S-4 on December 22, 2010. |
(2) | Previously filed with Form S-4/A on February 9, 2011. |
(3) | Previously filed with Form S-4/A on March 28, 2011. |
(4) | Filed herewith. |