Document_and_Entity_Informatio
Document and Entity Information | 12 Months Ended |
Dec. 31, 2013 | |
Document And Entity Information | ' |
Entity Registrant Name | 'New Residential Investment Corp. |
Entity Central Index Key | '0001556593 |
Document Type | 'S-11/A |
Document Period End Date | 31-Dec-13 |
Amendment Flag | 'false |
Current Fiscal Year End Date | '--12-31 |
Entity Filer Category | 'Non-accelerated Filer |
Pro_Forma_and_Consolidated_Bal
Pro Forma and Consolidated Balance Sheets (USD $) | Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2011 | |
In Thousands, unless otherwise specified | ||||
Investments in: | ' | ' | ' | |
Excess mortgage servicing rights at fair value | $324,151 | [1] | $245,036 | $43,971 |
Excess mortgage servicing rights, equity method investees, at fair value | 352,766 | [1] | ' | ' |
Servicer advances | 2,665,551 | [1] | ' | ' |
Real estate securities, available-for-sale | 1,973,189 | [1],[2] | 289,756 | ' |
Residential mortgage loans, held-for-investment | 33,539 | [1] | ' | ' |
Consumer loans, equity method investees | 215,062 | [1] | ' | ' |
Cash and cash equivalents | 271,994 | [1] | ' | ' |
Restricted cash | 33,338 | [1] | ' | ' |
Derivative assets | 35,926 | [1] | ' | ' |
Other assets | 53,142 | [1] | 84 | ' |
Total assets | 5,958,658 | [1] | 534,876 | 43,971 |
Liabilities | ' | ' | ' | |
Repurchase agreements | 1,620,711 | [1] | 150,922 | ' |
Notes Payable | 2,488,618 | [1] | ' | ' |
Trades Payable | 246,931 | [1] | ' | ' |
Due to affiliate | 19,169 | [1] | 5,136 | 158 |
Dividends Payable | 63,297 | [1] | ' | ' |
Accrued expenses and other liabilities | 6,857 | [1] | 462 | 755 |
Purchase price payable on investments in excess mortgage servicing rights | ' | ' | 3,250 | |
Total liabilities | 4,445,583 | [1] | 156,520 | 4,163 |
Commitments and contingencies | ' | [1] | ' | ' |
Stockholders' Equity | ' | ' | ' | |
Common stock, $0.01 par value, 2,000,000,000 shares authorized, 253,197,794 issued and outstanding as of December 31, 2013 | 2,532 | [1] | ' | ' |
Additional paid-in capital | 1,157,118 | [1] | 362,830 | ' |
Retained earnings | 102,986 | [1] | ' | ' |
Newcastle's Equity | ' | ' | 39,808 | |
Accumulated other comprehensive income, net of tax | 3,214 | [1] | 15,526 | ' |
Total New Residential stockholders' equity | 1,265,850 | [1] | 378,356 | 39,808 |
Noncontrolling interests in equity of consolidated subsidiaries | 247,225 | [1] | ' | ' |
Total Equity | 1,513,075 | [1] | 378,356 | 39,808 |
[LiabilitiesAndStockholdersEquity] | 5,958,658 | [1] | 534,876 | 43,971 |
Closed Transaction Adjustments | ' | ' | ' | |
Investments in: | ' | ' | ' | |
Excess mortgage servicing rights at fair value | 19,132 | [3] | ' | ' |
Servicer advances | 1,561,999 | [4] | ' | ' |
Real estate securities, available-for-sale | 450,816 | [5] | ' | ' |
Cash and cash equivalents | -194,961 | [6] | ' | ' |
Restricted cash | 11,483 | [7] | ' | ' |
Derivative assets | 8,427 | [8] | ' | ' |
Total assets | 1,856,896 | ' | ' | |
Liabilities | ' | ' | ' | |
Repurchase agreements | 612,648 | [9] | ' | ' |
Notes Payable | 1,462,625 | [10] | ' | ' |
Trades Payable | -246,931 | [11] | ' | ' |
Total liabilities | 1,828,342 | ' | ' | |
Stockholders' Equity | ' | ' | ' | |
Noncontrolling interests in equity of consolidated subsidiaries | 28,554 | [12] | ' | ' |
Total Equity | 28,554 | ' | ' | |
[LiabilitiesAndStockholdersEquity] | 1,856,896 | ' | ' | |
Pending Transaction Adjustments | ' | ' | ' | |
Investments in: | ' | ' | ' | |
Excess mortgage servicing rights at fair value | 33,857 | [3] | ' | ' |
Total assets | 33,857 | ' | ' | |
Liabilities | ' | ' | ' | |
Payable related to pending transactions | 33,857 | [13] | ' | ' |
Total liabilities | 33,857 | ' | ' | |
Stockholders' Equity | ' | ' | ' | |
[LiabilitiesAndStockholdersEquity] | 33,857 | ' | ' | |
Offering Proceeds Adjustments | ' | ' | ' | |
Investments in: | ' | ' | ' | |
Cash and cash equivalents | 150,227 | [14] | ' | ' |
Total assets | 150,227 | [14] | ' | ' |
Stockholders' Equity | ' | ' | ' | |
Common stock, $0.01 par value, 2,000,000,000 shares authorized, 253,197,794 issued and outstanding as of December 31, 2013 | 250 | [14] | ' | ' |
Additional paid-in capital | 149,977 | [14] | ' | ' |
Total New Residential stockholders' equity | 150,227 | [14] | ' | ' |
Total Equity | 150,227 | [14] | ' | ' |
[LiabilitiesAndStockholdersEquity] | 150,227 | [14] | ' | ' |
Pro Forma | ' | ' | ' | |
Investments in: | ' | ' | ' | |
Excess mortgage servicing rights at fair value | 377,140 | ' | ' | |
Excess mortgage servicing rights, equity method investees, at fair value | 352,766 | ' | ' | |
Servicer advances | 4,227,550 | ' | ' | |
Real estate securities, available-for-sale | 2,424,005 | ' | ' | |
Residential mortgage loans, held-for-investment | 33,539 | ' | ' | |
Consumer loans, equity method investees | 215,062 | ' | ' | |
Cash and cash equivalents | 227,260 | ' | ' | |
Restricted cash | 44,821 | ' | ' | |
Derivative assets | 44,353 | ' | ' | |
Other assets | 53,142 | ' | ' | |
Total assets | 7,999,638 | ' | ' | |
Liabilities | ' | ' | ' | |
Repurchase agreements | 2,233,359 | ' | ' | |
Notes Payable | 3,951,243 | ' | ' | |
Due to affiliate | 19,169 | ' | ' | |
Dividends Payable | 63,297 | ' | ' | |
Accrued expenses and other liabilities | 6,857 | ' | ' | |
Payable related to pending transactions | 33,857 | ' | ' | |
Total liabilities | 6,307,782 | ' | ' | |
Stockholders' Equity | ' | ' | ' | |
Common stock, $0.01 par value, 2,000,000,000 shares authorized, 253,197,794 issued and outstanding as of December 31, 2013 | 2,782 | ' | ' | |
Additional paid-in capital | 1,307,095 | ' | ' | |
Retained earnings | 102,986 | ' | ' | |
Accumulated other comprehensive income, net of tax | 3,214 | ' | ' | |
Total New Residential stockholders' equity | 1,416,077 | ' | ' | |
Noncontrolling interests in equity of consolidated subsidiaries | 275,779 | ' | ' | |
Total Equity | 1,691,856 | ' | ' | |
[LiabilitiesAndStockholdersEquity] | $7,999,638 | ' | ' | |
[1] | Represents our historical consolidated balance sheet at December 31, 2013. | |||
[2] | Fair value, which is equal to carrying value for all securities. See Note 12 regarding the estimation of fair value. | |||
[3] | Represents the commitment to invest $53.0 million in Excess MSRs on portfolios of residential mortgage loans with an aggregate UPB of approximately $22.1 billion. We have closed on $19.1 million of these investments. The commitment amount is based on the UPB as of the commitment date. The actual amount invested will be based on the UPB at the time of close. | |||
[4] | Represents the purchase of servicer advances from equity contributions ($1.6 billion). | |||
[5] | Represents our net investments in Non-Agency RMBS and Agency ARM RMBS subsequent to December 31, 2013. | |||
[6] | Represents adjustments to the cash and cash equivalents balance. The adjustment to the cash and cash equivalents balance includes cash inflows from (i) the net increase in repurchase agreements related to Agency ARM RMBS and Non-Agency RMBS ($462.6 million); (ii) the repurchase agreement related to the Consumer Loan Companies ($150.0 million). The adjustment to the cash and cash equivalents balance includes cash outflows from (i) the servicer advance investments ($82.3 million); (ii) the trades payable balance at December 31, 2013 ($246.9 million); (iii) the net purchase of Agency ARM RMBS and Non-Agency RMBS ($450.8 million); (iv) the Excess MSR transactions ($19.1 million); and (v) the acquisition of non-performing loans, which are treated as derivative assets ($8.4 million). | |||
[7] | Represents the increase in restricted cash from the financing of servicer advances. | |||
[8] | Represents our net investment in non-performing loans of $8.4 million accounted as linked transactions not used for hedging purposes. Additionally, we hold TBA positions with $1.1 billion in a long notional amount of Agency RMBS and $1.2 billion in a short notional amount of Agency RMBS, as of April 15, 2014, and any amounts or obligations owed by or to us are subject to the right of set-off with the TBA counterparty. | |||
[9] | Represents the change in repurchase agreements related to Agency ARM RMBS, Non-Agency RMBS, and the Consumer Loan Companies. The increase of $612.6 million is comprised of a $590.2 million increase related to the financing of Non-Agency RMBS purchases and a $150.0 million financing of our investment in the Consumer Loan Companies, partially offset by a $127.5 million decrease related to the sale of Agency RMBS. | |||
[10] | Represents the notes payable related to the financing of servicer advances ($1.5 billion), including the repayment of certain notes payable using new notes issued pursuant to an advance receivables trust that issued variable funding and term notes. | |||
[11] | Represents the settlement of trades payable related to Agency ARM RMBS and Non-Agency RMBS which had not settled on December 31, 2013 ($246.9 million). | |||
[12] | Represents the non-controlling interest of the third party co-investors in our consolidated subsidiary that holds our investment in servicer advances. | |||
[13] | Represents the payable related to pending transactions on Excess MSRs. | |||
[14] | Represents the estimated net cash proceeds, common stock issued, and additional paid-in-capital from the issuance of 25,000,000 shares of our common stock for net proceeds of $150.2 million after deducting underwriting discounts and commissions and the estimated offering expenses payable by us, assuming the underwriters do not exercise their option to purchase additional shares of our common stock. |
Pro_Forma_and_Consolidated_Bal1
Pro Forma and Consolidated Balance Sheets (Parenthetical) (USD $) | Dec. 31, 2013 | Dec. 31, 2013 | Dec. 31, 2013 | Dec. 31, 2013 |
In Thousands, except Share data, unless otherwise specified | Pro Forma | Pro Forma | Pro Forma | |
Agency RMBS | Non-Agency RMBS | |||
Common stock, par value | $0.01 | ' | ' | ' |
Common stock, shares authorized | 2,000,000,000 | ' | ' | ' |
Common stock, shares issued | 253,197,974 | ' | ' | ' |
Common stock, shares outstanding | 253,197,974 | ' | ' | ' |
Face value of RMBS purchased subsequent to period end | ' | ' | ' | $740,600 |
Purchase price of RMBS purchased subsequent to period end | ' | ' | ' | 308,900 |
Face value of RMBS sold subsequent to period end | ' | ' | 154,200 | 437,900 |
Amortized cost basis of RMBS sold subsequent to period end | ' | ' | ' | 244,600 |
Sale price of RMBS sold subsequent to period end | ' | ' | 162,900 | 248,500 |
Financing in ownership interest in Consumer Loan Companies subsequent to period end | ' | 150,000 | ' | ' |
Shares issued in offering subsequent to period end | ' | 25,000,000 | ' | ' |
Net proceeds from stock offering | ' | 150,200 | ' | ' |
Amount commited to be invested in MSRs subsequent to period end | ' | 53,000 | ' | ' |
UPB of MSRs committed to be invested in subsequent to period end | ' | 22,100,000 | ' | ' |
Investments in MSRs closed subsequent to period end | ' | 19,100 | ' | ' |
Servicer advances purchased from equity contributions subsequent to period end | ' | 1,600,000 | ' | ' |
Cash inflow from repurchase agreements related to Agency ARM RMBS and Non-Agency RMBS | ' | 462,600 | ' | ' |
Cash inflow from repurchase agreements related to Consumer Loan Companies | ' | 150,000 | ' | ' |
Cash outflow from servicer advances transactions | ' | 82,300 | ' | ' |
Cash outflow from trades payable | ' | 246,900 | ' | ' |
Cash outflow from purchase of Agency ARM RMBS and Non-Agency RMBS | ' | 450,800 | ' | ' |
Cash outflow from Excess MSR transactions | ' | 19,100 | ' | ' |
Cash outflows from acquisition of non-performing loans | ' | 8,400 | ' | ' |
TBA agreements with a long notional amount, subsequent to year end | ' | 850,000 | ' | ' |
TBA agreements with a short notional amount, subsequent to year end | ' | 975,000 | ' | ' |
Adjustments related to Agency ARM RMBS and Non-Agency RMBS repurchase agreements | ' | ' | -127,500 | 590,200 |
Adjustments related to Consumer Loan company financing | ' | 150,000 | ' | ' |
Notes payable related to Servicer Advances | ' | 1,500,000 | ' | ' |
Payable on securities purchased but not yet settled | ' | $246,900 | ' | ' |
Pro_Forma_and_Consolidated_Sta
Pro Forma and Consolidated Statements of Income (USD $) | 1 Months Ended | 12 Months Ended | |||
In Thousands, except Share data, unless otherwise specified | Dec. 31, 2011 | Dec. 31, 2013 | Dec. 31, 2012 | ||
Interest income | $1,260 | $87,567 | [1] | $33,759 | |
Interest expense | ' | 15,024 | [1] | 704 | |
Net Interest Income | 1,260 | 72,543 | [1] | 33,055 | |
Impairment (Reversal) | ' | ' | ' | ||
Other-than-temporary impairment ("OTTI") on securities | ' | 4,993 | [1] | ' | |
Valuation allowance on loans | ' | 461 | [1] | ' | |
Impairment Net Of The Reversal Of Prior Valuation Allowances On Loans | ' | 5,454 | [1] | ' | |
Net interest income after impairment | 1,260 | 67,089 | [1] | 33,055 | |
Other Income | ' | ' | ' | ||
Change in fair value of investments in excess mortgage servicing rights | 367 | 53,332 | [1] | 9,023 | |
Change in fair value of investments in excess mortgage servicing rights, equity method investees | ' | 50,343 | [1] | ' | |
Earnings from investments in consumer loans, equity method investee | ' | 82,856 | [1] | ' | |
Gain on settlement of securities | ' | 52,657 | [1] | ' | |
Other income | ' | 1,820 | [1] | 8,400 | |
Other Income | 367 | 241,008 | [1],[2] | 17,423 | [2] |
Expenses | ' | ' | ' | ||
General and administrative expenses | 874 | 10,284 | [1] | 5,878 | |
Management fee allocated by Newcastle | 39 | 4,134 | [1] | 3,353 | |
Management fee to affiliate | ' | 11,209 | [1] | ' | |
Incentive compensation to affiliate | ' | 16,847 | [1] | ' | |
[OperatingExpenses] | 913 | 42,474 | [1] | 9,231 | |
Income (Loss) before Income Taxes | 714 | 265,623 | [1] | 41,247 | |
Net Income (Loss) | 714 | 265,623 | [1] | 41,247 | |
Noncontrolling Interests in Income (Loss) of Consolidated Subsidiaries | ' | -326 | [1] | ' | |
Net Income (Loss) Applicable to Common Stockholders | 714 | 265,949 | [1] | 41,247 | |
Income Per Share of Common Stock | ' | ' | ' | ||
Basic | ' | $1.05 | [1] | $0.16 | |
Diluted | ' | $1.03 | [1] | $0.16 | |
Weighted Average Number of Shares of Common Stock Outstanding | ' | ' | ' | ||
Basic | 253,025,645 | 253,078,048 | [1] | 253,025,645 | |
Diluted | 253,025,645 | 257,368,255 | [1] | 253,025,645 | |
Dividends Declared per Share of Common Stock | ' | $0.50 | [1] | ' | |
Pro Forma Adjustments | ' | ' | ' | ||
Interest income | ' | -2,167 | [3] | ' | |
Interest expense | ' | 62,029 | [4] | ' | |
Net Interest Income | ' | -64,196 | ' | ||
Impairment (Reversal) | ' | ' | ' | ||
Net interest income after impairment | ' | -64,196 | ' | ||
Expenses | ' | ' | ' | ||
Management fee allocated by Newcastle | ' | 71 | [5] | ' | |
Management fee to affiliate | ' | 2,250 | [6] | ' | |
[OperatingExpenses] | ' | 2,321 | ' | ||
Income (Loss) before Income Taxes | ' | -66,517 | ' | ||
Net Income (Loss) | ' | -66,517 | ' | ||
Noncontrolling Interests in Income (Loss) of Consolidated Subsidiaries | ' | -29,189 | [7] | ' | |
Net Income (Loss) Applicable to Common Stockholders | ' | -37,328 | ' | ||
Pro Forma | ' | ' | ' | ||
Interest income | ' | 85,400 | ' | ||
Interest expense | ' | 77,053 | ' | ||
Net Interest Income | ' | 8,347 | ' | ||
Impairment (Reversal) | ' | ' | ' | ||
Other-than-temporary impairment ("OTTI") on securities | ' | 4,993 | ' | ||
Valuation allowance on loans | ' | 461 | ' | ||
Impairment Net Of The Reversal Of Prior Valuation Allowances On Loans | ' | 5,454 | ' | ||
Net interest income after impairment | ' | 2,893 | ' | ||
Other Income | ' | ' | ' | ||
Change in fair value of investments in excess mortgage servicing rights | ' | 53,332 | ' | ||
Change in fair value of investments in excess mortgage servicing rights, equity method investees | ' | 50,343 | ' | ||
Earnings from investments in consumer loans, equity method investee | ' | 82,856 | ' | ||
Gain on settlement of securities | ' | 52,657 | ' | ||
Other income | ' | 1,820 | ' | ||
Other Income | ' | 241,008 | ' | ||
Expenses | ' | ' | ' | ||
General and administrative expenses | ' | 10,284 | ' | ||
Management fee allocated by Newcastle | ' | 4,205 | ' | ||
Management fee to affiliate | ' | 13,459 | ' | ||
Incentive compensation to affiliate | ' | 16,847 | ' | ||
[OperatingExpenses] | ' | 44,795 | ' | ||
Income (Loss) before Income Taxes | ' | 199,106 | ' | ||
Net Income (Loss) | ' | 199,106 | ' | ||
Noncontrolling Interests in Income (Loss) of Consolidated Subsidiaries | ' | -29,515 | ' | ||
Net Income (Loss) Applicable to Common Stockholders | ' | $228,621 | ' | ||
Income Per Share of Common Stock | ' | ' | ' | ||
Basic | ' | $0.90 | [8] | ' | |
Diluted | ' | $0.89 | [9] | ' | |
Weighted Average Number of Shares of Common Stock Outstanding | ' | ' | ' | ||
Basic | ' | 253,078,048 | [8] | ' | |
Diluted | ' | 257,368,255 | [9] | ' | |
[1] | Represents our historical consolidated statement of income for the year ended December 31, 2013. | ||||
[2] | Earnings from investments in equity method investees is included in other income. | ||||
[3] | Represents the reduction in interest income from the net Agency ARM RMBS with a net face of $154.2 million sold subsequent to December 31, 2013. The full year of interest income was computed based on the weighted average accounting yield of the securities of 1.33%. A 1/8% increase (decrease) in the benchmark interest rate would result in an increase (decrease) in interest income of approximately $0.2 million for the year ended December 31, 2013, respectively. | ||||
[4] | Represents additional interest expense from the additional repurchase agreements and notes payable. The full year of interest expense on the repurchase agreements related to Agency ARM RMBS and Non-Agency RMBS was computed based on a weighted average rate of the repurchase agreements of 0.65%. Additional interest expense related to the repurchase agreement for the purchase of mezzanine and subordinate tranches of a Non-Agency RMBS securitization previously sponsored by Springleaf was computed at a rate of 2.17%, which is based on the stated interest rate in the repurchase agreement of one-month LIBOR plus 2%. The repurchase agreement related to the Consumer Loan Companies had an outstanding balance of $150.0 million and funding cost of approximately 4.17%. The interest expense on the notes payable related to the servicer advance investments was computed based on the weighted average funding cost of the three servicer advance financing facilities, including the interest rate and commitment and non-usage fees, which was 3.01% as of March 28, 2014. The funding cost of these facilities ranges from 2.48% to 3.77%. A 1/8% increase (decrease) in the benchmark interest rate, considering servicer advances are financed with approximately 66.7% floating rate debt, would result in an increase (decrease) in interest expense of approximately $2.0 million for the year ended December 31, 2013. | ||||
[5] | Represents additional management fees related to the capital transactions noted herein. | ||||
[6] | Represents the estimated increase to the management fees we will pay Fortress as a result of this offering pursuant to the management agreement, according to which we pay 1.5% of our gross equity, as defined in the management agreement, assuming the underwriters do not exercise their option to purchase additional shares of our common stock. | ||||
[7] | Represents the interest expense related to the servicer advances attributable to non-controlling interests. | ||||
[8] | Basic earnings per share and weighted average number of basic shares outstanding reflect shares of common stock issued in connection with the spinoff as if they been outstanding for the entire year ended December 31, 2013. | ||||
[9] | Diluted earnings per share and weighted average number of diluted shares outstanding reflect shares of common stock issued in connection with the spin-off as if they been outstanding for the entire year ended December 31, 2013. For periods prior to the spin-off on May 15, 2013, the options issued on the spin-off date as a result of the conversion of Newcastle options were treated as if they were granted on May 15, 2013 since no New Residential awards were outstanding prior to that date. The pro forma weighted average diluted shares outstanding have not been adjusted to reflect options issued in connection with this offering as if they had been issued on January 1, 2013 since pro forma adjustments for the investments acquired with the related proceeds have not been applied to the income statement as described above. The estimated fair value of these options is $1.3 million, based on an assumed offering price of $6.23, which was the last reported sale price on April 23, 2014. |
Pro_Forma_and_Consolidated_Sta1
Pro Forma and Consolidated Statements of Income (Parenthetical) (USD $) | 12 Months Ended | 12 Months Ended | 0 Months Ended | 12 Months Ended | 0 Months Ended | 12 Months Ended | ||
In Thousands, except Per Share data, unless otherwise specified | Dec. 31, 2013 | Apr. 23, 2014 | Dec. 31, 2013 | Mar. 28, 2014 | Dec. 31, 2013 | Mar. 28, 2014 | Mar. 28, 2014 | Dec. 31, 2013 |
Pro Forma | Pro Forma | Servicer Advance Notes | Notes Payable and Repurchase Agreements | Notes Payable and Repurchase Agreements | Notes Payable and Repurchase Agreements | Notes Payable and Repurchase Agreements | Agency RMBS | |
Lower Range | Upper Range | |||||||
Face value of Agency RMBS acquired subsequent to period end | ' | ' | ' | ' | ' | ' | ' | $154,200 |
Weighted average accounting yield | ' | ' | ' | ' | 0.65% | ' | ' | 1.33% |
Benchmark interest change | ' | ' | ' | ' | 0.13% | ' | ' | 0.13% |
Potential increase in interest income | ' | ' | ' | ' | ' | ' | ' | 200 |
Securitization interest rate based on repurchase agreements previously sponsored at Springleaf | ' | ' | ' | ' | 2.17% | ' | ' | ' |
Variable interest rate basis description | ' | ' | 'One-month LIBOR | ' | 'one-month LIBOR | ' | ' | ' |
Variable Interest Rate Spread | ' | ' | ' | ' | 2.00% | ' | ' | ' |
Repurchase agreement related to Consumer Loan Companies | ' | ' | ' | ' | 150,000 | ' | ' | ' |
Funding costs of repurchase agreements | ' | ' | ' | ' | 4.17% | ' | ' | ' |
Funding costs of notes payable - servicer advance investments | ' | ' | ' | 3.01% | ' | 2.48% | 3.77% | ' |
Percentage of servicer advance investments financed by floating rate debt | ' | ' | 66.70% | ' | ' | ' | ' | ' |
Potential increase in interest expense | ' | ' | ' | ' | 2,000 | ' | ' | ' |
Management fee rate (percent) | 1.50% | ' | ' | ' | ' | ' | ' | ' |
Fair value of options | $1,300 | ' | ' | ' | ' | ' | ' | ' |
Offering price | ' | $6.23 | ' | ' | ' | ' | ' | ' |
Consolidated_Statements_of_Com
Consolidated Statements of Comprehensive Income (USD $) | 12 Months Ended | ||
In Thousands, unless otherwise specified | Dec. 31, 2013 | Dec. 31, 2012 | |
Comprehensive income (loss), net of tax: | ' | ' | |
Net Income (Loss) | $265,623 | [1] | $41,247 |
Other comprehensive income (loss) | ' | ' | |
Net unrealized gain (loss) on securities | 35,352 | 15,526 | |
Reclassification of net realized (gain) loss on securities into earnings | -47,664 | ' | |
[OtherComprehensiveIncomeLossNetOfTax] | -12,312 | 15,526 | |
Total comprehensive income (loss) | 253,311 | 56,773 | |
Comprehensive income (loss) attributable to noncontrolling interests | -326 | ' | |
Comprehensive income (loss) atributable to common stockholders | $253,637 | $56,773 | |
[1] | Represents our historical consolidated statement of income for the year ended December 31, 2013. |
Consolidated_Statement_of_Chan
Consolidated Statement of Changes in Stockholders' Equity (USD $) | Common Stock | Additional Paid-in Capital [Member] | Retained Earnings | Accumulated Other Comprehensive Income | Total New Residential Stockholders' Equity | Noncontrolling Interests in Income of Consolidated Subsidiaries | Total | ||
In Thousands, except Share data, unless otherwise specified | |||||||||
Balance, beginning at Dec. 07, 2011 | ' | ' | ' | ' | ' | ' | ' | ||
Capital contributions | ' | $40,492 | ' | ' | $40,492 | ' | $40,492 | ||
Capital distributions | ' | -1,398 | ' | ' | -1,398 | ' | -1,398 | ||
Comprehensive income (loss), (net of tax) | ' | ' | ' | ' | ' | ' | ' | ||
Net Income | ' | 714 | ' | ' | 714 | ' | 714 | ||
Total comprehensive income (loss) | ' | ' | ' | ' | ' | ' | 714 | ||
Comprehensive income (loss) atributable to common stockholders | ' | ' | ' | ' | ' | ' | 714 | ||
Total Equity at Dec. 31, 2011 | ' | ' | ' | ' | ' | ' | 39,808 | ||
Balance, ending at Dec. 31, 2011 | ' | 39,808 | ' | ' | 39,808 | ' | 39,808 | ||
Capital contributions | ' | 368,294 | ' | ' | 368,294 | ' | 368,294 | ||
Contributions in-kind | ' | 164,142 | ' | ' | 164,142 | ' | 164,142 | ||
Capital distributions | ' | -250,661 | ' | ' | -250,661 | ' | -250,661 | ||
Comprehensive income (loss), (net of tax) | ' | ' | ' | ' | ' | ' | ' | ||
Net Income | ' | 41,247 | ' | ' | 41,247 | ' | 41,247 | ||
Net unrealized gain (loss) on securities | ' | ' | ' | 15,526 | 15,526 | ' | 15,526 | ||
Total comprehensive income (loss) | ' | ' | ' | ' | 56,773 | ' | 56,773 | ||
Comprehensive income (loss) atributable to common stockholders | ' | ' | ' | ' | ' | ' | 56,773 | ||
Total Equity at Dec. 31, 2012 | ' | ' | ' | ' | ' | ' | 378,356 | ||
Balance, ending at Dec. 31, 2012 | ' | 362,830 | ' | 15,526 | 378,356 | ' | 378,356 | ||
Dividends declared | ' | ' | -125,317 | ' | -125,317 | ' | -125,317 | ||
Capital contributions | ' | 893,466 | ' | ' | 893,466 | 247,551 | 1,141,017 | ||
Contributions in-kind | ' | 1,093,684 | ' | ' | 1,093,684 | ' | 1,093,684 | ||
Capital distributions | ' | -1,228,054 | ' | ' | -1,228,054 | ' | -1,228,054 | ||
Issuance of common stock | 2,530 | -2,530 | ' | ' | ' | ' | ' | ||
Issuance of common stock, shares | 253,025,645 | ' | ' | ' | ' | ' | ' | ||
Option exercise | 2 | -2 | ' | ' | ' | ' | ' | ||
Option exercise, shares | 160,634 | ' | ' | ' | ' | ' | 160,634 | ||
Director share grant | ' | 78 | ' | ' | 78 | ' | 78 | ||
Director share grant, shares | 11,695 | ' | ' | ' | ' | ' | ' | ||
Comprehensive income (loss), (net of tax) | ' | ' | ' | ' | ' | ' | ' | ||
Net Income | ' | 37,646 | 228,303 | ' | 265,949 | -326 | 265,623 | [1] | |
Net unrealized gain (loss) on securities | ' | ' | ' | 35,352 | 35,352 | ' | 35,352 | ||
Reclassification of net realized (gain) loss on securities into earnings | ' | ' | ' | -47,664 | -47,664 | ' | -47,664 | ||
Total comprehensive income (loss) | ' | ' | ' | ' | 253,311 | ' | 253,311 | ||
Comprehensive income (loss) atributable to common stockholders | ' | ' | ' | ' | ' | -326 | 253,637 | ||
Total Equity at Dec. 31, 2013 | [2] | ' | ' | ' | ' | ' | ' | 1,513,075 | |
Noncontrolling interests in equity of consolidated subsidiaries at Dec. 31, 2013 | ' | ' | ' | ' | ' | 247,225 | 247,225 | [2] | |
Balance, ending at Dec. 31, 2013 | $2,532 | $1,157,118 | $102,986 | $3,214 | $1,265,850 | ' | $1,265,850 | [2] | |
Balance, ending - shares at Dec. 31, 2013 | 253,197,974 | ' | ' | ' | ' | ' | 253,197,974 | ||
[1] | Represents our historical consolidated statement of income for the year ended December 31, 2013. | ||||||||
[2] | Represents our historical consolidated balance sheet at December 31, 2013. |
Consolidated_Statements_of_Cas
Consolidated Statements of Cash Flows (USD $) | 12 Months Ended | ||
In Thousands, unless otherwise specified | Dec. 31, 2013 | Dec. 31, 2012 | |
Cash Flows From Operating Activities | ' | ' | |
Net income | $265,623 | [1] | $41,247 |
Adjustments to reconcile net income to net cash provided by (used in) operating activities (inclusive of amounts related to discontinued operations): | ' | ' | |
Change in fair value of investments in excess mortgage servicing rights | -53,332 | [1] | -9,023 |
Change in fair value of investments in excess mortgage servicing rights, equity method investees | -50,343 | [1] | ' |
Distributions of earnings from excess mortgage servicing rights, equity method investees | 44,454 | ' | |
Earnings from consumer loan equity method investees | -82,856 | [1] | ' |
Distributions of earnings from consumer loan equity method investees | 82,856 | ' | |
Change in fair value of investments in derivative assets | -1,820 | ' | |
Accretion of discount and other amortization | -13,908 | -5,339 | |
(Gain)/Loss on settlement of investments (net) | -52,657 | [1] | ' |
Other-than-temporary impairment ("OTTI") | 4,993 | [1] | ' |
Valuation allowance | 461 | [1] | ' |
Non-cash directors' compensation | 78 | ' | |
Change in: | ' | ' | |
Restricted cash | -2,790 | ' | |
Other assets | -8,274 | -84 | |
Due to affiliates | 14,033 | 4,978 | |
Accrued expenses and other liabilities | 6,360 | -352 | |
Reduction of liability deemed as capital contribution by Newcastle | 11,515 | ' | |
Other operating cash flows: | ' | ' | |
Cash proceeds from investments, in excess of interest income | 41,435 | 43,113 | |
Net cash proceeds deemed as capital distributions to Newcastle | -52,888 | -74,540 | |
Net cash provided by (used in) operating activities | 152,940 | ' | |
Cash Flows From Investing Activities | ' | ' | |
Acquisition of investments in excess mortgage servicing rights | -63,434 | ' | |
Acquisition of investments in excess mortgage servicing rights. equity method investees | -233,764 | ' | |
Purchase of servicer advance investments | -670,820 | ' | |
Purchase of Agency ARM RMBS | -605,114 | ' | |
Purchase of Non-Agency RMBS | -407,689 | ' | |
Purchase of derivative assets | -70,227 | ' | |
Return of investments in excess mortgage servicing rights | 24,735 | ' | |
Return of investments in excess mortgage servicing rights, equity method investees | 4,018 | ' | |
Principal repayments from servicer advance investments | 103,394 | ' | |
Principal repayments from Agency ARM RMBS | 302,920 | ' | |
Principal repayments from Non-Agency RMBS | 66,495 | ' | |
Proceeds from sale of investments | 521,865 | ' | |
Principal repayments from residential mortgage loans | 3,809 | ' | |
Return of investments in consumer loan equity method investees | 30,359 | ' | |
Net cash provided by (used in) investing activities | -993,453 | ' | |
Cash Flows From Financing Activities | ' | ' | |
Repayments of repurchase agreements | -2,271,765 | ' | |
Margin deposits under repurchase agreements | -61,152 | ' | |
Repayments of notes payable | -59,149 | ' | |
Payment of deferred financing fees | -5,541 | ' | |
Common stock dividends paid | -62,020 | ' | |
Borrowings under repurchase agreements | 2,634,990 | ' | |
Return of margin deposits under repurchase agreements | 21,020 | ' | |
Borrowings under notes payable | 423,515 | ' | |
Capital contributions | 245,058 | ' | |
Noncontrolling interest in equity of consolidated subsidiaries, contributions | 247,551 | ' | |
Net cash provided by financing activities | 1,112,507 | ' | |
Net Increase in Cash and Cash Equivalents | 271,994 | ' | |
Cash and Cash Equivalents, End of Period | 271,994 | [2] | ' |
Supplemental Disclosure of Cash Flow Information | ' | ' | |
Cash paid during the period for interest expense | 10,212 | 649 | |
Prior to Date of Cash Contribution by Newcastle | ' | ' | |
Cash proceeds from investments, in excess of interest income | 41,435 | 43,113 | |
Acquisition of real estate securities | 242,750 | 121,262 | |
Acquisition of investments in excess mortgage servicing rights | ' | 221,832 | |
Deposit paid on investment in excess mortgage servicing rights | ' | 25,200 | |
Return of deposit paid on investment in excess mortgage service rights | ' | 25,200 | |
Purchase price payable on investments in excess mortgage servicing rights | ' | 59 | |
Acquisition of investments in excess mortgage servicing rights, equity method investees at fair value | 125,099 | ' | |
Acquisition of investments in consumer loan equity method investees | 245,121 | ' | |
Acquisition of residential mortgage loans, held-for-investment | 35,138 | ' | |
Borrowings under repurchase agreements | 1,179,068 | 153,510 | |
Repayments of repurchase agreements | 3,902 | 2,588 | |
Capital contributions by Newcastle | 648,408 | 368,294 | |
Contributions in-kind by Newcastle | 1,093,684 | 164,142 | |
Capital distributions to Newcastle | 1,228,054 | 250,661 | |
Subsequent to Date of Cash Contribution by Newcastle | ' | ' | |
Acquisition of restricted cash | 30,548 | ' | |
Acquisition of Servicer advance investments | 2,093,704 | ' | |
Borrowings under notes payable - Servicer advance investments | 2,124,252 | ' | |
Dividends declared but not paid | $63,297 | [2] | ' |
[1] | Represents our historical consolidated statement of income for the year ended December 31, 2013. | ||
[2] | Represents our historical consolidated balance sheet at December 31, 2013. |
ORGANIZATION
ORGANIZATION | 12 Months Ended | |
Dec. 31, 2013 | Dec. 31, 2012 | |
Organization | ' | ' |
ORGANIZATION | ' | ' |
1. ORGANIZATION | 1. ORGANIZATION | |
New Residential Investment Corp. (together with its subsidiaries, “New Residential”) is a Delaware corporation that was formed as a limited liability company in September 2011 for the purpose of making real estate related investments and commenced operations on December 8, 2011. On December 20, 2012, New Residential was converted to a corporation. Newcastle Investment Corp. (“Newcastle”) was the sole stockholder of New Residential until the spin-off (Note 13), which was completed on May 15, 2013. Newcastle is listed on the New York Stock Exchange (“NYSE”) under the symbol “NCT.” | New Residential Investment Corp. (formerly known as NIC MSR LLC) (together with its subsidiaries, “New Residential”) is a Delaware corporation that was formed as a limited liability company in September 2011 for the purpose of making real estate related investments and commenced operations on December 8, 2011. On December 20, 2012, New Residential was converted to a corporation. Newcastle Investment Corp. (“Newcastle” or the “stockholder”) is the sole stockholder of New Residential. Newcastle is listed on the New York Stock Exchange under the symbol “NCT.” Newcastle generally does not have any liability for the obligations of New Residential, except as described in Note 6. | |
Following the spin-off, New Residential is an independent publicly traded real estate investment trust (“REIT”) primarily focused on investing in residential mortgage related assets. New Residential is listed on the NYSE under the symbol “NRZ.” | As of December 31, 2012, New Residential had acquired excess mortgage servicing rights (“Excess MSRs”) on five pools of residential mortgage loans from Nationstar Mortgage LLC (“Nationstar”). Nationstar is a leading residential mortgage servicer and is majority-owned by funds managed by Newcastle’s manager. Furthermore, New Residential acquired real estate securities during the third and fourth quarters of 2012. | |
New Residential intends to elect and qualify to be taxed as a REIT for U.S. federal income tax purposes for the tax year ending December 31, 2013. As such, New Residential will generally not be subject to U.S. federal corporate income tax on that portion of its net income that is distributed to stockholders if it distributes at least 90% of its REIT taxable income to its stockholders by prescribed dates and complies with various other requirements. | New Residential intends to elect and qualify to be taxed as a real estate investment trust (“REIT”) for U.S. federal income tax purposes for the tax year ending December 31, 2013. As such, New Residential will generally not be subject to U.S. federal corporate income tax on that portion of its net income that is distributed to stockholders if it distributes at least 90% of its REIT taxable income to its stockholders by prescribed dates and complies with various other requirements. | |
New Residential has entered into a management agreement (the “Management Agreement”) with FIG LLC (the “Manager”), an affiliate of Fortress Investment Group LLC (“Fortress”), under which the Manager advises New Residential on various aspects of its business and manages its day-to-day operations, subject to the supervision of New Residential’s board of directors. For its services, the Manager is entitled to management fees and incentive compensation, both defined in, and in accordance with the terms of, the Management Agreement. For a further discussion of the Management Agreement, see Note 15. The Manager also manages Newcastle and investment funds that own a majority of Nationstar Mortgage LLC (“Nationstar”), a leading residential mortgage servicer, and Springleaf Holdings, Inc. (“Springleaf”), managing member of the Consumer Loan Companies (Note 9). | New Residential intends to enter into a management agreement (the “Management Agreement”) with FIG LLC (the “Manager”), an affiliate of Fortress Investment Group LLC (“Fortress”), under which the Manager will advise New Residential on various aspects of its business and will manage its day-to-day operations, subject to the supervision of New Residential’s board of directors. For its services, the Manager is expected to be entitled to management fees and incentive compensation, both to be defined in, and in accordance with the terms of, the Management Agreement. For a further discussion of the Management Agreement, see Note 9. The Manager also manages Newcastle and investment funds that own a majority of Nationstar. | |
As of December 31, 2013, New Residential conducted its business through the following segments: (i) investments in Excess MSRs, (ii) investments in servicer advances, (iii) investments in real estate securities, (iv) investments in real estate loans, (v) investments in consumer loans and (vi) corporate. | ||
Approximately 5.3 million shares of New Residential’s common stock were held by Fortress, through its affiliates, and its principals as of December 31, 2013. In addition, Fortress, through its affiliates, held options to purchase approximately 17.7 million shares of New Residential’s common stock as of December 31, 2013. |
SUMMARY_OF_SIGNIFICANT_ACCOUNT
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 12 Months Ended | |||||||||||||||||||
Dec. 31, 2013 | Dec. 31, 2012 | |||||||||||||||||||
Summary Of Significant Accounting Policies | ' | ' | ||||||||||||||||||
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | ' | ' | ||||||||||||||||||
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | |||||||||||||||||||
Basis of Accounting — The accompanying consolidated financial statements are prepared in accordance with U.S. generally accepted accounting principles (“GAAP’’). The consolidated financial statements include the accounts of New Residential and its consolidated subsidiaries. All significant intercompany transactions and balances have been eliminated. New Residential consolidates those entities in which it has control over significant operating, financial and investing decisions of the entity, as well as those entities deemed to be variable interest entities (“VIEs”) in which New Residential is determined to be the primary beneficiary. VIEs are defined as entities in which equity investors do not have the characteristics of a controlling financial interest or do not have sufficient equity at risk for the entity to finance its activities without additional subordinated financial support from other parties. A VIE is required to be consolidated only by its primary beneficiary, which is defined as the party who has the power to direct the activities of a VIE that most significantly impact its economic performance and who has the obligation to absorb losses or the right to receive benefits from the VIE that could be potentially significant to the VIE. For entities over which New Residential exercises significant influence, but which do not meet the requirements for consolidation, New Residential uses the equity method of accounting whereby it records its share of the underlying income of such entities. | GENERAL | |||||||||||||||||||
Principles of Consolidation and Basis of Presentation—The accompanying consolidated financial statements and related notes have been prepared in accordance with United States generally accepted accounting principles (“U.S. GAAP”). These financial statements include the accounts of New Residential and its consolidated subsidiaries, which are comprised of entities in which it has an investment of 50% or more and has control over significant operating, financial and investing decisions of the entity. All intercompany balances and transactions have been eliminated upon consolidation. New Residential currently operates in three business segments: (i) investments in Excess MSRs, (ii) investments in real estate securities and (iii) corporate. | ||||||||||||||||||||
New Residential’s investments in Non-Agency RMBS are variable interests. New Residential monitors these investments and analyzes the potential need to consolidate the related securitization entities pursuant to the VIE consolidation requirements. New Residential has not consolidated the securitization entities that issued its Non-Agency RMBS. This determination is based, in part, on New Residential’s assessment that it does not have the power to direct the activities that most significantly impact the economic performance of these entities, such as through ownership of a majority of the currently controlling class. In addition, New Residential is not obligated to provide, and has not provided, any financial support to these entities. | Variable interest entities (VIEs) are defined as entities in which equity investors do not have the characteristics of a controlling financial interest or do not have sufficient equity at risk for the entity to finance its activities without additional subordinated financial support from other parties. A VIE is required to be consolidated by its primary beneficiary, and only by its primary beneficiary, which is defined as the party who has the power to direct the activities of a VIE that most significantly impact its economic performance and who has the obligation to absorb losses or the right to receive benefits from the VIE that could potentially be significant to the VIE. | |||||||||||||||||||
Noncontrolling interests represent the ownership interests in certain consolidated subsidiaries held by entities or persons other than New Residential. These interests are related to noncontrolling interests in consolidated entities that hold New Residential’s investment in servicer advances (Note 6). | ||||||||||||||||||||
The consolidated financial statements for periods prior to May 15, 2013 have been prepared on a spin-off basis from the consolidated financial statements and accounting records of Newcastle and reflect New Residential’s historical results of operations, financial position and cash flows, in accordance with U.S. GAAP. As presented in the Consolidated Statements of Cash Flows, New Residential did not have any cash balance during periods prior to April 5, 2013, which is the first date Newcastle contributed cash to New Residential. All of its cash activity occurred in Newcastle’s accounts during these periods. The consolidated financial statements for periods prior to May 15, 2013 do not necessarily reflect what New Residential’s consolidated results of operations, financial position and cash flows would have been had New Residential operated as an independent company prior to the spin-off. | New Residential’s investments in Non-Agency RMBS are variable interests. New Residential monitors these investments and analyzes the potential need to consolidate the related securitization entities pursuant to the VIE consolidation requirements. | |||||||||||||||||||
Certain expenses of Newcastle, comprised primarily of a portion of its management fee, have been allocated to New Residential to the extent they were directly associated with New Residential for periods prior to the spin-off on May 15, 2013. The portion of the management fee allocated to New Residential prior to the spin-off represents the product of the management fee rate payable by Newcastle (1.5%) and New Residential’s gross equity, which management believes is a reasonable method for quantifying the expense of the services provided by the employees of the Manager to New Residential. The incremental cost of certain legal, accounting and other expenses related to New Residential’s operations prior to May 15, 2013 are reflected in the accompanying consolidated financial statements. New Residential and Newcastle do not share any expenses following the spin-off. | New Residential has not consolidated the securitization entities that issued its Non-Agency RMBS. This determination is based, in part, on New Residential’s assessment that it does not have the power to direct the activities that most significantly impact the economic performance of these entities, such as through ownership of a majority of the currently controlling class. In addition, New Residential is not obligated to provide, and has not provided, any financial support to these entities. | |||||||||||||||||||
Risks and Uncertainties — In the normal course of business, New Residential encounters primarily two significant types of economic risk: credit and market. Credit risk is the risk of default on New Residential’s investments that results from a borrower’s or counterparty’s inability or unwillingness to make contractually required payments. Market risk reflects changes in the value of investments due to changes in prepayment speeds, interest rates, spreads or other market factors, including risks that impact the value of the collateral underlying New Residential’s investments. Management believes that the carrying values of its investments are reasonable taking into consideration these risks along with estimated prepayments, financings, collateral values, payment histories, and other information. Furthermore, for each of the periods presented, a significant portion of New Residential’s assets are dependent on Nationstar’s ability to perform its obligations as the servicer of residential mortgage loans underlying New Residential’s investments in Excess MSRs, servicer advances, Non-Agency RMBS and residential mortgage loans. If Nationstar is terminated as the servicer, New Residential’s right to receive its portion of the cash flows related to interests in MSRs is also terminated. New Residential is similarly dependent on Springleaf as the servicer of the loans underlying its investment in the Consumer Loan Companies (Note 9). | The consolidated financial statements have been prepared on a spin off basis from the consolidated financial statements and accounting records of Newcastle and reflect New Residential’s historical results of operations, financial position and cash flows, in accordance with U.S. GAAP. The consolidated financial statements may not be indicative of New Residential’s future performance and do not necessarily reflect what its consolidated results of operations, financial position and cash flows would have been had New Residential operated as an independent company during the periods presented. | |||||||||||||||||||
Additionally, New Residential is subject to significant tax risks. If New Residential were to fail to qualify as a REIT in any taxable year, New Residential would be subject to U.S. federal corporate income tax (including any applicable alternative minimum tax), which could be material. Unless entitled to relief under certain statutory provisions, New Residential would also be disqualified from treatment as a REIT for the four taxable years following the year during which qualification is lost. | The incremental cost of certain legal, accounting and other expenses related to New Residential’s operations are reflected in the accompanying consolidated financial statements. Certain expenses of Newcastle, currently comprised primarily of a portion of its management fee, have been allocated to New Residential to the extent they are directly associated with New Residential. The portion of the management fee allocated to New Residential represents the product of the management fee rate payable by Newcastle (1.5%) and New Residential’s gross equity, which management believes is a reasonable method for quantifying the expense of the services provided by the employees of the Manager to New Residential. New Residential and Newcastle do not intend to share any expenses following the separation. | |||||||||||||||||||
Use of Estimates — The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates. | Risks and Uncertainties—In the normal course of business, New Residential encounters primarily two significant types of economic risk: credit and market. Credit risk is the risk of default on New Residential’s investments that results from a borrower’s inability or unwillingness to make contractually required payments. Market risk reflects changes in the value of investments due to changes in prepayment speeds, interest rates, spreads or other market factors. Management believes that the carrying values of its investments are reasonable taking into consideration these risks along with estimated prepayments, refinancings, collateral values, payment histories, and other borrower information. Furthermore, as of December 31, 2012 and 2011, a significant portion of New Residential’s assets are its investments in Excess MSRs, which are dependent on Nationstar to perform its obligations as the servicer. If Nationstar is terminated as the servicer, New Residential’s right to receive its portion of the excess mortgage servicing amount is also terminated. | |||||||||||||||||||
Additionally, New Residential is subject to significant tax risks. If New Residential were to fail to qualify as a REIT in any taxable year, it would be subject to U.S. federal corporate income tax (including any applicable alternative minimum tax), which could be material. Unless entitled to relief under certain statutory provisions, New Residential would also be disqualified from treatment as a REIT for the four taxable years following the year during which qualification is lost. | ||||||||||||||||||||
Comprehensive Income — Comprehensive income is defined as the change in equity of a business enterprise during a period from transactions and other events and circumstances, excluding those resulting from investments by and distributions to owners. For New Residential’s purposes, comprehensive income represents net income, as presented in the Consolidated Statements of Income, adjusted for unrealized gains or losses on securities available for sale. | Use of Estimates—The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates. | |||||||||||||||||||
INCOME RECOGNITION | REVENUE RECOGNITION | |||||||||||||||||||
Investments in Excess Mortgage Servicing Rights (“Excess MSRs”) — Excess MSRs are aggregated into pools as applicable; each pool of Excess MSRs is accounted for in the aggregate. Interest income for Excess MSRs is accreted into interest income on an effective yield or “interest” method, based upon the expected excess mortgage servicing amount through the expected life of the underlying mortgages. Changes to expected cash flows result in a cumulative retrospective adjustment, which will be recorded in the period in which the change in expected cash flows occurs. Under the retrospective method, the interest income recognized for a reporting period is measured as the difference between the amortized cost basis at the end of the period and the amortized cost basis at the beginning of the period, plus any cash received during the period. The amortized cost basis is calculated as the present value of estimated future cash flows using an effective yield, which is the yield that equates all past actual and current estimated future cash flows to the initial investment. In addition, New Residential’s policy is to recognize interest income only on its Excess MSRs in existing eligible underlying mortgages. The difference between the fair value of Excess MSRs and their amortized cost basis is recorded as “Change in fair value of investments in excess mortgage servicing rights.” Fair value is generally determined by discounting the expected future cash flows using discount rates that incorporate the market risks and liquidity premium specific to the Excess MSRs, and therefore may differ from their effective yields. | Investments in Excess Mortgage Servicing Rights—Excess MSRs are aggregated into pools as applicable; each pool of Excess MSRs is accounted for in the aggregate. Interest income for Excess MSRs is accreted into interest income on an effective yield or “interest” method, based upon the expected excess mortgage servicing amount through the expected life of the underlying mortgages. Changes to expected cash flows result in a cumulative retrospective adjustment, which will be recorded in the period in which the change in expected cash flows occurs. Under the retrospective method, the interest income recognized for a reporting period would be measured as the difference between the amortized cost basis at the end of the period and the amortized cost basis at the beginning of the period, plus any cash received during the period. The amortized cost basis is calculated as the present value of estimated future cash flows using an effective yield, which is the yield that equates all past actual and current estimated future cash flows to the initial investment. In addition, New Residential’s policy is to recognize interest income only on its Excess MSRs in existing eligible underlying mortgages. The difference between the fair value of Excess MSRs and their amortized cost basis is recorded as “Change in fair value of investments in excess mortgage servicing rights.” Fair value is generally determined by discounting the expected future cash flows using discount rates that incorporate the market risks and liquidity premium specific to the Excess MSRs, and therefore may differ from their effective yields. | |||||||||||||||||||
Investments in Servicer Advances (“Servicer Advances”) — New Residential accounts for its investments in Servicer Advances similarly to its investments in Excess MSRs. Interest income for Servicer Advances is accreted into interest income on an effective yield or “interest” method, based upon the expected aggregate cash flows of the servicer advances, including the basic fee component of the related MSR (but excluding any Excess MSR component) through the expected life of the underlying mortgages, net of a portion of the basic fee component of the MSR that New Residential remits to Nationstar as compensation for Nationstar’s servicing activities. Changes to expected cash flows result in a cumulative retrospective adjustment, which will be recorded in the period in which the change in expected cash flows occurs. Refer to “—Investments in Excess Mortgage Servicing Rights” for a description of the retrospective method. Fair value is generally determined by discounting the expected future cash flows using discount rates that incorporate the market risks and liquidity premium specific to the Servicer Advances, and therefore may differ from their effective yields. | Real Estate Securities—New Residential invests in real estate related asset backed securities. Discounts or premiums are accreted into interest income on an effective yield or “interest” method, based upon a comparison of actual and expected cash flows, through the expected maturity date of the security. Depending on the nature of the investment, changes to expected cash flows may result in a prospective change to yield or a retrospective change which would include a catch up adjustment. Deferred fees and costs, if any, are recognized as a reduction to the interest income over the terms of the securities using the interest method. Upon settlement of securities, the excess (or deficiency) of net proceeds over the net carrying value of such security is recognized as a gain (or loss) in the period of settlement. | |||||||||||||||||||
Interest income recognized by New Residential related to its investment in Servicer Advances for the year ended December 31, 2013 was comprised of the following: | Impairment of Securities—New Residential continually evaluates securities for impairment. Securities are considered to be other-than-temporarily impaired, for financial reporting purposes, generally when it is probable that New Residential will be unable to collect all principal or interest when due according to the contractual terms of the original agreements, or for securities purchased at a discount for credit quality when New Residential determines that it is probable that it will be unable to collect as anticipated. The evaluation of a security’s estimated cash flows includes the following, as applicable: (i) review of the credit of the issuer, (ii) review of the credit rating of the security, (iii) review of the key terms of the security, (iv) review of the performance of the underlying loans, including debt service coverage and loan to value ratios, (v) analysis of the value of the collateral for the underlying loans, (vi) analysis of the effect of local, industry and broader economic factors, and (vii) analysis of historical and anticipated trends in defaults, loss severities and prepayments for similar securities. Furthermore, New Residential must record a write down if we have the intent to sell a given security in an unrealized loss position, or if it is more likely than not that we will be required to sell such a security. Upon determination of impairment, New Residential records a direct write down for securities based on the estimated fair value of the security or underlying collateral using a discounted cash flow analysis or based on an observable market value. It is New Residential’s policy to establish an allowance for uncollectible interest on performing securities that are past due more than 90 days or sooner when, in the judgment of management, the probability of collection of interest is deemed to be insufficient to warrant further accrual. Upon such a determination, those securities are deemed to be non-performing and put on nonaccrual status. Actual losses may differ from New Residential’s estimates. New Residential may resume accrual of income on a security if, in management’s opinion, full collection is probable. Subsequent to a determination of impairment, and a related write down, income is accrued on an effective yield method from the new carrying value to the related expected cash flows, with cash received treated as a reduction of basis. | |||||||||||||||||||
Other Income (Loss)—On May 14, 2012, New Residential entered into definitive agreements to co-invest in Excess MSRs related to mortgage servicing rights that Nationstar proposed to acquire from Residential Capital, LLC and related entities (“ResCap”) in an auction conducted as part of ResCap’s bankruptcy proceedings. The auction commenced on October 23, 2012, and Nationstar did not submit the highest bid on October 24, 2012. Therefore, New Residential did not complete this co-investment and was entitled to its portion of the breakup fee of approximately $8.4 million, which was recorded as other income for the year ended December 31, 2012. | ||||||||||||||||||||
Interest income, gross of amounts attributable to servicer compensation | $ | 6,708 | Reclassification From Accumulated Other Comprehensive Income Into Net Income—No amounts were reclassified out of accumulated other comprehensive income into net income for the year ended December 31, 2012. | |||||||||||||||||
Amounts attributable to servicer compensation | (2,287 | ) | EXPENSE RECOGNITION | |||||||||||||||||
Interest Expense—New Residential finances certain investments using floating rate repurchase agreements. Interest is expensed as incurred. | ||||||||||||||||||||
Interest income | $ | 4,421 | General and Administrative Expenses—General and administrative expenses, including legal fees, audit fees and other costs and are expensed as incurred. | |||||||||||||||||
Management Fees Allocated by Newcastle—These represent the management fees allocated by and due to Newcastle based on the equity used in funding the acquisition of Excess MSRs and real estate securities. The management fees are equal to 1.5% of the gross equity, as defined in the Management Agreement between Newcastle and FIG LLC. For further information on the Management Agreement, see Note 9. | ||||||||||||||||||||
Investments in Real Estate Securities — Discounts or premiums are accreted into interest income on an effective yield or “interest” method, based upon a comparison of actual and expected cash flows, through the expected maturity date of the security. For securities acquired at a discount for credit quality, the difference between contractual cash flows and expected cash flows at acquisition is not accreted (non-accretable difference). | BALANCE SHEET MEASUREMENT | |||||||||||||||||||
Cash and Cash Equivalents—New Residential has no cash account as of December 31, 2011 or 2012. Cash transactions affecting account balances are collected or paid through a cash account held by Newcastle. | ||||||||||||||||||||
Depending on the nature of the investment, changes to expected cash flows may result in a prospective change to yield or a retrospective change which would include a catch up adjustment. Deferred fees and costs, if any, are recognized as a reduction to the interest income over the terms of the securities using the interest method. Upon settlement of securities, the excess (or deficiency) of net proceeds over the net carrying value of such security is recognized as a gain (or loss) in the period of settlement. | Due from/to Newcastle—For purposes of classifying amounts, New Residential considers the Manager and principals of Fortress to be affiliates. Amounts due from and to Newcastle are recorded at their contractual or allocated amount, subject to an allowance for uncollectible amounts if collection is not deemed probable. | |||||||||||||||||||
Investments in Residential Mortgage Loans — Income on these loans is recognized similarly to that on securities using a level yield methodology. For loans acquired at a discount for credit quality, the difference between contractual cash flows and expected cash flows at acquisition is not accreted (non-accretable difference). | Investments in Excess Mortgage Servicing Rights—Upon acquisition, New Residential has elected to record each of such investments at fair value. New Residential elected to record its Excess MSRs at fair value in order to provide users of the financial statements with better information regarding the effects of prepayment risk and other market factors on the Excess MSRs. Under this election, New Residential records a valuation adjustment on its Excess MSRs on a quarterly basis to recognize the changes in fair value in net income as described in Revenue Recognition—Investments in Excess Mortgage Servicing Rights above. As of December 31, 2012 and 2011, all Excess MSRs are classified as held-for-investment as New Residential has the intent and ability to hold the investments for the foreseeable future. | |||||||||||||||||||
Impairment of Securities and Loans — New Residential continually evaluates securities and loans for impairment. Securities and loans are considered to be other-than-temporarily impaired (“OTTI”), for financial reporting purposes, generally when it is probable that New Residential will be unable to collect all principal or interest when due according to the contractual terms of the original agreements, or for securities or loans purchased at a discount for credit quality or that represent retained beneficial interests in securitizations when New Residential determines that it is probable that it will be unable to collect as anticipated. The evaluation of a security’s or loan’s estimated cash flows includes the following, as applicable: (i) review of the credit of the issuer or borrower, (ii) review of the credit rating of the security, (iii) review of the key terms of the security or loan, (iv) review of the performance of the loan or underlying loans, including debt service coverage and loan to value ratios, (v) analysis of the value of the collateral for the loan or underlying loans, (vi) analysis of the effect of local, industry and broader economic factors, and (vii) analysis of historical and anticipated trends in defaults, loss severities and prepayments for similar securities or loans. Furthermore, New Residential must record a write down if it has the intent to sell a given security in an unrealized loss position, or if it is more likely than not that it will be required to sell such a security. Upon determination of impairment, New Residential establishes specific valuation allowances for loans or records a direct write down for securities based on the estimated fair value of the security or underlying collateral using a discounted cash flow analysis or based on an observable market value. New Residential also establishes allowances for estimated unidentified incurred losses on pools of loans. The allowance for each loan is maintained at a level believed adequate by management to absorb probable losses, based on periodic reviews of actual and expected losses. It is New Residential’s policy to establish an allowance for uncollectible interest on performing securities or loans that are past due more than 90 days or sooner when, in the judgment of management, the probability of collection of interest is deemed to be insufficient to warrant further accrual. Upon such a determination, those securities or loans are deemed to be non-performing and put on nonaccrual status. Significant judgment is required in determining impairment and in estimating the resulting loss allowance, and actual losses may differ from New Residential’s estimates. New Residential may resume accrual of income on a loan or security if, in management’s opinion, full collection is probable. Subsequent to a determination of impairment, and a related write down, income is accrued on an effective yield method from the new carrying value to the related expected cash flows, with cash received treated as a reduction of basis. | Investments in Real Estate Securities—New Residential has classified its investments in securities as available-for-sale. Available-for-sale securities are carried at market value with the net unrealized gains or losses reported as a separate component of accumulated other comprehensive income, to the extent impairment losses are considered temporary. At disposition, the net realized gain or loss is determined on the basis of the cost of the specific investments and is included in earnings. Unrealized losses on securities are charged to earnings if they reflect a decline in value that is other-than-temporary, as described above. | |||||||||||||||||||
Accretion of Discount and Other Amortization — As reflected on the consolidated statements of cash flows, this item is comprised of the following: | Capital Contributions and Distributions—Capital contributions represent the settlements of acquisition price in the acquisition of Excess MSRs and real estate securities and deposits related to Excess MSRs paid by Newcastle on behalf of New Residential. Capital distributions represent the cash receipts from investments, repayments of repurchase agreements and borrowings under repurchase agreements less cash payments for expenses, which would be equivalent to net increases in cash and cash equivalents in the respective periods had New Residential maintained a separate bank account. | |||||||||||||||||||
Contributions in-kind—Contributions in-kind represent the contribution of real estate securities by Newcastle to New Residential. | ||||||||||||||||||||
Year Ended | RECENT ACCOUNTING PRONOUNCEMENTS | |||||||||||||||||||
December 31, | In May 2011, the FASB issued new guidance regarding the measurement and disclosure of fair value, which became effective for New Residential on January 1, 2012. The adoption of this guidance did not have a material impact on New Residential’s financial position, liquidity or results of operations. | |||||||||||||||||||
2013 | 2012 | In June 2011, the FASB issued a new accounting standard that eliminates the current option to report other comprehensive income and its components in the statement of stockholders’ equity. Instead, an entity will be required to present items of net income and other comprehensive income in one continuous statement or in two separate, but consecutive, statements. New Residential has early adopted this standard in the period ended December 31, 2011 and has presented the Statement of Comprehensive Income separately from the Statement of Changes in Newcastle’s Equity. | ||||||||||||||||||
Accretion of net discount on securities and loans | $ | 14,676 | $ | 5,339 | In February 2013, the FASB issued new guidance regarding the reporting of reclassifications out of accumulated other comprehensive income. The new guidance does not change current requirements for reporting net income or other comprehensive income in the financial statements. However, it requires companies to present the effects on the line items of net income of significant amounts reclassified out of accumulated OCI if the item reclassified is required to be reclassified to net income in its entirety during the same reporting period. Presentation should occur either on the face of the income statement where net income is presented, or in the notes to the financial statements. New Residential has early adopted this accounting standard and opted to present this information in a note to the financial statements. | |||||||||||||||
Amortization of deferred financing costs | (768 | ) | — | The FASB has recently issued or discussed a number of proposed standards on such topics as consolidation, the definition of an investment company, financial statement presentation, revenue recognition, financial instruments, hedging and contingencies. Some of the proposed changes are significant and could have a material impact on New Residential’s reporting. New Residential has not yet fully evaluated the potential impact of these proposals, but will make such an evaluation as the standards are finalized. | ||||||||||||||||
$ | 13,908 | $ | 5,339 | |||||||||||||||||
Other Income — This item is comprised of the following: | ||||||||||||||||||||
Year Ended December 31, | ||||||||||||||||||||
2013 | 2012 | |||||||||||||||||||
Other income | ||||||||||||||||||||
Gain (loss) on non-hedge derivative instruments | $ | 1,820 | $ | — | ||||||||||||||||
Other income (loss) | — | 8,400 | ||||||||||||||||||
$ | 1,820 | $ | 8,400 | |||||||||||||||||
On May 14, 2012, New Residential entered into definitive agreements to co-invest in Excess MSRs related to mortgage servicing rights that Nationstar proposed to acquire from Residential Capital, LLC and related entities (“ResCap”) in an auction conducted as part of ResCap’s bankruptcy proceedings. The auction commenced on October 23, 2012, and Nationstar did not submit the highest bid on October 24, 2012. Therefore, New Residential did not complete this co-investment and was entitled to its portion of the breakup fee of approximately $8.4 million, which was recorded as other income for the year ended December 31, 2012. | ||||||||||||||||||||
EXPENSE RECOGNITION | ||||||||||||||||||||
Interest Expense — New Residential finances certain investments using floating rate repurchase agreements and loans. Interest is expensed as incurred. | ||||||||||||||||||||
General and Administrative Expenses — General and administrative expenses, including legal fees, audit fees, insurance premiums, and other costs and are expensed as incurred. | ||||||||||||||||||||
Management Fee and Incentive Compensation to Affiliate — These represent amounts due to the Manager pursuant to the Management Agreement. For further information on the Management Agreement, see Note 15. | ||||||||||||||||||||
BALANCE SHEET MEASUREMENT | ||||||||||||||||||||
Investments in Servicing Related Assets — Servicing Related Assets consist of New Residential’s investments in Excess MSRs and Servicer Advances. Upon acquisition, New Residential has elected to record each of such investments at fair value. New Residential elected to record its investments at fair value in order to provide users of the financial statements with better information regarding the effects of prepayment risk and other market factors on Servicing Related Assets. Under this election, New Residential records a valuation adjustment on its investments in Servicing Related Assets on a quarterly basis to recognize the changes in fair value in net income as described in “Income Recognition — Investments in Excess Mortgage Servicing Rights” and “Income Recognition — Investments in Servicer Advances.” | ||||||||||||||||||||
Investments in Real Estate Securities — New Residential has classified its investments in securities as available for sale. Securities available for sale are carried at market value with the net unrealized gains or losses reported as a separate component of accumulated other comprehensive income, to the extent impairment losses are considered temporary. At disposition, the net realized gain or loss is determined on the basis of the amortized cost of the specific investments and is included in earnings. Unrealized losses on securities are charged to earnings if they reflect a decline in value that is other-than-temporary. | ||||||||||||||||||||
Investments in Residential Mortgage Loans — Residential mortgage loans are presented at cost net of any unamortized discount (or gross of any unamortized premium), including any fees received, and an allowance for loan losses. New Residential determines at acquisition whether loans will be aggregated into pools based on common risk characteristics (credit quality, loan type, and date of origination or acquisition); loans aggregated into pools are accounted for as if each pool were a single loan. Loans which New Residential does not have the intent or the ability to hold into the foreseeable future are considered held-for-sale and are carried at the lower of average amortized cost or market value. Loans for which New Residential has the intent and ability to hold for the foreseeable future, or until maturity or payoff, are classified as held-for-investment. Other loans are classified as held-for-sale and recorded at the lower of their amortized cost basis or fair value. New Residential discontinues the accretion of discounts on loans if they are reclassified from held-for-investment to held-for-sale. To the extent that the loans are classified as held-for-investment, New Residential periodically evaluates such loans for possible impairment as described in “—Impairment of Securities and Loans.” | ||||||||||||||||||||
Cash and Cash Equivalents and Restricted Cash — New Residential considers all highly liquid short-term investments with maturities of 90 days or less when purchased to be cash equivalents. Substantially all amounts on deposit with major financial institutions exceed insured limits. New Residential held $33.3 million of restricted cash related to the financing of the servicer advances (Note 6) that has been pledged to the note holders for interest and fees payable. | ||||||||||||||||||||
Derivatives — New Residential financed certain investments with the same counterparty from which it purchased those investments, and accounts for the contemporaneous purchase of the investments and the associated financings as linked transactions. Accordingly, New Residential records a non-hedge derivative instrument on a net basis, with changes in market value recorded as “Other Income” in the Consolidated Statements of Income. In the Consolidated Statement of Cash Flows, New Residential presents the linked transactions on a gross basis with the related asset purchased reflected as an investment activity and the related financing as a financing activity. | ||||||||||||||||||||
Income Taxes — New Residential operates so as to qualify as a REIT under the requirements of the Internal Revenue Code of 1986, as amended, or the Internal Revenue Code. Requirements for qualification as a REIT include various restrictions on ownership of New Residential’s stock, requirements concerning distribution of taxable income and certain restrictions on the nature of assets and sources of income. A REIT must distribute at least 90% of its taxable income to its stockholders of which 85% plus any undistributed amounts from the prior year must be distributed within the taxable year in order to avoid the imposition of an excise tax. Distribution of the remaining balance may extend until timely filing of New Residential’s tax return in the subsequent taxable year. Qualifying distributions of taxable income are deductible by a REIT in computing taxable income. | ||||||||||||||||||||
Certain activities of New Residential are conducted through taxable REIT subsidiaries (“TRSs”) and therefore are subject to federal and state income taxes. Accordingly, deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases upon the change in tax status. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. | ||||||||||||||||||||
New Residential recognizes tax benefits for uncertain tax positions only if it is more likely than not that the position is sustainable based on its technical merits. Interest and penalties on uncertain tax positions are included as a component of the provision for income taxes on the consolidated statements of operations. | ||||||||||||||||||||
Other Assets and Other Liabilities — Other assets and liabilities are comprised of the following: | ||||||||||||||||||||
Other Assets | Other Liabilities | |||||||||||||||||||
December 31, | December 31, | |||||||||||||||||||
2013 | 2012 | 2013 | 2012 | |||||||||||||||||
Margin receivable (A) | $ | 40,132 | $ | — | Interest payable | $ | 4,010 | $ | 55 | |||||||||||
Interest and other receivables | 7,548 | 84 | Accounts payable | 2,829 | 348 | |||||||||||||||
Deferred financing costs (B) | 5,541 | — | Other | 18 | 59 | |||||||||||||||
Accumulated amortization | (768 | ) | — | $ | 6,857 | $ | 462 | |||||||||||||
Other | 689 | — | ||||||||||||||||||
$ | 53,142 | $ | 84 | |||||||||||||||||
(A) | Margin receivable represents amounts due to New Residential from counterparties resulting from changes in the counterparties’ estimated value of the underlying collateral of New Residential’s financed investments resulting from market fluctuations and principal paydowns. Brief periods of time may lapse between the time New Residential pays, or receives, margin from one counterparty relative to other counterparties. | |||||||||||||||||||
(B) | Deferred financing costs consist primarily of costs incurred in obtaining financing, which are amortized into interest expense over the term of the financing generally using the effective interest method. | |||||||||||||||||||
Repurchase Agreements and Notes Payable — New Residential’s repurchase agreements and notes payable are generally short-term debt that expire within one year. Such agreements and notes payable are carried at their contractual amounts, as specified by each repurchase or financing agreement, and generally treated as collateralized financing transactions. | ||||||||||||||||||||
Recent Accounting Pronouncements | ||||||||||||||||||||
In February 2013, the FASB issued new guidance regarding the reporting of reclassifications out of accumulated other comprehensive income. The new guidance does not change current requirements for reporting net income or other comprehensive income in financial statements. However, it requires companies to present the effects on the line items of net income of significant amounts reclassified out of accumulated other comprehensive income if the item reclassified is required to be reclassified to net income in its entirety during the same reporting period. Presentation should occur either on the face of the income statement where net income is presented, or in the notes to the financial statements. New Residential has adopted this accounting standard. Refer to Note 16 for this presentation. | ||||||||||||||||||||
The FASB has recently issued or discussed a number of proposed standards on such topics as consolidation, financial statement presentation, revenue recognition, financial instruments, hedging, and contingencies. Some of the proposed changes are significant and could have a material impact on New Residential’s reporting. New Residential has not yet fully evaluated the potential impact of these proposals, but will make such an evaluation as the standards are finalized. |
SEGMENT_REPORTING
SEGMENT REPORTING | 12 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||
Dec. 31, 2013 | Dec. 31, 2012 | |||||||||||||||||||||||||||||||||||||||||||||
Segment Reporting [Abstract] | ' | ' | ||||||||||||||||||||||||||||||||||||||||||||
SEGMENT REPORTING | ' | ' | ||||||||||||||||||||||||||||||||||||||||||||
3. SEGMENT REPORTING | 3. SEGMENT REPORTING | |||||||||||||||||||||||||||||||||||||||||||||
New Residential conducts its business through the following segments: (i) investments in Excess MSRs, (ii) investments in servicer advances, (iii) investments in real estate securities, (iv) investments in real estate loans, (v) investments in consumer loans and (vi) corporate. The corporate segment consists primarily of (i) general and administrative expenses, (ii) the allocation of management fees by Newcastle until the spin-off on May 15, 2013, (iii) the management fees and incentive compensation owed to the Manager by New Residential following the spin-off, (iv) corporate cash and related interest income and (v) the secured corporate loan and related interest expense. | New Residential conducts its business through the following segments: (i) investments in Excess MSRs, (ii) investments in real estate securities and (iii) corporate. The corporate segment consists primarily of general and administrative expenses and the allocation of management fees by the stockholder. | |||||||||||||||||||||||||||||||||||||||||||||
In the third quarter of 2012, New Residential changed the composition of its reportable segments to add a real estate securities segment and a corporate segment. Management acquired real estate securities during the third quarter and determined that it should disaggregate corporate expenses from the other segments presented. Segment information for previously reported periods in the accompanying financial statements has been restated to reflect this change to the composition of its segments. | ||||||||||||||||||||||||||||||||||||||||||||||
In the fourth quarter of 2013, New Residential determined that its investments in real estate loans represented a separate reportable segment due to New Residential’s increased focus on this previously immaterial business line. As a result, the real estate loans segment was disaggregated from the real estate securities segment for all periods presented. | ||||||||||||||||||||||||||||||||||||||||||||||
Summary financial data on New Residential’s segments is given below, together with a reconciliation to the same data for New Residential as a whole: | Summary financial data on New Residential’s segments is given below, together with a reconciliation to the same data for New Residential as a whole: | |||||||||||||||||||||||||||||||||||||||||||||
Servicing Related Assets | Residential Securities | Excess | Real Estate | Corporate | New | |||||||||||||||||||||||||||||||||||||||||
and Loans | MSRs | Securities | Residential | |||||||||||||||||||||||||||||||||||||||||||
Excess MSRs | Servicer | Real Estate | Real Estate | Consumer | Corporate | Total | Year ended December 31, 2012 | |||||||||||||||||||||||||||||||||||||||
Advances | Securities | Loans | Loans | Interest income | $ | 27,496 | $ | 6,263 | $ | — | $ | 33,759 | ||||||||||||||||||||||||||||||||||
Year Ended December 31, 2013 | Interest expense | — | 704 | — | 704 | |||||||||||||||||||||||||||||||||||||||||
Interest income | $ | 40,921 | $ | 4,421 | $ | 39,533 | $ | 2,650 | $ | — | $ | 42 | $ | 87,567 | ||||||||||||||||||||||||||||||||
Interest expense | — | 3,901 | 10,876 | — | — | 247 | 15,024 | Net interest income (expense) | 27,496 | 5,559 | — | 33,055 | ||||||||||||||||||||||||||||||||||
Change in fair value of investments in excess mortgage servicing rights | 9,023 | — | — | 9,023 | ||||||||||||||||||||||||||||||||||||||||||
Net interest income | 40,921 | 520 | 28,657 | 2,650 | — | (205 | ) | 72,543 | Other income (loss) | 8,400 | — | — | 8,400 | |||||||||||||||||||||||||||||||||
Impairment | — | — | 4,993 | 461 | — | — | 5,454 | Expenses | 5,449 | — | 3,782 | 9,231 | ||||||||||||||||||||||||||||||||||
Other income | 103,675 | — | 52,645 | 1,832 | 82,856 | — | 241,008 | |||||||||||||||||||||||||||||||||||||||
Operating expenses | 215 | 2,077 | 312 | 357 | 2,076 | 37,437 | 42,474 | Net Income (Loss) | $ | 39,470 | $ | 5,559 | $ | (3,782 | ) | $ | 41,247 | |||||||||||||||||||||||||||||
Income (Loss) Before Income Taxes | 144,381 | (1,557 | ) | 75,997 | 3,664 | 80,780 | (37,642 | ) | 265,623 | December 31, 2012 | ||||||||||||||||||||||||||||||||||||
Total Assets | $ | 245,068 | $ | 289,808 | $ | — | $ | 534,876 | ||||||||||||||||||||||||||||||||||||||
Income tax expense | — | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||
Net Income (Loss) | $ | 144,381 | $ | (1,557 | ) | $ | 75,997 | $ | 3,664 | $ | 80,780 | $ | (37,642 | ) | $ | 265,623 | Excess | Real Estate | Corporate | New | ||||||||||||||||||||||||||
MSRs | Securities | Residential | ||||||||||||||||||||||||||||||||||||||||||||
Noncontrolling interests in income (loss) | $ | — | $ | (326 | ) | $ | — | $ | — | $ | — | $ | — | $ | (326 | ) | Period from December 8, 2011 (Commencement of Operations) through December 31, 2011 | |||||||||||||||||||||||||||||
of consolidated subsidiaries | Interest income | $ | 1,260 | $ | — | $ | — | $ | 1,260 | |||||||||||||||||||||||||||||||||||||
Interest expense | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||
Net income attributable to common | $ | 144,381 | $ | (1,231 | ) | $ | 75,997 | $ | 3,664 | $ | 80,780 | $ | (37,642 | ) | $ | 265,949 | ||||||||||||||||||||||||||||||
shareholders | Net interest income (expense) | 1,260 | — | — | 1,260 | |||||||||||||||||||||||||||||||||||||||||
Change in fair value of investments in excess mortgage servicing rights | 367 | — | — | 367 | ||||||||||||||||||||||||||||||||||||||||||
Expenses | 809 | — | 104 | 913 | ||||||||||||||||||||||||||||||||||||||||||
Servicing Related Assets | Residential Securities | |||||||||||||||||||||||||||||||||||||||||||||
and Loans | Net Income (Loss) | $ | 818 | $ | — | $ | (104 | ) | $ | 714 | ||||||||||||||||||||||||||||||||||||
Excess MSRs | Servicer | Real Estate | Real Estate | Consumer | Corporate | Total | ||||||||||||||||||||||||||||||||||||||||
Advances | Securities | Loans | Loans | December 31, 2011 | ||||||||||||||||||||||||||||||||||||||||||
December 31, 2013 | Total Assets | $ | 43,791 | $ | — | $ | — | $ | 43,791 | |||||||||||||||||||||||||||||||||||||
Investments | $ | 676,917 | $ | 2,665,551 | $ | 1,973,189 | $ | 33,539 | $ | 215,062 | $ | — | $ | 5,564,258 | ||||||||||||||||||||||||||||||||
Cash and restricted cash | — | 85,243 | 51,627 | 22,840 | — | 145,622 | 305,332 | |||||||||||||||||||||||||||||||||||||||
Derivative assets | — | — | 1,452 | 34,474 | — | — | 35,926 | |||||||||||||||||||||||||||||||||||||||
Other assets | 2 | 7,062 | 44,848 | — | — | 1,230 | 53,142 | |||||||||||||||||||||||||||||||||||||||
Total assets | $ | 676,919 | $ | 2,757,856 | $ | 2,071,116 | $ | 90,853 | $ | 215,062 | $ | 146,852 | $ | 5,958,658 | ||||||||||||||||||||||||||||||||
Debt | $ | — | $ | 2,390,778 | $ | 1,620,711 | $ | 22,840 | $ | — | $ | 75,000 | $ | 4,109,329 | ||||||||||||||||||||||||||||||||
Other liabilities | 80 | 4,271 | 215,159 | 32,553 | 33 | 84,158 | 336,254 | |||||||||||||||||||||||||||||||||||||||
Total liabilities | 80 | 2,395,049 | 1,835,870 | 55,393 | 33 | 159,158 | 4,445,583 | |||||||||||||||||||||||||||||||||||||||
Total equity | 676,839 | 362,807 | 235,246 | 35,460 | 215,029 | (12,306 | ) | 1,513,075 | ||||||||||||||||||||||||||||||||||||||
Noncontrolling interests in equity of | — | 247,225 | — | — | — | — | 247,225 | |||||||||||||||||||||||||||||||||||||||
consolidated subsidiaries | ||||||||||||||||||||||||||||||||||||||||||||||
Total New Residential stockholders’ equity | $ | 676,839 | $ | 115,582 | $ | 235,246 | $ | 35,460 | $ | 215,029 | $ | (12,306 | ) | $ | 1,265,850 | |||||||||||||||||||||||||||||||
Investments in equity method investees | $ | 352,766 | $ | — | $ | — | $ | — | $ | 215,062 | $ | — | $ | 567,828 | ||||||||||||||||||||||||||||||||
Servicing Related Assets | Residential Securities | |||||||||||||||||||||||||||||||||||||||||||||
and Loans | ||||||||||||||||||||||||||||||||||||||||||||||
Excess MSRs | Servicer | Real Estate | Real Estate | Consumer | Corporate | Total | ||||||||||||||||||||||||||||||||||||||||
Advances | Securities | Loans | Loans | |||||||||||||||||||||||||||||||||||||||||||
Year Ended December 31, 2012 | ||||||||||||||||||||||||||||||||||||||||||||||
Interest income | $ | 27,496 | $ | — | $ | 6,263 | $ | — | $ | — | $ | — | $ | 33,759 | ||||||||||||||||||||||||||||||||
Interest expense | — | — | 704 | — | — | — | 704 | |||||||||||||||||||||||||||||||||||||||
Net interest income | 27,496 | — | 5,559 | — | — | — | 33,055 | |||||||||||||||||||||||||||||||||||||||
Impairment | — | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||
Other income | 17,423 | — | — | — | — | — | 17,423 | |||||||||||||||||||||||||||||||||||||||
Operating expenses | 5,449 | — | — | — | — | 3,782 | 9,231 | |||||||||||||||||||||||||||||||||||||||
Income (Loss) Before Income Taxes | 39,470 | — | 5,559 | — | — | (3,782 | ) | 41,247 | ||||||||||||||||||||||||||||||||||||||
Income tax expense | — | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||
Net Income (Loss) | $ | 39,470 | $ | — | $ | 5,559 | $ | — | $ | — | $ | (3,782 | ) | $ | 41,247 | |||||||||||||||||||||||||||||||
Noncontrolling interests in income (loss) | $ | — | $ | — | $ | — | $ | — | $ | — | $ | — | $ | — | ||||||||||||||||||||||||||||||||
of consolidated subsidiaries | ||||||||||||||||||||||||||||||||||||||||||||||
Net income attributable to common | $ | 39,470 | $ | — | $ | 5,559 | $ | — | $ | — | $ | (3,782 | ) | $ | 41,247 | |||||||||||||||||||||||||||||||
shareholders | ||||||||||||||||||||||||||||||||||||||||||||||
Servicing Related Assets | Residential Securities | |||||||||||||||||||||||||||||||||||||||||||||
and Loans | ||||||||||||||||||||||||||||||||||||||||||||||
Excess MSRs | Servicer | Real Estate | Real Estate | Consumer | Corporate | Total | ||||||||||||||||||||||||||||||||||||||||
Advances | Securities | Loans | Loans | |||||||||||||||||||||||||||||||||||||||||||
December 31, 2012 | ||||||||||||||||||||||||||||||||||||||||||||||
Investments | $ | 245,036 | $ | — | $ | 289,756 | $ | — | $ | — | $ | — | $ | 534,792 | ||||||||||||||||||||||||||||||||
Cash and restricted cash | — | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||
Derivative assets | — | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||
Other assets | 32 | — | 52 | — | — | — | 84 | |||||||||||||||||||||||||||||||||||||||
Total assets | $ | 245,068 | $ | — | $ | 289,808 | $ | — | $ | — | $ | — | $ | 534,876 | ||||||||||||||||||||||||||||||||
Debt | $ | — | $ | — | $ | 150,922 | $ | — | $ | — | $ | — | $ | 150,922 | ||||||||||||||||||||||||||||||||
Other liabilities | 174 | — | 56 | — | — | 5,368 | 5,598 | |||||||||||||||||||||||||||||||||||||||
Total liabilities | 174 | — | 150,978 | — | — | 5,368 | 156,520 | |||||||||||||||||||||||||||||||||||||||
Total equity | 244,894 | — | 138,830 | — | — | (5,368 | ) | 378,356 | ||||||||||||||||||||||||||||||||||||||
Noncontrolling interests in equity of | — | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||
consolidated subsidiaries | ||||||||||||||||||||||||||||||||||||||||||||||
Total New Residential stockholders’ equity | $ | 244,894 | $ | — | $ | 138,830 | $ | — | $ | — | $ | (5,368 | ) | $ | 378,356 | |||||||||||||||||||||||||||||||
Investments in equity method investees | $ | — | $ | — | $ | — | $ | — | $ | — | $ | — | $ | — | ||||||||||||||||||||||||||||||||
Servicing Related Assets | Residential Securities | |||||||||||||||||||||||||||||||||||||||||||||
and Loans | ||||||||||||||||||||||||||||||||||||||||||||||
Excess MSRs | Servicer | Real Estate | Real Estate | Consumer | Corporate | Total | ||||||||||||||||||||||||||||||||||||||||
Advances | Securities | Loans | Loans | |||||||||||||||||||||||||||||||||||||||||||
Period from December 8, 2011 | ||||||||||||||||||||||||||||||||||||||||||||||
(Commencement of Operations) | ||||||||||||||||||||||||||||||||||||||||||||||
through December 31, 2011 | ||||||||||||||||||||||||||||||||||||||||||||||
Interest income | $ | 1,260 | $ | — | $ | — | $ | — | $ | — | $ | — | $ | 1,260 | ||||||||||||||||||||||||||||||||
Interest expense | — | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||
Net interest income | 1,260 | — | — | — | — | — | 1,260 | |||||||||||||||||||||||||||||||||||||||
Impairment | — | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||
Other income | 367 | — | — | — | — | — | 367 | |||||||||||||||||||||||||||||||||||||||
Operating expenses | 809 | — | — | — | — | 104 | 913 | |||||||||||||||||||||||||||||||||||||||
Income (Loss) Before Income Taxes | 818 | — | — | — | — | (104 | ) | 714 | ||||||||||||||||||||||||||||||||||||||
Income tax expenses | — | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||
Net Income (Loss) | $ | 818 | $ | — | $ | — | $ | — | $ | — | $ | (104 | ) | $ | 714 | |||||||||||||||||||||||||||||||
Noncontrolling interests in income of | $ | — | $ | — | $ | — | $ | — | $ | — | $ | — | $ | — | ||||||||||||||||||||||||||||||||
consolidated subsidiaries | ||||||||||||||||||||||||||||||||||||||||||||||
Net income attributable to shareholders | $ | 818 | $ | — | $ | — | $ | — | $ | — | $ | (104 | ) | $ | 714 | |||||||||||||||||||||||||||||||
INVESTMENTS_IN_EXCESS_MORTGAGE
INVESTMENTS IN EXCESS MORTGAGE SERVICING RIGHTS AT FAIR VALUE | 12 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||
Dec. 31, 2013 | Dec. 31, 2012 | |||||||||||||||||||||||||||||||||||||||||||||||||||||
Investments In Excess Mortgage Servicing Rights At Fair Value | ' | ' | ||||||||||||||||||||||||||||||||||||||||||||||||||||
INVESTMENTS IN EXCESS MORTGAGE SERVICING RIGHTS AT FAIR VALUE | ' | ' | ||||||||||||||||||||||||||||||||||||||||||||||||||||
4. INVESTMENTS IN EXCESS MORTGAGE SERVICING RIGHTS AT FAIR VALUE | 4. INVESTMENTS IN EXCESS MORTGAGE SERVICING RIGHTS AT FAIR VALUE | |||||||||||||||||||||||||||||||||||||||||||||||||||||
Pool 1. On December 13, 2011, Newcastle announced the completion of the first co-investment between New Residential and Nationstar in Excess MSRs related to mortgage servicing rights acquired by Nationstar. New Residential invested approximately $43.7 million to acquire a 65% interest in the Excess MSRs on a portfolio of government-sponsored enterprise (“GSE”) residential mortgage loans (“Pool 1”). Nationstar has co-invested on a pari passu basis with New Residential in 35% of the Excess MSRs and is the servicer of the loans, performing all servicing and advancing functions, and retaining the ancillary income, the servicing obligations and liabilities associated with this portfolio as the servicer. Under the terms of this investment, to the extent that any loans in the portfolio are refinanced by Nationstar, the resulting Excess MSRs are shared on a pro rata basis by New Residential and Nationstar, subject to certain limitations. | Pool 1. On December 13, 2011, Newcastle announced the completion of the first co-investment between New Residential and Nationstar in Excess MSRs related to mortgage servicing rights acquired by Nationstar. New Residential invested approximately $44 million to acquire a 65% interest in the Excess MSRs on a portfolio of government-sponsored enterprise (“GSE”) residential mortgage loans with an outstanding principal balance of approximately $9.9 billion (“Pool 1”). Nationstar has co-invested on a pari-passu basis with New Residential in 35% of the Excess MSRs and will be the servicer of the loans, performing all servicing and advancing functions, and retaining the ancillary income, the servicing obligations and liabilities as the servicer. Under the terms of this investment, to the extent that any loans in the portfolio are refinanced by Nationstar, the resulting Excess MSRs will be shared on a pro rata basis by New Residential and Nationstar, subject to certain limitations. | |||||||||||||||||||||||||||||||||||||||||||||||||||||
Pool 2. On June 5, 2012, Newcastle announced the completion of a co-investment between New Residential and Nationstar in Excess MSRs related to mortgage servicing rights Nationstar acquired from Bank of America. New Residential invested approximately $42.3 million to acquire a 65% interest in the Excess MSRs on a portfolio of residential mortgage loans (“Pool 2”), comprised of loans in GSE pools. Nationstar has co-invested on a pari passu basis with New Residential in 35% of the Excess MSRs and is the servicer of the loans, performing all servicing and advancing functions, and retaining the ancillary income, servicing obligations and liabilities associated with this portfolio as the servicer. Under the terms of this investment, to the extent that any loans in the portfolio are refinanced by Nationstar, the resulting Excess MSRs are shared on a pro rata basis by New Residential and Nationstar, subject to certain limitations. | Pool 2. On June 5, 2012, Newcastle announced the completion of a co-investment between New Residential and Nationstar in Excess MSRs related to mortgage servicing rights Nationstar acquired from Bank of America. New Residential invested approximately $44 million to acquire a 65% interest in the Excess MSRs on a portfolio of residential mortgage loans with an outstanding principal balance of approximately $10.4 billion (“Pool 2”), comprised of loans in GSE pools. Nationstar has co-invested on a pari passu basis with New Residential in 35% of the Excess MSRs and will be the servicer of the loans, performing all servicing and advancing functions, and retaining the ancillary income, servicing obligations and liabilities as the servicer. Under the terms of this investment, to the extent that any loans in the portfolio are refinanced by Nationstar, the resulting Excess MSRs will be shared on a pro rata basis by New Residential and Nationstar, subject to certain limitations. As of December 31, 2012, New Residential has a remaining purchase price payable of less than $0.1 million which is to be funded in 2013 pursuant to the payment terms of the agreement. | |||||||||||||||||||||||||||||||||||||||||||||||||||||
Pools 3, 4 and 5. On June 29, 2012, Newcastle announced the completion of a co-investment between New Residential and Nationstar in Excess MSRs related to mortgage servicing rights Nationstar acquired from Aurora Bank FSB, a subsidiary of Lehman Brothers Bancorp Inc. New Residential invested approximately $176.5 million to acquire a 65% interest in the Excess MSRs on a portfolio of residential mortgage loans, comprised of approximately 25% conforming loans in Fannie Mae (“Pool 3”) and Freddie Mac (“Pool 4”) GSE pools as well as approximately 75% non-conforming loans in private label securitizations (“Pool 5”). Nationstar had co-invested on a pari passu basis with New Residential in 35% of the Excess MSRs and is the servicer of the loans, performing all servicing and advancing functions, and retaining the ancillary income, servicing obligations and liabilities associated with this portfolio as the servicer. In September 2013, New Residential invested an additional $26.6 million to acquire an additional 15% interest in the Excess MSRs related to Pool 5 from Nationstar. Under the terms of this investment, to the extent that any loans in the portfolio are refinanced by Nationstar, the resulting Excess MSRs are shared on a pro rata basis by New Residential and Nationstar, subject to certain limitations. In December 2013, New Residential entered into a corporate loan secured by the Excess MSRs related to Pool 5 (Note 11). | Pools 3, 4 and 5. On June 29, 2012, Newcastle announced the completion of a co-investment between New Residential and Nationstar in Excess MSRs related to mortgage servicing rights Nationstar acquired from Aurora Bank FSB, a subsidiary of Lehman Brothers Bancorp Inc. New Residential invested approximately $176.5 million to acquire a 65% interest in the Excess MSRs on a portfolio of residential mortgage loans with an outstanding principal balance of approximately $63.7 billion, comprised of approximately 75% non-conforming loans in private label securitizations and approximately 25% conforming loans in GSE pools. The portfolio is comprised of three pools: two GSE loan pools with outstanding principal balances of approximately $9.8 billion (“Pool 3”) and $6.3 billion (“Pool 4”), respectively, and a pool of non-conforming loans in private label securitizations with an outstanding principal balance of approximately $47.6 billion (“Pool 5”). Nationstar has co-invested on a pari passu basis with New Residential in 35% of the Excess MSRs and will be the servicer of the loans, performing all servicing and advancing functions, and retaining the ancillary income, servicing obligations and liabilities as the servicer. Under the terms of this investment, to the extent that any loans in the portfolio are refinanced by Nationstar, the resulting Excess MSRs will be shared on a pro rata basis by New Residential and Nationstar, subject to certain limitations. | |||||||||||||||||||||||||||||||||||||||||||||||||||||
Pool 11. On May 20, 2013, New Residential entered into an excess spread agreement with Nationstar to purchase a two-thirds interest in the Excess MSRs on a portion of the loans in the pool which are eligible to be refinanced by a specific third party for a period of time for $2.4 million, with Nationstar retaining the remaining one-third interest in the Excess MSRs and all servicing rights. After this period expired, Nationstar acquired the ability to refinance all of the loans in the pool. See Note 5 for information on New Residential’s other agreements with Nationstar with respect to Excess MSRs on Pool 11. | The following is a summary of New Residential’s Excess MSRs at December 31, 2012 and 2011: | |||||||||||||||||||||||||||||||||||||||||||||||||||||
Pool 12. On September 23, 2013, New Residential invested approximately $17.4 million to acquire a 40% interest in the Excess MSRs on a portfolio of residential mortgage loans (“Pool 12”), comprised of loans in private label securitizations. Fortress-managed funds also acquired a 40% interest in the Excess MSRs and the remaining 20% interest in the Excess MSRs is owned by Nationstar. Nationstar performs all servicing and advancing functions, and it retains the ancillary income, servicing obligations and liabilities associated with this portfolio as the servicer. Under the terms of this investment, to the extent that any loans in the portfolio are refinanced by Nationstar, the resulting Excess MSRs are shared on a pro rata basis by New Residential, the Fortress-managed funds and Nationstar, subject to certain limitations. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
Pool 18. In the fourth quarter of 2013, New Residential invested approximately $17.0 million to acquire a 40% interest in the Excess MSRs on a portfolio of residential mortgage loans (“Pool 18”) comprised of loans in private label securitizations. Fortress-managed funds also acquired a 40% interest in the Excess MSRs and the remaining 20% interest in the Excess MSR is owned by Nationstar. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
December 31, 2011 | Period From | |||||||||||||||||||||||||||||||||||||||||||||||||||||
Nationstar performs all servicing and advancing functions and it retains the ancillary income, servicing obligations and liabilities associated with the portfolio as the servicer. Under the terms of this investment, to the extent that any loans in the portfolio are refinanced by Nationstar, the resulting Excess MSRs are shared on a pro rata basis by New Residential, the Fortress-managed funds and Nationstar, subject to certain limitations. New Residential, through co-investments made by its subsidiaries, has separately agreed to purchase the servicer advances and the right to certain other cash flows associated with this portfolio. See Note 6 for information on New Residential’s investment in servicer advances with respect to Pool 18. | 8-Dec-11 | |||||||||||||||||||||||||||||||||||||||||||||||||||||
As described above, New Residential has entered into a “Recapture Agreement” in each of the Excess MSR investments to date, including those Excess MSR investments made through investments in joint ventures (Note 5). Under the Recapture Agreements, New Residential is generally entitled to a pro rata interest in the Excess MSRs on any initial or subsequent refinancing by Nationstar of a loan in the original portfolio. These Recapture Agreements do not apply to New Residential’s investments in servicer advances (Note 6). | (Commencement | |||||||||||||||||||||||||||||||||||||||||||||||||||||
New Residential elected to record its investments in Excess MSRs at fair value pursuant to the fair value option for financial instruments in order to provide users of the financial statements with better information regarding the effects of prepayment risk and other market factors on the Excess MSRs. | of Operations) | |||||||||||||||||||||||||||||||||||||||||||||||||||||
The following is a summary of New Residential’s direct investments in Excess MSRs: | Through Dec 31, | |||||||||||||||||||||||||||||||||||||||||||||||||||||
2011 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
Description | Unpaid | Amortized | Carrying | Wtd. | Wtd. | Changes in Fair | ||||||||||||||||||||||||||||||||||||||||||||||||
December 31, 2013 | Year | Principal | Cost | Value(B) | Avg. | Avg. | Value Recorded | |||||||||||||||||||||||||||||||||||||||||||||||
Ended | Balance | Basis(A) | Yield | Maturity | in Income(D) | |||||||||||||||||||||||||||||||||||||||||||||||||
December 31, | (Years)(C) | |||||||||||||||||||||||||||||||||||||||||||||||||||||
2013 | Pool 1 | $ | 9,705,512 | $ | 37,469 | $ | 37,637 | 20 | % | 4.5 | $ | 168 | ||||||||||||||||||||||||||||||||||||||||||
Unpaid | Interest in | Amortized | Carrying | Weighted | Weighted | Changes in | Pool 1-Recapture Agreement | — | 6,135 | 6,334 | 20 | % | 10.3 | 199 | ||||||||||||||||||||||||||||||||||||||||
Principal | Excess | Cost Basis | Value (B) | Average | Average | Fair Value | ||||||||||||||||||||||||||||||||||||||||||||||||
Balance | MSR | (A) | Yield | Life | Recorded in | $ | 9,705,512 | $ | 43,604 | $ | 43,971 | 20 | % | 6 | $ | 367 | ||||||||||||||||||||||||||||||||||||||
(“UPB”) of | (Years) (C) | Other | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Underlying | Income (D) | |||||||||||||||||||||||||||||||||||||||||||||||||||||
Mortgages | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
MSR Pool 1 | $ | 6,873,942 | 65 | % | $ | 26,279 | $ | 36,235 | 12.5 | % | 5.2 | $ | 4,219 | Description | December 31, 2012 | Year Ended | ||||||||||||||||||||||||||||||||||||||
MSR Pool 1 - Recapture Agreement | — | 65 | % | 1,109 | 6,820 | 12.5 | % | 11.9 | 5,205 | December 31, | ||||||||||||||||||||||||||||||||||||||||||||
MSR Pool 2 | 7,924,920 | 65 | % | 30,217 | 35,234 | 12.5 | % | 5.5 | 3,971 | 2012 | ||||||||||||||||||||||||||||||||||||||||||||
MSR Pool 2 - Recapture Agreement | — | 65 | % | 1,252 | 6,587 | 12.5 | % | 12.5 | 5,154 | Unpaid | Amortized | Carrying | Wtd. | Wtd. Avg. | Changes in | |||||||||||||||||||||||||||||||||||||||
MSR Pool 3 | 7,822,453 | 65 | % | 24,636 | 32,899 | 12.5 | % | 5.1 | 5,408 | Principal | Cost | Value(B) | Avg. | Maturity | Fair Value | |||||||||||||||||||||||||||||||||||||||
MSR Pool 3 - Recapture Agreement | — | 65 | % | 2,733 | 6,642 | 12.5 | % | 12.1 | 3,985 | Balance | Basis(A) | Yield | (Years)(C) | Recorded in | ||||||||||||||||||||||||||||||||||||||||
MSR Pool 4 | 5,076,470 | 65 | % | 9,876 | 13,823 | 12.5 | % | 4.9 | 2,929 | Income(D) | ||||||||||||||||||||||||||||||||||||||||||||
MSR Pool 4 - Recapture Agreement | — | 65 | % | 2,300 | 4,105 | 12.5 | % | 12 | 1,819 | Pool 1 | $ | 8,403,211 | $ | 30,237 | $ | 35,974 | 18 | % | 4.8 | $ | 5,569 | |||||||||||||||||||||||||||||||||
MSR Pool 5 (E) | 36,907,851 | 80 | % | 117,544 | 140,634 | 12.5 | % | 5.4 | 21,113 | Pool 1-Recapture Agreement | — | 4,430 | 4,936 | 18 | % | 10.8 | 307 | |||||||||||||||||||||||||||||||||||||
MSR Pool 5 - Recapture Agreement | — | 80 | % | 9,229 | 5,609 | 12.5 | % | 13.4 | 221 | Pool 2 | 9,397,120 | 32,890 | 33,935 | 17.3 | % | 5 | 1,045 | |||||||||||||||||||||||||||||||||||||
MSR Pool 11 | 436,241 | 66.7 | % | 2,091 | 2,080 | 12.5 | % | 6.5 | (11 | ) | Pool 2-Recapture Agreement | — | 5,206 | 5,387 | 17.3 | % | 11.8 | 181 | ||||||||||||||||||||||||||||||||||||
MSR Pool 11 - Recapture Agreement | — | 66.7 | % | 254 | 235 | 12.5 | % | 14.3 | (19 | ) | Pool 3 | 9,069,726 | 27,618 | 30,474 | 17.6 | % | 4.7 | 2,856 | ||||||||||||||||||||||||||||||||||||
MSR Pool 12 (E) | 5,152,877 | 40 | % | 16,233 | 16,294 | 16.4 | % | 4.5 | 60 | Pool 3-Recapture Agreement | — | 5,036 | 4,960 | 17.6 | % | 11.3 | (76 | ) | ||||||||||||||||||||||||||||||||||||
MSR Pool 12 - Recapture Agreement | — | 40 | % | 474 | 240 | 16.4 | % | 13.2 | (233 | ) | Pool 4 | 5,788,133 | 11,130 | 12,149 | 17.9 | % | 4.6 | 1,019 | ||||||||||||||||||||||||||||||||||||
MSR Pool 18(F) | 8,758,860 | 40 | % | 16,075 | 16,079 | 15.3 | % | 4.6 | 3 | Pool 4-Recapture Agreement | — | 2,902 | 2,887 | 17.9 | % | 11.1 | (15 | ) | ||||||||||||||||||||||||||||||||||||
MSR Pool 18 Recapture Agreement | — | 40 | % | 1,127 | 635 | 15.3 | % | 12.3 | (492 | ) | Pool 5 | 43,902,561 | 107,704 | 109,682 | 17.5 | % | 4.8 | 1,978 | ||||||||||||||||||||||||||||||||||||
Pool 5-Recapture Agreement | — | 8,493 | 4,652 | 17.5 | % | 11.7 | (3,841 | ) | ||||||||||||||||||||||||||||||||||||||||||||||
$ | 78,953,614 | $ | 261,429 | $ | 324,151 | 12.9 | % | 5.8 | $ | 53,332 | ||||||||||||||||||||||||||||||||||||||||||||
$ | 76,560,751 | $ | 235,646 | $ | 245,036 | 17.6 | % | 5.4 | $ | 9,023 | ||||||||||||||||||||||||||||||||||||||||||||
December 31, 2012 | Year Ended | (A) | The amortized cost basis of the Recapture Agreements is determined based on the relative fair values of the Recapture Agreements and related Excess MSRs at the time they were acquired. | |||||||||||||||||||||||||||||||||||||||||||||||||||
December 31, | (B) | Carrying Value represents the fair value of the pools or Recapture Agreements, as applicable. | ||||||||||||||||||||||||||||||||||||||||||||||||||||
2012 | (C) | Weighted Average Maturity represents the weighted average expected timing of the receipt of expected cash flows for this investment. | ||||||||||||||||||||||||||||||||||||||||||||||||||||
UPB | Interest | Amortized Cost | Carrying | Weighted | Weighted | Changes in | (D) | The portion of the change in fair value of the Recapture Agreements relating to loans recaptured to date is reflected in the respective pool. | ||||||||||||||||||||||||||||||||||||||||||||||
in Excess | Basis (A) | Value (B) | Average Yield | Average Life | Fair Value | The table below summarizes the geographic distribution of the underlying residential mortgage loans of the Excess MSRs at December 31, 2012 and 2011: | ||||||||||||||||||||||||||||||||||||||||||||||||
MSR | (Years) (C) | Recorded in | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Other | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
Income (D) | Percentage of Total Outstanding Unpaid Principal Amount(A) | |||||||||||||||||||||||||||||||||||||||||||||||||||||
MSR Pool 1 | $ | 8,403,211 | 65 | % | $ | 30,237 | $ | 35,974 | 18 | % | 4.8 | $ | 5,569 | December 31, 2012 | December 31, 2011 | |||||||||||||||||||||||||||||||||||||||
MSR Pool 1 - Recapture Agreement | — | 65 | % | 4,430 | 4,936 | 18 | % | 10.8 | 307 | State Concentration | Percentage | State Concentration | Percentage | |||||||||||||||||||||||||||||||||||||||||
MSR Pool 2 | 9,397,120 | 65 | % | 32,890 | 33,935 | 17.3 | % | 5 | 1,045 | California | 32 | % | California | 19.4 | % | |||||||||||||||||||||||||||||||||||||||
MSR Pool 2 - Recapture Agreement | — | 65 | % | 5,206 | 5,387 | 17.3 | % | 11.8 | 181 | Florida | 10.1 | % | Florida | 11.1 | % | |||||||||||||||||||||||||||||||||||||||
MSR Pool 3 | 9,069,726 | 65 | % | 27,618 | 30,474 | 17.6 | % | 4.7 | 2,856 | Washington | 4.3 | % | Texas | 6.7 | % | |||||||||||||||||||||||||||||||||||||||
MSR Pool 3 - Recapture Agreement | — | 65 | % | 5,036 | 4,960 | 17.6 | % | 11.3 | (76 | ) | New York | 4.3 | % | Arizona | 4.8 | % | ||||||||||||||||||||||||||||||||||||||
MSR Pool 4 | 5,788,133 | 65 | % | 11,130 | 12,149 | 17.9 | % | 4.6 | 1,019 | Arizona | 3.9 | % | Virginia | 3.5 | % | |||||||||||||||||||||||||||||||||||||||
MSR Pool 4 - Recapture Agreement | — | 65 | % | 2,902 | 2,887 | 17.9 | % | 11.1 | (15 | ) | Texas | 3.6 | % | Washington | 3.2 | % | ||||||||||||||||||||||||||||||||||||||
MSR Pool 5 (E) | 43,902,561 | 65 | % | 107,704 | 109,682 | 17.5 | % | 4.8 | 1,978 | Colorado | 3.5 | % | New Jersey | 3.1 | % | |||||||||||||||||||||||||||||||||||||||
MSR Pool 5 - Recapture Agreement | — | 65 | % | 8,493 | 4,652 | 17.5 | % | 11.7 | (3,841 | ) | Maryland | 3.4 | % | Maryland | 3.1 | % | ||||||||||||||||||||||||||||||||||||||
New Jersey | 3.1 | % | Illinois | 3 | % | |||||||||||||||||||||||||||||||||||||||||||||||||
$ | 76,560,751 | $ | 235,646 | $ | 245,036 | 17.6 | % | 5.4 | $ | 9,023 | Virginia | 3 | % | Nevada | 2.7 | % | ||||||||||||||||||||||||||||||||||||||
Other U.S. | 28.8 | % | Other U.S. | 39.4 | % | |||||||||||||||||||||||||||||||||||||||||||||||||
(A) | The amortized cost basis of the Recapture Agreements is determined based on the relative fair values of the Recapture Agreements and related Excess MSRs at the time they were acquired. | 100 | % | 100 | % | |||||||||||||||||||||||||||||||||||||||||||||||||
(B) | Carrying Value represents the fair value of the pools or Recapture Agreements, as applicable. | |||||||||||||||||||||||||||||||||||||||||||||||||||||
(C) | Weighted Average Life represents the weighted average expected timing of the receipt of expected cash flows for this investment. | |||||||||||||||||||||||||||||||||||||||||||||||||||||
(D) | The portion of the change in fair value of the Recapture Agreements relating to loans recaptured to date is reflected in the respective pool. For the year ended December 31, 2011 the change in fair value recorded in other income related to Pool 1 was $0.4 million. | (A) | Based on the information provided by the loan servicer as of the most recent remittance for the respective dates. | |||||||||||||||||||||||||||||||||||||||||||||||||||
(E) | Pool in which New Residential also invested in related servicer advances, including the basic fee component of the related MSR subsequent to December 31, 2013 (Note 18). | Geographic concentrations of investments expose New Residential to the risk of economic downturns within the relevant states. Any such downturn in a state where New Residential holds significant investments could affect the underlying borrower’s ability to make the mortgage payment and therefore could have a meaningful, negative impact on the Excess MSRs. | ||||||||||||||||||||||||||||||||||||||||||||||||||||
(F) | Pool in which New Residential also invested in related servicer advances, including the basic fee component of the related MSR as of December 31, 2013 (Note 6). | |||||||||||||||||||||||||||||||||||||||||||||||||||||
The table below summarizes the geographic distribution of the underlying residential mortgage loans of the direct investments in Excess MSRs as of December 31, 2013: | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
Percentage of Total Outstanding Unpaid Principal Amount as of December 31, | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
2013 | 2012 | |||||||||||||||||||||||||||||||||||||||||||||||||||||
State Concentration | Percentage of UPB | State Concentration | Percentage of UPB | |||||||||||||||||||||||||||||||||||||||||||||||||||
California | 31.5 | % | California | 32 | % | |||||||||||||||||||||||||||||||||||||||||||||||||
Florida | 9.8 | % | Florida | 10.1 | % | |||||||||||||||||||||||||||||||||||||||||||||||||
New York | 4.9 | % | New York | 4.3 | % | |||||||||||||||||||||||||||||||||||||||||||||||||
Texas | 4 | % | Washington | 4.3 | % | |||||||||||||||||||||||||||||||||||||||||||||||||
Washington | 3.9 | % | Arizona | 3.9 | % | |||||||||||||||||||||||||||||||||||||||||||||||||
Arizona | 3.5 | % | Texas | 3.6 | % | |||||||||||||||||||||||||||||||||||||||||||||||||
Maryland | 3.5 | % | Colorado | 3.5 | % | |||||||||||||||||||||||||||||||||||||||||||||||||
New Jersey | 3.3 | % | Maryland | 3.4 | % | |||||||||||||||||||||||||||||||||||||||||||||||||
Colorado | 3.2 | % | New Jersey | 3.1 | % | |||||||||||||||||||||||||||||||||||||||||||||||||
Virginia | 3.1 | % | Virginia | 3 | % | |||||||||||||||||||||||||||||||||||||||||||||||||
Other U.S. | 29.3 | % | Other U.S. | 28.8 | % | |||||||||||||||||||||||||||||||||||||||||||||||||
100 | % | 100 | % | |||||||||||||||||||||||||||||||||||||||||||||||||||
Geographic concentrations of investments expose New Residential to the risk of economic downturns within the relevant states. Any such downturn in a state where New Residential holds significant investments could affect the underlying borrower’s ability to make mortgage payments and therefore could have a meaningful, negative impact on the Excess MSRs. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
Refer to Notes 6, 14 and 18, for discussion of investments in servicer advances, capital commitments, and the recent activities related to New Residential’s investments in Excess MSRs, respectively. |
INVESTMENTS_IN_EXCESS_MORTGAGE1
INVESTMENTS IN EXCESS MORTGAGE SERVICING RIGHTS EQUITY METHOD INVESTEES | 12 Months Ended | ||||||||||||||||||||||||||||
Dec. 31, 2013 | |||||||||||||||||||||||||||||
Investments In Excess Mortgage Servicing Rights Equity Method Investees | ' | ||||||||||||||||||||||||||||
INVESTMENTS IN EXCESS MORTGAGE SERVICING RIGHTS EQUITY METHOD INVESTEES | ' | ||||||||||||||||||||||||||||
5. INVESTMENTS IN EXCESS MORTGAGE SERVICING RIGHTS EQUITY METHOD INVESTEES | |||||||||||||||||||||||||||||
During the year ended December 31, 2013, New Residential entered into investments in joint ventures (“Excess MSR joint ventures”) jointly controlled by New Residential and Fortress-managed funds investing in Excess MSRs. New Residential elected to record these investments at fair value pursuant to the fair value option for financial instruments to provide users of the financial statements with better information regarding the effects of prepayment risk and other market factors. | |||||||||||||||||||||||||||||
Pool 6. On January 4, 2013, New Residential, through a joint venture, co-invested in Excess MSRs on a portfolio of Government National Mortgage Association (“Ginnie Mae”) residential mortgage loans (“Pool 6”). Nationstar acquired the related servicing rights from Bank of America in November 2012. New Residential contributed approximately $28.9 million for a 50% interest in a joint venture which acquired an approximately 67% interest in the Excess MSRs on this portfolio. The remaining interests in the joint venture are owned by a Fortress-managed fund and the remaining interest of approximately 33% in the Excess MSRs is owned by Nationstar. Nationstar performs all servicing and advancing functions, and it retains the ancillary income, servicing obligations and liabilities associated with this portfolio as the servicer. Under the terms of this investment, to the extent that any loans in the portfolio are refinanced by Nationstar, the resulting Excess MSRs are shared on a pro rata basis by the joint venture and Nationstar, subject to certain limitations. | |||||||||||||||||||||||||||||
Pools 7, 8, 9, 10. On January 6, 2013, New Residential, through joint ventures, agreed to co-invest in Excess MSRs on a portfolio of four pools of residential mortgage loans Nationstar acquired from Bank of America. At the time of acquisition, approximately 53% of the loans in this portfolio were in private label securitizations (“Pool 10”) and the remainder were owned, insured or guaranteed by Fannie Mae (“Pool 7”), Freddie Mac (“Pool 8”) or Ginnie Mae (“Pool 9”). New Residential committed to invest approximately $340 million for a 50% interest in joint ventures which were expected to acquire an approximately 67% interest in the Excess MSRs on these portfolios. The remaining interests in the joint ventures are owned by Fortress-managed funds and the remaining interest of approximately 33% in the Excess MSRs is owned by Nationstar. In September 2013, New Residential and a Fortress-managed fund each invested an additional $13.9 million into the joint venture invested in Pool 10 to acquire an additional 10% in the Excess MSRs held by the joint venture. Nationstar performs all servicing and advancing functions, and it retains the ancillary income, servicing obligations and liabilities associated with this portfolio as the servicer. New Residential, through co-investments made by its subsidiaries, have separately agreed to purchase the servicer advances and the right to certain other cash flows associated with Pool 10. See Note 6 for information on New Residential’s investment in servicer advances. Under the terms of this investment, to the extent that any loans in the portfolio are refinanced by Nationstar, the resulting Excess MSRs are shared on a pro rata basis by the joint ventures and Nationstar, subject to certain limitations. | |||||||||||||||||||||||||||||
Pool 11. On May 20, 2013, New Residential acquired, through a joint venture, an interest in Excess MSRs from Nationstar on a portfolio of Freddie Mac residential mortgage loans (“Pool 11”). New Residential has invested approximately $37.8 million for a 50% interest in a joint venture which acquired an approximately 67% interest in the Excess MSRs on this portfolio. The remaining interests in the joint venture are owned by a Fortress-managed fund and the remaining interest of approximately 33% in the Excess MSR is owned by Nationstar. Nationstar performs all servicing and advancing functions, and it retains the ancillary income, servicing obligations and liabilities associated with this portfolio as the servicer. Under the terms of this investment, to the extent that any loans in the portfolio are refinanced by Nationstar, the resulting Excess MSRs are included in the portfolio, subject to certain limitations. See Note 4 for information on New Residential’s other agreements with respect to Pool 11. | |||||||||||||||||||||||||||||
The following tables summarize the investments in Excess MSR joint ventures, accounted for as equity method investees held by New Residential: | |||||||||||||||||||||||||||||
December 31, 2013 | |||||||||||||||||||||||||||||
Excess MSR assets | $ | 703,681 | |||||||||||||||||||||||||||
Other assets | 5,534 | ||||||||||||||||||||||||||||
Debt | — | ||||||||||||||||||||||||||||
Other liabilities | (3,683 | ) | |||||||||||||||||||||||||||
Equity | $ | 705,532 | |||||||||||||||||||||||||||
New Residential’s investment | $ | 352,766 | |||||||||||||||||||||||||||
New Residential’s ownership | 50 | % | |||||||||||||||||||||||||||
Year Ended December 31, | |||||||||||||||||||||||||||||
2013 | |||||||||||||||||||||||||||||
Interest income | $ | 50,306 | |||||||||||||||||||||||||||
Other income | 53,964 | ||||||||||||||||||||||||||||
Expenses | (3,585 | ) | |||||||||||||||||||||||||||
Net income | $ | 100,685 | |||||||||||||||||||||||||||
The following is a summary of New Residential’s Excess MSR investments made through equity method investees: | |||||||||||||||||||||||||||||
December 31, 2013 | |||||||||||||||||||||||||||||
Unpaid | Investee | New | Amortized | Carrying Value | Weighted | Weighted | |||||||||||||||||||||||
Principal | Interest in | Residential | Cost Basis (A) | (B) | Average | Average | |||||||||||||||||||||||
Balance | Excess MSR | Interest | Yield | Life (Years) | |||||||||||||||||||||||||
in Investees | (C) | ||||||||||||||||||||||||||||
MSR Pool 6 | $ | 10,152,488 | 66.7 | % | 50 | % | $ | 38,488 | $ | 47,144 | 12.5 | % | 5 | ||||||||||||||||
MSR Pool 6 - Recapture Agreement | — | 66.7 | % | 50 | % | 7,666 | 9,969 | 12.5 | % | 11.9 | |||||||||||||||||||
MSR Pool 7 | 31,518,733 | 66.7 | % | 50 | % | 99,743 | 102,947 | 12.5 | % | 5.1 | |||||||||||||||||||
MSR Pool 7 - Recapture Agreement | — | 66.7 | % | 50 | % | 16,706 | 26,388 | 12.5 | % | 12.3 | |||||||||||||||||||
MSR Pool 8 | 14,040,636 | 66.7 | % | 50 | % | 55,905 | 54,759 | 12.5 | % | 5.1 | |||||||||||||||||||
MSR Pool 8 - Recapture Agreement | — | 66.7 | % | 50 | % | 7,542 | 14,713 | 12.5 | % | 11.9 | |||||||||||||||||||
MSR Pool 9 | 30,814,192 | 66.7 | % | 50 | % | 103,713 | 127,646 | 12.5 | % | 4.8 | |||||||||||||||||||
MSR Pool 9 - Recapture Agreement | — | 66.7 | % | 50 | % | 33,905 | 34,154 | 12.5 | % | 11.9 | |||||||||||||||||||
MSR Pool 10 (D) | 68,890,509 | 66.7-77.0 | % | 50 | % | 205,975 | 208,055 | 12.5 | % | 5.4 | |||||||||||||||||||
MSR Pool 10 - Recapture Agreement | — | 66.7-77.0 | % | 50 | % | 13,739 | 7,165 | 12.5 | % | 13.4 | |||||||||||||||||||
MSR Pool 11 | 18,202,920 | 66.7 | % | 50 | % | 43,157 | 51,687 | 12.5 | % | 5.5 | |||||||||||||||||||
MSR Pool 11 - Recapture Agreement | — | 66.7 | % | 50 | % | 23,178 | 19,054 | 12.5 | % | 11.1 | |||||||||||||||||||
$ | 173,619,478 | $ | 649,717 | $ | 703,681 | 12.5 | % | 6.3 | |||||||||||||||||||||
(A) | Represents the amortized cost basis of the equity method investees in which New Residential holds a 50% interest. The amortized cost basis of the Recapture Agreements is determined based on the relative fair values of the Recapture Agreements and related Excess MSRs at the time they were acquired. | ||||||||||||||||||||||||||||
(B) | Represents the carrying value of the Excess MSRs held in equity method investees, in which New Residential holds a 50% interest. Carrying value represents the fair value of the pools or Recapture Agreements, as applicable. | ||||||||||||||||||||||||||||
(C) | The weighted average life represents the weighted average expected timing of the receipt of cash flows of each investment. | ||||||||||||||||||||||||||||
(D) | Pool in which New Residential also invested in related servicer advances, including the basic fee component of the related MSR as of December 31, 2013 (Note 6). | ||||||||||||||||||||||||||||
The table below summarizes the geographic distribution of the underlying residential mortgage loans of the Excess MSR investments made through equity method investees as of December 31, 2013: | |||||||||||||||||||||||||||||
State Concentration | Percentage of | ||||||||||||||||||||||||||||
UPB | |||||||||||||||||||||||||||||
California | 23.5 | % | |||||||||||||||||||||||||||
Florida | 9.2 | % | |||||||||||||||||||||||||||
New York | 5.3 | % | |||||||||||||||||||||||||||
Texas | 4.9 | % | |||||||||||||||||||||||||||
Georgia | 4 | % | |||||||||||||||||||||||||||
New Jersey | 3.7 | % | |||||||||||||||||||||||||||
Illinois | 3.5 | % | |||||||||||||||||||||||||||
Virginia | 3.1 | % | |||||||||||||||||||||||||||
Maryland | 3.1 | % | |||||||||||||||||||||||||||
Washington | 2.8 | % | |||||||||||||||||||||||||||
Other U.S. | 36.9 | % | |||||||||||||||||||||||||||
100 | % | ||||||||||||||||||||||||||||
Refer to Notes 6 and 14 for discussion of investments in servicer advances and capital commitments, respectively, related to New Residential’s investments in Excess MSRs made through equity method investees. |
INVESTMENTS_IN_SERVICER_ADVANC
INVESTMENTS IN SERVICER ADVANCES | 12 Months Ended | ||||||||||||||||||||||||||||||||
Dec. 31, 2013 | |||||||||||||||||||||||||||||||||
Investments In Servicer Advances | ' | ||||||||||||||||||||||||||||||||
INVESTMENTS IN SERVICER ADVANCES | ' | ||||||||||||||||||||||||||||||||
6. INVESTMENTS IN SERVICER ADVANCES | |||||||||||||||||||||||||||||||||
On December 17, 2013, New Residential and third-party co-investors, through a joint venture entity (the “Buyer”) consolidated by New Residential, agreed to purchase $3.2 billion of outstanding servicer advances on a portfolio of loans, which is a subset of the same portfolio of loans in which New Residential invests in a portion of the Excess MSR (Pools 10, 17 and 18) (Notes 4 and 5), including the basic fee component of the related MSRs. As of December 31, 2013, New Residential and third-party co-investors had settled $2.7 billion of servicer advances, financed with $2.4 billion of notes payable (Note 11). A taxable wholly owned subsidiary of New Residential is the managing member of the Buyer that holds its investments in servicer advances and owned an approximately 32% interest in the Buyer as of December 31, 2013. Noncontrolling third-party investors owning the remaining interest in the Buyer have aggregate capital commitments to the Buyer of $247.6 million, which were fully funded as of December 31, 2013. As of December 31, 2013, New Residential had capital commitments to the Buyer of $172.4 million, of which it had funded $115.7 million. The Buyer may call capital up to the commitment amount on unfunded commitments and recall capital to the extent the Buyer makes distributions to the co-investors, including New Residential. Neither the third-party co-investors nor New Residential is obligated to fund amounts in excess of their respective capital commitments, regardless of the capital requirements of the Buyer that holds it investments in servicer advances. | |||||||||||||||||||||||||||||||||
The Buyer has purchased servicer advances from Nationstar, is required to purchase all future servicer advances made with respect to these pools from Nationstar, and receives cash flows from advance recoveries and the basic fee component of the related MSRs, net of compensation paid back to Nationstar in consideration of Nationstar’s servicing activities. The compensation paid to Nationstar is approximately 8.6% of the basic fee component of the related MSRs plus a performance fee that represents a portion (up to 100%) of the cash flows in excess of those required for the Buyer to obtain a specified return on its equity. | |||||||||||||||||||||||||||||||||
New Residential elected to record its investments in servicer advances, including the right to the basic fee component of the related MSRs, at fair value pursuant to the fair value option for financial instruments to provide users of the financial statements with better information regarding the effects of market factors. | |||||||||||||||||||||||||||||||||
The following is a summary of the investments in servicer advances, including the right to the basic fee component of the related MSRs, made by the Buyer, which New Residential consolidates: | |||||||||||||||||||||||||||||||||
December 31, 2013 | Year Ended | ||||||||||||||||||||||||||||||||
December 31, 2013 | |||||||||||||||||||||||||||||||||
Amortized Cost | Carrying | Weighted | Weighted Average | Change in Fair Value | |||||||||||||||||||||||||||||
Basis | Value (A) | Average Yield | Life (Years) (B) | Recorded in Other | |||||||||||||||||||||||||||||
Income | |||||||||||||||||||||||||||||||||
Servicer advances | $ | 2,665,551 | $ | 2,665,551 | 4.4 | % | 2.7 | $ | — | ||||||||||||||||||||||||
(A) | Carrying value represents the fair value of the investment in servicer advances, including the basic fee component of the related MSRs. | ||||||||||||||||||||||||||||||||
(B) | Weighted Average Life represents the weighted average expected timing of the receipt of expected net cash flows for this investment. | ||||||||||||||||||||||||||||||||
The following is additional information regarding the servicer advances, and related financing, of the Buyer, which New Residential consolidates as of December 31, 2013: | |||||||||||||||||||||||||||||||||
UPB of | Loan-to-Value | Cost of Funds (B) | |||||||||||||||||||||||||||||||
Underlying | |||||||||||||||||||||||||||||||||
Residential | |||||||||||||||||||||||||||||||||
Mortgage | |||||||||||||||||||||||||||||||||
Loans | Outstanding | Servicer | Carrying | Gross | Net (A) | Gross | Net | ||||||||||||||||||||||||||
Servicer | Advances | Value of | |||||||||||||||||||||||||||||||
Advances | to UPB | Notes | |||||||||||||||||||||||||||||||
of | Payable | ||||||||||||||||||||||||||||||||
Underlying | |||||||||||||||||||||||||||||||||
Residential | |||||||||||||||||||||||||||||||||
Mortgage | |||||||||||||||||||||||||||||||||
Loans | |||||||||||||||||||||||||||||||||
Servicer advances (C) | $ | 43,444,216 | $ | 2,661,130 | 6.1 | % | $ | 2,390,778 | 89.8 | % | 88.6 | % | 4 | % | 2.3 | % | |||||||||||||||||
(A) | Ratio of face amount of borrowings to value of servicer advance collateral, net of an interest reserve maintained by the Buyer. | ||||||||||||||||||||||||||||||||
(B) | Annualized measure of the cost associated with borrowings. Gross Cost of Funds primarily includes interest expense and facility fees. Net Cost of Funds excludes facility fees. | ||||||||||||||||||||||||||||||||
(C) | The following types of advances comprise the investment in servicer advances: | ||||||||||||||||||||||||||||||||
December 31, 2013 | |||||||||||||||||||||||||||||||||
Principal and interest advances | $ | 1,516,715 | |||||||||||||||||||||||||||||||
Escrow advances (taxes and insurance advances) | 934,525 | ||||||||||||||||||||||||||||||||
Foreclosure advances | 209,890 | ||||||||||||||||||||||||||||||||
Total | $ | 2,661,130 | |||||||||||||||||||||||||||||||
Refer to Notes 11 and 18 for discussions of the financing associated with, and recent activities related to, investments in servicer advances, respectively. |
INVESTMENTS_IN_REAL_ESTATE_SEC
INVESTMENTS IN REAL ESTATE SECURITIES | 12 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Dec. 31, 2013 | Dec. 31, 2012 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Investments In Real Estate Securities | ' | ' | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
INVESTMENTS IN REAL ESTATE SECURITIES | ' | ' | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
7. INVESTMENTS IN REAL ESTATE SECURITIES | 5. INVESTMENTS IN REAL ESTATE SECURITIES | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
During 2013, New Residential acquired $1.3 billion face amount of Non-Agency RMBS for approximately $835.6 million and $608.9 million face amount of Agency ARM RMBS for approximately $645.5 million. In addition, Newcastle contributed $1.0 billion face amount of Agency ARM RMBS to New Residential during 2013, prior to the spin-off (Note 13). New Residential sold $729.7 million face amount of Non-Agency RMBS for approximately $521.9 million and recorded a gain of $52.7 million. | During 2012, Newcastle contributed approximately $258.0 million face amount of Non-Agency residential mortgage backed securities (“RMBS”), which had a fair value of approximately $164.1 million on the contribution date, to New Residential. Furthermore, New Residential acquired an additional $193.8 million face amount of Non-Agency RMBS for approximately $121.3 million during 2012. | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
The following is a summary of New Residential’s real estate securities at December 31, 2012, all of which are classified as available-for-sale and are, therefore, reported at fair value with changes in fair value recorded in other comprehensive income. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
During the third quarter of 2013, Nationstar exercised their cleanup call option related to four Non-Agency RMBS deals, in which Nationstar was the master servicer. New Residential owned $2.6 million face amount of Non-Agency RMBS in these deals. New Residential received par on these securities, which had an amortized cost basis of $2.1 million prior to the repayment, and recorded interest income of $0.6 million related to these securities in the third quarter of 2013. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
The following is a summary of New Residential’s real estate securities as of December 31, 2013 and 2012, all of which are classified as available-for-sale and are, therefore, reported at fair value with changes in fair value recorded in other comprehensive income, except for securities that are other-than-temporarily impaired. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Gross Unrealized | Weighted Average | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Asset Type | Outstanding | Amortized | Gains | Losses | Carrying | Number of | Rating | Coupon | Yield | Maturity | Principal | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Gross Unrealized | Weighted Average | Face Amount | Cost Basis | Value | Securities | (B) | (Years) | Subordination | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Asset Type | Outstanding | Amortized | Gains | Losses | Carrying | Number | Rating | Coupon | Yield | Life | Principal | (A) | (C) | (D) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Face Amount | Cost Basis | Value (A) | of | (B) | (Years) | Subordination | ABS-Subprime (E) | $ | 433,510 | $ | 274,230 | $ | 15,856 | $ | (330 | ) | $ | 289,756 | 29 | CC | 0.63 | % | 6.55 | % | 6.8 | 10 | % | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Securities | (C) | (D) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
December 31, 2013 | (A) | Fair value, which is equal to carrying value for all securities. See Note 7 regarding the estimation of fair value. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Agency ARM RMBS (E)(F) | $ | 1,314,130 | $ | 1,403,215 | $ | 3,434 | $ | (3,885 | ) | $ | 1,402,764 | 114 | AAA | 3.18 | % | 1.33 | % | 4.1 | N/A | (B) | Represents the weighted average of the ratings of all securities in each asset type, expressed as an S&P equivalent rating. For each security rated by multiple rating agencies, the lowest rating is used. Ratings provided were determined by third party rating agencies as of a particular date, may not be current and are subject to change at any time. | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Non-Agency RMBS | 872,866 | 566,760 | 7,618 | (3,953 | ) | 570,425 | 100 | CCC- | 0.94 | % | 4.68 | % | 8 | 7.4 | % | (C) | The weighted average maturity is based on the timing of expected principal reduction on the assets. | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
(D) | Percentage of the outstanding face amount of securities and residual interests that is subordinate to New Residential’s investments. | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Total/Weighted Average (G) | $ | 2,186,996 | $ | 1,969,975 | $ | 11,052 | $ | (7,838 | ) | $ | 1,973,189 | 214 | BBB+ | 2.28 | % | 2.66 | % | 5.7 | (E) | The total outstanding face amount of fixed rate securities was $1.1 million, and of floating rate securities was $432.4 million. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
During the year ended December 31, 2012, New Residential recorded no other-than-temporary impairment charge (“OTTI”) related to its real estate securities. The unrealized losses on New Residential’s securities were primarily the result of changes in market factors, rather than issue-specific credit impairment. New Residential performed analyses in relation to such securities, using management’s best estimate of their cash flows, which support its belief that the carrying values of such securities were fully recoverable over their expected holding period. New Residential has no intent to sell and is not more likely than not to be required to sell these securities. The following table summarizes New Residential’s securities in an unrealized loss position as of December 31, 2012. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
December 31, 2012 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Non-Agency RMBS | $ | 433,510 | $ | 274,230 | $ | 15,856 | $ | (330 | ) | $ | 289,756 | 29 | CC | 0.63 | % | 6.55 | % | 6.8 | 10 | % | GrossUnrealized | Weighted Average | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Securities in an | Outstanding | Amortized | Gains | Losses | Carrying | Number of | Rating | Coupon | Yield | Maturity | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Unrealized Loss Position | Face Amount | Cost Basis | Value | Securities | (Years) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
(A) | Fair value, which is equal to carrying value for all securities. See Note 12 regarding the estimation of fair value. | Less than Twelve Months | $ | 15,747 | $ | 9,945 | $ | — | $ | (330 | ) | $ | 9,615 | 4 | CC | 1.46 | % | 5.91 | % | 7.2 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
(B) | Represents the weighted average of the ratings of all securities in each asset type, expressed as an S&P equivalent rating. This excludes the ratings of two non-agency bonds with a face amount of $6.3 million for which New Residential was unable to obtain rating information. For each security rated by multiple rating agencies, the lowest rating is used. New Residential used an implied AAA rating for the Agency ARM RMBS. Ratings provided were determined by third party rating agencies, represent the most recent credit ratings available as of the reporting date and may not be current. | Twelve of More Months | — | — | — | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
(C) | The weighted average life is based on the timing of expected principal reduction on the assets. | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
(D) | Percentage of the outstanding face amount of securities and residual interests that is subordinate to New Residential’s investments. | Total | $ | 15,747 | $ | 9,945 | $ | — | $ | (330 | ) | $ | 9,615 | 4 | CC | 1.46 | % | 5.91 | % | 7.2 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
(E) | Includes securities issued or guaranteed by U.S. Government agencies such as the Federal National Mortgage Association (“Fannie Mae”) or the Federal Home Loan Mortgage Corporation (“Freddie Mac”). | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
(F) | Amortized cost basis and carrying value include principal receivable of $10.6 million. | The table below summarizes the geographic distribution of the collateral securing New Residential’s real estate securities at December 31, 2012: | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
(G) | The total outstanding face amount was $6.6 million for fixed rate securities and $2.2 billion for floating rate securities. | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Unrealized losses that are considered other-than-temporary are recognized currently in earnings. During the year ended December 31, 2013, New Residential recorded OTTI of $5.0 million, of which $3.8 million was recorded with respect to real estate securities included in the spin-off on May 15, 2013. Based on Newcastle management’s analysis of these securities, Newcastle determined it did not have the intent to hold the securities past May 15, 2013. New Residential has also recorded OTTI of $1.0 million with respect to real estate securities sold in January 2014 that were in an unrealized loss position as of December 31, 2013 since New Residential determined that it did not have the intent to hold the securities, as well as $0.3 million with respect to expected credit loss related to real estate securities in an unrealized loss position as of December 31, 2013, based on management’s analysis of expected cash flows of these securities. Any remaining unrealized losses on New Residential’s securities were primarily the result of changes in market factors, rather than issuer-specific credit impairment. New Residential performed analyses in relation to such securities, using management’s best estimate of their cash flows, which support its belief that the carrying values of such securities were fully recoverable over their expected holding period. New Residential has no intent to sell, and is not more likely than not to be required to sell, these securities. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
December 31, 2012 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
The following table summarizes New Residential’s securities in an unrealized loss position as of December 31, 2013. | Geographic Location | Outstanding | Percentage | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Face | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Amount | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Amortized Cost Basis | Weighted Average | Western U.S. | $ | 151,227 | 34.9 | % | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Securities in an | Outstanding | Before | Other- | After | Gross | Carrying | Number | Rating | Coupon | Yield | Life | Southeastern U.S. | 100,636 | 23.2 | % | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Unrealized Loss Position | Face | Impairment | Than- | Impairment | Unrealized | Value | of | (B) | (Years) | Northeastern U.S. | 95,565 | 22 | % | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Amount | Temporary | Losses | Securities | Midwestern U.S. | 43,230 | 10 | % | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Impairment | Southwestern U.S | 42,852 | 9.9 | % | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
(A) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
$ | 433,510 | 100 | % | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Less than Twelve Months | $ | 878,993 | $ | 827,517 | $ | (1,470 | ) | $ | 826,047 | $ | (7,542 | ) | $ | 818,505 | 78 | A- | 2.54 | % | 2.07 | % | 5.5 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Twelve or More Months | 48,078 | 51,930 | (601 | ) | 51,329 | (296 | ) | 51,033 | 7 | AAA | 3.36 | % | 1.28 | % | 3.3 | New Residential evaluates the credit quality of its real estate securities, as of the acquisition date, for evidence of credit quality deterioration. As a result, we identified a population of real estate securities for which it was determined that it was probable that we would be unable to collect all contractually required payments. At December 31, 2012, these securities had a face amount of $342.0 million and a carrying value of $212.1 million. On their respective acquisition dates, the face amount of these real estate securities was $351.8 million, with total expected cash flows of $285.9 and a fair value of $205.3 million. The following is a summary of the changes in accretable yield for these securities during the year ended December 31, 2012. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Total/Weighted Average | $ | 927,071 | $ | 879,447 | $ | (2,071 | ) | $ | 877,376 | $ | (7,838 | ) | $ | 869,538 | 85 | A- | 2.58 | % | 2.03 | % | 5.4 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
For the year ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
December 31, 2012 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
(A) | This amount represents other-than-temporary impairment recorded on securities that are in an unrealized loss position as of December 31, 2013. | Balance at December 31, 2011 | $ | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
(B) | The rating of securities in an unrealized loss position for less than twelve months excludes the rating of one bond for which New Residential was unable to obtain rating information. | Additions | 80,636 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
New Residential performed an assessment of all of its debt securities that are in an unrealized loss position (unrealized loss position exists when a security’s amortized cost basis, excluding the effect of OTTI, exceeds its fair value) and determined the following: | Accretion | (3,195 | ) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Reclassifications from nonaccretable difference | 12,636 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Disposals | — | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
December 31, 2013 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Unrealized Losses | Balance at December 31, 2012 | $ | 90,077 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value | Amortized Cost Basis | Credit (A) | Non-Credit (B) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
After Impairment | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Securities New Residential intends to sell (C) | $ | 164,666 | $ | 164,666 | $ | (988 | ) | $ | — | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Securities New Residential is more likely | — | — | — | N/A | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
than not to be required to sell (D) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Securities New Residential has no intent to sell | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
and is not more likely than not to be required | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
to sell: | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Credit impaired securities | 288,306 | 290,487 | (2,071 | ) | (2,181 | ) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Non-credit impaired securities | 581,232 | 586,889 | — | (5,657 | ) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Total debt securities in an unrealized loss position | $ | 1,034,204 | $ | 1,042,042 | $ | (3,059 | ) | $ | (7,838 | ) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
(A) | This amount is required to be recorded as other-than-temporary impairment through earnings. In measuring the portion of credit losses, New Residential’s management estimates the expected cash flow for each of the securities. This evaluation includes a review of the credit status and the performance of the collateral supporting those securities, including the credit of the issuer, key terms of the securities and the effect of local, industry and broader economic trends. Significant inputs in estimating the cash flows include management’s expectations of prepayment speeds, default rates and loss severities. Credit losses are measured as the decline in the present value of the expected future cash flows discounted at the investment’s effective interest rate. | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
(B) | This amount represents unrealized losses on securities that are due to non-credit factors and recorded through other comprehensive income. | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
(C) | Securities New Residential intends to sell have a fair value equal to their amortized cost basis after impairment, and, therefore do not have unrealized losses reflected in other comprehensive income as of December 31, 2013. | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
(D) | New Residential may, at times, be more likely than not to be required to sell certain securities for liquidity purposes. While the amount of the securities to be sold may be an estimate, and the securities to be sold have not yet been identified, New Residential must make its best estimate, which is subject to significant judgment regarding future events, and may differ materially from actual future sales. | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
The following table summarizes the activity related to credit losses on debt securities: | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2013 | 2012 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Beginning balance of credit losses on debt securities for which a portion | $ | — | $ | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
of an OTTI was recognized in other comprehensive income | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Additions for credit losses on securities for which an OTTI was not | 4,993 | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
previously recognized | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Reduction for credit losses on securities for which no OTTI was | (2,878 | ) | — | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
recognized in other comprehensive income at the current measurement | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
date | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Reduction for securities sold during the period | (44 | ) | — | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Ending balance of credit losses on debt securities for which a portion of | $ | 2,071 | $ | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
an OTTI was recognized in other comprehensive income | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
The securities are encumbered by certain repurchase agreements, as described in Note 11, as of December 31, 2013. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
The table below summarizes the geographic distribution of the collateral securing New Residential’s Non-Agency RMBS as of December 31, 2013: | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Geographic Location | Outstanding Face | Percentage of Total | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Amount | Outstanding | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Western U.S. | $ | 317,111 | 36.3 | % | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Southeastern U.S. | 198,298 | 22.7 | % | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Northeastern U.S. | 164,481 | 18.9 | % | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Midwestern U.S. | 98,682 | 11.3 | % | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Southwestern U.S. | 51,425 | 5.9 | % | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Other (A) | 42,869 | 4.9 | % | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
$ | 872,866 | 100 | % | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
(A) | Represents collateral for which New Residential was unable to obtain geographic information. | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
New Residential evaluates the credit quality of its real estate securities, as of the acquisition date, for evidence of credit quality deterioration. As a result, New Residential identified a population of real estate securities for which it was determined that it was probable that New Residential would be unable to collect all contractually required payments. For those securities acquired during the year ended December 31, 2013, the face amount was $1.1 billion, the total expected cash flows were $0.9 billion and the fair value was $0.7 billion on the dates that New Residential purchased the respective securities. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
The following is the outstanding face amount and carrying value for securities as of December 31, 2013 and December 31, 2012, for which, as of the acquisition date, it was probable that New Residential would be unable to collect all contractually required payments: | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Outstanding Face | Carrying | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Amount | Value | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
December 31, 2013 | $ | 729,895 | $ | 483,680 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
December 31, 2012 | $ | 342,013 | $ | 212,129 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
The following is a summary of the changes in accretable yield for these securities: | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Year Ended December 31, | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2013 | 2012 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Beginning Balance | $ | 90,077 | $ | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Additions | 155,854 | 80,636 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Accretion | (19,939 | ) | (3,195 | ) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Reclassifications from non-accretable difference | 40,785 | 12,636 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Disposals | (123,710 | ) | — | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Ending Balance | $ | 143,067 | $ | 90,077 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
INVESTMENT_IN_RESIDENTIAL_MORT
INVESTMENT IN RESIDENTIAL MORTGAGE LOANS | 12 Months Ended | ||||||||||||||||||||||||||||||||
Dec. 31, 2013 | |||||||||||||||||||||||||||||||||
Investment In Residential Mortgage Loans | ' | ||||||||||||||||||||||||||||||||
INVESTMENT IN RESIDENTIAL MORTGAGE LOANS | ' | ||||||||||||||||||||||||||||||||
8. INVESTMENTS IN RESIDENTIAL MORTGAGE LOANS | |||||||||||||||||||||||||||||||||
On February 27, 2013, New Residential, through a subsidiary, entered into an agreement to co-invest in reverse mortgage loans with a UPB of approximately $83.1 million as of December 31, 2012. New Residential had invested approximately $35.1 million to acquire a 70% interest in the residential mortgage loans. Nationstar co-invested pari passu with New Residential in 30% of the mortgage loans and is the servicer of the loans, performing all servicing and advancing functions, and retaining the ancillary income, servicing obligations and liabilities as the servicer. | |||||||||||||||||||||||||||||||||
The following is a summary of residential mortgage loans as of December 31, 2013, all of which are classified as held for investment: | |||||||||||||||||||||||||||||||||
December 31, 2013 | |||||||||||||||||||||||||||||||||
Loan Type | Outstanding | Carrying | Loan | Wtd. | Weighted | Weighted | Floating | Delinquent | |||||||||||||||||||||||||
Face Amount | Value (A) | Count | Avg. | Average | Average | Rate Loans | Face Amount | ||||||||||||||||||||||||||
(A) | Yield | Coupon | Life | as a % of | (A)(D) | ||||||||||||||||||||||||||||
(B) | (Years) (C) | Face Amount | |||||||||||||||||||||||||||||||
Residential Mortgage Loans Held-for-Investment (E) | $ | 57,552 | $ | 33,539 | 328 | 10.3 | % | 5.1 | % | 3.7 | 22 | % | $ | 48,696 | |||||||||||||||||||
(A) | Represents a 70% interest New Residential holds in the reverse mortgage loans, which had an aggregate United States federal income tax basis of $33.9 million. The average loan balance outstanding based on total UPB is $0.2 million. | ||||||||||||||||||||||||||||||||
(B) | Represents the stated interest rate on the loans. Accrued interest on reverse mortgage loans is generally added to the principal balance and paid when the loan is resolved. | ||||||||||||||||||||||||||||||||
(C) | The weighted average life is based on the expected timing of the receipt of cash flows. | ||||||||||||||||||||||||||||||||
(D) | Includes loans that have either experienced (i) a termination event or (ii) an event of default, substantially all of which are more than 90 days past the time at which they were considered delinquent or real estate owned (“REO”). Collateral value underlying loans considered delinquent is generally sufficient, however $1.6 million face amount of REO loans, representing New Residential’s 70% interest therein, was on non-accrual status resulting from the uncertainty of cash collections as of December 31, 2013. | ||||||||||||||||||||||||||||||||
(E) | 82% of these loans have reached a termination event. As a result, the borrower can no longer make draws on these loans. Each loan matures upon the occurrence of a termination event. | ||||||||||||||||||||||||||||||||
Activities related to the carrying value of residential mortgage loans are as follows: | |||||||||||||||||||||||||||||||||
Year Ended | |||||||||||||||||||||||||||||||||
December 31, | |||||||||||||||||||||||||||||||||
2013 | |||||||||||||||||||||||||||||||||
Balance as of December 31, 2012 | $ | — | |||||||||||||||||||||||||||||||
Purchases/additional fundings | 35,138 | ||||||||||||||||||||||||||||||||
Proceeds from repayments | (3,788 | ) | |||||||||||||||||||||||||||||||
Accretion of loan discount and other amortization | 2,650 | ||||||||||||||||||||||||||||||||
Valuation allowance | (461 | ) | |||||||||||||||||||||||||||||||
Balance as of December 31, 2013 | $ | 33,539 | |||||||||||||||||||||||||||||||
Residential Mortgage | |||||||||||||||||||||||||||||||||
Loans | |||||||||||||||||||||||||||||||||
Balance as of December 31, 2011 | $ | — | |||||||||||||||||||||||||||||||
Charge-offs | — | ||||||||||||||||||||||||||||||||
Valuation allowance on loans | — | ||||||||||||||||||||||||||||||||
Balance as of December 31, 2012 | — | ||||||||||||||||||||||||||||||||
Charge-offs | — | ||||||||||||||||||||||||||||||||
Valuation allowance on loans | 461 | ||||||||||||||||||||||||||||||||
Balance as of December 31, 2013 | $ | 461 | |||||||||||||||||||||||||||||||
The average carrying amount of New Residential’s residential mortgage loans was approximately $33.8 million during the year ended December 31, 2013, on which New Residential earned approximately $2.7 million of interest income. | |||||||||||||||||||||||||||||||||
The table below summarizes the geographic distribution of the underlying residential mortgage loans as of December 31, 2013: | |||||||||||||||||||||||||||||||||
State Concentration | Percentage of | ||||||||||||||||||||||||||||||||
Total | |||||||||||||||||||||||||||||||||
Outstanding | |||||||||||||||||||||||||||||||||
Unpaid | |||||||||||||||||||||||||||||||||
Principal Amount | |||||||||||||||||||||||||||||||||
New York | 22 | % | |||||||||||||||||||||||||||||||
Florida | 21.2 | % | |||||||||||||||||||||||||||||||
Illinois | 7.7 | % | |||||||||||||||||||||||||||||||
New Jersey | 6.9 | % | |||||||||||||||||||||||||||||||
California | 5.7 | % | |||||||||||||||||||||||||||||||
Massachusetts | 4.1 | % | |||||||||||||||||||||||||||||||
Washington | 3.9 | % | |||||||||||||||||||||||||||||||
Connecticut | 3.9 | % | |||||||||||||||||||||||||||||||
Virginia | 3.3 | % | |||||||||||||||||||||||||||||||
Texas | 2.8 | % | |||||||||||||||||||||||||||||||
Other U.S. | 18.5 | % | |||||||||||||||||||||||||||||||
100 | % | ||||||||||||||||||||||||||||||||
On December 31, 2013, Nationstar financed the mortgage loans and related participation interests in a repurchase facility with Barclays Bank PLC, an affiliate of Barclays Capital Inc., which resulted in New Residential’s receipt of approximately $22.8 million of financing proceeds correlating to New Residential’s 70% interest in the mortgage loans. Refer to Notes 11 and 18 for discussions of the financing associated with, and the recent activities related to, residential mortgage loans. |
INVESTMENTS_IN_CONSUMER_LOANS_
INVESTMENTS IN CONSUMER LOANS EQUITY METHOD INVESTEES | 12 Months Ended | ||||||||||||||||||||||||
Dec. 31, 2013 | |||||||||||||||||||||||||
Investments In Consumer Loans Equity Method Investees | ' | ||||||||||||||||||||||||
INVESTMENTS IN CONSUMER LOANS EQUITY METHOD INVESTEES | ' | ||||||||||||||||||||||||
9. INVESTMENTS IN CONSUMER LOANS EQUITY METHOD INVESTEES | |||||||||||||||||||||||||
On April 1, 2013, New Residential completed, through newly formed limited liability companies (together, the “Consumer Loan Companies”) a co-investment in a portfolio of consumer loans with a UPB of approximately $4.2 billion as of December 31, 2012. The portfolio included over 400,000 personal unsecured loans and personal homeowner loans originated through subsidiaries of HSBC Finance Corporation. | |||||||||||||||||||||||||
The Consumer Loan Companies acquired the portfolio from HSBC Finance Corporation and its affiliates. New Residential invested approximately $250 million for 30% membership interests in each of the Consumer Loan Companies. Of the remaining 70% of the membership interests, Springleaf, which is majority-owned by Fortress funds managed by the Manager, acquired 47% and an affiliate of Blackstone Tactical Opportunities Advisors L.L.C. acquired 23%. Springleaf acts as the managing member of the Consumer Loan Companies. The Consumer Loan Companies initially financed $2.2 billion of the approximately $3.0 billion purchase price with asset-backed notes. In September 2013, the Consumer Loan Companies issued and sold an additional $0.4 billion of asset-backed notes for 96% of par. These notes are subordinate to the $2.2 billion of debt issued in April 2013. The Consumer Loan Companies were formed on March 19, 2013, for the purpose of making this investment, and commenced operations upon the completion of the investment. After a servicing transition period, Springleaf became the servicer of the loans and provides all servicing and advancing functions for the portfolio. | |||||||||||||||||||||||||
New Residential accounts for its investment in the Consumer Loan Companies pursuant to the equity method of accounting because it can exercise significant influence over the Consumer Loan Companies, but the requirements for consolidation are not met. New Residential’s share of earnings and losses in these equity method investees is included in “Earnings from investments in consumer loans, equity method investees” on the Consolidated Statements of Income. Equity method investments are included in “Investments in consumer loans, equity method investees” on the Consolidated Balance Sheets. | |||||||||||||||||||||||||
New Residential periodically reviews equity method investments for impairment in value whenever events or changes in circumstances indicate that the carrying amount of such investments may not be recoverable. New Residential will record an impairment charge to the extent that the estimated fair value of an investment is less than its carrying value and New Residential determines the impairment is other-than-temporary. | |||||||||||||||||||||||||
The following tables summarize the investment in the Consumer Loan Companies held by New Residential: | |||||||||||||||||||||||||
December 31, 2013 | |||||||||||||||||||||||||
Consumer Loan Assets | $ | 2,572,577 | |||||||||||||||||||||||
Other Assets | 192,830 | ||||||||||||||||||||||||
Debt (A) | (2,010,433 | ) | |||||||||||||||||||||||
Other Liabilities | (32,712 | ) | |||||||||||||||||||||||
Equity | $ | 722,262 | |||||||||||||||||||||||
New Residential’s investment | $ | 215,062 | |||||||||||||||||||||||
New Residential’s ownership | 30 | % | |||||||||||||||||||||||
(A) | Represents the Class A asset-backed notes with a face amount of $1.7 billion, an interest rate of 3.75% and a maturity of April 2021 and the Class B asset-backed notes with a face amount of $0.4 billion, an interest rate of 4.0%, and a maturity of December 2024. Substantially all of the net cash flow generated by the Consumer Loan Companies is required to be used to pay down the Class A notes. When the balance of the outstanding Class A notes is reduced to 50% of the outstanding UPB of the performing consumer loans, 70% of the net cash flow generated is required to be used to pay down the Class A notes and the equity holders of the Consumer Loan Companies and holders of the Class B notes will each be entitled to receive 15% of the net cash flow of the Consumer Loan Companies on a periodic basis. | ||||||||||||||||||||||||
Year Ended | |||||||||||||||||||||||||
December 31, 2013 | |||||||||||||||||||||||||
Interest income | $ | 481,056 | |||||||||||||||||||||||
Interest expense | (71,639 | ) | |||||||||||||||||||||||
Provision for finance receivable losses | (60,619 | ) | |||||||||||||||||||||||
Other expenses, net | (67,225 | ) | |||||||||||||||||||||||
Net income | $ | 281,573 | |||||||||||||||||||||||
New Residential’s equity in net income | $ | 82,856 | |||||||||||||||||||||||
New Residential’s ownership | 30 | % | |||||||||||||||||||||||
The following is a summary of New Residential’s consumer loan investments made through equity method investees: | |||||||||||||||||||||||||
December 31, 2013 | |||||||||||||||||||||||||
Unpaid | Interest in | Carrying Value | Weighted | Weighted | Weighted | ||||||||||||||||||||
Principal | Consumer | (A) | Average | Average | Average | ||||||||||||||||||||
Balance | Loan | Coupon (B) | Asset Yield | Expected Life | |||||||||||||||||||||
Companies | (Years) (C) | ||||||||||||||||||||||||
Consumer Loans | $ | 3,298,769 | 30 | % | $ | 2,572,577 | 18.3 | % | 15.9 | % | 3.2 | ||||||||||||||
(A) | Represents the carrying value of the consumer loans held by the Consumer Loan Companies. | ||||||||||||||||||||||||
(B) | Substantially all of the cash flows received on the loans is required to be used to make payments on the notes described above. | ||||||||||||||||||||||||
(C) | Weighted Average Life represents the weighted average expected timing of the receipt of expected cash flows for this investment. | ||||||||||||||||||||||||
New Residential’s investments in consumer loans, equity method investees changed during the year ended December 31, 2013 as follows: | |||||||||||||||||||||||||
Year Ended | |||||||||||||||||||||||||
December 31, 2013 | |||||||||||||||||||||||||
Balance as of December 31, 2012 | $ | — | |||||||||||||||||||||||
Contributions to equity method investees | 245,421 | ||||||||||||||||||||||||
Distributions of earnings from equity method investees | (82,856 | ) | |||||||||||||||||||||||
Distributions of capital from equity method investees | (30,359 | ) | |||||||||||||||||||||||
Earnings from investments in consumer loan equity method investees | 82,856 | ||||||||||||||||||||||||
Balance as of December 31, 2013 | $ | 215,062 | |||||||||||||||||||||||
Refer to Note 18 for discussion of the recent activities related to New Residential’s investments in consumer loans. |
DERIVATIVES
DERIVATIVES | 12 Months Ended | ||||||||||
Dec. 31, 2013 | |||||||||||
Derivatives | ' | ||||||||||
DERIVATIVES | ' | ||||||||||
10. DERIVATIVES | |||||||||||
New Residential’s derivative instruments are comprised of linked transactions that were not entered into for risk management purposes or for hedging activity. As discussed in Note 2, New Residential’s credit risk with respect to these transactions is the risk of default on New Residential’s investments that results from a borrower’s or counterparty’s inability or unwillingness to make contractually required payments. | |||||||||||
New Residential’s derivatives are recorded at fair value on the Consolidated Balance Sheets as follows: | |||||||||||
December 31, | |||||||||||
Balance Sheet Location | 2013 | 2012 | |||||||||
Real Estate Securities | Derivative assets | $ | 1,452 | $ | — | ||||||
Non-Performing Loans | Derivative assets | 34,474 | — | ||||||||
$ | 35,926 | $ | — | ||||||||
The following table summarizes gains (losses) recorded in relation to derivatives: | |||||||||||
Year Ended | |||||||||||
December 31, | |||||||||||
Income Statement Location | 2013 | 2012 | |||||||||
Real Estate Securities | Other Income | $ | (11 | ) | $ | — | |||||
Non-Performing Loans | Other Income | 1,831 | — | ||||||||
$ | 1,820 | $ | — | ||||||||
The following table presents both gross and net information about linked transactions: | |||||||||||
December 31, | |||||||||||
2013 | 2012 | ||||||||||
Real Estate Securities | |||||||||||
Real estate securities, at fair value (A) | $ | 9,952 | $ | — | |||||||
Repurchase agreements (B) | (8,500 | ) | — | ||||||||
1,452 | — | ||||||||||
Non-Performing Loans | |||||||||||
Non-performing loans, at fair value (C) | 95,014 | — | |||||||||
Repurchase agreements (B) | (60,540 | ) | — | ||||||||
34,474 | — | ||||||||||
Net assets recognized as linked transactions | $ | 35,926 | $ | — | |||||||
(A) | Real estate securities that had a current face amount of $10.0 million as of December 31, 2013, which represents the notional amount of the linked transaction. | ||||||||||
(B) | Represents their face amount that approximates fair value. Amounts for repurchase agreements related to non-performing loans also includes $0.4 million of accrued interest and deferred financing costs. | ||||||||||
(C) | Non-performing loans that had a UPB of $164.6 million as of December 31, 2013, which represents the notional amount of the linked transaction. | ||||||||||
Refer to Notes 7 and 8 for further detail of these asset classes held by New Residential. Refer to Notes 11 and 18 for discussions of the financing associated with, and the recent activities related to, non-hedge derivative instruments, respectively. |
DEBT_OBLIGATIONS
DEBT OBLIGATIONS | 12 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Dec. 31, 2013 | Dec. 31, 2012 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Debt Obligations | ' | ' | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
DEBT OBLIGATIONS | ' | ' | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
11. DEBT OBLIGATIONS | 6. DEBT OBLIGATIONS | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
The following table presents certain information regarding New Residential’s debt obligations: | The following table presents certain information regarding New Residential’s debt obligations at December 31, 2012: | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
December 31, 2013 (A) | December 31, 2012 | December 31, 2012 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Collateral | Collateral | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Debt Obligations/Collateral | Month | Outstanding | Carrying | Final | Weighted | Weighted | Outstanding | Amortized | Carrying | Weighted | Outstanding | Carrying | Debt Obligation/ | Month | Outstanding | Carrying | Final | Contractual | Weighted | Weighted | Face | Outstanding | Amortized | Carrying | Weighted | Floating | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Issued | Face | Value | Stated | Average | Average | Face | Cost Basis | Value | Average | Face | Value | Collateral | Issued | Face Amount | Value | Stated | Weighted | Average | Average | Amount of | Face Amount | Cost Basis | Value | Average | Rate Face | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Maturity | Funding | Life | Life | Maturity | Average | Funding | Maturity | Floating | Maturity | Amount | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Cost | (Years) | (Years) | Funding Cost | Cost | (Years) | Rate Debt | (Years) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Repurchase Agreements (B) | Repurchase Agreements(A) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Agency ARM RMBS (C) | Various | $ | 1,332,954 | $ | 1,332,954 | 14-Mar | 0.39 | % | 0.3 | $ | 1,277,570 | $ | 1,353,630 | $ | 1,353,719 | 4.1 | $ | — | $ | — | Non-Agency RMBS (B)(C) | Various | $ | 150,922 | $ | 150,922 | Jan 2013 | LIBOR+ | 2.21 | % | 0.1 | $ | 150,922 | $ | 344,177 | $ | 215,034 | $ | 228,493 | 6.9 | $ | 344,177 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Non-Agency RMBS (D) | Various | 287,757 | 287,757 | Jan-14 to | 1.85 | % | 0.1 | 576,146 | 388,855 | 392,360 | 8.2 | 150,922 | 150,922 | 2 | % | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
14-Oct | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
(A) | These repurchase agreements had approximately $55 thousand of associated accrued interest payable at December 31, 2012. $151 million face amount of these repurchase agreements were renewed subsequent to December 31, 2012. | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Total Repurchase Agreements | 1,620,711 | 1,620,711 | 0.65 | % | 0.2 | 1,853,716 | 1,742,485 | 1,746,079 | 5.4 | 150,922 | 150,922 | (B) | The counterparty of these repurchase agreements is Credit Suisse. | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
(C) | Newcastle is the guarantor of these repurchase agreements, which are subject to customary margin call provisions. | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Notes Payable | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Secured Corporate Loan (E) | 13-Dec | 75,000 | 75,000 | 14-Mar | 4.17 | % | 0.3 | 36,907,851 | 126,773 | 146,243 | 6 | — | — | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Servicer Advances (F) | 13-Dec | 2,390,778 | 2,390,778 | 14-Sep | 4.04 | % | 0.8 | 2,661,130 | 2,665,551 | 2,665,551 | 2.7 | — | — | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Residential Mortgage | 13-Dec | 22,840 | 22,840 | 14-Sep | 3.42 | % | 0.7 | 57,552 | 33,539 | 33,539 | 3.7 | — | — | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Loans (G) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Total Notes Payable | 2,488,618 | 2,488,618 | 4.04 | % | 0.8 | 39,626,533 | 2,825,863 | 2,845,333 | 5.8 | — | — | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Total | $ | 4,109,329 | $ | 4,109,329 | 2.7 | % | 0.6 | $ | 41,480,249 | $ | 4,568,348 | $ | 4,591,412 | 5.8 | $ | 150,922 | $ | 150,922 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
(A) | Excludes debt related to linked transactions (Note 10). | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
(B) | These repurchase agreements had approximately $0.7 million of associated accrued interest payable as of December 31, 2013. All of the repurchase agreements that matured during the first quarter of 2014 were renewed or refinanced subsequent to December 31, 2013. | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
(C) | The counterparties of these repurchase agreements are Mizuho ($186.8 million), Barclays ($410.7 million), Royal Bank of Canada ($101.8 million), Citi ($129.3 million), Morgan Stanley ($169.7 million) and Daiwa ($334.7 million) and were subject to customary margin call provisions. | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
(D) | The counterparties of these repurchase agreements are Barclays ($42.3 million), Credit Suisse ($104.0 million), Royal Bank of Scotland ($26.2 million) and Royal Bank of Canada ($115.3 million) and were subject to customary margin call provisions. All of the Non-Agency repurchase agreements have LIBOR-based floating interest rates. Includes $104.0 million borrowed under a $414.2 million master repurchase agreement, which bears interest at one-month LIBOR plus 1.75%. | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
(E) | The loan bears interest equal to the sum of (i) a floating rate index rate equal to one-month LIBOR and (ii) a margin of 4.0%. The outstanding face of the collateral represents the UPB of the residential mortgage loans underlying the Excess MSRs that secure this corporate loan. | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
(F) | The notes bore interest equal to the sum of (i) a floating rate index rate equal to one-month LIBOR or a cost of funds rate, as applicable, and (ii) a margin ranging from 2.0% to 2.6%. | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
(G) | The note is payable to Nationstar and bears interest equal to one-month LIBOR and a margin of 3.25%. | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Certain of the debt obligations included above are obligations of New Residential’s consolidated subsidiaries, which own the related collateral. In some cases, including the servicer advances, such collateral is not available to other creditors of New Residential. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Maturities | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
New Residential’s debt obligations as of December 31, 2013 had contractual maturities as follows (in thousands): | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Year | Nonrecourse | Recourse (A) | Total | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2014 | $ | 2,548,387 | $ | 1,560,942 | $ | 4,109,329 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
(A) | Excludes recourse debt related to linked transactions (Note 10). | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Covenants | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
New Residential was in compliance with all of its debt covenants as of December 31, 2013. The following is a summary of covenants to which New Residential is subject. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Repurchase Agreements | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Agency ARM RMBS | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
New Residential has outstanding repurchase agreements with terms that generally conform to the terms of the standard master repurchase agreement published by the Securities Industry and Financial Markets Association (“SIFMA”) as to repayment, margin requirements and segregation of all securities sold under any repurchase transactions. In addition, each counterparty typically requires additional terms and conditions to the standard master repurchase agreement, including changes to the margin maintenance requirements, required haircuts, purchase price maintenance requirements, requirements that all controversies related to the repurchase agreement be litigated in a particular jurisdiction and cross default provisions. These provisions may differ by counterparty and are not determined until New Residential engages in a specific repurchase transaction. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Non-Agency RMBS | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
On October 30, 2013, New Residential terminated an existing $342.9 million master repurchase agreement and entered into a new $414.2 million master repurchase agreement with Alpine Securitization Corp., an asset-backed commercial paper facility sponsored by Credit Suisse AG, an affiliate of Credit Suisse Securities (USA) LLC, which has a one year maturity. The new $414.2 million one year term master repurchase agreement is subject to margin call provisions as well as customary loan covenants and event of default provisions, including event of default provisions triggered by a 50% equity decline over any 12 month period and 35% equity decline over any 3 month period and a four-to-one indebtedness to tangible net worth provision. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Notes Payable | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Secured Corporate Loan | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
On December 13, 2013, New Residential entered into a $75.0 million secured corporate loan with Credit Suisse First Boston Mortgage LLC, an affiliate of Credit Suisse Securities (USA) LLC. The loan contains customary covenants and event of default provisions including event of default provisions triggered by a 50% equity decline as of the end of the corresponding period in the prior fiscal year, or a 35% equity decline as of the end of the quarter immediately preceding the most recently completed fiscal quarter and a four-to-one indebtedness to tangible net worth provision. Subsequent to December 31, 2013, the loan was paid down by $5.9 million, and the maturity was extended to May 31, 2014. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Servicer Advances | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
In December 2013, Advance Purchaser LLC funded the purchase of servicer advances, including the basic fee component of the related MSRs, with approximately $2.4 billion of variable funding notes issued by special purpose subsidiaries of Advance Purchaser LLC pursuant to a servicer advance facility with Barclays Bank PLC and a servicer advance facility with Credit Suisse AG, New York Branch, Morgan Stanley Bank, N.A. and Natixis, New York Branch, which Advance Purchaser LLC holds in wholly owned special purpose subsidiaries. Each of the wholly owned special purpose subsidiaries of Advance Purchaser LLC is structured as a bankruptcy remote special purpose entity and is the sole owner of its respective assets. Creditors of the wholly owned special purpose subsidiaries of Advance Purchaser LLC have no recourse to any assets or revenues of Nationstar or Advance Purchaser LLC other than to the limited extent contemplated by the facilities (which include, without limitation, indemnities for covenant violations). New Residential’s creditors and/or creditors of Nationstar do not have recourse to any assets or revenues of the wholly owned special purpose subsidiaries of Advance Purchaser LLC. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Upon the occurrence of an early amortization event or a target amortization event, there is either an interest rate increase on the variable funding notes, a rapid amortization of the variable funding notes or an acceleration of principal repayment, or all of the foregoing. The early amortization and target amortization events under the servicer advance facilities include: (i) the occurrence of an event of default under the transaction documents, (ii) failure to satisfy an interest coverage test, (iii) the occurrence of any servicer default or termination event for pooling and servicing agreements representing 15% or more (by mortgage loan balance as of the date | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
of termination) of all the pooling and servicing agreements related to the purchased basic fee subject to certain exceptions; (iv) failure to satisfy a collateral performance test measuring the ratio of collected advance reimbursements to the balance of advances; (v) for certain variable funding notes, failure to satisfy minimum tangible net worth requirements for Nationstar and Advance Purchaser LLC; (vi) for certain variable funding notes, failure to satisfy minimum liquidity requirements for Nationstar and Advance Purchaser LLC, (vii) failure to satisfy leverage tests for Nationstar; (viii) for certain variable funding notes, a change of control of Advance Purchaser LLC; (ix) for certain variable funding notes, certain judgments against Advance Purchaser LLC or each of its wholly owned special purpose subsidiaries in excess of certain thresholds; (x) for certain variable funding notes, payment default under, or an acceleration of, other debt of Advance Purchaser LLC; (xi) failure to deliver certain reports; and (xii) material breaches of any of the transaction documents. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
The definitive documents related to the variable funding notes contain customary representations and warranties, as well as affirmative and negative covenants. Affirmative covenants include, among others, reporting requirements, provision of notices of material events, maintenance of existence, maintenance of books and records, compliance with laws, compliance with covenants under the designated servicing agreements and maintaining certain servicing standards with respect to the advances and the related mortgage loans. Negative covenants include, among others, limitations on amendments to the designated servicing agreements and limitations on amendments to the procedures and methodology for repaying the advances or determining that advances have become non-recoverable. The definitive documents related to the variable funding notes also contain customary events of default, including, among others, (i) non-payment of principal, interest or other amounts when due, (ii) insolvency of Nationstar, Advance Purchaser LLC or its applicable wholly owned special purpose subsidiary; (iii) the applicable wholly owned special purpose subsidiary becoming subject to registration as an “investment company” within the meaning of the 1940 Act; (iv) Nationstar or Advance Purchaser LLC fails to comply with the deposit and remittance requirements set forth in any pooling and servicing agreement or such definitive documents; and (v) Nationstar’s failure to make an indemnity payment after giving effect to any applicable grace period. Upon the occurrence and during the continuance of an event of default under any servicer advance facility, the requisite percentage of the related noteholders may declare the variable funding notes and all other obligations of the applicable wholly owned special purpose subsidiary of Advance Purchaser LLC immediately due and payable and may terminate the commitments. A bankruptcy event of default causes such obligations automatically to become immediately due and payable and the commitments automatically to terminate. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Additional borrowing is permitted on the Notes that are variable funding notes subject to a maximum balance and certain funding conditions, such as the accuracy of representations and warranties, the absence of a default and the satisfaction of a collateral test that generally requires the sum of eligible servicer advances transferred to the applicable wholly owned special purpose subsidiary of Advance Purchaser LLC multiplied by an advance rate plus all collections in the applicable wholly owned special purpose subsidiary of Advance Purchaser LLC accounts to be greater than or equal to the aggregate outstanding principal balance of the variable funding notes. Generally, during the revolving period, payments to noteholders will consist of payments of interest, but excess cash flow from repaid servicer advances may be used to fund the purchase of new servicer advances. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Residential Mortgage Loans | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
On November 25, 2013, New Residential entered into a $300.0 million master repurchase agreement with The Royal Bank of Scotland (“RBS”) with advance rates ranging from 65% to 85% and an interest cost of one-month LIBOR plus 2.5% to 2.75%. The repurchase agreement, which contains customary covenants and event of default provisions and is subject to margin calls, matures on November 24, 2014. Pursuant to the repurchase agreement New Residential may sell, and later repurchase, (x) trust certificates representing interests in certain residential mortgage loans and (y) the capital stock of a corporation that holds certain real estate owned properties. The principal amount paid by RBS for such assets is based on a percentage of the lesser of the market value or the UPB of such mortgage assets backing the assets. Upon New Residential’s repurchase of such assets sold under the repurchase agreement, New Residential is required to repay RBS a repurchase amount based on the purchase price plus accrued interest. New Residential is also required to pay certain administrative costs and expenses in connection with the structuring, management and ongoing administration of the master repurchase agreement. The repurchase agreement contains customary covenants and event of default provisions, including a minimum liquidity requirement of $15.0 million, a minimum tangible net worth provision of $540.0 million, and a four to one indebtedness to tangible net worth provision. As of December 31, 2013, New Residential had purchased $92.7 million of loans financed with $60.1 million under this facility. This financing was treated as a linked transaction (Note 10) and is therefore not included in the table above. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Borrowing Capacity | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
The following table represents New Residential’s borrowing capacity as of December 31, 2013: | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Debt Obligations / Collateral | Collateral Type | Borrowing | Balance | Available | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Capacity | Outstanding | Financing | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Notes Payable | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Secured Corporate Loan | Excess MSRs | $ | 75,000 | $ | 75,000 | $ | — | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Servicer Advances (A) | Servicer Advances | 3,900,000 | 2,390,778 | 1,509,222 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Repurchase Agreements | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Residential Mortgage Loans (B) | Real Estate Loans | 300,000 | 60,102 | 239,898 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
$ | 4,275,000 | $ | 2,525,880 | $ | 1,749,120 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
(A) | New Residential’s unused borrowing capacity is available if New Residential has additional eligible collateral to pledge and meets other borrowing conditions. New Residential pays a 0.5% fee on the unused borrowing capacity. | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
(B) | Financing related to linked transaction (Note 10). | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Refer to Note 18 for a discussion of recent financing activities. |
FAIR_VALUE_OF_FINANCIAL_INSTRU
FAIR VALUE OF FINANCIAL INSTRUMENTS | 12 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Dec. 31, 2013 | Dec. 31, 2012 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value Of Financial Instruments | ' | ' | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
FAIR VALUE OF FINANCIAL INSTRUMENTS | ' | ' | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
12. FAIR VALUE OF FINANCIAL INSTRUMENTS | 7. FAIR VALUE OF FINANCIAL INSTRUMENTS | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
U.S. GAAP requires the categorization of the fair value of financial instruments into three broad levels which form a hierarchy. | U.S. GAAP requires the categorization of the fair value of financial instruments into three broad levels which form a hierarchy. | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Level 1 - Quoted prices in active markets for identical instruments. | Level 1-Quoted prices in active markets for identical instruments. | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Level 2 - Valuations based principally on other observable market parameters, including | Level 2-Valuations based principally on other observable market parameters, including | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
• | Quoted prices in active markets for similar instruments, | • | Quoted prices in active markets for similar instruments, | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
• | Quoted prices in less active or inactive markets for identical or similar instruments, | • | Quoted prices in less active or inactive markets for identical or similar instruments, | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
• | Other observable inputs (such as interest rates, yield curves, volatilities, prepayment speeds, loss severities, credit risks and default rates), and | • | Other observable inputs (such as interest rates, yield curves, volatilities, prepayment speeds, loss severities, credit risks and default rates), and | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
• | Market corroborated inputs (derived principally from or corroborated by observable market data). | • | Market corroborated inputs (derived principally from or corroborated by observable market data). | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Level 3 - Valuations based significantly on unobservable inputs. | Level 3-Valuations based significantly on unobservable inputs. | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
New Residential follows this hierarchy for its financial instruments. The classifications are based on the lowest level of input that is significant to the fair value measurement. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
New Residential follows this hierarchy for its financial instruments. The classifications are based on the lowest level of input that is significant to the fair value measurement. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
The carrying values and fair values of New Residential’s financial assets recorded at fair value on a recurring basis, as well as other financial instruments for which fair value is disclosed, as of December 31, 2013 were as follows: | The carrying value and fair value of New Residential’s financial assets and liabilities at December 31, 2012 were as follows: | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value | Principal | Fair Value | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Principal Balance | Carrying | Level 1 | Level 2 | Level 3 | Total | Balance or | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
or Notional | Value | Notional | Carrying | Level 2 | Level 3 | Total | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Amount | Amount | Value | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Assets: | Assets: | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Investments in: | Investments in Excess MSRs (A) | $ | 76,560,751 | $ | 245,036 | $ | — | $ | 245,036 | $ | 245,036 | |||||||||||||||||||||||||||||||||||||||||||||||||||
Excess mortgage servicing rights, at fair | $ | 78,953,614 | $ | 324,151 | $ | — | $ | — | $ | 324,151 | $ | 324,151 | Real estate securities, available-for-sale | $ | 433,510 | $ | 289,756 | $ | — | $ | 289,756 | $ | 289,756 | |||||||||||||||||||||||||||||||||||||||
value (A) | Liabilities: | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Excess mortgage servicing rights, equity | 173,619,478 | 352,766 | — | — | 352,766 | 352,766 | Repurchase agreements | $ | 150,922 | $ | 150,922 | $ | 150,922 | $ | — | $ | 150,922 | |||||||||||||||||||||||||||||||||||||||||||||
method investees, at fair value (A) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Servicer advances | 2,661,130 | 2,665,551 | — | — | 2,665,551 | 2,665,551 | (A) | The notional amount represents the total unpaid principal balance of the mortgage loans underlying the Excess MSRs. Generally, New Residential does not receive an excess mortgage servicing amount on nonperforming loans. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
Real estate securities, available-for-sale | 2,186,996 | 1,973,189 | — | 1,402,764 | 570,425 | 1,973,189 | Investments in Excess MSRs Valuation | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
Residential mortgage loans, held for | 57,552 | 33,539 | — | — | 33,539 | 33,539 | Fair value estimates of New Residential’s Excess MSRs were based on internal pricing models as of December 31, 2012 and 2011, respectively. The valuation technique is based on discounted cash flows. Significant inputs used in the valuations included expectations of prepayment rates, delinquency rates, recapture rates, the excess mortgage servicing amount of the underlying mortgage loans and discount rates that market participants would use in determining the fair values of mortgage servicing rights on similar pools of residential mortgage loans. New Residential’s management validates the inputs and outputs of the internal pricing models by comparing them to available independent third party market parameters and models for reasonableness. New Residential believes its valuation methods and the assumptions used are appropriate and consistent with other market participants. | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
investment (B) | In order to evaluate the reasonableness of its fair value determinations, management engages an independent valuation firm to separately measure the fair value of its Excess MSRs. The independent valuation firm determines an estimated fair value range based on its own models and issues a “fairness opinion” with this range. Management compares the range included in the opinion to the value generated by its internal models. For Excess MSRs acquired prior to the current quarter, the fairness opinion relates to the valuation at the current quarter end date. For Excess MSRs acquired during the current quarter, the fairness opinion relates to the valuation at the time of acquisition. To date, New Residential has not made any significant valuation adjustments as a result of these fairness opinions. | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Non-hedge derivative investments (C) | 101,775 | 35,926 | — | — | 35,926 | 35,926 | For Excess MSRs acquired during the current quarter, New Residential revalues the Excess MSRs at the quarter end date if a payment is received between the acquisition date and the end of the quarter. Otherwise, Excess MSRs acquired during the current quarter are carried at their amortized cost basis if there has been no change in assumptions since acquisition. | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
Cash and restricted cash | 305,332 | 305,332 | 305,332 | — | — | 305,332 | In addition, in valuing the Excess MSRs, management considered the likelihood of Nationstar being removed as the servicer, which likelihood is considered to be remote. Fair value measurements of the Excess MSRs are sensitive to changes in the assumptions or methodology used to determine fair value, and such changes could result in a significant increase or decrease in the fair value. Significant increases (decreases) in the discount rates, prepayments or delinquency rates in isolation would result in a significantly lower (higher) fair value measurement, whereas significant increases (decreases) in the recapture rates or excess mortgage servicing amount in isolation would result in a significantly higher (lower) fair value measurement. Generally, a change in the delinquency rate assumption is accompanied by a directionally similar change in the assumption used for the prepayment speed. | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
$ | 257,885,877 | $ | 5,690,454 | $ | 305,332 | $ | 1,402,764 | $ | 3,982,358 | $ | 5,690,454 | The following table summarizes certain information regarding the inputs used in valuing the Excess MSRs as of December 31, 2012 and 2011: | ||||||||||||||||||||||||||||||||||||||||||||||||||
Liabilities: | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Repurchase agreements | $ | 1,620,711 | $ | 1,620,711 | $ | — | $ | 1,620,711 | $ | — | $ | 1,620,711 | Significant Input Ranges (December 31, 2011) | |||||||||||||||||||||||||||||||||||||||||||||||||
Notes payable | 2,488,618 | 2,488,618 | — | — | 2,488,618 | 2,488,618 | Prepayment | Delinquency | Recapture | Excess | Discount | |||||||||||||||||||||||||||||||||||||||||||||||||||
Speed (A) | (B) | Rate (C) | Mortgage | Rate | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
$ | 4,109,329 | $ | 4,109,329 | $ | — | $ | 1,620,711 | $ | 2,488,618 | $ | 4,109,329 | Servicing | ||||||||||||||||||||||||||||||||||||||||||||||||||
Amount (D) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Pool 1 | 20 | % | 10 | % | 35 | % | 29 bps | 20 | % | |||||||||||||||||||||||||||||||||||||||||||||||||||||
(A) | The notional amount represents the total unpaid principal balance of the mortgage loans underlying the Excess MSRs. New Residential does not receive an excess mortgage servicing amount on nonperforming loans in Agency portfolios. | Pool 1—Recapture Agreement | 8 | % | 10 | % | 35 | % | 21 bps | 20 | % | |||||||||||||||||||||||||||||||||||||||||||||||||||
(B) | Represents New Residential’s 70% interest in the total unpaid principal balance of the Residential Mortgage Loans. | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
(C) | Notional amount consists of the aggregate current face and UPB amounts of the securities and loans, respectively, that comprise the asset portion of the linked transaction. | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
New Residential has various processes and controls in place to ensure that fair value is reasonably estimated. With respect to the broker and pricing service quotations, to ensure these quotes represent a reasonable estimate of fair value, New Residential’s quarterly procedures include a comparison to quotations from different sources, outputs generated from its internal pricing models and transactions New Residential has completed with respect to these or similar securities, as well as on its knowledge and experience of these markets. With respect to fair value estimates generated based on New Residential’s internal pricing models, New Residential’s management corroborates the inputs and outputs of the internal pricing models by comparing them to available independent third party market parameters, where available, and models for reasonableness. New Residential believes its valuation methods and the assumptions used are appropriate and consistent with other market participants. | Significant Input Ranges (December 31, 2012) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair value measurements categorized within Level 3 are sensitive to changes in the assumptions or methodology used to determine fair value and such changes could result in a significant increase or decrease in the fair value. | Prepayment | Delinquency | Recapture | Excess | Discount | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Investments in Excess MSRs Valuation | Speed (A) | (B) | Rate (C) | Mortgage | Rate | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair value estimates of New Residential’s Excess MSRs were based on internal pricing models. The valuation technique is based on discounted cash flows. Significant inputs used in the valuations included expectations of prepayment rates, delinquency rates, recapture rates, the excess mortgage servicing amount of the underlying mortgage loans and discount rates that market participants would use in determining the fair values of mortgage servicing rights on similar pools of residential mortgage loans. | Servicing | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Amount (D) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
In order to evaluate the reasonableness of its fair value determinations, management engages an independent valuation firm to separately measure the fair value of its Excess MSRs. The independent valuation firm determines an estimated fair value range of each pool based on its own models and issues a “fairness opinion” with this range. Management compares the range included in the opinion to the value generated by its internal models. For Excess MSRs acquired prior to the current quarter, the fairness opinion relates to the valuation at the current quarter end date. For Excess MSRs acquired during the current quarter, the fairness opinion relates to the valuation at the time of acquisition. To date, New Residential has not made any significant valuation adjustments as a result of these fairness opinions. | Pool 1 | 17.1 | % | 10 | % | 35 | % | 29 bps | 18 | % | ||||||||||||||||||||||||||||||||||||||||||||||||||||
For Excess MSRs acquired during the current quarter, New Residential revalues the Excess MSRs at the quarter end date if a payment is received between the acquisition date and the end of the quarter. Otherwise, Excess MSRs acquired during the current quarter are carried at their amortized cost basis if there has been no change in assumptions since acquisition. | Pool 1—Recapture Agreement | 8 | % | 10 | % | 35 | % | 21 bps | 18 | % | ||||||||||||||||||||||||||||||||||||||||||||||||||||
In addition, in valuing the Excess MSRs, management considered the likelihood of Nationstar being removed as the servicer, which likelihood is considered to be remote. Fair value measurements of the Excess MSRs are sensitive to changes in the assumptions or methodology used to determine fair value, and such changes could result in a significant increase or decrease in the fair value. Significant increases (decreases) in the discount rates, prepayment or delinquency rates in isolation would result in a significantly lower (higher) fair value measurement, whereas significant increases (decreases) in the recapture rates or excess mortgage servicing amount in isolation would result in a significantly higher (lower) fair value measurement. Generally, a change in the delinquency rate assumption is accompanied by a directionally similar change in the assumption used for the prepayment speed. | Pool 2 | 16.7 | % | 11 | % | 35 | % | 23 bps | 17.3 | % | ||||||||||||||||||||||||||||||||||||||||||||||||||||
The following table summarizes certain information regarding the inputs used in valuing the Excess MSRs owned directly and through equity method investees as of December 31, 2013: | Pool 2—Recapture Agreement | 8 | % | 10 | % | 35 | % | 21 bps | 17.3 | % | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Pool 3 | 16.9 | % | 12.1 | % | 35 | % | 23 bps | 17.6 | % | |||||||||||||||||||||||||||||||||||||||||||||||||||||
Pool 3—Recapture Agreement | 8 | % | 10 | % | 35 | % | 21 bps | 17.6 | % | |||||||||||||||||||||||||||||||||||||||||||||||||||||
Significant Inputs | Pool 4 | 18.6 | % | 15.9 | % | 35 | % | 17 bps | 17.9 | % | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Held Directly (Note 4) | Prepayment | Delinquency | Recapture | Excess Mortgage | Discount | Pool 4—Recapture Agreement | 8 | % | 10 | % | 35 | % | 21 bps | 17.9 | % | |||||||||||||||||||||||||||||||||||||||||||||||
Speed (A) | (B) | Rate | Servicing Amount | Rate | Pool 5 | 15 | % | N/A | (E) | 20 | % | 13 bps | 17.5 | % | ||||||||||||||||||||||||||||||||||||||||||||||||
(C) | (D) | Pool 5—Recapture Agreement | 8 | % | N/A | (E) | 20 | % | 21 bps | 17.5 | % | |||||||||||||||||||||||||||||||||||||||||||||||||||
MSR Pool 1 | 13.1 | % | 8.9 | % | 35.8 | % | 27 bps | 12.5 | % | |||||||||||||||||||||||||||||||||||||||||||||||||||||
MSR Pool 1 - Recapture Agreement | 8 | % | 5 | % | 35 | % | 21 bps | 12.5 | % | (A) | Projected annualized weighted average lifetime voluntary and involuntary prepayment rate using a prepayment vector. | |||||||||||||||||||||||||||||||||||||||||||||||||||
MSR Pool 2 | 13 | % | 10.1 | % | 35.8 | % | 22 bps | 12.5 | % | (B) | Projected percentage of mortgage loans in the pool that will miss their mortgage payments. | |||||||||||||||||||||||||||||||||||||||||||||||||||
MSR Pool 2 - Recapture Agreement | 8 | % | 5 | % | 35 | % | 21 bps | 12.5 | % | (C) | Percentage of voluntarily prepaid loans that are expected to be refinanced by Nationstar. | |||||||||||||||||||||||||||||||||||||||||||||||||||
MSR Pool 3 | 13.2 | % | 11.2 | % | 35.9 | % | 22 bps | 12.5 | % | (D) | Weighted average total mortgage servicing amount in excess of the basic fee. | |||||||||||||||||||||||||||||||||||||||||||||||||||
MSR Pool 3 - Recapture Agreement | 8 | % | 5 | % | 35 | % | 21 bps | 12.5 | % | (E) | The Excess MSR will be paid on the total UPB of the mortgage portfolio (including both performing and delinquent loans until REO). | |||||||||||||||||||||||||||||||||||||||||||||||||||
MSR Pool 4 | 15.7 | % | 15 | % | 36.9 | % | 17 bps | 12.5 | % | All of the assumptions listed have some degree of market observability, based on New Residential’s knowledge of the market, relationships with market participants, and use of common market data sources. Prepayment speed and default rate projections are in the form of “curves” or “vectors” that vary over the expected life of the pool. New Residential uses assumptions that generate its best estimate of future cash flows for each investment in Excess MSRs. | ||||||||||||||||||||||||||||||||||||||||||||||||||||
MSR Pool 4 - Recapture Agreement | 8 | % | 5 | % | 35 | % | 21 bps | 12.5 | % | When valuing Excess MSRs, New Residential uses the following criteria to determine the significant inputs: | ||||||||||||||||||||||||||||||||||||||||||||||||||||
MSR Pool 5 | 11.6 | % | N/A | (E) | 9 | % | 13 bps | 12.5 | % | |||||||||||||||||||||||||||||||||||||||||||||||||||||
MSR Pool 5 - Recapture Agreement | 8 | % | N/A | (E) | 35 | % | 21 bps | 12.5 | % | • | Prepayment Speed: Prepayment speed projections are in the form of a “vector” that varies over the expected life of the pool. The prepayment vector specifies the percentage of the collateral balance that is expected to prepay voluntarily (i.e., pay off) and involuntarily (i.e., default) at each point in the future. The prepayment vector is based on assumptions that reflect factors such as the borrower’s FICO score, loan-to-value ratio, debt-to-income ratio, vintage on a loan level basis, as well as the projected effect on loans eligible for the Home Affordable Refinance Program 2.0 (“HARP 2.0”). Management considers collateral-specific prepayment experience when determining this vector. For the Recapture Agreements and recaptured loans, New Residential also considers industry research on the prepayment experience of similar loan pools (i.e., loan pools composed of refinanced loans). This data is obtained from remittance reports, market data services and other market sources. | |||||||||||||||||||||||||||||||||||||||||||||||||||
MSR Pool 11 | 7.6 | % | 5 | % | 34 | % | 19 bps | 12.5 | % | • | Delinquency Rates: For existing mortgage pools, delinquency rates are based on the pool-specific experience of loans that missed their latest mortgage payments. For the Recapture Agreements and recaptured loans, delinquency rates are based on the experience of similar loan pools originated by Nationstar and delinquency experience over the past year. Management believes this time period provides a reasonable sample for projecting future delinquency rates while taking into account current market conditions. Additional consideration is given to loans that are expected to become 30 or more days delinquent. | |||||||||||||||||||||||||||||||||||||||||||||||||||
MSR Pool 11 - Recapture Agreement | 8 | % | 5 | % | 35 | % | 19 bps | 12.5 | % | |||||||||||||||||||||||||||||||||||||||||||||||||||||
MSR Pool 12 | 15.4 | % | — | 8.8 | % | 26 bps | 16.4 | % | • | Recapture Rates: Recapture rates are based on actual average recapture rates experienced by Nationstar on similar mortgage loan pools. Generally, New Residential looks to one year worth of actual recapture rates, which management believes provides a reasonable sample for projecting future recapture rates while taking into account current market conditions. | ||||||||||||||||||||||||||||||||||||||||||||||||||||
MSR Pool 12 - Recapture Agreement | 8 | % | N/A | (E) | 35 | % | 19 bps | 16.4 | % | |||||||||||||||||||||||||||||||||||||||||||||||||||||
MSR Pool 18 | 15 | % | N/A | (E) | 9 | % | 15 bps | 15.3 | % | • | Excess Mortgage Servicing Amount: For existing mortgage pools, excess mortgage servicing amount projections are based on the actual total mortgage servicing amount in excess of a basic fee. For loans expected to be refinanced by Nationstar and subject to a Recapture Agreement, New Residential considers the excess mortgage servicing amount on loans originated by Nationstar over the past year and other general market considerations. Management believes this time period provides a reasonable sample for projecting future excess mortgage servicing amounts while taking into account current market conditions. | |||||||||||||||||||||||||||||||||||||||||||||||||||
MSR Pool 18 - Recapture Agreement | 10 | % | N/A | (E) | 35 | % | 19 bps | 15.3 | % | |||||||||||||||||||||||||||||||||||||||||||||||||||||
• | Discount Rate: The discount rates New Residential uses are derived from market data on pricing of mortgage servicing rights backed by similar collateral. | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Held through Equity Method Investees (Note 5) | New Residential uses different prepayment and delinquency assumptions in valuing the Excess MSRs relating to the original loan pools, the Recapture Agreements and the Excess MSRs relating to recaptured loans. The prepayment speed and delinquency rate assumptions differ because of differences in the collateral characteristics, eligibility for the Home Affordable Refinance Program 2.0 (“HARP 2.0”) and expected borrower behavior for original loans and loans which have been refinanced. New Residential uses the same assumptions for recapture and discount rates when valuing Excess MSRs and Recapture Agreement. These assumptions are based on historical recapture experience and market pricing. | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
MSR Pool 6 | 16 | % | 8.2 | % | 30.4 | % | 25 bps | 12.5 | % | |||||||||||||||||||||||||||||||||||||||||||||||||||||
MSR Pool 6 - Recapture Agreement | 8 | % | 5 | % | 35 | % | 23 bps | 12.5 | % | Excess MSRs measured at fair value on a recurring basis using Level 3 inputs changed during the period December 8, 2011 (Commencement of operations) through December 31, 2011 and the year ended December 31, 2012 as follows: | ||||||||||||||||||||||||||||||||||||||||||||||||||||
MSR Pool 7 | 13.1 | % | 7.8 | % | 35.9 | % | 16 bps | 12.5 | % | |||||||||||||||||||||||||||||||||||||||||||||||||||||
MSR Pool 7 - Recapture Agreement | 8 | % | 5 | % | 35 | % | 19 bps | 12.5 | % | |||||||||||||||||||||||||||||||||||||||||||||||||||||
MSR Pool 8 | 14.6 | % | 6.8 | % | 35.9 | % | 20 bps | 12.5 | % | Level 3 | ||||||||||||||||||||||||||||||||||||||||||||||||||||
MSR Pool 8 - Recapture Agreement | 8 | % | 5 | % | 35 | % | 19 bps | 12.5 | % | Pool 1 (A) | Pool 2 (A) | Pool 3 (A) | Pool 4 (A) | Pool 5 (A) | Total | |||||||||||||||||||||||||||||||||||||||||||||||
MSR Pool 9 | 16.2 | % | 5 | % | 30.1 | % | 22 bps | 12.5 | % | Balance at December 8, 2011 (Commencement of operations) | $ | — | $ | — | $ | — | $ | — | $ | — | $ | — | ||||||||||||||||||||||||||||||||||||||||
MSR Pool 9 - Recapture Agreement | 8 | % | 5 | % | 35 | % | 26 bps | 12.5 | % | Transfers (B) | ||||||||||||||||||||||||||||||||||||||||||||||||||||
MSR Pool 10 | 11.4 | % | N/A | (E) | 9 | % | 11 bps | 12.5 | % | Transfers from Level 3 | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||
MSR Pool 10 - Recapture Agreement | 8 | % | N/A | (E) | 35 | % | 19 bps | 12.5 | % | Transfers into Level 3 | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||
MSR Pool 11 | 15.2 | % | 9.6 | % | 37 | % | 16 bps | 12.5 | % | Total gains (losses) included in net income (C) | 367 | — | — | — | — | 367 | ||||||||||||||||||||||||||||||||||||||||||||||
MSR Pool 11 - Recapture Agreement | 7.9 | % | 5 | % | 35 | % | 19 bps | 12.5 | % | Interest income | 1,260 | — | — | — | — | 1,260 | ||||||||||||||||||||||||||||||||||||||||||||||
Purchases, sales and repayments | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
(A) | Projected annualized weighted average lifetime voluntary and involuntary prepayment rate using a prepayment vector. | Purchases | 43,742 | — | — | — | — | 43,742 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
(B) | Projected percentage of mortgage loans in the pool that will miss their mortgage payments. | Proceeds from sales | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
(C) | Percentage of voluntarily prepaid loans that are expected to be refinanced by Nationstar. | Proceeds from repayments | (1,398 | ) | — | — | — | — | (1,398 | ) | ||||||||||||||||||||||||||||||||||||||||||||||||||||
(D) | Weighted average total mortgage servicing amount in excess of the basic fee. | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
(E) | The Excess MSR will be paid on the total UPB of the mortgage portfolio (including both performing and delinquent loans until REO). | Balance at December 31, 2011 | $ | 43,971 | $ | — | $ | — | $ | — | $ | — | $ | 43,971 | ||||||||||||||||||||||||||||||||||||||||||||||||
All of the assumptions listed have some degree of market observability, based on New Residential’s knowledge of the market, relationships with market participants, and use of common market data sources. Prepayment speed and delinquency rate projections are in the form of “curves” or “vectors” that vary over the expected life of the pool. New Residential uses assumptions that generate its best estimate of future cash flows for each investment in Excess MSRs. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
When valuing Excess MSRs, New Residential uses the following criteria to determine the significant inputs: | Transfers (B) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Transfers from Level 3 | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
• | Prepayment Speed: Prepayment speed projections are in the form of a “vector” that varies over the expected life of the pool. The prepayment vector specifies the percentage of the collateral balance that is expected to prepay voluntarily (i.e., pay off) and involuntarily (i.e., default) at each point in the future. The prepayment vector is based on assumptions that reflect macroeconomic conditions and factors such as the borrower’s FICO score, loan-to-value ratio, debt-to-income ratio, vintage on a loan level basis, as well as the projected effect on loans eligible for the Home Affordable Refinance Program 2.0 (“HARP 2.0”). Management considers collateral-specific prepayment experience when determining this vector. For the Recapture Agreements and recaptured loans, New Residential also considers industry research on the prepayment experience of similar loan pools (i.e., loan pools composed of refinanced loans). This data is obtained from remittance reports, market data services and other market sources. | Transfers into Level 3 | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
Total gains (losses) included in net income (C) | 5,877 | 1,226 | 2,780 | 1,004 | (1,864 | ) | 9,023 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
• | Delinquency Rates: For existing mortgage pools, delinquency rates are based on the recent pool-specific experience of loans that missed their latest mortgage payments. For the Recapture Agreements and recaptured loans, delinquency rates are based on the experience of similar loan pools originated by Nationstar and delinquency experience over the past year. Management believes this time period provides a reasonable sample for projecting future delinquency rates while taking into account current market conditions. Additional consideration is given to loans that are expected to become 30 or more days delinquent. | Interest income | 7,955 | 3,450 | 3,409 | 1,381 | 11,293 | 27,488 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
Purchases, sales and repayments | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
• | Recapture Rates: Recapture rates are based on actual average recapture rates experienced by Nationstar on similar mortgage loan pools. Generally, New Residential looks to one year worth of actual recapture rates, which management believes provides a reasonable sample for projecting future recapture rates while taking into account current market conditions. | Purchases | — | 43,872 | 36,218 | 15,439 | 124,813 | 220,342 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
Purchase adjustments | (178 | ) | (1,522 | ) | — | — | — | (1,700 | ) | |||||||||||||||||||||||||||||||||||||||||||||||||||||
• | Excess Mortgage Servicing Amount: For existing mortgage pools, excess mortgage servicing amount projections are based on the actual total mortgage servicing amount in excess of a basic fee. For loans expected to be refinanced by Nationstar and subject to a Recapture Agreement, New Residential considers the excess mortgage servicing amount on loans recently originated by Nationstar over the past year and other general market considerations. Management believes this time period provides a reasonable sample for projecting future excess mortgage servicing amounts while taking into account current market conditions. | Proceeds from sales | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
Proceeds from repayments | (16,715 | ) | (7,704 | ) | (6,973 | ) | (2,788 | ) | (19,908 | ) | (54,088 | ) | ||||||||||||||||||||||||||||||||||||||||||||||||||
• | Discount Rate: The discount rates used by New Residential are derived from market data on pricing of mortgage servicing rights backed by similar collateral. | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Balance at December 31, 2012 | $ | 40,910 | $ | 39,322 | $ | 35,434 | $ | 15,036 | $ | 114,334 | $ | 245,036 | ||||||||||||||||||||||||||||||||||||||||||||||||||
New Residential uses different prepayment and delinquency assumptions in valuing the Excess MSRs relating to the original loan pools, the Recapture Agreements and the Excess MSRs relating to recaptured loans. The prepayment speed and delinquency rate assumptions differ because of differences in the collateral characteristics, eligibility for HARP 2.0 and expected borrower behavior for original loans and loans which have been refinanced. New Residential uses the same assumptions for recapture and discount rates when valuing Excess MSRs and Recapture Agreements. These assumptions are based on historical recapture experience and market pricing. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Excess MSRs, owned directly (Note 4), measured at fair value on a recurring basis using Level 3 inputs changed during the year ended December 31, 2013 as follows: | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
(A) | Includes the recapture agreement for each respective pool. | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
(B) | Transfers are assumed to occur at the beginning of the respective period. | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Level 3 (A) | (C) | The gains (losses) recorded in earnings during the period are attributable to the change in unrealized gains (losses) relating to Level 3 assets still held at the reporting dates. These gains (losses) represent the change in fair value of the Excess MSRs and are recorded in “Change in fair value of investments in excess mortgage servicing rights” in the consolidated statements of income. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
MSR | MSR | MSR | MSR | MSR | MSR | MSR | MSR | Total | Real Estate Securities Valuation | |||||||||||||||||||||||||||||||||||||||||||||||||||||
Pool 1 | Pool 2 | Pool 3 | Pool 4 | Pool 5 | Pool 11 | Pool 12 | Pool 18 | As of December 31, 2012 New Residential’s securities valuation methodology and results are further detailed as follows: | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
Balance as of December 31, 2011 | $ | 43,971 | $ | — | $ | — | $ | — | $ | — | $ | — | $ | — | $ | — | $ | 43,971 | ||||||||||||||||||||||||||||||||||||||||||||
Transfers (B) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Transfers from Level 3 | — | — | — | — | — | — | — | — | — | Fair Value | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Transfers to Level 3 | — | — | — | — | — | — | — | — | — | Asset Type | Outstanding | Amortized | Multiple | Single | Total | |||||||||||||||||||||||||||||||||||||||||||||||
Gains (losses) included in net income (C) | 5,877 | 1,226 | 2,780 | 1,004 | (1,864 | ) | — | — | — | 9,023 | Face Amount | Cost Basis | Quotes (A) | Quote (B) | ||||||||||||||||||||||||||||||||||||||||||||||||
Interest income | 7,955 | 3,450 | 3,409 | 1,381 | 11,293 | — | — | — | 27,488 | ABS-Subprime | $ | 433,510 | $ | 274,230 | $ | 265,556 | $ | 24,200 | $ | 289,756 | ||||||||||||||||||||||||||||||||||||||||||
Purchases, sales and repayments | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Purchases | — | 43,872 | 36,218 | 15,439 | 124,813 | — | — | — | 220,342 | (A) | Management generally obtained pricing service quotations or broker quotations from two sources, one of which was generally the seller (the party that sold us the security). Management selected one of the quotes received as being most representative of the fair value and did not use an average of the quotes. Even if New Residential receives two or more quotes on a particular security that come from non-selling brokers or pricing services, it does not use an average because management believes using an actual quote more closely represents a transactable price for the security than an average level. Furthermore, in some cases there is a wide disparity between the quotes New Residential receives. Management believes using an average of the quotes in these cases would not represent the fair value of the asset. Based on New Residential’s own fair value analysis using internal models, management selects one of the quotes which is believed to more accurately reflect fair value. New Residential never adjusts quotes received. These quotations are generally received via email and contain disclaimers which state that they are “indicative” and not “actionable” — meaning that the party giving the quotation is not bound to actually purchase the security at the quoted price. | |||||||||||||||||||||||||||||||||||||||||||||||||||
Purchase adjustments | (178 | ) | (1,522 | ) | — | — | — | — | — | — | (1,700 | ) | (B) | Management was unable to obtain quotations from more than one source on these securities. The one source was generally the seller (the party that sold us the security) or a pricing service. | ||||||||||||||||||||||||||||||||||||||||||||||||
Proceeds from sales | — | — | — | — | — | — | — | — | — | Fair value measurements categorized within Level 3 are sensitive to changes in the assumptions or methodology used to determine fair value, and such changes could result in a significant increase or decrease in the fair value. For New Residential’s investments in real estate securities categorized within Level 3 of the fair value hierarchy, the significant unobservable inputs include the discount rates, assumptions related to prepayments, default rates and loss severities. Significant increases (decreases) in any of the discount rates, default rates or loss severities in isolation would result in a significantly lower (higher) fair value measurement. The impact of changes in prepayment speeds would have differing impacts on fair value, depending on the seniority of the investment. Generally, a change in the default assumption is generally accompanied by directionally similar changes in the assumptions used for the loss severity and the prepayment speed. | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Proceeds from repayments | (16,715 | ) | (7,704 | ) | (6,973 | ) | (2,788 | ) | (19,908 | ) | — | — | — | (54,088 | ) | Fair value estimates of New Residential’s securities were based on third party indications as of December 31, 2012 and classified as Level 3. Securities measured at fair value on a recurring basis using Level 3 inputs changed during the year ended December 31, 2012 as follows: | ||||||||||||||||||||||||||||||||||||||||||||||
Balance as of December 31, 2012 | $ | 40,910 | $ | 39,322 | $ | 35,434 | $ | 15,036 | $ | 114,334 | $ | — | $ | — | $ | — | $ | 245,036 | ||||||||||||||||||||||||||||||||||||||||||||
Level 3 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Transfers (B) | — | ABS- | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Transfers from Level 3 | — | — | — | — | — | — | — | — | — | Subprime | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Transfers to Level 3 | — | — | — | — | — | — | — | — | — | Balance at December 31, 2011 | $ | — | ||||||||||||||||||||||||||||||||||||||||||||||||||
Gains (losses) included in net income (C) | 9,424 | 9,125 | 9,393 | 4,748 | 21,334 | (30 | ) | (173 | ) | (489 | ) | 53,332 | Transfers (A) | |||||||||||||||||||||||||||||||||||||||||||||||||
Interest income | 5,839 | 4,885 | 5,767 | 2,842 | 20,637 | 83 | 678 | 190 | 40,921 | Transfers from Level 3 | — | |||||||||||||||||||||||||||||||||||||||||||||||||||
Purchases, sales and repayments | — | — | — | — | — | — | — | — | — | Transfers into Level 3 | — | |||||||||||||||||||||||||||||||||||||||||||||||||||
Purchases | — | — | — | — | 26,637 | 2,391 | 17,393 | 17,013 | 63,434 | Total gains (losses) | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Purchase adjustments | — | — | — | — | — | — | — | — | — | Included in net income | — | |||||||||||||||||||||||||||||||||||||||||||||||||||
Proceeds from sales | — | — | — | — | — | — | — | — | — | Included in other comprehensive income (B) | 15,526 | |||||||||||||||||||||||||||||||||||||||||||||||||||
Proceeds from repayments | (13,118 | ) | (11,511 | ) | (11,053 | ) | (4,698 | ) | (36,699 | ) | (129 | ) | (1,364 | ) | — | (78,572 | ) | Amortization included in interest income | 5,339 | |||||||||||||||||||||||||||||||||||||||||||
Purchases, contributions in-kind, sales and repayments | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Balance as of December 31, 2013 | $ | 43,055 | $ | 41,821 | $ | 39,541 | $ | 17,928 | $ | 146,243 | $ | 2,315 | $ | 16,534 | $ | 16,714 | $ | 324,151 | Purchases | 121,262 | ||||||||||||||||||||||||||||||||||||||||||
Contributions in-kind | 164,142 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Proceeds from sales | — | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
(A) | Includes the Recapture Agreement for each respective pool. | Proceeds from repayments | (16,513 | ) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
(B) | Transfers are assumed to occur at the beginning of the respective period. | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
(C) | The gains (losses) recorded in earnings during the period are attributable to the change in unrealized gains (losses) relating to Level 3 assets still held at the reporting dates. These gains (losses) represent the change in fair value of the Excess MSRs and are recorded in “Change in fair value of investments in excess mortgage servicing rights” in the Consolidated Statements of Income. | Balance at December 31, 2012 | $ | 289,756 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Excess MSR joint ventures (Note 5), measured at fair value on a recurring basis using Level 3 inputs changed during the year ended December 31, 2013 as follows: | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
(A) | Transfers are assumed to occur at the beginning of the respective period. | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
(B) | These gains (losses) were included in net unrealized gain (loss) on securities in the consolidated statements of comprehensive income. | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Level 3 (A) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
MSR Pool | MSR Pool | MSR Pool | MSR Pool | MSR Pool | MSR Pool | Total | Liabilities for Which Fair Value is Only Disclosed | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
6 | 7 | 8 | 9 | 10 | 11 | The following table summarizes the level of the fair value hierarchy, valuation techniques and variables used for estimating liabilities not measured at fair value in the statement of financial position but for which fair value is disclosed: | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Balance as of December 31, 2012 | $ | — | $ | — | $ | — | $ | — | $ | — | $ | — | $ | — | ||||||||||||||||||||||||||||||||||||||||||||||||
Purchases, sales and repayments | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Purchases | 57,803 | 137,469 | 70,440 | 147,015 | 229,430 | 75,572 | 717,729 | Type of Liabilities Not Measured At Fair | Fair Value Hierarchy | Valuation Techniques and | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Purchase adjustments | — | — | — | — | — | — | — | Value for Which Fair Value Is Disclosed | Significant Inputs | |||||||||||||||||||||||||||||||||||||||||||||||||||||
Proceeds from sales | — | — | — | — | — | — | — | Repurchase agreements | Level 2 | Valuation technique is based on market comparables. | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Proceeds from repayments | (17,458 | ) | (33,012 | ) | (15,516 | ) | (16,258 | ) | (20,395 | ) | (10,243 | ) | (112,882 | ) | ||||||||||||||||||||||||||||||||||||||||||||||||
Transfers (B) | Significant variables include: | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Transfers from Level 3 | — | — | — | — | — | — | — | • Amount and timing of expected future cash flows | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
Transfers to Level 3 | — | — | — | — | — | — | — | • Interest rates | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
Gains (losses) included in net income (C) | 10,958 | 12,887 | 6,025 | 24,181 | (4,494 | ) | 4,407 | 53,964 | • Collateral funding spreads | |||||||||||||||||||||||||||||||||||||||||||||||||||||
Interest income | 7,336 | 11,982 | 5,558 | 8,669 | 10,193 | 2,983 | 46,721 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
Balance as of December 31, 2013 | $ | 58,639 | $ | 129,326 | $ | 66,507 | $ | 163,607 | $ | 214,734 | $ | 72,719 | $ | 705,532 | ||||||||||||||||||||||||||||||||||||||||||||||||
(A) | Includes the Recapture Agreement for each respective pool. Amounts represent all of the Excess MSRs held by the respective joint ventures in which New Residential has a 50% interest. | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
(B) | Transfers are assumed to occur at the beginning of the respective period. | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
(C) | The gains (losses) recorded in earnings during the period are attributable to the change in unrealized gains (losses) relating to Level 3 assets still held at the reporting dates. These gains (losses) represent the change in fair value of the Excess MSRs and are recorded in “Change in fair value of investments in excess mortgage servicing rights” in the Consolidated Statements of Income. | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Excess Mortgage Servicing Rights Equity Method Investees Valuation | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair value estimates of New Residential’s investments were based on internal pricing models. New Residential estimated the fair value of the assets and liabilities of the underlying entities in which it holds an equity interest. The valuation technique is based on discounted cash flows. Significant inputs represent the inputs required to estimate the fair value of the Excess MSRs held by the entities and include expectations of prepayment rates, delinquency rates, recapture rates, the excess mortgage servicing amount of the underlying mortgage loans, and discount rates that market participants would use in determining the fair values of mortgage servicing rights on similar pools of residential mortgage loans. In addition, in valuing the Excess MSRs, management considered the likelihood of Nationstar being removed as servicer, which likelihood is considered to be remote. Refer to the Investments in Excess MSRs Valuation section above for further details. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
New Residential’s investments in equity method investees measured at fair value on a recurring basis using Level 3 inputs changed during the year ended December 31, 2013 as follows: | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Balance as of December 31, 2012 | $ | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Contributions to equity method investees | 358,864 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Distributions of earnings from equity method investees | (33,189 | ) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Distributions of capital from equity method investees | (23,252 | ) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Change in fair value of investments in equity method investees | 50,343 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Balance as of December 31, 2013 | $ | 352,766 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Investments in Servicer Advances Valuation | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
On December 17, 2013, New Residential initially recorded its investment in servicer advances, including the basic fee component of the related MSR, at the purchase price paid, which New Residential’s management believes reflects the value a market participant would attribute to the investment at the time of purchase and approximates the fair value of the investment as of December 31, 2013. New Residential categorizes its investment under Level 3 of the GAAP hierarchy. Management uses internal pricing models to estimate the future cash flows related to the servicer advance investments that incorporate significant unobservable inputs and include assumptions that are inherently subjective and imprecise. Management’s estimations of future cash flows include the combined cash flows of all of the components that comprise the servicer advance investments: existing advances, the requirement to purchase future advances, the recovery of advances and the right to the basic fee component of the related MSR. The factors that most significantly impact the fair value include (i) the rate at which the servicer advance balance changes over the term of the investment, (ii) the UPB of the underlying loans with respect to which New Residential has the obligation to make advances and owns the basic fee component of the related MSR which, in turn, is driven by prepayment speeds and (iii) the percentage of delinquent loans with respect to which New Residential owns the basic fee component of the related MSR. The valuation technique is based on discounted cash flows. Significant inputs used in the valuations included the assumptions used to establish the aforementioned cash flows and discount rates that market participants would use in determining the fair values of servicer advances. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
In order to evaluate the reasonableness of its fair value determinations, management engages an independent valuation firm to separately measure the fair value of its investment in servicer advances. The independent valuation firm determines an estimated fair value range based on its own models and issues a “fairness opinion” with this range. Management compares the range included in the opinion to the value generated by its internal models. For servicer advances acquired during the current quarter, the fairness opinion relates to the valuation at the time of acquisition. To date, New Residential has not made any significant valuation adjustments as a result of these fairness opinions. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
For servicer advances acquired during the current quarter, New Residential revalues the servicer advances at the quarter end date if a payment is received between the acquisition date and the end of the quarter. Otherwise, servicer advances acquired during the current quarter are carried at their amortized cost basis if there has been no change in assumptions since acquisition. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
In valuing the servicer advances, management considered the likelihood of Nationstar being removed as the servicer, which likelihood is considered to be remote. Fair value measurements of the servicer advances are sensitive to changes in the assumptions or methodology used to determine fair value, and such changes could result in a significant increase or decrease in the fair value. Significant increases (decreases) in the advance balance-to-UPB ratio, prepayment speed, delinquency rate, or discount rate, in isolation, would result in a significantly lower (higher) fair value measurement. Generally, a change in the delinquency rate assumption is accompanied by a directionally similar change in the assumption used for the advance balance-to-UPB ratio, but also a directionally opposite change in the prepayment rate. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
The following table summarizes certain information regarding the inputs used in valuing the servicer advances as of December 31, 2013: | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Significant Inputs | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Weighted Average | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Outstanding | Prepayment | Delinquency | Mortgage | Discount | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Servicer Advances | Speed | Servicing | Rate | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
to UPB of Underlying | Amount | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Residential Mortgage | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Loans | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Servicer advances | 2.70% | 13.30% | 20.00% | 21.2 bps | 4.40% | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
All of the assumptions listed have some degree of market observability, based on New Residential’s knowledge of the market, relationships with market participants, and use of common market data sources. The prepayment speed, the delinquency rate and the advance-to-UPB ratio projections are in the form of “curves” or “vectors” that vary over the expected life of the underlying mortgages and related servicer advances. New Residential uses assumptions that generate its best estimate of future cash flows for each investment in servicer advances, including the basic fee component of the related MSR. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
When valuing servicer advances, New Residential uses the following criteria to determine the significant inputs: | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
• | Servicer advance balance: Servicer advance balance projections are in the form of a “vector” that varies over the expected life of the residential mortgage loan pool. The servicer advance balance projection is based on assumptions that reflect factors such as the borrower’s expected delinquency status, the rate at which delinquent borrowers reperform or become current again, servicer modification offer and acceptance rates, liquidation timelines and the servicers’ stop advance and clawback policies. | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
• | Prepayment Speed: Prepayment speed projections are in the form of a “vector” that varies over the expected life of the pool. The prepayment vector specifies the percentage of the collateral balance that is expected to prepay voluntarily (i.e., pay off) and involuntarily (i.e., default) at each point in the future. The prepayment vector is based on assumptions that reflect macroeconomic conditions and factors such as the borrower’s FICO score, loan-to-value ratio, debt-to-income ratio, and vintage on a loan level basis. Management considers collateral-specific prepayment experience when determining this vector. | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
• | Delinquency Rates: For existing mortgage pools, delinquency rates are based on the recent pool-specific experience of loans that missed recent mortgage payment(s) as well as loan- and borrower-specific characteristics such as the borrower’s FICO score, the loan-to-value ratio, debt-to-income ratio, occupancy status, loan documentation, payment history and previous loan modifications. Management believes the time period utilized provides a reasonable sample for projecting future delinquency rates while taking into account current market conditions. | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
• | Mortgage Servicing Amount: Mortgage servicing amounts are contractually determined on a pool-by-pool basis. Management projects the weighted average mortgage servicing amount based on its projections for prepayment speeds. | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
• | Discount Rate: The discount rates used by New Residential are derived from market data on pricing of mortgage servicing rights backed by similar collateral and the advances made thereon. | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Servicer advances measured at fair value on a recurring basis using Level 3 inputs changed during the year ended December 31, 2013 as follows: | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Balance as of December 31, 2012 | $ | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Transfers (A) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Transfers from Level 3 | — | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Transfers to Level 3 | — | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Gains (losses) included in net income | — | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Interest income | 4,421 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Purchases, sales and repayments | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Purchases | 2,764,524 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Purchase adjustments | — | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Proceeds from sales | — | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Proceeds from repayments | (103,394 | ) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Balance as of December 31, 2013 | $ | 2,665,551 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
(A) | Transfers are assumed to occur at the beginning of the respective period. | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Real Estate Securities Valuation | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
As of December 31, 2013, New Residential’s securities valuation methodology and results are further detailed as follows: | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Asset Type | Outstanding | Amortized | Multiple | Total | Level | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Face Amount | Cost Basis | Quotes (A) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Agency ARM RMBS | $ | 1,314,130 | $ | 1,403,215 | $ | 1,402,764 | $ | 1,402,764 | 2 | |||||||||||||||||||||||||||||||||||||||||||||||||||||
Non-Agency RMBS | 872,866 | 566,760 | 570,425 | 570,425 | 3 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Total | $ | 2,186,996 | $ | 1,969,975 | $ | 1,973,189 | $ | 1,973,189 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
(A) | Management generally obtained pricing service quotations or broker quotations from two sources, one of which was generally the seller (the party that sold New Residential the security) for Non-Agency RMBS. Management selected one of the quotes received as being most representative of the fair value and did not use an average of the quotes. Even if New Residential receives two or more quotes on a particular security that come from non-selling brokers or pricing services, it does not use an average because management believes using an actual quote more closely represents a transactable price for the security than an average level. Furthermore, in some cases there is a wide disparity between the quotes New Residential receives. Management believes using an average of the quotes in these cases would not represent the fair value of the asset. Based on New Residential’s own fair value analysis, management selects one of the quotes which is believed to more accurately reflect fair value. New Residential never adjusts quotes received. These quotations are generally received via email and contain disclaimers which state that they are “indicative” and not “actionable” — meaning that the party giving the quotation is not bound to actually purchase the security at the quoted price. | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair value measurements categorized within Level 3 are sensitive to changes in the assumptions or methodology used to determine fair value, and such changes could result in a significant increase or decrease in the fair value. For New Residential’s investments in real estate securities categorized within Level 3 of the fair value hierarchy, the significant unobservable inputs include the discount rates, assumptions related to prepayments, default rates and loss severities. Significant increases (decreases) in any of the discount rates, default rates or loss severities in isolation would result in a significantly lower (higher) fair value measurement. The impact of changes in prepayment speeds would have differing impacts on fair value, depending on the seniority of the investment. Generally, a change in the default assumption is accompanied by directionally similar changes in the assumptions used for the loss severity and the prepayment speed. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair value estimates of New Residential’s Non-Agency RMBS were based on third party indications as of December 31, 2013 and classified as Level 3. Securities measured at fair value on a recurring basis using Level 3 inputs changed during the year ended December 31, 2013 as follows: | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Level 3 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Non-Agency | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
RMBS | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Balance as of December 31, 2012 | $ | 289,756 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Transfer (A) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Transfers from Level 3 | — | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Transfers into Level 3 | — | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Total gains (losses) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Included in net income as impairment | (978 | ) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Gain on settlement of securities | 52,657 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Included in comprehensive income (B) | (11,604 | ) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Amortization included in interest income | 20,556 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Purchases, sales and repayments | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Purchases/contributions from Newcastle | 825,871 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Sales | (521,865 | ) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Proceeds from repayments | (83,968 | ) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Balance as of December 31, 2013 | $ | 570,425 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
(A) | Transfers are assumed to occur at the beginning of the respective period. | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
(B) | These gains (losses) were included in net unrealized gain (loss) on securities in the Consolidated Statements of Comprehensive Income. | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Residential Mortgage Loans for Which Fair Value is Only Disclosed | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
As of December 31, 2013, loans which New Residential has the intent and ability to hold into the foreseeable future are classified as held-for-investment. Loans held-for-investment are carried at the aggregate unpaid principal balance adjusted for any unamortized premium or discount, deferred fees or expenses, an allowance for loan losses, charge-offs and write-downs for impaired loans. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
The fair values of New Residential’s reverse mortgage loans held-for-investment were estimated based on a discounted cash flow analysis using internal pricing models. The significant inputs to these models include discount rates and the timing and amount of expected cash flows that management believes market participants would use in determining the fair values on similar pools of reverse mortgage loans. New Residential’s loans held-for-investment are categorized within Level 3 of the fair value hierarchy. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Significant Inputs | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Loan Type | Outstanding | Carrying | Fair | Valuation | Discount | Weighted | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Face | Value | Value | Allowance/ | Rate | Average | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Amount (A) | (A) | (Reversal) | Life | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
In Current | (Years) (B) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Year | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Reverse Mortgage Loans | $ | 57,552 | $ | 33,539 | $ | 33,539 | $ | 461 | 10.3 | % | 3.7 | |||||||||||||||||||||||||||||||||||||||||||||||||||
(A) | Represents a 70% interest New Residential holds in the reverse mortgage loans. | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
(B) | The weighted average life is based on the expected timing of the receipt of cash flows. | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Derivative Valuation | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
New Residential financed certain investments with the same counterparty from which it purchased those investments, and accounts for the contemporaneous purchase of the investments and the associated financings as linked transactions (Note 10). The linked transactions are valued on a net basis considering their underlying components, the investment value and the related repurchase financing agreement value, generally determined consistently with the relevant instruments as described in this note. The linked transactions, which are categorized as Level 3 and recorded as a non-hedge derivative instrument on a net basis, changed during the year ended December 31, 2013 as follows: | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Balance as of December 31, 2012 | $ | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Transfers (A) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Transfers from Level 3 | — | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Transfers into Level 3 | — | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Gains (losses) included in net income (B) | 1,820 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Purchases, sales and repayments | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Purchases | 34,106 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Sales | — | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Balance as of December 31, 2013 | $ | 35,926 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
(A) | Transfers are assumed to occur at the beginning of the respective period. | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
(B) | The gains (losses) recorded in earnings during the period are attributable to the change in unrealized gains (losses) relating to Level 3 assets still held at the reporting dates. These gains (losses) represent the change in fair value of the non-hedge derivative instruments and are recorded in “Other Income” in the Consolidated Statements of Income. | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Liabilities for Which Fair Value is Only Disclosed | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Repurchase agreements and notes payable are not measured at fair value in the statement of position; however, management believes that their carrying value approximates fair value, primarily resulting from the short duration of related borrowings. Repurchase agreements and notes payable are considered to be Level 2 and Level 3 in the valuation hierarchy, respectively, with significant valuation variables including the amount and timing of expected cash flows, interest rates and collateral funding spreads. |
EQUITY_AND_EARNINGS_PER_SHARE
EQUITY AND EARNINGS PER SHARE | 12 Months Ended | ||||||||||||||||||||||||
Dec. 31, 2013 | |||||||||||||||||||||||||
Equity And Earnings Per Share | ' | ||||||||||||||||||||||||
EQUITY AND EARNINGS PER SHARE | ' | ||||||||||||||||||||||||
13. EQUITY AND EARNINGS PER SHARE | |||||||||||||||||||||||||
Equity and Dividends | |||||||||||||||||||||||||
On April 26, 2013, Newcastle announced that its board of directors had formally declared the distribution of shares of common stock of New Residential, a then wholly owned subsidiary of Newcastle. Following the spin-off, New Residential is an independent, publicly-traded REIT primarily focused on investing in residential mortgage related assets. The spin-off was completed on May 15, 2013 and New Residential began trading on the New York Stock Exchange under the symbol “NRZ.” The spin-off transaction was effected as a taxable pro rata distribution by Newcastle of all the outstanding shares of common stock of New Residential to the stockholders of record of Newcastle as of May 6, 2013. The stockholders of Newcastle as of the record date received one share of New Residential common stock for each share of Newcastle common stock held. | |||||||||||||||||||||||||
On April 29, 2013, New Residential’s certificate of incorporation was amended so that its authorized capital stock now consists of 2,000,000,000 shares of common stock, par value $0.01 per share, and 100,000,000 shares of preferred stock, par value $0.01 per share. At the time of the completion of the spin-off, there were 253,025,645 outstanding shares of common stock which was based on the number of Newcastle’s shares of common stock outstanding on May 6, 2013 and a distribution ratio of one share of New Residential common stock for each share of Newcastle common stock. | |||||||||||||||||||||||||
On June 3, 2013, New Residential declared a quarterly dividend of $0.07 per common share, or $17.7 million, for the quarter ended June 30, 2013, based on earnings for the period May 16, 2013 to June 30, 2013, which was paid in July 2013. On September 17, 2013, New Residential declared a quarterly dividend of $0.175 per common share, or $44.3 million, for the quarter ended on September 30, 2013, which was paid in October 2013. On December 17, 2013, New Residential declared a quarterly dividend of $0.175 per common share and a special cash dividend of $0.075 per common share, totaling $63.3 million, for the quarter ended December 31, 2013. The combined dividend of $0.25 was paid on January 31, 2014. | |||||||||||||||||||||||||
Approximately 5,314,416 shares of New Residential’s common stock were held by Fortress, through its affiliates, and its principals as of December 31, 2013. | |||||||||||||||||||||||||
See Note 18 for a discussion of a dividend declared by New Residential’s board of directors subsequent to December 31, 2013. | |||||||||||||||||||||||||
Option Plan | |||||||||||||||||||||||||
Effective upon the spin-off, New Residential has a Nonqualified Stock Option and Incentive Award Plan (the “Plan”) which provides for the grant of equity-based awards, including restricted stock, stock options, stock appreciation rights, performance awards, tandem awards and other equity-based and non-equity based awards, in each case to the Manager, and to the directors, officers, employees, service providers, consultants and advisor of the Manager who perform services for New Residential, and to New Residential’s directors, officers, service providers, consultants and advisors. New Residential has initially reserved 30,000,000 shares of its common stock for issuance under the Plan; on the first day of each fiscal year beginning during the ten-year term of the Plan in and after calendar year 2014, that number will be increased by a number of shares of New Residential’s common stock equal to 10% of the number of shares of common stock newly issued by New Residential during the immediately preceding fiscal year (and, in the case of fiscal year 2013, after the effective date of the Plan). No adjustment was made on January 1, 2014. New Residential’s board of directors may also determine to issue options to the Manager that are not subject to the Plan, provided that the number of shares underlying any options granted to the Manager in connection with capital raising efforts would not exceed 10% of the shares sold in such offering and would be subject to NYSE rules. Upon exercise, all options will be settled in an amount of cash equal to the excess of the fair market value of a share of common stock on the date of exercise over the strike price per share unless advance approval is made to settle the option in shares of common stock. | |||||||||||||||||||||||||
Prior to the spin-off, Newcastle had issued options to the Manager in connection with capital raising activities. In connection with the spin-off, 21.5 million options that were held by the Manager, or by the directors, officers or employees of the Manager, were converted into an adjusted Newcastle option and a new New Residential option. The exercise price of each adjusted Newcastle option and New Residential option was set to collectively maintain the intrinsic value of the Newcastle option immediately prior to the spin-off and to maintain the ratio of the exercise price of the adjusted Newcastle option and the New Residential option, respectively, to the fair market value of the underlying shares as of the spin-off date, in each case based on the five day average closing price subsequent to the spin-off date. | |||||||||||||||||||||||||
Upon joining the board, non-employee directors were, in accordance with the Plan, granted options relating to an aggregate of 8,000 shares of common stock. The fair value of such options was not material at the date of grant. | |||||||||||||||||||||||||
As a result of a resignation, a former employee of the Manager exercised 307,833 options with a weighted average exercise price of $3.08 on September 3, 2013. Upon exercise, 160,634 shares of common stock of New Residential were issued, reflecting the $1.0 million aggregate intrinsic value of the exercisable options. In addition, 192,167 unvested options and 2,170 vested options were forfeited by the employee and transferred back to the Manager. | |||||||||||||||||||||||||
As of December 31, 2013, New Residential’s outstanding options were summarized as follows: | |||||||||||||||||||||||||
December 31, 2013 | December 31, 2012 | ||||||||||||||||||||||||
Issued Prior to | Issued in 2011- | Total | Issued Prior to | Issued in 2011 | Total | ||||||||||||||||||||
2011 | 2013 | 2011 | and 2012 | ||||||||||||||||||||||
Held by the Manager | 1,496,555 | 16,176,333 | 17,672,888 | 1,751,172 | 7,934,166 | 9,685,338 | |||||||||||||||||||
Issued to the Manager and | 535,570 | 2,510,000 | 3,045,570 | 701,937 | 2,860,000 | 3,561,937 | |||||||||||||||||||
subsequently transferred to | |||||||||||||||||||||||||
certain of the Manager’s employees | |||||||||||||||||||||||||
Issued to the independent directors | 2,000 | 10,000 | 12,000 | 2,000 | 2,000 | 4,000 | |||||||||||||||||||
Total | 2,034,125 | 18,696,333 | 20,730,458 | 2,455,109 | 10,796,166 | 13,251,275 | |||||||||||||||||||
The following table summarizes New Residential’s outstanding options as of December 31, 2013. The last sales price on the New York Stock Exchange for New Residential’s common stock in the year ended December 31, 2013 was $6.68 per share. | |||||||||||||||||||||||||
Recipient | Date of | Number of | Options | Weighted | Intrinsic | ||||||||||||||||||||
Grant/ | Options | Exercisable | Average | Value as of | |||||||||||||||||||||
Exercise (A) | as of | Exercise | December 31, | ||||||||||||||||||||||
December 31, | Price (B) | 2013 | |||||||||||||||||||||||
2013 | (millions) | ||||||||||||||||||||||||
Directors | Various | 12,000 | 12,000 | $ | 7.76 | — | |||||||||||||||||||
Manager (C) | 2003 - 2007 | 2,453,109 | 2,032,125 | $ | 15.28 | — | |||||||||||||||||||
Manager (C) | 11-Mar | 1,676,833 | 1,580,166 | $ | 3.29 | $ | 5.4 | ||||||||||||||||||
Manager (C) | 11-Sep | 2,539,833 | 2,170,850 | $ | 2.49 | $ | 9.1 | ||||||||||||||||||
Manager (C) | 12-Apr | 1,897,500 | 1,244,778 | $ | 3.41 | $ | 4.1 | ||||||||||||||||||
Manager (C) | 12-May | 2,300,000 | 1,421,667 | $ | 3.67 | $ | 4.3 | ||||||||||||||||||
Manager (C) | 12-Jul | 2,530,000 | 1,416,195 | $ | 3.67 | $ | 4.3 | ||||||||||||||||||
Manager (C) | 13-Jan | 5,750,000 | 2,108,333 | $ | 5.12 | $ | 3.3 | ||||||||||||||||||
Manager (C) | 13-Feb | 2,300,000 | 766,667 | $ | 5.74 | $ | 0.7 | ||||||||||||||||||
Exercised (D) | 2013 | (307,833 | ) | N/A | $ | 3.08 | N/A | ||||||||||||||||||
Expired unexercised | 2003 | (420,984 | ) | N/A | N/A | N/A | |||||||||||||||||||
Outstanding | 20,730,458 | 12,752,781 | |||||||||||||||||||||||
(A) | Options expire on the tenth anniversary from date of grant. | ||||||||||||||||||||||||
(B) | The strike prices are subject to adjustment in connection with return of capital dividends. | ||||||||||||||||||||||||
(C) | The Manager assigned certain of its options to Fortress’s employees as follows: | ||||||||||||||||||||||||
Date of Grant | Range of Strike | Total Unexercised | |||||||||||||||||||||||
Prices | Inception to Date | ||||||||||||||||||||||||
2004 - 2007 | $13.86 - $16.95 | 535,570 | |||||||||||||||||||||||
2011 | $2.49 - $3.29 | 1,210,000 | |||||||||||||||||||||||
2012 | $3.41 - $3.67 | 1,300,000 | |||||||||||||||||||||||
Total | 3,045,570 | ||||||||||||||||||||||||
(D) | Exercised by employees of Fortress subsequent to their assignment. The options exercised had an intrinsic value of $1.0 million. | ||||||||||||||||||||||||
Income and Earnings Per Share | |||||||||||||||||||||||||
Net income earned prior to the spin-off is included in additional paid-in capital instead of retained earnings since the accumulation of retained earnings began as of the date of spin-off from Newcastle. | |||||||||||||||||||||||||
New Residential is required to present both basic and diluted earnings per share (“EPS”). Basic EPS is calculated by dividing net income by the weighted average number of shares of common stock outstanding. Diluted EPS is computed by dividing net income by the weighted average number of shares of common stock outstanding plus the additional dilutive effect, if any, of common stock equivalents during each period. New Residential’s common stock equivalents are its outstanding stock options. During the year ended December 31, 2013, based on the treasury stock method, New Residential had 4,290,207 dilutive common stock equivalents. | |||||||||||||||||||||||||
For the purposes of computing EPS for periods prior to the spin-off on May 15, 2013, New Residential treated the common shares issued in connection with the spin-off as if they had been outstanding for all periods presented, similar to a stock split. For the purposes of computing diluted EPS for periods prior to the spin-off on May 15, 2013, New Residential treated the 21.5 million options issued on the spin-off date as a result of the conversion of Newcastle options as if they were granted on May 15, 2013 since no New Residential awards were outstanding prior to that date. | |||||||||||||||||||||||||
Noncontrolling Interests | |||||||||||||||||||||||||
Noncontrolling interests is comprised of the interests held by third parties in consolidated entities that hold New Residential’s investment in servicer advances (Note 6). |
COMMITMENTS_AND_CONTINGENCIES
COMMITMENTS AND CONTINGENCIES | 12 Months Ended | |
Dec. 31, 2013 | Dec. 31, 2012 | |
Commitments and Contingencies Disclosure [Abstract] | ' | ' |
COMMITMENTS AND CONTINGENCIES | ' | ' |
14. COMMITMENTS AND CONTINGENCIES | 8. COMMITMENTS AND CONTINGENCIES | |
Litigation — New Residential may, from time to time, be a defendant in legal actions from transactions conducted in the ordinary course of business. As of December 31, 2013, New Residential is not subject to any material litigation, individually or in the aggregate, nor, to management’s knowledge, is any material litigation currently threatened against New Residential. | Litigation—New Residential may, from time to time, be a defendant in legal actions from transactions conducted in the ordinary course of business. As of December 31, 2012 and 2011, New Residential is not subject to any material litigation, individually or in the aggregate, nor, to management’s knowledge, is any material litigation currently threatened against New Residential. | |
Indemnifications — In the normal course of business, New Residential and its subsidiaries enter into contracts that contain a variety of representations and warranties and that provide general indemnifications. New Residential’s maximum exposure under these arrangements is unknown as this would involve future claims that may be made against New Residential that have not yet occurred. However, based on Newcastle’s and its own experience, New Residential expects the risk of material loss to be remote. | Capital Commitment to a Joint Venture—As of December 31, 2012, New Residential had a capital commitment of $27.3 million related to a 50% investment in a joint venture in connection with the acquisition of Excess MSRs on a portfolio of Ginnie Mae residential mortgage loans, see Note 11. | |
Capital Commitments — As of December 31, 2013, New Residential had outstanding capital commitments related to the acquisition of investments in the following investment types (also refer to Note 18 for additional capital commitments entered into subsequent to December 31, 2013): | ||
Excess MSRs — As of December 31, 2013, New Residential had outstanding capital commitments of $52.9 million related to the acquisition of five pools (Pools 13-17) of Excess MSRs on portfolios comprised of Fannie Mae, Freddie Mac and private label securitizations (“PLS”) residential mortgage loans. In January 2014, New Residential invested approximately $19.1 million in Excess MSRs on a portfolio of PLS residential mortgage loans with an UPB of approximately $8.1 billion (Pool 17). Additionally, through co-investments made by subsidiaries of New Residential, New Residential has separately purchased the servicer advances, including the right to receive the basic fee component of related MSRs on Pool 17. | ||
Servicer Advances — In December 2013, New Residential and third-party co-investors agreed to purchase, though Advance Purchaser LLC, future servicer advances related to the Non-Agency mortgage loans with an aggregate UPB of approximately $54.6 billion underlying New Residential’s first investment in servicer advances, including the basic fee component of the related MSRs. The actual amount of future advances purchased will be based on: (a) the credit and prepayment performance of the underlying loans, (b) the amount of advances recoverable prior to liquidation of the related collateral and (c) the percentage of the loans with respect to which no additional advance obligations are made. The actual amount of future advances is subject to significant uncertainty. | ||
Debt Covenants — New Residential’s debt obligations contain various customary loan covenants (Note 11). | ||
Certain Tax-Related Covenants — If New Residential is treated as a successor to Newcastle under applicable U.S. federal income tax rules, and if Newcastle fails to qualify as a REIT, New Residential could be prohibited from electing to be a REIT. Accordingly, Newcastle has (i) represented that it has no knowledge of any fact or circumstance that would cause New Residential to fail to qualify as a REIT, (ii) covenanted to use commercially reasonable efforts to cooperate with New Residential as necessary to enable New Residential to qualify for taxation as a REIT and receive customary legal opinions concerning REIT status, including providing information and representations to New Residential and its tax counsel with respect to the composition of Newcastle’s income and assets, the composition of its stockholders, and its operation as a REIT; and (iii) covenanted to use its reasonable best efforts to maintain its REIT status for each of Newcastle’s taxable years ending on or before December 31, 2014 (unless Newcastle obtains an opinion from a nationally recognized tax counsel or a private letter ruling from the IRS to the effect that Newcastle’s failure to maintain its REIT status will not cause New Residential to fail to qualify as a REIT under the successor REIT rule referred to above). Additionally, New Residential covenanted to use its reasonable best efforts to qualify for taxation as a REIT for its taxable year ended December 31, 2013. |
TRANSACTIONS_WITH_AFFILIATES_A
TRANSACTIONS WITH AFFILIATES AND AFFILIATED ENTITIES | 12 Months Ended | |||||||||||||||||
Dec. 31, 2013 | Dec. 31, 2012 | |||||||||||||||||
Transactions With Affiliates And Affiliated Entities | ' | ' | ||||||||||||||||
TRANSACTIONS WITH AFFILIATES AND AFFILIATED ENTITIES | ' | ' | ||||||||||||||||
15. TRANSACTIONS WITH AFFILIATES AND AFFILIATED ENTITIES | 9. TRANSACTIONS WITH AFFILIATES AND AFFILIATED ENTITIES | |||||||||||||||||
New Residential is party to a Management Agreement with its Manager which provides for automatically renewing one-year terms subject to certain termination rights. The Manager’s performance is reviewed annually and the Management Agreement may be terminated by New Residential by payment of a termination fee, as defined in the Management Agreement, equal to the amount of management fees earned by the Manager during the twelve consecutive calendar months immediately preceding the termination, upon the affirmative vote of at least two-thirds of the independent directors, or by a majority vote of the holders of common stock. Pursuant to the Management Agreement, the Manager, under the supervision of New Residential’s board of directors, formulates investment strategies, arranges for the acquisition of assets and associated financing, monitors the performance of New Residential’s assets and provides certain advisory, administrative and managerial services in connection with the operations of New Residential. | New Residential intends to enter into a Management Agreement with the Manager, an affiliate of Fortress. Pursuant to the Management Agreement, the Manager, under the supervision of New Residential’s board of directors, will formulate investment strategies, will arrange for the acquisition of assets and the associated financing, will monitor the performance of New Residential’s assets and will provide certain advisory, administrative and managerial services in connection with the operations of New Residential. For performing these services, the Manager is expected to receive from New Residential a management fee and incentive compensation, as defined in the Management Agreement. In addition to the management fee and incentive compensation, New Residential is also expected to be responsible for reimbursing the Manager for certain expenses paid by the Manager on behalf of New Residential. | |||||||||||||||||
Effective May 15, 2013, the Manager is entitled to receive a management fee in an amount equal to 1.5% per annum of New Residential’s gross equity calculated and payable monthly in arrears in cash. Gross equity is generally the equity transferred by Newcastle on the distribution date, plus total net proceeds from stock offerings, plus certain capital contributions to subsidiaries, less capital distributions and repurchases of common stock. | Prior to entering into a Management Agreement with FIG LLC, management fees are allocated by and due to Newcastle based on the equity used in funding the acquisition of Excess MSRs and real estate securities. The management fees are equal to 1.5% of the gross equity, as defined in the Management Agreement between Newcastle and FIG LLC. | |||||||||||||||||
In addition, effective May 15, 2013, the Manager is entitled to receive annual incentive compensation in an amount equal to the product of (A) 25% of the dollar amount by which (1) (a) New Residential’s Funds from Operations before the incentive compensation per share of common stock, excluding Funds from Operations from investments in equity method investees that are invested in consumer loans as of the date hereof (the Consumer Loan Companies) and any unrealized gains or losses from mark-to-market valuation changes on Excess MSRs and on equity method investees invested in Excess MSRs, per REIT Share (as defined in the Management Agreement, based on the weighted average number of REIT Shares outstanding), plus (b) earnings (or losses) from the Consumer Loan Companies computed on a level-yield basis (such that the loans are treated as if they qualified as loans acquired with a discount for credit quality as set forth in ASC 310-30, as such codification was in effect on June 30, 2013) as if the Consumer Loan Companies had been acquired at their GAAP basis on May 15, 2013, earnings (or losses) from equity method investees invested in Excess MSRs as if such equity method investees had not made a fair value election, and gains (or losses) from debt restructuring and gains (or losses) from sales of property and other assets per share of common stock, exceed (2) an amount equal to (a) the weighted average of the book value per share of the equity transferred by Newcastle on the date of the spin-off and the prices per share of New Residential’s common stock in any offerings (adjusted for prior capital dividends or capital distributions) multiplied by (b) a simple interest rate of 10% per annum, multiplied by (B) the weighted average number of shares of common stock outstanding. “Funds from Operations” means net income (computed in accordance with GAAP), excluding gains (or losses) from debt restructuring and gains (or losses) from sales of property, plus depreciation on real estate assets, and after adjustments for unconsolidated partnerships and joint ventures. Funds from operations will be computed on an unconsolidated basis. The computation of funds from operations may be adjusted at the direction of New Residential’s independent directors based on changes in, or certain applications of, GAAP. Funds from operations is determined from the date of the spin-off and without regard to Newcastle’s prior performance. | Due to Newcastle is comprised of the following amounts due to Newcastle as of December 31, 2012 and 2011: | |||||||||||||||||
In addition to the management fee and incentive compensation, New Residential is responsible for reimbursing the Manager for certain expenses paid by the Manager on behalf of New Residential. | ||||||||||||||||||
Due to affiliate is comprised of the following amounts: | December 31, | December 31, | ||||||||||||||||
2012 | 2011 | |||||||||||||||||
Management fees payable to Newcastle | $ | 3,392 | $ | 39 | ||||||||||||||
December 31, | Reimbursable expenses payable to Newcastle | 1,744 | 119 | |||||||||||||||
2013 | 2012 | |||||||||||||||||
Management fees | $ | 1,495 | $ | 3,392 | $ | 5,136 | $ | 158 | ||||||||||
Incentive compensation | 16,847 | — | ||||||||||||||||
Expense reimbursements and other | 827 | — | ||||||||||||||||
Purchase price payable | — | 1,744 | See Notes 1, 4 and 11 for a discussion of transactions with Nationstar. As of December 31, 2012, New Residential held on its balance sheet a total face amount of $433.5 million of Non-Agency RMBS serviced by Nationstar. The total UPB of the loans underlying these Nationstar serviced Non-Agency RMBS was approximately $5.7 billion as of December 31, 2012. | |||||||||||||||
Total | $ | 19,169 | $ | 5,136 | ||||||||||||||
Affiliate expenses and fees were comprised of: | ||||||||||||||||||
Year Ended December 31, | ||||||||||||||||||
2013 | 2012 | |||||||||||||||||
Management fees | $ | 15,343 | $ | 3,353 | ||||||||||||||
Incentive compensation | 16,847 | — | ||||||||||||||||
Expense reimbursements(A) | 500 | — | ||||||||||||||||
Total | $ | 32,690 | $ | 3,353 | ||||||||||||||
(A) | Included in General and Administrative Expenses in the Consolidated Statements of Income. | |||||||||||||||||
On June 27, 2013, New Residential purchased Agency ARM RMBS with an aggregate face amount of approximately $22.7 million from Newcastle for approximately $1.2 million, net of related financing. New Residential purchased the securities on the same terms as they were purchased by Newcastle and paid the $1.2 million to Newcastle during the third quarter of 2013. | ||||||||||||||||||
See Notes 2, 4, 5, 6, 7, 8, 11, 14 and 18 for a discussion of transactions with Nationstar. As of December 31, 2013, a total face amount of $848.6 million of New Residential’s Non-Agency portfolio was serviced by Nationstar. The total UPB of the loans underlying these Nationstar serviced Non-Agency RMBS was approximately $17.1 billion as of December 31, 2013. | ||||||||||||||||||
See Notes 9 and 18 for a discussion of a transaction with Springleaf. |
RECLASSIFICATION_FROM_ACCUMULA
RECLASSIFICATION FROM ACCUMULATED OTHER COMPREHENSIVE INCOME INTO NET INCOME | 12 Months Ended | ||||||||||||||
Dec. 31, 2013 | |||||||||||||||
Reclassification From Accumulated Other Comprehensive Income Into Net Income | ' | ||||||||||||||
RECLASSIFICATION FROM ACCUMULATED OTHER COMPREHENSIVE INCOME INTO NET INCOME | ' | ||||||||||||||
16. RECLASSIFICATION FROM ACCUMULATED OTHER COMPREHENSIVE INCOME INTO NET INCOME | |||||||||||||||
The following table summarizes the amounts reclassified out of accumulated other comprehensive income into net income: | |||||||||||||||
Accumulated Other Comprehensive Income | Statement of Income Location | Year Ended December 31, | December 8 | ||||||||||||
Components | through | ||||||||||||||
December 31, | |||||||||||||||
2013 | 2012 | 2011 | |||||||||||||
Reclassification of net realized (gain) loss on securities into earnings | Gain on settlement of securities | $ | (52,657 | ) | $ | — | $ | — | |||||||
Reclassification of net realized (gain) loss on securities into earnings | Other-than-temporary impairment on securities | 4,993 | — | — | |||||||||||
Total reclassifications | $ | (47,664 | ) | $ | — | $ | — | ||||||||
New Residential did not allocate any income tax expense or benefit to any component of other comprehensive income for any period presented as no taxable subsidiary generated other comprehensive income. |
INCOME_TAXES
INCOME TAXES | 12 Months Ended | |||||||||||||||||
Dec. 31, 2013 | Dec. 31, 2012 | |||||||||||||||||
Income Taxes | ' | ' | ||||||||||||||||
INCOME TAXES | ' | ' | ||||||||||||||||
17. INCOME TAXES | 10. INCOME TAXES | |||||||||||||||||
New Residential intends to qualify as a REIT for the tax year ending December 31, 2013. A REIT is generally not subject to U.S. federal corporate income tax on that portion of its income that is distributed to stockholders if it distributes at least 90% of its REIT taxable income to its stockholders by prescribed dates and complies with various other requirements. New Residential was a wholly owned subsidiary of Newcastle until May 15, 2013 and, as a qualified REIT subsidiary, was a disregarded entity until such date. As a result, no provision or liability for U.S. federal or state income taxes has been included in the accompanying consolidated financial statements for the years ended December 31, 2013 or 2012. | New Residential intends to qualify as a REIT for the tax year ending December 31, 2013. A REIT will generally not be subject to U.S. federal corporate income tax on that portion of its income that is distributed to stockholders if it distributes at least 90% of its REIT taxable income to its stockholders by prescribed dates and complies with various other requirements. On December 20, 2012, New Residential Investment LLC was converted to New Residential Investment Corp. New Residential remains a wholly owned subsidiary of Newcastle and, as a qualified REIT subsidiary, continues to be a disregarded entity for the year ended December 31, 2012. As a result, no provision or liability for U.S. federal or state income taxes has been included in the accompanying consolidated financial statements for the periods ended December 31, 2012 or 2011. | |||||||||||||||||
New Residential has made certain investments, particularly its investment in servicer advances (Notes 6 and 18), through TRSs and is subject to regular corporate income taxes on these investments, New Residential and its TRSs will file income tax returns with the U.S. federal government and various state and local jurisdictions for the tax year ending December 31, 2013. Generally, these income tax returns will be subject to tax examinations by tax authorities for a period of three years after the date of filing. | ||||||||||||||||||
Common stock distributions were taxable as follows: | ||||||||||||||||||
Year | Dividends | Ordinary | Long-term | Return | ||||||||||||||
per Share | Income | Capital | of | |||||||||||||||
Gain | Capital | |||||||||||||||||
2013 | $ | 0.495 | $ | 0.445561 | $ | 0.049439 | $ | — |
RECENT_ACTIVITIES
RECENT ACTIVITIES | 12 Months Ended | |
Dec. 31, 2013 | Dec. 31, 2012 | |
Recent Activities | ' | ' |
RECENT ACTIVITIES | ' | ' |
18. RECENT ACTIVITIES | 11. RECENT ACTIVITIES | |
These financial statements include a discussion of material events that have occurred subsequent to December 31, 2013 (referred to as “subsequent events”) through the issuance of these consolidated financial statements. Events subsequent to that date have not been considered in these financial statements. | These financial statements include a discussion of material events that have occurred subsequent to December 31, 2012 (referred to as “subsequent events”) through the issuance of these consolidated financial statements. Events subsequent to that date have not been considered in these financial statements. | |
Subsequent to December 31, 2012, New Residential acquired approximately $391.7 million face amount of Non-Agency RMBS for approximately $242.8 million. These Non-Agency RMBS are serviced by Nationstar. | ||
Excess MSRs | On January 4, 2013, New Residential, through a joint venture, co-invested in Excess MSRs on a portfolio of Ginnie Mae residential mortgage loans with a UPB of approximately $13 billion as of November 30, 2012. | |
On January 17, 2014, New Residential completed an additional closing of Excess MSRs that it agreed to acquire as part of a previously committed transaction between Nationstar and First Tennessee Bank. New Residential invested approximately $19.1 million in Pool 17 on loans with an aggregate UPB of approximately $8.1 billion. New Residential has remaining commitments of approximately $1.5 million to fund additional investments in Pool 17, which have not yet closed and will increase the outstanding principal balance of Pool 17 by an estimated $0.9 billion. | Nationstar acquired the related servicing rights from Bank of America in November 2012. New Residential invested approximately $27.3 million for a 50% interest in a joint venture which will acquire an approximately 67% interest in the Excess MSRs on this portfolio. The remaining interests in the joint venture will be owned by a Fortress-managed fund and the remaining interest of approximately 33% in the Excess MSRs will be owned by Nationstar. As the servicer, Nationstar will perform all servicing and advancing functions, and it will retain the ancillary income, servicing obligations and liabilities associated with this portfolio. Under the terms of this investment, to the extent that any loans in the portfolio are refinanced by Nationstar, the resulting Excess MSRs will be shared on a pro rata basis by the joint venture and Nationstar, subject to certain limitations. | |
New Residential has remaining commitments of $32.3 million to invest in Excess MSRs on a portfolio of GSE residential mortgages comprised of four pools (Pools 13-16) with an aggregate outstanding unpaid principal balance of approximately $13.1 billion that New Residential committed to in 2013. | On January 6, 2013 New Residential, through a joint venture, agreed to co-invest in Excess MSRs on a portfolio of four pools of residential mortgage loans with a UPB of approximately $215 billion as of November 30, 2012. Approximately 53% of the loans in this portfolio are in private label securitizations, and the remainder are owned, insured or guaranteed by the Federal National Mortgage Association, the Federal Home Loan Mortgage Corporation or the Government National Mortgage Association (“Ginnie Mae”). Nationstar has agreed to acquire the related servicing rights from Bank of America. New Residential committed to invest approximately $340 million (based on the November 30, 2012 UPB) for a 50% interest in a joint venture which will acquire an approximately 67% interest in the Excess MSRs on this portfolio. The remaining interests in the joint venture will be owned by a Fortress-managed fund and the remaining interest of approximately 33% in the Excess MSRs will be owned by Nationstar. As the servicer, Nationstar will perform all servicing and advancing functions, and it will retain the ancillary income, servicing obligations and liabilities associated with this portfolio. Under the terms of this investment, to the extent that any loans in the portfolio are refinanced by Nationstar, the resulting Excess MSRs will be shared on a pro rata basis by the joint venture and Nationstar, subject to certain limitations. On January 31, 2013, New Residential completed the first closing of this co-investment. The first closing related to Excess MSRs on loans with an aggregate UPB of approximately $58 billion as of December 31, 2012, that are owned, insured, or guaranteed by Fannie Mae or Freddie Mac. There can be no assurance that New Residential will complete this investment as anticipated or at all. | |
In each transaction (Pools 13-17), New Residential agreed to acquire a one-third interest in Excess MSRs on the portfolio. Fortress-managed funds and Nationstar each agreed to acquire a one-third interest in the Excess MSRs. Nationstar as servicer will perform all servicing and advancing functions, and retain the ancillary income, servicing obligations and liabilities as the servicer of the underlying loans in the portfolio. Commitments related to GSE residential mortgage loans are contingent upon GSE approval of Nationstar to service such loans and transfer Excess MSRs to New Residential. | On January 28, 2013, New Residential extended all of its existing repurchase agreements to April 29, 2013. The repurchase agreements had an outstanding principal balance of approximately $158.0 million on April 3, 2013. | |
Subsequent to December 31, 2013, New Residential paid down $5.9 million of the corporate loan (Note 11) secured by Excess MSRs related to Pool 5 and extended the maturity of the loan to May 31, 2014. | On February 27, 2013, New Residential, through a subsidiary, entered into an agreement to co-invest in residential mortgage loans with a UPB of approximately $83 million as of December 31, 2012. New Residential has invested approximately $35 million to acquire a 70% interest in the mortgage loans. Nationstar has co-invested pari passu with New Residential in 30% of the mortgage loans and will be the servicer of the loans performing all servicing and advancing functions and retaining the ancillary income, servicing obligations and liabilities as the servicer. | |
Servicer Advances | On March 5, 2013, New Residential agreed to co-invest in a portfolio of consumer loans with a UPB of approximately $4.2 billion as of December 31, 2012. The portfolio includes over 400,000 personal unsecured loans and personal homeowner loans originated through subsidiaries of HSBC Finance Corporation. On April 1, 2013, New Residential completed this co-investment through newly formed limited liability companies (collectively, “the consumer loan companies”). The consumer loan companies acquired the portfolio from HSBC Finance Corporation and its affiliates. New Residential invested approximately $250 million for 30% membership interests in each of the consumer loan companies. Of the remaining 70% of the membership interests, Springleaf Finance, Inc. (“Springleaf”), which is majority-owned by Fortress funds managed by our Manager, acquired 47%, and an affiliate of Blackstone Tactical Opportunities Advisors L.L.C. acquired 23%. Springleaf will act as the managing member of the consumer loan companies. The consumer loan companies financed $2.2 billion of the approximately $3.0 billion purchase price with asset-backed notes. The consumer loan companies were formed on March 19, 2013, for the purpose of making this investment and commenced operations upon the completion of the investment. After a servicing transition period, Springleaf will be the servicer of the loans and will provide all servicing and advancing functions for the portfolio. | |
Subsequent to December 31, 2013 and prior to March 17, 2014, Advance Purchaser LLC settled an additional $509.4 million of advances, which represents substantially all of the remaining balance related to New Residential’s first investment in servicer advances through Buyer and funded a total of $2.1 billion of new servicer advances, financed using $1.7 billion of notes payable. Restricted cash increased approximately $9.8 million in relation to these fundings. Additionally, Advance Purchaser LLC received $9.8 million from Nationstar to satisfy a targeted return shortfall. | From March 25, 2013 to April 2, 2013, Newcastle contributed to New Residential approximately $1.0 billion face amount of Agency RMBS. New Residential financed these Agency RMBS with approximately $1.0 billion of repurchase agreements. The counterparties of these repurchase agreements are Goldman Sachs & Co., Barclays Capital Inc., Citigroup Global Markets, Inc., Nomura Securities International, Inc. and Morgan Stanley & Co. LLC. | |
On February 28 and March 7, 2014, Advance Purchaser LLC received $105.0 million and $37.0 million, respectively, from two co-investors to fund the purchase of $756.2 million and $299.1 million, respectively, of additional servicer advances. | ||
In March 2014, Advance Purchaser LLC prepaid all of the notes issued pursuant to one servicer advance facility and a portion of the notes issued pursuant to another servicer advance facility. The notes were prepaid with the proceeds of new notes issued pursuant to an advance receivables trust (the “NRART Master Trust”) that issued (i) variable funding notes (“VFNs”) with borrowing capacity of up to $1.1 billion and (ii) $1.0 billion of term notes (“Term Notes”) to institutional investors. The VFNs generally bear interest at a rate equal to the sum of (i) LIBOR or a cost of funds rate plus (ii) a spread of 1.375% to 2.5% depending on the class of the notes. The expected repayment date of the VFNs is March 2015. The Term Notes generally bear interest at approximately 1.9% and have expected repayment dates in March 2015 and March 2017. The VFNs and the Term Notes are secured by servicer advances, and the financing is nonrecourse to Advance Purchaser LLC, except for customary recourse provisions. As of March 18, 2014, the principal balance of notes issued by the NRART Master Trust is equal to approximately $1.9 billion. | ||
Real Estate Securities | ||
Subsequent to December 31, 2013, New Residential acquired no new Agency ARM RMBS. New Residential sold Agency ARM RMBS with a face amount of $154.2 million for $162.9 million and recorded a gain of $0.7 million. Furthermore, New Residential acquired Non-Agency RMBS with an aggregate face amount of approximately $740.6 million financed with repurchase agreements. New Residential sold Non-Agency RMBS with a face amount of $437.9 million for $248.5 million and recorded a gain of $3.8 million. | ||
As of March 25, 2014, New Residential held TBA positions with $625.0 million in a long notional amount of Agency RMBS and $750.0 million in short notional amount of Agency RMBS, and any amounts or obligations owed by or to New Residential are subject to the right of set-off with the TBA counterparty. | ||
As of March 25, 2014, New Residential held a $300.0 million short position of 3-Year U.S. Treasury notes. | ||
On March 6, 2014, New Residential and Merrill Lynch, Pierce, Fenner & Smith Incorporated entered into an agreement pursuant to which New Residential agreed to purchase approximately $625 million current face amount of Non-Agency residential mortgage securities for approximately $553 million. The purchased securities represent 75% of the mezzanine and subordinate tranches of a securitization previously sponsored by Springleaf. The securitization, including the purchased securities, are collateralized by residential mortgage loans with a current face amount of approximately $0.9 billion. | ||
Real Estate Loans | ||
On January 15, 2014, New Residential settled a portfolio of non-performing residential mortgage loans with a UPB of approximately $170.1 million at a price of approximately $92.7 million. The purchase was financed with $60.1 million using the $300.0 million master repurchase agreement with RBS. This purchase was accounted for as a linked transaction (Note 10). The repurchase agreement, which contains customary covenants and event of default provisions and is subject to margin calls, matures on November 24, 2014. | ||
On January 15, 2014, New Residential purchased a portfolio of non-performing residential mortgage loans with a UPB of approximately $65.6 million at a price of approximately $33.7 million. To finance this purchase, on January 15, 2014, New Residential entered into a $25.3 million repurchase agreement with Credit Suisse Securities (USA) LLC, which matures on January 14, 2015. Borrowings under the agreement bear interest equal to the sum of (i) a floating rate index rate equal to one-month LIBOR and (ii) a margin of 3.00%. The agreement contains customary covenants and event of default provisions. | ||
Other Investments | ||
On January 8, 2014, New Residential financed all of its ownership interest in each of the Consumer Loan Companies under a $150.0 million master repurchase agreement with Credit Suisse Securities (USA) LLC which matures on June 30, 2014. Borrowings under the facility bear interest equal to the sum of (i) a floating rate index rate equal to one-month LIBOR and (ii) a margin of 4.00%. The facility contains customary covenants and event of default provisions. | ||
Corporate Activities | ||
On March 19, 2014, New Residential’s board of directors declared a first quarter 2014 dividend of $0.175 per share of common stock, which is payable on April 30, 2014 to stockholders of record as of March 31, 2014. |
SUMMARY_OF_QUARTERLY_CONSOLIDA
SUMMARY OF QUARTERLY CONSOLIDATED FINANCIAL INFORMATION (UNAUDITED) | 12 Months Ended | ||||||||||||||||||||
Dec. 31, 2013 | |||||||||||||||||||||
Summary Of Quarterly Consolidated Financial Information | ' | ||||||||||||||||||||
SUMMARY OF QUARTERLY CONSOLIDATED FINANCIAL INFORMATION (UNAUDITED) | ' | ||||||||||||||||||||
19. SUMMARY QUARTERLY CONSOLIDATED FINANCIAL INFORMATION (UNAUDITED) | |||||||||||||||||||||
The following is an unaudited summary information on New Residential’s quarterly operations. | |||||||||||||||||||||
2013 | Quarter Ended | Year Ended | |||||||||||||||||||
March 31 | June 30 | September 30 | December 31 | December 31 | |||||||||||||||||
Interest income | $ | 16,191 | $ | 22,999 | $ | 21,885 | $ | 26,492 | $ | 87,567 | |||||||||||
Interest expense | 899 | 2,651 | 3,443 | 8,031 | 15,024 | ||||||||||||||||
Net interest income | 15,292 | 20,348 | 18,442 | 18,461 | 72,543 | ||||||||||||||||
Impairment | |||||||||||||||||||||
Other-than-temporary impairment (“OTTI”) on Securities | — | 3,756 | — | 1,237 | 4,993 | ||||||||||||||||
Valuation allowance on loans | — | — | — | 461 | 461 | ||||||||||||||||
— | 3,756 | — | 1,698 | 5,454 | |||||||||||||||||
Net interest income after impairment | 15,292 | 16,592 | 18,442 | 16,763 | 67,089 | ||||||||||||||||
Other income (A) | 2,827 | 98,182 | 56,195 | 83,804 | 241,008 | ||||||||||||||||
2,827 | 98,182 | 56,195 | 83,804 | 241,008 | |||||||||||||||||
Operating Expenses | 5,044 | 5,552 | 11,492 | 20,386 | 42,474 | ||||||||||||||||
5,044 | 5,552 | 11,492 | 20,386 | 42,474 | |||||||||||||||||
Income (Loss) Before Income Taxes | 13,075 | 109,222 | 63,145 | 80,181 | 265,623 | ||||||||||||||||
Income tax expense | — | — | — | — | — | ||||||||||||||||
Net Income (Loss) | 13,075 | 109,222 | 63,145 | 80,181 | 265,623 | ||||||||||||||||
Noncontrolling Interests in Income of | — | — | — | (326 | ) | (326 | ) | ||||||||||||||
Consolidated Subsidiaries | |||||||||||||||||||||
Net Income (Loss) Attributable to Common | $ | 13,075 | $ | 109,222 | $ | 63,145 | $ | 80,507 | $ | 265,949 | |||||||||||
Stockholders | |||||||||||||||||||||
Net Income Per Share of Common Stock | |||||||||||||||||||||
Basic | $ | 0.05 | $ | 0.43 | $ | 0.25 | $ | 0.32 | $ | 1.05 | |||||||||||
Diluted | $ | 0.05 | $ | 0.43 | $ | 0.24 | $ | 0.31 | $ | 1.03 | |||||||||||
Weighted Average Number of Shares of | |||||||||||||||||||||
Common Stock Outstanding | |||||||||||||||||||||
Basic | 253,025,645 | 253,025,645 | 253,072,788 | 253,186,406 | 253,078,048 | ||||||||||||||||
Diluted | 253,025,645 | 256,659,488 | 259,889,285 | 259,796,493 | 257,368,255 | ||||||||||||||||
Dividends Declared per Share of Common Stock | $ | — | $ | 0.07 | $ | 0.175 | $ | 0.25 | $ | 0.495 | |||||||||||
2012 | Quarter Ended | Year Ended | |||||||||||||||||||
March 31 | June 30 | September 30 | December 31 | December 31 | |||||||||||||||||
Interest income | $ | 2,037 | $ | 4,479 | $ | 12,295 | $ | 14,948 | $ | 33,759 | |||||||||||
Interest expense | — | — | 298 | 406 | 704 | ||||||||||||||||
Net interest income | 2,037 | 4,479 | 11,997 | 14,542 | 33,055 | ||||||||||||||||
Impairment | |||||||||||||||||||||
Other-than-temporary impairment (“OTTI”) on Securities | — | — | — | — | — | ||||||||||||||||
Net interest income after impairment | 2,037 | 4,479 | 11,997 | 14,542 | 33,055 | ||||||||||||||||
Other income | 1,216 | 3,523 | 1,774 | 10,910 | 17,423 | ||||||||||||||||
1,216 | 3,523 | 1,774 | 10,910 | 17,423 | |||||||||||||||||
Operating Expenses | 565 | 1,528 | 2,003 | 5,135 | 9,231 | ||||||||||||||||
565 | 1,528 | 2,003 | 5,135 | 9,231 | |||||||||||||||||
Net Income (Loss) | $ | 2,688 | $ | 6,474 | $ | 11,768 | $ | 20,317 | $ | 41,247 | |||||||||||
Net Income Per Share of Common Stock | |||||||||||||||||||||
Basic | $ | 0.01 | $ | 0.03 | $ | 0.05 | $ | 0.08 | $ | 0.16 | |||||||||||
Diluted | $ | 0.01 | $ | 0.03 | $ | 0.05 | $ | 0.08 | $ | 0.16 | |||||||||||
Weighted average number of shares of | |||||||||||||||||||||
common stock outstanding | |||||||||||||||||||||
Basic | 253,025,645 | 253,025,645 | 253,025,645 | 253,025,645 | 253,025,645 | ||||||||||||||||
Diluted | 253,025,645 | 253,025,645 | 253,025,645 | 253,025,645 | 253,025,645 | ||||||||||||||||
Dividends Declared per Share of Common Stock | $ | — | $ | — | $ | — | $ | — | $ | — | |||||||||||
(A) | Earnings from investments in equity method investees is included in other income. |
SUMMARY_OF_SIGNIFICANT_ACCOUNT1
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies) | 12 Months Ended | |||||||||||||||||||
Dec. 31, 2013 | Dec. 31, 2012 | |||||||||||||||||||
Summary Of Significant Accounting Policies Policies | ' | ' | ||||||||||||||||||
Basis of Accounting | ' | ' | ||||||||||||||||||
Basis of Accounting — The accompanying consolidated financial statements are prepared in accordance with U.S. generally accepted accounting principles (“GAAP’’). The consolidated financial statements include the accounts of New Residential and its consolidated subsidiaries. All significant intercompany transactions and balances have been eliminated. New Residential consolidates those entities in which it has control over significant operating, financial and investing decisions of the entity, as well as those entities deemed to be variable interest entities (“VIEs”) in which New Residential is determined to be the primary beneficiary. VIEs are defined as entities in which equity investors do not have the characteristics of a controlling financial interest or do not have sufficient equity at risk for the entity to finance its activities without additional subordinated financial support from other parties. A VIE is required to be consolidated only by its primary beneficiary, which is defined as the party who has the power to direct the activities of a VIE that most significantly impact its economic performance and who has the obligation to absorb losses or the right to receive benefits from the VIE that could be potentially significant to the VIE. For entities over which New Residential exercises significant influence, but which do not meet the requirements for consolidation, New Residential uses the equity method of accounting whereby it records its share of the underlying income of such entities. | ||||||||||||||||||||
New Residential’s investments in Non-Agency RMBS are variable interests. New Residential monitors these investments and analyzes the potential need to consolidate the related securitization entities pursuant to the VIE consolidation requirements. New Residential has not consolidated the securitization entities that issued its Non-Agency RMBS. This determination is based, in part, on New Residential’s assessment that it does not have the power to direct the activities that most significantly impact the economic performance of these entities, such as through ownership of a majority of the currently controlling class. In addition, New Residential is not obligated to provide, and has not provided, any financial support to these entities. | ||||||||||||||||||||
Noncontrolling interests represent the ownership interests in certain consolidated subsidiaries held by entities or persons other than New Residential. These interests are related to noncontrolling interests in consolidated entities that hold New Residential’s investment in servicer advances (Note 6). | ||||||||||||||||||||
The consolidated financial statements for periods prior to May 15, 2013 have been prepared on a spin-off basis from the consolidated financial statements and accounting records of Newcastle and reflect New Residential’s historical results of operations, financial position and cash flows, in accordance with U.S. GAAP. As presented in the Consolidated Statements of Cash Flows, New Residential did not have any cash balance during periods prior to April 5, 2013, which is the first date Newcastle contributed cash to New Residential. All of its cash activity occurred in Newcastle’s accounts during these periods. The consolidated financial statements for periods prior to May 15, 2013 do not necessarily reflect what New Residential’s consolidated results of operations, financial position and cash flows would have been had New Residential operated as an independent company prior to the spin-off. | ||||||||||||||||||||
Certain expenses of Newcastle, comprised primarily of a portion of its management fee, have been allocated to New Residential to the extent they were directly associated with New Residential for periods prior to the spin-off on May 15, 2013. The portion of the management fee allocated to New Residential prior to the spin-off represents the product of the management fee rate payable by Newcastle (1.5%) and New Residential’s gross equity, which management believes is a reasonable method for quantifying the expense of the services provided by the employees of the Manager to New Residential. The incremental cost of certain legal, accounting and other expenses related to New Residential’s operations prior to May 15, 2013 are reflected in the accompanying consolidated financial statements. New Residential and Newcastle do not share any expenses following the spin-off. | ||||||||||||||||||||
Principles of Consolidation and Basis of Presentation | ' | ' | ||||||||||||||||||
Principles of Consolidation and Basis of Presentation—The accompanying consolidated financial statements and related notes have been prepared in accordance with United States generally accepted accounting principles (“U.S. GAAP”). These financial statements include the accounts of New Residential and its consolidated subsidiaries, which are comprised of entities in which it has an investment of 50% or more and has control over significant operating, financial and investing decisions of the entity. All intercompany balances and transactions have been eliminated upon consolidation. New Residential currently operates in three business segments: (i) investments in Excess MSRs, (ii) investments in real estate securities and (iii) corporate. | ||||||||||||||||||||
Variable interest entities (VIEs) are defined as entities in which equity investors do not have the characteristics of a controlling financial interest or do not have sufficient equity at risk for the entity to finance its activities without additional subordinated financial support from other parties. A VIE is required to be consolidated by its primary beneficiary, and only by its primary beneficiary, which is defined as the party who has the power to direct the activities of a VIE that most significantly impact its economic performance and who has the obligation to absorb losses or the right to receive benefits from the VIE that could potentially be significant to the VIE. | ||||||||||||||||||||
New Residential’s investments in Non-Agency RMBS are variable interests. New Residential monitors these investments and analyzes the potential need to consolidate the related securitization entities pursuant to the VIE consolidation requirements. | ||||||||||||||||||||
New Residential has not consolidated the securitization entities that issued its Non-Agency RMBS. This determination is based, in part, on New Residential’s assessment that it does not have the power to direct the activities that most significantly impact the economic performance of these entities, such as through ownership of a majority of the currently controlling class. In addition, New Residential is not obligated to provide, and has not provided, any financial support to these entities. | ||||||||||||||||||||
The consolidated financial statements have been prepared on a spin off basis from the consolidated financial statements and accounting records of Newcastle and reflect New Residential’s historical results of operations, financial position and cash flows, in accordance with U.S. GAAP. The consolidated financial statements may not be indicative of New Residential’s future performance and do not necessarily reflect what its consolidated results of operations, financial position and cash flows would have been had New Residential operated as an independent company during the periods presented. | ||||||||||||||||||||
The incremental cost of certain legal, accounting and other expenses related to New Residential’s operations are reflected in the accompanying consolidated financial statements. Certain expenses of Newcastle, currently comprised primarily of a portion of its management fee, have been allocated to New Residential to the extent they are directly associated with New Residential. The portion of the management fee allocated to New Residential represents the product of the management fee rate payable by Newcastle (1.5%) and New Residential’s gross equity, which management believes is a reasonable method for quantifying the expense of the services provided by the employees of the Manager to New Residential. New Residential and Newcastle do not intend to share any expenses following the separation. | ||||||||||||||||||||
Risks and Uncertainties | ' | ' | ||||||||||||||||||
Risks and Uncertainties — In the normal course of business, New Residential encounters primarily two significant types of economic risk: credit and market. Credit risk is the risk of default on New Residential’s investments that results from a borrower’s or counterparty’s inability or unwillingness to make contractually required payments. Market risk reflects changes in the value of investments due to changes in prepayment speeds, interest rates, spreads or other market factors, including risks that impact the value of the collateral underlying New Residential’s investments. Management believes that the carrying values of its investments are reasonable taking into consideration these risks along with estimated prepayments, financings, collateral values, payment histories, and other information. Furthermore, for each of the periods presented, a significant portion of New Residential’s assets are dependent on Nationstar’s ability to perform its obligations as the servicer of residential mortgage loans underlying New Residential’s investments in Excess MSRs, servicer advances, Non-Agency RMBS and residential mortgage loans. If Nationstar is terminated as the servicer, New Residential’s right to receive its portion of the cash flows related to interests in MSRs is also terminated. New Residential is similarly dependent on Springleaf as the servicer of the loans underlying its investment in the Consumer Loan Companies (Note 9). | Risks and Uncertainties—In the normal course of business, New Residential encounters primarily two significant types of economic risk: credit and market. Credit risk is the risk of default on New Residential’s investments that results from a borrower’s inability or unwillingness to make contractually required payments. Market risk reflects changes in the value of investments due to changes in prepayment speeds, interest rates, spreads or other market factors. Management believes that the carrying values of its investments are reasonable taking into consideration these risks along with estimated prepayments, refinancings, collateral values, payment histories, and other borrower information. Furthermore, as of December 31, 2012 and 2011, a significant portion of New Residential’s assets are its investments in Excess MSRs, which are dependent on Nationstar to perform its obligations as the servicer. If Nationstar is terminated as the servicer, New Residential’s right to receive its portion of the excess mortgage servicing amount is also terminated. | |||||||||||||||||||
Additionally, New Residential is subject to significant tax risks. If New Residential were to fail to qualify as a REIT in any taxable year, New Residential would be subject to U.S. federal corporate income tax (including any applicable alternative minimum tax), which could be material. Unless entitled to relief under certain statutory provisions, New Residential would also be disqualified from treatment as a REIT for the four taxable years following the year during which qualification is lost. | Additionally, New Residential is subject to significant tax risks. If New Residential were to fail to qualify as a REIT in any taxable year, it would be subject to U.S. federal corporate income tax (including any applicable alternative minimum tax), which could be material. Unless entitled to relief under certain statutory provisions, New Residential would also be disqualified from treatment as a REIT for the four taxable years following the year during which qualification is lost. | |||||||||||||||||||
Use of Estimates | ' | ' | ||||||||||||||||||
Use of Estimates — The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates. | Use of Estimates—The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates. | |||||||||||||||||||
Comprehensive Income | ' | ' | ||||||||||||||||||
Comprehensive Income — Comprehensive income is defined as the change in equity of a business enterprise during a period from transactions and other events and circumstances, excluding those resulting from investments by and distributions to owners. For New Residential’s purposes, comprehensive income represents net income, as presented in the Consolidated Statements of Income, adjusted for unrealized gains or losses on securities available for sale. | ||||||||||||||||||||
Income Recognition - Investments in Excess Mortgage Servicing Rights | ' | ' | ||||||||||||||||||
Investments in Excess Mortgage Servicing Rights (“Excess MSRs”) — Excess MSRs are aggregated into pools as applicable; each pool of Excess MSRs is accounted for in the aggregate. Interest income for Excess MSRs is accreted into interest income on an effective yield or “interest” method, based upon the expected excess mortgage servicing amount through the expected life of the underlying mortgages. Changes to expected cash flows result in a cumulative retrospective adjustment, which will be recorded in the period in which the change in expected cash flows occurs. Under the retrospective method, the interest income recognized for a reporting period is measured as the difference between the amortized cost basis at the end of the period and the amortized cost basis at the beginning of the period, plus any cash received during the period. The amortized cost basis is calculated as the present value of estimated future cash flows using an effective yield, which is the yield that equates all past actual and current estimated future cash flows to the initial investment. In addition, New Residential’s policy is to recognize interest income only on its Excess MSRs in existing eligible underlying mortgages. The difference between the fair value of Excess MSRs and their amortized cost basis is recorded as “Change in fair value of investments in excess mortgage servicing rights.” Fair value is generally determined by discounting the expected future cash flows using discount rates that incorporate the market risks and liquidity premium specific to the Excess MSRs, and therefore may differ from their effective yields. | Investments in Excess Mortgage Servicing Rights—Excess MSRs are aggregated into pools as applicable; each pool of Excess MSRs is accounted for in the aggregate. Interest income for Excess MSRs is accreted into interest income on an effective yield or “interest” method, based upon the expected excess mortgage servicing amount through the expected life of the underlying mortgages. Changes to expected cash flows result in a cumulative retrospective adjustment, which will be recorded in the period in which the change in expected cash flows occurs. Under the retrospective method, the interest income recognized for a reporting period would be measured as the difference between the amortized cost basis at the end of the period and the amortized cost basis at the beginning of the period, plus any cash received during the period. The amortized cost basis is calculated as the present value of estimated future cash flows using an effective yield, which is the yield that equates all past actual and current estimated future cash flows to the initial investment. In addition, New Residential’s policy is to recognize interest income only on its Excess MSRs in existing eligible underlying mortgages. The difference between the fair value of Excess MSRs and their amortized cost basis is recorded as “Change in fair value of investments in excess mortgage servicing rights.” Fair value is generally determined by discounting the expected future cash flows using discount rates that incorporate the market risks and liquidity premium specific to the Excess MSRs, and therefore may differ from their effective yields. | |||||||||||||||||||
Income Recognition - Interest in Servicer Advances | ' | ' | ||||||||||||||||||
Investments in Servicer Advances (“Servicer Advances”) — New Residential accounts for its investments in Servicer Advances similarly to its investments in Excess MSRs. Interest income for Servicer Advances is accreted into interest income on an effective yield or “interest” method, based upon the expected aggregate cash flows of the servicer advances, including the basic fee component of the related MSR (but excluding any Excess MSR component) through the expected life of the underlying mortgages, net of a portion of the basic fee component of the MSR that New Residential remits to Nationstar as compensation for Nationstar’s servicing activities. Changes to expected cash flows result in a cumulative retrospective adjustment, which will be recorded in the period in which the change in expected cash flows occurs. Refer to “—Investments in Excess Mortgage Servicing Rights” for a description of the retrospective method. Fair value is generally determined by discounting the expected future cash flows using discount rates that incorporate the market risks and liquidity premium specific to the Servicer Advances, and therefore may differ from their effective yields. | ||||||||||||||||||||
Interest income recognized by New Residential related to its investment in Servicer Advances for the year ended December 31, 2013 was comprised of the following: | ||||||||||||||||||||
Interest income, gross of amounts attributable to servicer compensation | $ | 6,708 | ||||||||||||||||||
Amounts attributable to servicer compensation | (2,287 | ) | ||||||||||||||||||
Interest income | $ | 4,421 | ||||||||||||||||||
Income Recognition - Real Estate Securities | ' | ' | ||||||||||||||||||
Investments in Real Estate Securities — Discounts or premiums are accreted into interest income on an effective yield or “interest” method, based upon a comparison of actual and expected cash flows, through the expected maturity date of the security. For securities acquired at a discount for credit quality, the difference between contractual cash flows and expected cash flows at acquisition is not accreted (non-accretable difference). | Real Estate Securities—New Residential invests in real estate related asset backed securities. Discounts or premiums are accreted into interest income on an effective yield or “interest” method, based upon a comparison of actual and expected cash flows, through the expected maturity date of the security. Depending on the nature of the investment, changes to expected cash flows may result in a prospective change to yield or a retrospective change which would include a catch up adjustment. Deferred fees and costs, if any, are recognized as a reduction to the interest income over the terms of the securities using the interest method. Upon settlement of securities, the excess (or deficiency) of net proceeds over the net carrying value of such security is recognized as a gain (or loss) in the period of settlement. | |||||||||||||||||||
Depending on the nature of the investment, changes to expected cash flows may result in a prospective change to yield or a retrospective change which would include a catch up adjustment. Deferred fees and costs, if any, are recognized as a reduction to the interest income over the terms of the securities using the interest method. Upon settlement of securities, the excess (or deficiency) of net proceeds over the net carrying value of such security is recognized as a gain (or loss) in the period of settlement. | ||||||||||||||||||||
Income Recognition - Investments in Residential Mortgage Loans | ' | ' | ||||||||||||||||||
Investments in Residential Mortgage Loans — Income on these loans is recognized similarly to that on securities using a level yield methodology. For loans acquired at a discount for credit quality, the difference between contractual cash flows and expected cash flows at acquisition is not accreted (non-accretable difference). | ||||||||||||||||||||
Impairment of Securities and Loans | ' | ' | ||||||||||||||||||
Impairment of Securities and Loans — New Residential continually evaluates securities and loans for impairment. Securities and loans are considered to be other-than-temporarily impaired (“OTTI”), for financial reporting purposes, generally when it is probable that New Residential will be unable to collect all principal or interest when due according to the contractual terms of the original agreements, or for securities or loans purchased at a discount for credit quality or that represent retained beneficial interests in securitizations when New Residential determines that it is probable that it will be unable to collect as anticipated. The evaluation of a security’s or loan’s estimated cash flows includes the following, as applicable: (i) review of the credit of the issuer or borrower, (ii) review of the credit rating of the security, (iii) review of the key terms of the security or loan, (iv) review of the performance of the loan or underlying loans, including debt service coverage and loan to value ratios, (v) analysis of the value of the collateral for the loan or underlying loans, (vi) analysis of the effect of local, industry and broader economic factors, and (vii) analysis of historical and anticipated trends in defaults, loss severities and prepayments for similar securities or loans. Furthermore, New Residential must record a write down if it has the intent to sell a given security in an unrealized loss position, or if it is more likely than not that it will be required to sell such a security. Upon determination of impairment, New Residential establishes specific valuation allowances for loans or records a direct write down for securities based on the estimated fair value of the security or underlying collateral using a discounted cash flow analysis or based on an observable market value. New Residential also establishes allowances for estimated unidentified incurred losses on pools of loans. The allowance for each loan is maintained at a level believed adequate by management to absorb probable losses, based on periodic reviews of actual and expected losses. It is New Residential’s policy to establish an allowance for uncollectible interest on performing securities or loans that are past due more than 90 days or sooner when, in the judgment of management, the probability of collection of interest is deemed to be insufficient to warrant further accrual. Upon such a determination, those securities or loans are deemed to be non-performing and put on nonaccrual status. Significant judgment is required in determining impairment and in estimating the resulting loss allowance, and actual losses may differ from New Residential’s estimates. New Residential may resume accrual of income on a loan or security if, in management’s opinion, full collection is probable. Subsequent to a determination of impairment, and a related write down, income is accrued on an effective yield method from the new carrying value to the related expected cash flows, with cash received treated as a reduction of basis. | Impairment of Securities—New Residential continually evaluates securities for impairment. Securities are considered to be other-than-temporarily impaired, for financial reporting purposes, generally when it is probable that New Residential will be unable to collect all principal or interest when due according to the contractual terms of the original agreements, or for securities purchased at a discount for credit quality when New Residential determines that it is probable that it will be unable to collect as anticipated. The evaluation of a security’s estimated cash flows includes the following, as applicable: (i) review of the credit of the issuer, (ii) review of the credit rating of the security, (iii) review of the key terms of the security, (iv) review of the performance of the underlying loans, including debt service coverage and loan to value ratios, (v) analysis of the value of the collateral for the underlying loans, (vi) analysis of the effect of local, industry and broader economic factors, and (vii) analysis of historical and anticipated trends in defaults, loss severities and prepayments for similar securities. Furthermore, New Residential must record a write down if we have the intent to sell a given security in an unrealized loss position, or if it is more likely than not that we will be required to sell such a security. Upon determination of impairment, New Residential records a direct write down for securities based on the estimated fair value of the security or underlying collateral using a discounted cash flow analysis or based on an observable market value. It is New Residential’s policy to establish an allowance for uncollectible interest on performing securities that are past due more than 90 days or sooner when, in the judgment of management, the probability of collection of interest is deemed to be insufficient to warrant further accrual. Upon such a determination, those securities are deemed to be non-performing and put on nonaccrual status. Actual losses may differ from New Residential’s estimates. New Residential may resume accrual of income on a security if, in management’s opinion, full collection is probable. Subsequent to a determination of impairment, and a related write down, income is accrued on an effective yield method from the new carrying value to the related expected cash flows, with cash received treated as a reduction of basis. | |||||||||||||||||||
Accretion of Discount and Other Amortization | ' | ' | ||||||||||||||||||
Accretion of Discount and Other Amortization — As reflected on the consolidated statements of cash flows, this item is comprised of the following: | ||||||||||||||||||||
Year Ended | ||||||||||||||||||||
December 31, | ||||||||||||||||||||
2013 | 2012 | |||||||||||||||||||
Accretion of net discount on securities and loans | $ | 14,676 | $ | 5,339 | ||||||||||||||||
Amortization of deferred financing costs | (768 | ) | — | |||||||||||||||||
$ | 13,908 | $ | 5,339 | |||||||||||||||||
Other Income | ' | ' | ||||||||||||||||||
Other Income — This item is comprised of the following: | Other Income (Loss)—On May 14, 2012, New Residential entered into definitive agreements to co-invest in Excess MSRs related to mortgage servicing rights that Nationstar proposed to acquire from Residential Capital, LLC and related entities (“ResCap”) in an auction conducted as part of ResCap’s bankruptcy proceedings. The auction commenced on October 23, 2012, and Nationstar did not submit the highest bid on October 24, 2012. Therefore, New Residential did not complete this co-investment and was entitled to its portion of the breakup fee of approximately $8.4 million, which was recorded as other income for the year ended December 31, 2012. | |||||||||||||||||||
Year Ended December 31, | ||||||||||||||||||||
2013 | 2012 | |||||||||||||||||||
Other income | ||||||||||||||||||||
Gain (loss) on non-hedge derivative instruments | $ | 1,820 | $ | — | ||||||||||||||||
Other income (loss) | — | 8,400 | ||||||||||||||||||
$ | 1,820 | $ | 8,400 | |||||||||||||||||
On May 14, 2012, New Residential entered into definitive agreements to co-invest in Excess MSRs related to mortgage servicing rights that Nationstar proposed to acquire from Residential Capital, LLC and related entities (“ResCap”) in an auction conducted as part of ResCap’s bankruptcy proceedings. The auction commenced on October 23, 2012, and Nationstar did not submit the highest bid on October 24, 2012. Therefore, New Residential did not complete this co-investment and was entitled to its portion of the breakup fee of approximately $8.4 million, which was recorded as other income for the year ended December 31, 2012. | ||||||||||||||||||||
Revenue Recognition - Reclassification from Accumulated Other Comprehensive Income Into Net Income | ' | ' | ||||||||||||||||||
Other Income (Loss)—On May 14, 2012, New Residential entered into definitive agreements to co-invest in Excess MSRs related to mortgage servicing rights that Nationstar proposed to acquire from Residential Capital, LLC and related entities (“ResCap”) in an auction conducted as part of ResCap’s bankruptcy proceedings. The auction commenced on October 23, 2012, and Nationstar did not submit the highest bid on October 24, 2012. Therefore, New Residential did not complete this co-investment and was entitled to its portion of the breakup fee of approximately $8.4 million, which was recorded as other income for the year ended December 31, 2012. | ||||||||||||||||||||
Reclassification From Accumulated Other Comprehensive Income Into Net Income—No amounts were reclassified out of accumulated other comprehensive income into net income for the year ended December 31, 2012. | ||||||||||||||||||||
Interest Expense | ' | ' | ||||||||||||||||||
Interest Expense — New Residential finances certain investments using floating rate repurchase agreements and loans. Interest is expensed as incurred. | Interest Expense—New Residential finances certain investments using floating rate repurchase agreements. Interest is expensed as incurred. | |||||||||||||||||||
General and Administrative Fees | ' | ' | ||||||||||||||||||
General and Administrative Expenses — General and administrative expenses, including legal fees, audit fees, insurance premiums, and other costs and are expensed as incurred. | General and Administrative Expenses—General and administrative expenses, including legal fees, audit fees and other costs and are expensed as incurred. | |||||||||||||||||||
Management and Incentive Compensation to Affiliate | ' | ' | ||||||||||||||||||
Management Fee and Incentive Compensation to Affiliate — These represent amounts due to the Manager pursuant to the Management Agreement. For further information on the Management Agreement, see Note 15. | Management Fees Allocated by Newcastle—These represent the management fees allocated by and due to Newcastle based on the equity used in funding the acquisition of Excess MSRs and real estate securities. The management fees are equal to 1.5% of the gross equity, as defined in the Management Agreement between Newcastle and FIG LLC. For further information on the Management Agreement, see Note 9. | |||||||||||||||||||
Investments in Servicing Related Assets | ' | ' | ||||||||||||||||||
Investments in Servicing Related Assets — Servicing Related Assets consist of New Residential’s investments in Excess MSRs and Servicer Advances. Upon acquisition, New Residential has elected to record each of such investments at fair value. New Residential elected to record its investments at fair value in order to provide users of the financial statements with better information regarding the effects of prepayment risk and other market factors on Servicing Related Assets. Under this election, New Residential records a valuation adjustment on its investments in Servicing Related Assets on a quarterly basis to recognize the changes in fair value in net income as described in “Income Recognition — Investments in Excess Mortgage Servicing Rights” and “Income Recognition — Investments in Servicer Advances.” | ||||||||||||||||||||
Investments in Real Estate Securities and Residential Mortgage Loans | ' | ' | ||||||||||||||||||
Investments in Real Estate Securities — New Residential has classified its investments in securities as available for sale. Securities available for sale are carried at market value with the net unrealized gains or losses reported as a separate component of accumulated other comprehensive income, to the extent impairment losses are considered temporary. At disposition, the net realized gain or loss is determined on the basis of the amortized cost of the specific investments and is included in earnings. Unrealized losses on securities are charged to earnings if they reflect a decline in value that is other-than-temporary. | Investments in Real Estate Securities—New Residential has classified its investments in securities as available-for-sale. Available-for-sale securities are carried at market value with the net unrealized gains or losses reported as a separate component of accumulated other comprehensive income, to the extent impairment losses are considered temporary. At disposition, the net realized gain or loss is determined on the basis of the cost of the specific investments and is included in earnings. Unrealized losses on securities are charged to earnings if they reflect a decline in value that is other-than-temporary, as described above. | |||||||||||||||||||
Investments in Residential Mortgage Loans — Residential mortgage loans are presented at cost net of any unamortized discount (or gross of any unamortized premium), including any fees received, and an allowance for loan losses. New Residential determines at acquisition whether loans will be aggregated into pools based on common risk characteristics (credit quality, loan type, and date of origination or acquisition); loans aggregated into pools are accounted for as if each pool were a single loan. Loans which New Residential does not have the intent or the ability to hold into the foreseeable future are considered held-for-sale and are carried at the lower of average amortized cost or market value. Loans for which New Residential has the intent and ability to hold for the foreseeable future, or until maturity or payoff, are classified as held-for-investment. Other loans are classified as held-for-sale and recorded at the lower of their amortized cost basis or fair value. New Residential discontinues the accretion of discounts on loans if they are reclassified from held-for-investment to held-for-sale. To the extent that the loans are classified as held-for-investment, New Residential periodically evaluates such loans for possible impairment as described in “—Impairment of Securities and Loans.” | ||||||||||||||||||||
Cash and Cash Equivalents and Restricted Cash | ' | ' | ||||||||||||||||||
Cash and Cash Equivalents and Restricted Cash — New Residential considers all highly liquid short-term investments with maturities of 90 days or less when purchased to be cash equivalents. Substantially all amounts on deposit with major financial institutions exceed insured limits. New Residential held $33.3 million of restricted cash related to the financing of the servicer advances (Note 6) that has been pledged to the note holders for interest and fees payable. | Cash and Cash Equivalents—New Residential has no cash account as of December 31, 2011 or 2012. Cash transactions affecting account balances are collected or paid through a cash account held by Newcastle. | |||||||||||||||||||
Due from/to Newcastle | ' | ' | ||||||||||||||||||
Due from/to Newcastle—For purposes of classifying amounts, New Residential considers the Manager and principals of Fortress to be affiliates. Amounts due from and to Newcastle are recorded at their contractual or allocated amount, subject to an allowance for uncollectible amounts if collection is not deemed probable. | ||||||||||||||||||||
Balance Sheet Measurement - Investments in Excess Mortgage Servicing Rights | ' | ' | ||||||||||||||||||
Investments in Excess Mortgage Servicing Rights—Upon acquisition, New Residential has elected to record each of such investments at fair value. New Residential elected to record its Excess MSRs at fair value in order to provide users of the financial statements with better information regarding the effects of prepayment risk and other market factors on the Excess MSRs. Under this election, New Residential records a valuation adjustment on its Excess MSRs on a quarterly basis to recognize the changes in fair value in net income as described in Revenue Recognition—Investments in Excess Mortgage Servicing Rights above. As of December 31, 2012 and 2011, all Excess MSRs are classified as held-for-investment as New Residential has the intent and ability to hold the investments for the foreseeable future. | ||||||||||||||||||||
Derivatives | ' | ' | ||||||||||||||||||
Derivatives — New Residential financed certain investments with the same counterparty from which it purchased those investments, and accounts for the contemporaneous purchase of the investments and the associated financings as linked transactions. Accordingly, New Residential records a non-hedge derivative instrument on a net basis, with changes in market value recorded as “Other Income” in the Consolidated Statements of Income. In the Consolidated Statement of Cash Flows, New Residential presents the linked transactions on a gross basis with the related asset purchased reflected as an investment activity and the related financing as a financing activity. | ||||||||||||||||||||
Income Taxes | ' | ' | ||||||||||||||||||
Income Taxes — New Residential operates so as to qualify as a REIT under the requirements of the Internal Revenue Code of 1986, as amended, or the Internal Revenue Code. Requirements for qualification as a REIT include various restrictions on ownership of New Residential’s stock, requirements concerning distribution of taxable income and certain restrictions on the nature of assets and sources of income. A REIT must distribute at least 90% of its taxable income to its stockholders of which 85% plus any undistributed amounts from the prior year must be distributed within the taxable year in order to avoid the imposition of an excise tax. Distribution of the remaining balance may extend until timely filing of New Residential’s tax return in the subsequent taxable year. Qualifying distributions of taxable income are deductible by a REIT in computing taxable income. | ||||||||||||||||||||
Certain activities of New Residential are conducted through taxable REIT subsidiaries (“TRSs”) and therefore are subject to federal and state income taxes. Accordingly, deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases upon the change in tax status. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. | ||||||||||||||||||||
New Residential recognizes tax benefits for uncertain tax positions only if it is more likely than not that the position is sustainable based on its technical merits. Interest and penalties on uncertain tax positions are included as a component of the provision for income taxes on the consolidated statements of operations. | ||||||||||||||||||||
Other Assets and Other Liabilities | ' | ' | ||||||||||||||||||
Other Assets and Other Liabilities — Other assets and liabilities are comprised of the following: | ||||||||||||||||||||
Other Assets | Other Liabilities | |||||||||||||||||||
December 31, | December 31, | |||||||||||||||||||
2013 | 2012 | 2013 | 2012 | |||||||||||||||||
Margin receivable (A) | $ | 40,132 | $ | — | Interest payable | $ | 4,010 | $ | 55 | |||||||||||
Interest and other receivables | 7,548 | 84 | Accounts payable | 2,829 | 348 | |||||||||||||||
Deferred financing costs (B) | 5,541 | — | Other | 18 | 59 | |||||||||||||||
Accumulated amortization | (768 | ) | — | $ | 6,857 | $ | 462 | |||||||||||||
Other | 689 | — | ||||||||||||||||||
$ | 53,142 | $ | 84 | |||||||||||||||||
(A) | Margin receivable represents amounts due to New Residential from counterparties resulting from changes in the counterparties’ estimated value of the underlying collateral of New Residential’s financed investments resulting from market fluctuations and principal paydowns. Brief periods of time may lapse between the time New Residential pays, or receives, margin from one counterparty relative to other counterparties. | |||||||||||||||||||
(B) | Deferred financing costs consist primarily of costs incurred in obtaining financing, which are amortized into interest expense over the term of the financing generally using the effective interest method. | |||||||||||||||||||
Repurchase Agreements and Notes Payable | ' | ' | ||||||||||||||||||
Repurchase Agreements and Notes Payable — New Residential’s repurchase agreements and notes payable are generally short-term debt that expire within one year. Such agreements and notes payable are carried at their contractual amounts, as specified by each repurchase or financing agreement, and generally treated as collateralized financing transactions. | ||||||||||||||||||||
Balance Sheet Measurement - Capital Contributions and Distributions and Contributions in-kind | ' | ' | ||||||||||||||||||
Capital Contributions and Distributions—Capital contributions represent the settlements of acquisition price in the acquisition of Excess MSRs and real estate securities and deposits related to Excess MSRs paid by Newcastle on behalf of New Residential. Capital distributions represent the cash receipts from investments, repayments of repurchase agreements and borrowings under repurchase agreements less cash payments for expenses, which would be equivalent to net increases in cash and cash equivalents in the respective periods had New Residential maintained a separate bank account. | ||||||||||||||||||||
Contributions in-kind—Contributions in-kind represent the contribution of real estate securities by Newcastle to New Residential. | ||||||||||||||||||||
Recent Accounting Pronouncements | ' | ' | ||||||||||||||||||
Recent Accounting Pronouncements | RECENT ACCOUNTING PRONOUNCEMENTS | |||||||||||||||||||
In February 2013, the FASB issued new guidance regarding the reporting of reclassifications out of accumulated other comprehensive income. The new guidance does not change current requirements for reporting net income or other comprehensive income in financial statements. However, it requires companies to present the effects on the line items of net income of significant amounts reclassified out of accumulated other comprehensive income if the item reclassified is required to be reclassified to net income in its entirety during the same reporting period. Presentation should occur either on the face of the income statement where net income is presented, or in the notes to the financial statements. New Residential has adopted this accounting standard. Refer to Note 16 for this presentation. | In May 2011, the FASB issued new guidance regarding the measurement and disclosure of fair value, which became effective for New Residential on January 1, 2012. The adoption of this guidance did not have a material impact on New Residential’s financial position, liquidity or results of operations. | |||||||||||||||||||
The FASB has recently issued or discussed a number of proposed standards on such topics as consolidation, financial statement presentation, revenue recognition, financial instruments, hedging, and contingencies. Some of the proposed changes are significant and could have a material impact on New Residential’s reporting. New Residential has not yet fully evaluated the potential impact of these proposals, but will make such an evaluation as the standards are finalized. | In June 2011, the FASB issued a new accounting standard that eliminates the current option to report other comprehensive income and its components in the statement of stockholders’ equity. Instead, an entity will be required to present items of net income and other comprehensive income in one continuous statement or in two separate, but consecutive, statements. New Residential has early adopted this standard in the period ended December 31, 2011 and has presented the Statement of Comprehensive Income separately from the Statement of Changes in Newcastle’s Equity. | |||||||||||||||||||
In February 2013, the FASB issued new guidance regarding the reporting of reclassifications out of accumulated other comprehensive income. The new guidance does not change current requirements for reporting net income or other comprehensive income in the financial statements. However, it requires companies to present the effects on the line items of net income of significant amounts reclassified out of accumulated OCI if the item reclassified is required to be reclassified to net income in its entirety during the same reporting period. Presentation should occur either on the face of the income statement where net income is presented, or in the notes to the financial statements. New Residential has early adopted this accounting standard and opted to present this information in a note to the financial statements. | ||||||||||||||||||||
The FASB has recently issued or discussed a number of proposed standards on such topics as consolidation, the definition of an investment company, financial statement presentation, revenue recognition, financial instruments, hedging and contingencies. Some of the proposed changes are significant and could have a material impact on New Residential’s reporting. New Residential has not yet fully evaluated the potential impact of these proposals, but will make such an evaluation as the standards are finalized. |
SUMMARY_OF_SIGNIFICANT_ACCOUNT2
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Tables) | 12 Months Ended | ||||||||||||||||||
Dec. 31, 2013 | |||||||||||||||||||
Summary Of Significant Accounting Policies Tables | ' | ||||||||||||||||||
Schedule of interest income - servicer advances | ' | ||||||||||||||||||
Interest income recognized by New Residential related to its investment in Servicer Advances for the year ended December 31, 2013 was comprised of the following: | |||||||||||||||||||
Interest income, gross of amounts attributable to servicer compensation | $ | 6,708 | |||||||||||||||||
Amounts attributable to servicer compensation | (2,287 | ) | |||||||||||||||||
Interest income | $ | 4,421 | |||||||||||||||||
Schedule of accretion of discount and other amortization | ' | ||||||||||||||||||
As reflected on the consolidated statements of cash flows, this item is comprised of the following: | |||||||||||||||||||
Year Ended | |||||||||||||||||||
December 31, | |||||||||||||||||||
2013 | 2012 | ||||||||||||||||||
Accretion of net discount on securities and loans | $ | 14,676 | $ | 5,339 | |||||||||||||||
Amortization of deferred financing costs | (768 | ) | — | ||||||||||||||||
$ | 13,908 | $ | 5,339 | ||||||||||||||||
Schedule of other income | ' | ||||||||||||||||||
This item is comprised of the following: | |||||||||||||||||||
Year Ended December 31, | |||||||||||||||||||
2013 | 2012 | ||||||||||||||||||
Other income | |||||||||||||||||||
Gain (loss) on non-hedge derivative instruments | $ | 1,820 | $ | — | |||||||||||||||
Other income (loss) | — | 8,400 | |||||||||||||||||
$ | 1,820 | $ | 8,400 | ||||||||||||||||
Schedule of other assets and other liabilities | ' | ||||||||||||||||||
Other assets and liabilities are comprised of the following: | |||||||||||||||||||
Other Assets | Other Liabilities | ||||||||||||||||||
December 31, | December 31, | ||||||||||||||||||
2013 | 2012 | 2013 | 2012 | ||||||||||||||||
Margin receivable (A) | $ | 40,132 | $ | — | Interest payable | $ | 4,010 | $ | 55 | ||||||||||
Interest and other receivables | 7,548 | 84 | Accounts payable | 2,829 | 348 | ||||||||||||||
Deferred financing costs (B) | 5,541 | — | Other | 18 | 59 | ||||||||||||||
Accumulated amortization | (768 | ) | — | $ | 6,857 | $ | 462 | ||||||||||||
Other | 689 | — | |||||||||||||||||
$ | 53,142 | $ | 84 | ||||||||||||||||
(A) | Margin receivable represents amounts due to New Residential from counterparties resulting from changes in the counterparties’ estimated value of the underlying collateral of New Residential’s financed investments resulting from market fluctuations and principal paydowns. Brief periods of time may lapse between the time New Residential pays, or receives, margin from one counterparty relative to other counterparties. | ||||||||||||||||||
(B) | Deferred financing costs consist primarily of costs incurred in obtaining financing, which are amortized into interest expense over the term of the financing generally using the effective interest method. |
SEGMENT_REPORTING_Tables
SEGMENT REPORTING (Tables) | 12 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||
Dec. 31, 2013 | Dec. 31, 2012 | |||||||||||||||||||||||||||||||||||||||||||||
Segment Reporting Tables | ' | ' | ||||||||||||||||||||||||||||||||||||||||||||
Schedule of segment reporting | ' | ' | ||||||||||||||||||||||||||||||||||||||||||||
Summary financial data on New Residential’s segments is given below, together with a reconciliation to the same data for New Residential as a whole: | Summary financial data on New Residential’s segments is given below, together with a reconciliation to the same data for New Residential as a whole: | |||||||||||||||||||||||||||||||||||||||||||||
Servicing Related Assets | Residential Securities | Excess | Real Estate | Corporate | New | |||||||||||||||||||||||||||||||||||||||||
and Loans | MSRs | Securities | Residential | |||||||||||||||||||||||||||||||||||||||||||
Excess MSRs | Servicer | Real Estate | Real Estate | Consumer | Corporate | Total | Year ended December 31, 2012 | |||||||||||||||||||||||||||||||||||||||
Advances | Securities | Loans | Loans | Interest income | $ | 27,496 | $ | 6,263 | $ | — | $ | 33,759 | ||||||||||||||||||||||||||||||||||
Year Ended December 31, 2013 | Interest expense | — | 704 | — | 704 | |||||||||||||||||||||||||||||||||||||||||
Interest income | $ | 40,921 | $ | 4,421 | $ | 39,533 | $ | 2,650 | $ | — | $ | 42 | $ | 87,567 | ||||||||||||||||||||||||||||||||
Interest expense | — | 3,901 | 10,876 | — | — | 247 | 15,024 | Net interest income (expense) | 27,496 | 5,559 | — | 33,055 | ||||||||||||||||||||||||||||||||||
Change in fair value of investments in excess mortgage servicing rights | 9,023 | — | — | 9,023 | ||||||||||||||||||||||||||||||||||||||||||
Net interest income | 40,921 | 520 | 28,657 | 2,650 | — | (205 | ) | 72,543 | Other income (loss) | 8,400 | — | — | 8,400 | |||||||||||||||||||||||||||||||||
Impairment | — | — | 4,993 | 461 | — | — | 5,454 | Expenses | 5,449 | — | 3,782 | 9,231 | ||||||||||||||||||||||||||||||||||
Other income | 103,675 | — | 52,645 | 1,832 | 82,856 | — | 241,008 | |||||||||||||||||||||||||||||||||||||||
Operating expenses | 215 | 2,077 | 312 | 357 | 2,076 | 37,437 | 42,474 | Net Income (Loss) | $ | 39,470 | $ | 5,559 | $ | (3,782 | ) | $ | 41,247 | |||||||||||||||||||||||||||||
Income (Loss) Before Income Taxes | 144,381 | (1,557 | ) | 75,997 | 3,664 | 80,780 | (37,642 | ) | 265,623 | December 31, 2012 | ||||||||||||||||||||||||||||||||||||
Total Assets | $ | 245,068 | $ | 289,808 | $ | — | $ | 534,876 | ||||||||||||||||||||||||||||||||||||||
Income tax expense | — | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||
Net Income (Loss) | $ | 144,381 | $ | (1,557 | ) | $ | 75,997 | $ | 3,664 | $ | 80,780 | $ | (37,642 | ) | $ | 265,623 | Excess | Real Estate | Corporate | New | ||||||||||||||||||||||||||
MSRs | Securities | Residential | ||||||||||||||||||||||||||||||||||||||||||||
Noncontrolling interests in income (loss) | $ | — | $ | (326 | ) | $ | — | $ | — | $ | — | $ | — | $ | (326 | ) | Period from December 8, 2011 (Commencement of Operations) through December 31, 2011 | |||||||||||||||||||||||||||||
of consolidated subsidiaries | Interest income | $ | 1,260 | $ | — | $ | — | $ | 1,260 | |||||||||||||||||||||||||||||||||||||
Interest expense | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||
Net income attributable to common | $ | 144,381 | $ | (1,231 | ) | $ | 75,997 | $ | 3,664 | $ | 80,780 | $ | (37,642 | ) | $ | 265,949 | ||||||||||||||||||||||||||||||
shareholders | Net interest income (expense) | 1,260 | — | — | 1,260 | |||||||||||||||||||||||||||||||||||||||||
Change in fair value of investments in excess mortgage servicing rights | 367 | — | — | 367 | ||||||||||||||||||||||||||||||||||||||||||
Expenses | 809 | — | 104 | 913 | ||||||||||||||||||||||||||||||||||||||||||
Servicing Related Assets | Residential Securities | |||||||||||||||||||||||||||||||||||||||||||||
and Loans | Net Income (Loss) | $ | 818 | $ | — | $ | (104 | ) | $ | 714 | ||||||||||||||||||||||||||||||||||||
Excess MSRs | Servicer | Real Estate | Real Estate | Consumer | Corporate | Total | ||||||||||||||||||||||||||||||||||||||||
Advances | Securities | Loans | Loans | December 31, 2011 | ||||||||||||||||||||||||||||||||||||||||||
December 31, 2013 | Total Assets | $ | 43,791 | $ | — | $ | — | $ | 43,791 | |||||||||||||||||||||||||||||||||||||
Investments | $ | 676,917 | $ | 2,665,551 | $ | 1,973,189 | $ | 33,539 | $ | 215,062 | $ | — | $ | 5,564,258 | ||||||||||||||||||||||||||||||||
Cash and restricted cash | — | 85,243 | 51,627 | 22,840 | — | 145,622 | 305,332 | |||||||||||||||||||||||||||||||||||||||
Derivative assets | — | — | 1,452 | 34,474 | — | — | 35,926 | |||||||||||||||||||||||||||||||||||||||
Other assets | 2 | 7,062 | 44,848 | — | — | 1,230 | 53,142 | |||||||||||||||||||||||||||||||||||||||
Total assets | $ | 676,919 | $ | 2,757,856 | $ | 2,071,116 | $ | 90,853 | $ | 215,062 | $ | 146,852 | $ | 5,958,658 | ||||||||||||||||||||||||||||||||
Debt | $ | — | $ | 2,390,778 | $ | 1,620,711 | $ | 22,840 | $ | — | $ | 75,000 | $ | 4,109,329 | ||||||||||||||||||||||||||||||||
Other liabilities | 80 | 4,271 | 215,159 | 32,553 | 33 | 84,158 | 336,254 | |||||||||||||||||||||||||||||||||||||||
Total liabilities | 80 | 2,395,049 | 1,835,870 | 55,393 | 33 | 159,158 | 4,445,583 | |||||||||||||||||||||||||||||||||||||||
Total equity | 676,839 | 362,807 | 235,246 | 35,460 | 215,029 | (12,306 | ) | 1,513,075 | ||||||||||||||||||||||||||||||||||||||
Noncontrolling interests in equity of | — | 247,225 | — | — | — | — | 247,225 | |||||||||||||||||||||||||||||||||||||||
consolidated subsidiaries | ||||||||||||||||||||||||||||||||||||||||||||||
Total New Residential stockholders’ equity | $ | 676,839 | $ | 115,582 | $ | 235,246 | $ | 35,460 | $ | 215,029 | $ | (12,306 | ) | $ | 1,265,850 | |||||||||||||||||||||||||||||||
Investments in equity method investees | $ | 352,766 | $ | — | $ | — | $ | — | $ | 215,062 | $ | — | $ | 567,828 | ||||||||||||||||||||||||||||||||
Servicing Related Assets | Residential Securities | |||||||||||||||||||||||||||||||||||||||||||||
and Loans | ||||||||||||||||||||||||||||||||||||||||||||||
Excess MSRs | Servicer | Real Estate | Real Estate | Consumer | Corporate | Total | ||||||||||||||||||||||||||||||||||||||||
Advances | Securities | Loans | Loans | |||||||||||||||||||||||||||||||||||||||||||
Year Ended December 31, 2012 | ||||||||||||||||||||||||||||||||||||||||||||||
Interest income | $ | 27,496 | $ | — | $ | 6,263 | $ | — | $ | — | $ | — | $ | 33,759 | ||||||||||||||||||||||||||||||||
Interest expense | — | — | 704 | — | — | — | 704 | |||||||||||||||||||||||||||||||||||||||
Net interest income | 27,496 | — | 5,559 | — | — | — | 33,055 | |||||||||||||||||||||||||||||||||||||||
Impairment | — | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||
Other income | 17,423 | — | — | — | — | — | 17,423 | |||||||||||||||||||||||||||||||||||||||
Operating expenses | 5,449 | — | — | — | — | 3,782 | 9,231 | |||||||||||||||||||||||||||||||||||||||
Income (Loss) Before Income Taxes | 39,470 | — | 5,559 | — | — | (3,782 | ) | 41,247 | ||||||||||||||||||||||||||||||||||||||
Income tax expense | — | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||
Net Income (Loss) | $ | 39,470 | $ | — | $ | 5,559 | $ | — | $ | — | $ | (3,782 | ) | $ | 41,247 | |||||||||||||||||||||||||||||||
Noncontrolling interests in income (loss) | $ | — | $ | — | $ | — | $ | — | $ | — | $ | — | $ | — | ||||||||||||||||||||||||||||||||
of consolidated subsidiaries | ||||||||||||||||||||||||||||||||||||||||||||||
Net income attributable to common | $ | 39,470 | $ | — | $ | 5,559 | $ | — | $ | — | $ | (3,782 | ) | $ | 41,247 | |||||||||||||||||||||||||||||||
shareholders | ||||||||||||||||||||||||||||||||||||||||||||||
Servicing Related Assets | Residential Securities | |||||||||||||||||||||||||||||||||||||||||||||
and Loans | ||||||||||||||||||||||||||||||||||||||||||||||
Excess MSRs | Servicer | Real Estate | Real Estate | Consumer | Corporate | Total | ||||||||||||||||||||||||||||||||||||||||
Advances | Securities | Loans | Loans | |||||||||||||||||||||||||||||||||||||||||||
December 31, 2012 | ||||||||||||||||||||||||||||||||||||||||||||||
Investments | $ | 245,036 | $ | — | $ | 289,756 | $ | — | $ | — | $ | — | $ | 534,792 | ||||||||||||||||||||||||||||||||
Cash and restricted cash | — | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||
Derivative assets | — | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||
Other assets | 32 | — | 52 | — | — | — | 84 | |||||||||||||||||||||||||||||||||||||||
Total assets | $ | 245,068 | $ | — | $ | 289,808 | $ | — | $ | — | $ | — | $ | 534,876 | ||||||||||||||||||||||||||||||||
Debt | $ | — | $ | — | $ | 150,922 | $ | — | $ | — | $ | — | $ | 150,922 | ||||||||||||||||||||||||||||||||
Other liabilities | 174 | — | 56 | — | — | 5,368 | 5,598 | |||||||||||||||||||||||||||||||||||||||
Total liabilities | 174 | — | 150,978 | — | — | 5,368 | 156,520 | |||||||||||||||||||||||||||||||||||||||
Total equity | 244,894 | — | 138,830 | — | — | (5,368 | ) | 378,356 | ||||||||||||||||||||||||||||||||||||||
Noncontrolling interests in equity of | — | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||
consolidated subsidiaries | ||||||||||||||||||||||||||||||||||||||||||||||
Total New Residential stockholders’ equity | $ | 244,894 | $ | — | $ | 138,830 | $ | — | $ | — | $ | (5,368 | ) | $ | 378,356 | |||||||||||||||||||||||||||||||
Investments in equity method investees | $ | — | $ | — | $ | — | $ | — | $ | — | $ | — | $ | — | ||||||||||||||||||||||||||||||||
Servicing Related Assets | Residential Securities | |||||||||||||||||||||||||||||||||||||||||||||
and Loans | ||||||||||||||||||||||||||||||||||||||||||||||
Excess MSRs | Servicer | Real Estate | Real Estate | Consumer | Corporate | Total | ||||||||||||||||||||||||||||||||||||||||
Advances | Securities | Loans | Loans | |||||||||||||||||||||||||||||||||||||||||||
Period from December 8, 2011 | ||||||||||||||||||||||||||||||||||||||||||||||
(Commencement of Operations) | ||||||||||||||||||||||||||||||||||||||||||||||
through December 31, 2011 | ||||||||||||||||||||||||||||||||||||||||||||||
Interest income | $ | 1,260 | $ | — | $ | — | $ | — | $ | — | $ | — | $ | 1,260 | ||||||||||||||||||||||||||||||||
Interest expense | — | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||
Net interest income | 1,260 | — | — | — | — | — | 1,260 | |||||||||||||||||||||||||||||||||||||||
Impairment | — | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||
Other income | 367 | — | — | — | — | — | 367 | |||||||||||||||||||||||||||||||||||||||
Operating expenses | 809 | — | — | — | — | 104 | 913 | |||||||||||||||||||||||||||||||||||||||
Income (Loss) Before Income Taxes | 818 | — | — | — | — | (104 | ) | 714 | ||||||||||||||||||||||||||||||||||||||
Income tax expenses | — | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||
Net Income (Loss) | $ | 818 | $ | — | $ | — | $ | — | $ | — | $ | (104 | ) | $ | 714 | |||||||||||||||||||||||||||||||
Noncontrolling interests in income of | $ | — | $ | — | $ | — | $ | — | $ | — | $ | — | $ | — | ||||||||||||||||||||||||||||||||
consolidated subsidiaries | ||||||||||||||||||||||||||||||||||||||||||||||
Net income attributable to shareholders | $ | 818 | $ | — | $ | — | $ | — | $ | — | $ | (104 | ) | $ | 714 | |||||||||||||||||||||||||||||||
INVESTMENTS_IN_EXCESS_MORTGAGE2
INVESTMENTS IN EXCESS MORTGAGE SERVICING RIGHTS AT FAIR VALUE (Tables) | 12 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||
Dec. 31, 2013 | Dec. 31, 2012 | |||||||||||||||||||||||||||||||||||||||||||||||||||||
Investments In Excess Mortgage Servicing Rights At Fair Value Tables | ' | ' | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of direct investment in Excess Mortgage Servicing Rights (MSRs) | ' | ' | ||||||||||||||||||||||||||||||||||||||||||||||||||||
The following is a summary of New Residential’s direct investments in Excess MSRs: | The following is a summary of New Residential’s Excess MSRs at December 31, 2012 and 2011: | |||||||||||||||||||||||||||||||||||||||||||||||||||||
December 31, 2013 | Year | December 31, 2011 | Period From | |||||||||||||||||||||||||||||||||||||||||||||||||||
Ended | 8-Dec-11 | |||||||||||||||||||||||||||||||||||||||||||||||||||||
December 31, | (Commencement | |||||||||||||||||||||||||||||||||||||||||||||||||||||
2013 | of Operations) | |||||||||||||||||||||||||||||||||||||||||||||||||||||
Unpaid | Interest in | Amortized | Carrying | Weighted | Weighted | Changes in | Through Dec 31, | |||||||||||||||||||||||||||||||||||||||||||||||
Principal | Excess | Cost Basis | Value (B) | Average | Average | Fair Value | 2011 | |||||||||||||||||||||||||||||||||||||||||||||||
Balance | MSR | (A) | Yield | Life | Recorded in | Description | Unpaid | Amortized | Carrying | Wtd. | Wtd. | Changes in Fair | ||||||||||||||||||||||||||||||||||||||||||
(“UPB”) of | (Years) (C) | Other | Principal | Cost | Value(B) | Avg. | Avg. | Value Recorded | ||||||||||||||||||||||||||||||||||||||||||||||
Underlying | Income (D) | Balance | Basis(A) | Yield | Maturity | in Income(D) | ||||||||||||||||||||||||||||||||||||||||||||||||
Mortgages | (Years)(C) | |||||||||||||||||||||||||||||||||||||||||||||||||||||
MSR Pool 1 | $ | 6,873,942 | 65 | % | $ | 26,279 | $ | 36,235 | 12.5 | % | 5.2 | $ | 4,219 | Pool 1 | $ | 9,705,512 | $ | 37,469 | $ | 37,637 | 20 | % | 4.5 | $ | 168 | |||||||||||||||||||||||||||||
MSR Pool 1 - Recapture Agreement | — | 65 | % | 1,109 | 6,820 | 12.5 | % | 11.9 | 5,205 | Pool 1-Recapture Agreement | — | 6,135 | 6,334 | 20 | % | 10.3 | 199 | |||||||||||||||||||||||||||||||||||||
MSR Pool 2 | 7,924,920 | 65 | % | 30,217 | 35,234 | 12.5 | % | 5.5 | 3,971 | |||||||||||||||||||||||||||||||||||||||||||||
MSR Pool 2 - Recapture Agreement | — | 65 | % | 1,252 | 6,587 | 12.5 | % | 12.5 | 5,154 | $ | 9,705,512 | $ | 43,604 | $ | 43,971 | 20 | % | 6 | $ | 367 | ||||||||||||||||||||||||||||||||||
MSR Pool 3 | 7,822,453 | 65 | % | 24,636 | 32,899 | 12.5 | % | 5.1 | 5,408 | |||||||||||||||||||||||||||||||||||||||||||||
MSR Pool 3 - Recapture Agreement | — | 65 | % | 2,733 | 6,642 | 12.5 | % | 12.1 | 3,985 | |||||||||||||||||||||||||||||||||||||||||||||
MSR Pool 4 | 5,076,470 | 65 | % | 9,876 | 13,823 | 12.5 | % | 4.9 | 2,929 | |||||||||||||||||||||||||||||||||||||||||||||
MSR Pool 4 - Recapture Agreement | — | 65 | % | 2,300 | 4,105 | 12.5 | % | 12 | 1,819 | Description | December 31, 2012 | Year Ended | ||||||||||||||||||||||||||||||||||||||||||
MSR Pool 5 (E) | 36,907,851 | 80 | % | 117,544 | 140,634 | 12.5 | % | 5.4 | 21,113 | December 31, | ||||||||||||||||||||||||||||||||||||||||||||
MSR Pool 5 - Recapture Agreement | — | 80 | % | 9,229 | 5,609 | 12.5 | % | 13.4 | 221 | 2012 | ||||||||||||||||||||||||||||||||||||||||||||
MSR Pool 11 | 436,241 | 66.7 | % | 2,091 | 2,080 | 12.5 | % | 6.5 | (11 | ) | Unpaid | Amortized | Carrying | Wtd. | Wtd. Avg. | Changes in | ||||||||||||||||||||||||||||||||||||||
MSR Pool 11 - Recapture Agreement | — | 66.7 | % | 254 | 235 | 12.5 | % | 14.3 | (19 | ) | Principal | Cost | Value(B) | Avg. | Maturity | Fair Value | ||||||||||||||||||||||||||||||||||||||
MSR Pool 12 (E) | 5,152,877 | 40 | % | 16,233 | 16,294 | 16.4 | % | 4.5 | 60 | Balance | Basis(A) | Yield | (Years)(C) | Recorded in | ||||||||||||||||||||||||||||||||||||||||
MSR Pool 12 - Recapture Agreement | — | 40 | % | 474 | 240 | 16.4 | % | 13.2 | (233 | ) | Income(D) | |||||||||||||||||||||||||||||||||||||||||||
MSR Pool 18(F) | 8,758,860 | 40 | % | 16,075 | 16,079 | 15.3 | % | 4.6 | 3 | Pool 1 | $ | 8,403,211 | $ | 30,237 | $ | 35,974 | 18 | % | 4.8 | $ | 5,569 | |||||||||||||||||||||||||||||||||
MSR Pool 18 Recapture Agreement | — | 40 | % | 1,127 | 635 | 15.3 | % | 12.3 | (492 | ) | Pool 1-Recapture Agreement | — | 4,430 | 4,936 | 18 | % | 10.8 | 307 | ||||||||||||||||||||||||||||||||||||
Pool 2 | 9,397,120 | 32,890 | 33,935 | 17.3 | % | 5 | 1,045 | |||||||||||||||||||||||||||||||||||||||||||||||
$ | 78,953,614 | $ | 261,429 | $ | 324,151 | 12.9 | % | 5.8 | $ | 53,332 | Pool 2-Recapture Agreement | — | 5,206 | 5,387 | 17.3 | % | 11.8 | 181 | ||||||||||||||||||||||||||||||||||||
Pool 3 | 9,069,726 | 27,618 | 30,474 | 17.6 | % | 4.7 | 2,856 | |||||||||||||||||||||||||||||||||||||||||||||||
Pool 3-Recapture Agreement | — | 5,036 | 4,960 | 17.6 | % | 11.3 | (76 | ) | ||||||||||||||||||||||||||||||||||||||||||||||
Pool 4 | 5,788,133 | 11,130 | 12,149 | 17.9 | % | 4.6 | 1,019 | |||||||||||||||||||||||||||||||||||||||||||||||
December 31, 2012 | Year Ended | Pool 4-Recapture Agreement | — | 2,902 | 2,887 | 17.9 | % | 11.1 | (15 | ) | ||||||||||||||||||||||||||||||||||||||||||||
December 31, | Pool 5 | 43,902,561 | 107,704 | 109,682 | 17.5 | % | 4.8 | 1,978 | ||||||||||||||||||||||||||||||||||||||||||||||
2012 | Pool 5-Recapture Agreement | — | 8,493 | 4,652 | 17.5 | % | 11.7 | (3,841 | ) | |||||||||||||||||||||||||||||||||||||||||||||
UPB | Interest | Amortized Cost | Carrying | Weighted | Weighted | Changes in | ||||||||||||||||||||||||||||||||||||||||||||||||
in Excess | Basis (A) | Value (B) | Average Yield | Average Life | Fair Value | $ | 76,560,751 | $ | 235,646 | $ | 245,036 | 17.6 | % | 5.4 | $ | 9,023 | ||||||||||||||||||||||||||||||||||||||
MSR | (Years) (C) | Recorded in | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Other | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
Income (D) | (A) | The amortized cost basis of the Recapture Agreements is determined based on the relative fair values of the Recapture Agreements and related Excess MSRs at the time they were acquired. | ||||||||||||||||||||||||||||||||||||||||||||||||||||
MSR Pool 1 | $ | 8,403,211 | 65 | % | $ | 30,237 | $ | 35,974 | 18 | % | 4.8 | $ | 5,569 | (B) | Carrying Value represents the fair value of the pools or Recapture Agreements, as applicable. | |||||||||||||||||||||||||||||||||||||||
MSR Pool 1 - Recapture Agreement | — | 65 | % | 4,430 | 4,936 | 18 | % | 10.8 | 307 | (C) | Weighted Average Maturity represents the weighted average expected timing of the receipt of expected cash flows for this investment. | |||||||||||||||||||||||||||||||||||||||||||
MSR Pool 2 | 9,397,120 | 65 | % | 32,890 | 33,935 | 17.3 | % | 5 | 1,045 | (D) | The portion of the change in fair value of the Recapture Agreements relating to loans recaptured to date is reflected in the respective pool. | |||||||||||||||||||||||||||||||||||||||||||
MSR Pool 2 - Recapture Agreement | — | 65 | % | 5,206 | 5,387 | 17.3 | % | 11.8 | 181 | |||||||||||||||||||||||||||||||||||||||||||||
MSR Pool 3 | 9,069,726 | 65 | % | 27,618 | 30,474 | 17.6 | % | 4.7 | 2,856 | |||||||||||||||||||||||||||||||||||||||||||||
MSR Pool 3 - Recapture Agreement | — | 65 | % | 5,036 | 4,960 | 17.6 | % | 11.3 | (76 | ) | ||||||||||||||||||||||||||||||||||||||||||||
MSR Pool 4 | 5,788,133 | 65 | % | 11,130 | 12,149 | 17.9 | % | 4.6 | 1,019 | |||||||||||||||||||||||||||||||||||||||||||||
MSR Pool 4 - Recapture Agreement | — | 65 | % | 2,902 | 2,887 | 17.9 | % | 11.1 | (15 | ) | ||||||||||||||||||||||||||||||||||||||||||||
MSR Pool 5 (E) | 43,902,561 | 65 | % | 107,704 | 109,682 | 17.5 | % | 4.8 | 1,978 | |||||||||||||||||||||||||||||||||||||||||||||
MSR Pool 5 - Recapture Agreement | — | 65 | % | 8,493 | 4,652 | 17.5 | % | 11.7 | (3,841 | ) | ||||||||||||||||||||||||||||||||||||||||||||
$ | 76,560,751 | $ | 235,646 | $ | 245,036 | 17.6 | % | 5.4 | $ | 9,023 | ||||||||||||||||||||||||||||||||||||||||||||
(A) | The amortized cost basis of the Recapture Agreements is determined based on the relative fair values of the Recapture Agreements and related Excess MSRs at the time they were acquired. | |||||||||||||||||||||||||||||||||||||||||||||||||||||
(B) | Carrying Value represents the fair value of the pools or Recapture Agreements, as applicable. | |||||||||||||||||||||||||||||||||||||||||||||||||||||
(C) | Weighted Average Life represents the weighted average expected timing of the receipt of expected cash flows for this investment. | |||||||||||||||||||||||||||||||||||||||||||||||||||||
(D) | The portion of the change in fair value of the Recapture Agreements relating to loans recaptured to date is reflected in the respective pool. For the year ended December 31, 2011 the change in fair value recorded in other income related to Pool 1 was $0.4 million. | |||||||||||||||||||||||||||||||||||||||||||||||||||||
(E) | Pool in which New Residential also invested in related servicer advances, including the basic fee component of the related MSR subsequent to December 31, 2013 (Note 18). | |||||||||||||||||||||||||||||||||||||||||||||||||||||
(F) | Pool in which New Residential also invested in related servicer advances, including the basic fee component of the related MSR as of December 31, 2013 (Note 6). | |||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of the geographic distribution of the underlying residential mortgage loans of the direct investment in Excess MSRs | ' | ' | ||||||||||||||||||||||||||||||||||||||||||||||||||||
The table below summarizes the geographic distribution of the underlying residential mortgage loans of the direct investments in Excess MSRs as of December 31, 2013: | The table below summarizes the geographic distribution of the underlying residential mortgage loans of the Excess MSRs at December 31, 2012 and 2011: | |||||||||||||||||||||||||||||||||||||||||||||||||||||
Percentage of Total Outstanding Unpaid Principal Amount as of December 31, | Percentage of Total Outstanding Unpaid Principal Amount(A) | |||||||||||||||||||||||||||||||||||||||||||||||||||||
2013 | 2012 | December 31, 2012 | December 31, 2011 | |||||||||||||||||||||||||||||||||||||||||||||||||||
State Concentration | Percentage of UPB | State Concentration | Percentage of UPB | State Concentration | Percentage | State Concentration | Percentage | |||||||||||||||||||||||||||||||||||||||||||||||
California | 31.5 | % | California | 32 | % | California | 32 | % | California | 19.4 | % | |||||||||||||||||||||||||||||||||||||||||||
Florida | 9.8 | % | Florida | 10.1 | % | Florida | 10.1 | % | Florida | 11.1 | % | |||||||||||||||||||||||||||||||||||||||||||
New York | 4.9 | % | New York | 4.3 | % | Washington | 4.3 | % | Texas | 6.7 | % | |||||||||||||||||||||||||||||||||||||||||||
Texas | 4 | % | Washington | 4.3 | % | New York | 4.3 | % | Arizona | 4.8 | % | |||||||||||||||||||||||||||||||||||||||||||
Washington | 3.9 | % | Arizona | 3.9 | % | Arizona | 3.9 | % | Virginia | 3.5 | % | |||||||||||||||||||||||||||||||||||||||||||
Arizona | 3.5 | % | Texas | 3.6 | % | Texas | 3.6 | % | Washington | 3.2 | % | |||||||||||||||||||||||||||||||||||||||||||
Maryland | 3.5 | % | Colorado | 3.5 | % | Colorado | 3.5 | % | New Jersey | 3.1 | % | |||||||||||||||||||||||||||||||||||||||||||
New Jersey | 3.3 | % | Maryland | 3.4 | % | Maryland | 3.4 | % | Maryland | 3.1 | % | |||||||||||||||||||||||||||||||||||||||||||
Colorado | 3.2 | % | New Jersey | 3.1 | % | New Jersey | 3.1 | % | Illinois | 3 | % | |||||||||||||||||||||||||||||||||||||||||||
Virginia | 3.1 | % | Virginia | 3 | % | Virginia | 3 | % | Nevada | 2.7 | % | |||||||||||||||||||||||||||||||||||||||||||
Other U.S. | 29.3 | % | Other U.S. | 28.8 | % | Other U.S. | 28.8 | % | Other U.S. | 39.4 | % | |||||||||||||||||||||||||||||||||||||||||||
100 | % | 100 | % | 100 | % | 100 | % | |||||||||||||||||||||||||||||||||||||||||||||||
(A) | Based on the information provided by the loan servicer as of the most recent remittance for the respective dates. |
INVESTMENTS_IN_EXCESS_MORTGAGE3
INVESTMENTS IN EXCESS MORTGAGE SERVICING RIGHTS EQUITY METHOD INVESTEES (Tables) | 12 Months Ended | ||||||||||||||||||||||||||||
Dec. 31, 2013 | |||||||||||||||||||||||||||||
Investments In Excess Mortgage Servicing Rights Equity Method Investees Tables | ' | ||||||||||||||||||||||||||||
Schedule of investments in excess mortgage servicing rights equity method investees | ' | ||||||||||||||||||||||||||||
The following tables summarize the investments in Excess MSR joint ventures, accounted for as equity method investees held by New Residential: | |||||||||||||||||||||||||||||
December 31, 2013 | |||||||||||||||||||||||||||||
Excess MSR assets | $ | 703,681 | |||||||||||||||||||||||||||
Other assets | 5,534 | ||||||||||||||||||||||||||||
Debt | — | ||||||||||||||||||||||||||||
Other liabilities | (3,683 | ) | |||||||||||||||||||||||||||
Equity | $ | 705,532 | |||||||||||||||||||||||||||
New Residential’s investment | $ | 352,766 | |||||||||||||||||||||||||||
New Residential’s ownership | 50 | % | |||||||||||||||||||||||||||
Year Ended December 31, | |||||||||||||||||||||||||||||
2013 | |||||||||||||||||||||||||||||
Interest income | $ | 50,306 | |||||||||||||||||||||||||||
Other income | 53,964 | ||||||||||||||||||||||||||||
Expenses | (3,585 | ) | |||||||||||||||||||||||||||
Net income | $ | 100,685 | |||||||||||||||||||||||||||
Schedule of Excess Mortgage Servicing Rights (MSRs) investments made through equity method investees | ' | ||||||||||||||||||||||||||||
The following is a summary of New Residential’s Excess MSR investments made through equity method investees: | |||||||||||||||||||||||||||||
December 31, 2013 | |||||||||||||||||||||||||||||
Unpaid | Investee | New | Amortized | Carrying Value | Weighted | Weighted | |||||||||||||||||||||||
Principal | Interest in | Residential | Cost Basis (A) | (B) | Average | Average | |||||||||||||||||||||||
Balance | Excess MSR | Interest | Yield | Life (Years) | |||||||||||||||||||||||||
in Investees | (C) | ||||||||||||||||||||||||||||
MSR Pool 6 | $ | 10,152,488 | 66.7 | % | 50 | % | $ | 38,488 | $ | 47,144 | 12.5 | % | 5 | ||||||||||||||||
MSR Pool 6 - Recapture Agreement | — | 66.7 | % | 50 | % | 7,666 | 9,969 | 12.5 | % | 11.9 | |||||||||||||||||||
MSR Pool 7 | 31,518,733 | 66.7 | % | 50 | % | 99,743 | 102,947 | 12.5 | % | 5.1 | |||||||||||||||||||
MSR Pool 7 - Recapture Agreement | — | 66.7 | % | 50 | % | 16,706 | 26,388 | 12.5 | % | 12.3 | |||||||||||||||||||
MSR Pool 8 | 14,040,636 | 66.7 | % | 50 | % | 55,905 | 54,759 | 12.5 | % | 5.1 | |||||||||||||||||||
MSR Pool 8 - Recapture Agreement | — | 66.7 | % | 50 | % | 7,542 | 14,713 | 12.5 | % | 11.9 | |||||||||||||||||||
MSR Pool 9 | 30,814,192 | 66.7 | % | 50 | % | 103,713 | 127,646 | 12.5 | % | 4.8 | |||||||||||||||||||
MSR Pool 9 - Recapture Agreement | — | 66.7 | % | 50 | % | 33,905 | 34,154 | 12.5 | % | 11.9 | |||||||||||||||||||
MSR Pool 10 (D) | 68,890,509 | 66.7-77.0 | % | 50 | % | 205,975 | 208,055 | 12.5 | % | 5.4 | |||||||||||||||||||
MSR Pool 10 - Recapture Agreement | — | 66.7-77.0 | % | 50 | % | 13,739 | 7,165 | 12.5 | % | 13.4 | |||||||||||||||||||
MSR Pool 11 | 18,202,920 | 66.7 | % | 50 | % | 43,157 | 51,687 | 12.5 | % | 5.5 | |||||||||||||||||||
MSR Pool 11 - Recapture Agreement | — | 66.7 | % | 50 | % | 23,178 | 19,054 | 12.5 | % | 11.1 | |||||||||||||||||||
$ | 173,619,478 | $ | 649,717 | $ | 703,681 | 12.5 | % | 6.3 | |||||||||||||||||||||
(A) | Represents the amortized cost basis of the equity method investees in which New Residential holds a 50% interest. The amortized cost basis of the Recapture Agreements is determined based on the relative fair values of the Recapture Agreements and related Excess MSRs at the time they were acquired. | ||||||||||||||||||||||||||||
(B) | Represents the carrying value of the Excess MSRs held in equity method investees, in which New Residential holds a 50% interest. Carrying value represents the fair value of the pools or Recapture Agreements, as applicable. | ||||||||||||||||||||||||||||
(C) | The weighted average life represents the weighted average expected timing of the receipt of cash flows of each investment. | ||||||||||||||||||||||||||||
(D) | Pool in which New Residential also invested in related servicer advances, including the basic fee component of the related MSR as of December 31, 2013 (Note 6). | ||||||||||||||||||||||||||||
Summary of the geographic distribution of the underlying residential mortgage loans of Excess MSRs made through equity method investees | ' | ||||||||||||||||||||||||||||
The table below summarizes the geographic distribution of the underlying residential mortgage loans of the Excess MSR investments made through equity method investees as of December 31, 2013: | |||||||||||||||||||||||||||||
State Concentration | Percentage of | ||||||||||||||||||||||||||||
UPB | |||||||||||||||||||||||||||||
California | 23.5 | % | |||||||||||||||||||||||||||
Florida | 9.2 | % | |||||||||||||||||||||||||||
New York | 5.3 | % | |||||||||||||||||||||||||||
Texas | 4.9 | % | |||||||||||||||||||||||||||
Georgia | 4 | % | |||||||||||||||||||||||||||
New Jersey | 3.7 | % | |||||||||||||||||||||||||||
Illinois | 3.5 | % | |||||||||||||||||||||||||||
Virginia | 3.1 | % | |||||||||||||||||||||||||||
Maryland | 3.1 | % | |||||||||||||||||||||||||||
Washington | 2.8 | % | |||||||||||||||||||||||||||
Other U.S. | 36.9 | % | |||||||||||||||||||||||||||
100 | % | ||||||||||||||||||||||||||||
INVESTMENTS_IN_SERVICER_ADVANC1
INVESTMENTS IN SERVICER ADVANCES (Tables) | 12 Months Ended | ||||||||||||||||||||||||||||||||
Dec. 31, 2013 | |||||||||||||||||||||||||||||||||
Investments In Servicer Advances Tables | ' | ||||||||||||||||||||||||||||||||
Schedule of investment in servicer advances | ' | ||||||||||||||||||||||||||||||||
The following is a summary of the investments in servicer advances, including the right to the basic fee component of the related MSRs, made by the Buyer, which New Residential consolidates: | |||||||||||||||||||||||||||||||||
December 31, 2013 | Year Ended | ||||||||||||||||||||||||||||||||
December 31, 2013 | |||||||||||||||||||||||||||||||||
Amortized Cost | Carrying | Weighted | Weighted Average | Change in Fair Value | |||||||||||||||||||||||||||||
Basis | Value (A) | Average Yield | Life (Years) (B) | Recorded in Other | |||||||||||||||||||||||||||||
Income | |||||||||||||||||||||||||||||||||
Servicer advances | $ | 2,665,551 | $ | 2,665,551 | 4.4 | % | 2.7 | $ | — | ||||||||||||||||||||||||
(A) | Carrying value represents the fair value of the investment in servicer advances, including the basic fee component of the related MSRs. | ||||||||||||||||||||||||||||||||
(B) | Weighted Average Life represents the weighted average expected timing of the receipt of expected net cash flows for this investment. | ||||||||||||||||||||||||||||||||
The following is additional information regarding the servicer advances, and related financing, of the Buyer, which New Residential consolidates as of December 31, 2013: | |||||||||||||||||||||||||||||||||
UPB of | Loan-to-Value | Cost of Funds (B) | |||||||||||||||||||||||||||||||
Underlying | |||||||||||||||||||||||||||||||||
Residential | |||||||||||||||||||||||||||||||||
Mortgage | |||||||||||||||||||||||||||||||||
Loans | Outstanding | Servicer | Carrying | Gross | Net (A) | Gross | Net | ||||||||||||||||||||||||||
Servicer | Advances | Value of | |||||||||||||||||||||||||||||||
Advances | to UPB | Notes | |||||||||||||||||||||||||||||||
of | Payable | ||||||||||||||||||||||||||||||||
Underlying | |||||||||||||||||||||||||||||||||
Residential | |||||||||||||||||||||||||||||||||
Mortgage | |||||||||||||||||||||||||||||||||
Loans | |||||||||||||||||||||||||||||||||
Servicer advances (C) | $ | 43,444,216 | $ | 2,661,130 | 6.1 | % | $ | 2,390,778 | 89.8 | % | 88.6 | % | 4 | % | 2.3 | % | |||||||||||||||||
(A) | Ratio of face amount of borrowings to value of servicer advance collateral, net of an interest reserve maintained by the Buyer. | ||||||||||||||||||||||||||||||||
(B) | Annualized measure of the cost associated with borrowings. Gross Cost of Funds primarily includes interest expense and facility fees. Net Cost of Funds excludes facility fees. | ||||||||||||||||||||||||||||||||
(C) | The following types of advances comprise the investment in servicer advances: | ||||||||||||||||||||||||||||||||
December 31, 2013 | |||||||||||||||||||||||||||||||||
Principal and interest advances | $ | 1,516,715 | |||||||||||||||||||||||||||||||
Escrow advances (taxes and insurance advances) | 934,525 | ||||||||||||||||||||||||||||||||
Foreclosure advances | 209,890 | ||||||||||||||||||||||||||||||||
Total | $ | 2,661,130 | |||||||||||||||||||||||||||||||
INVESTMENTS_IN_REAL_ESTATE_SEC1
INVESTMENTS IN REAL ESTATE SECURITIES (Tables) | 12 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Dec. 31, 2013 | Dec. 31, 2012 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Investments In Real Estate Securities Tables | ' | ' | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Real Estate Securities | ' | ' | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
The following is a summary of New Residential’s real estate securities as of December 31, 2013 and 2012, all of which are classified as available-for-sale and are, therefore, reported at fair value with changes in fair value recorded in other comprehensive income, except for securities that are other-than-temporarily impaired. | The following is a summary of New Residential’s real estate securities at December 31, 2012, all of which are classified as available-for-sale and are, therefore, reported at fair value with changes in fair value recorded in other comprehensive income. | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Gross Unrealized | Weighted Average | Gross Unrealized | Weighted Average | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Asset Type | Outstanding | Amortized | Gains | Losses | Carrying | Number | Rating | Coupon | Yield | Life | Principal | Asset Type | Outstanding | Amortized | Gains | Losses | Carrying | Number of | Rating | Coupon | Yield | Maturity | Principal | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Face Amount | Cost Basis | Value (A) | of | (B) | (Years) | Subordination | Face Amount | Cost Basis | Value | Securities | (B) | (Years) | Subordination | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Securities | (C) | (D) | (A) | (C) | (D) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
December 31, 2013 | ABS-Subprime (E) | $ | 433,510 | $ | 274,230 | $ | 15,856 | $ | (330 | ) | $ | 289,756 | 29 | CC | 0.63 | % | 6.55 | % | 6.8 | 10 | % | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Agency ARM RMBS (E)(F) | $ | 1,314,130 | $ | 1,403,215 | $ | 3,434 | $ | (3,885 | ) | $ | 1,402,764 | 114 | AAA | 3.18 | % | 1.33 | % | 4.1 | N/A | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Non-Agency RMBS | 872,866 | 566,760 | 7,618 | (3,953 | ) | 570,425 | 100 | CCC- | 0.94 | % | 4.68 | % | 8 | 7.4 | % | (A) | Fair value, which is equal to carrying value for all securities. See Note 7 regarding the estimation of fair value. | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
(B) | Represents the weighted average of the ratings of all securities in each asset type, expressed as an S&P equivalent rating. For each security rated by multiple rating agencies, the lowest rating is used. Ratings provided were determined by third party rating agencies as of a particular date, may not be current and are subject to change at any time. | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Total/Weighted Average (G) | $ | 2,186,996 | $ | 1,969,975 | $ | 11,052 | $ | (7,838 | ) | $ | 1,973,189 | 214 | BBB+ | 2.28 | % | 2.66 | % | 5.7 | (C) | The weighted average maturity is based on the timing of expected principal reduction on the assets. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
(D) | Percentage of the outstanding face amount of securities and residual interests that is subordinate to New Residential’s investments. | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
(E) | The total outstanding face amount of fixed rate securities was $1.1 million, and of floating rate securities was $432.4 million. | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
December 31, 2012 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Non-Agency RMBS | $ | 433,510 | $ | 274,230 | $ | 15,856 | $ | (330 | ) | $ | 289,756 | 29 | CC | 0.63 | % | 6.55 | % | 6.8 | 10 | % | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
(A) | Fair value, which is equal to carrying value for all securities. See Note 12 regarding the estimation of fair value. | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
(B) | Represents the weighted average of the ratings of all securities in each asset type, expressed as an S&P equivalent rating. This excludes the ratings of two non-agency bonds with a face amount of $6.3 million for which New Residential was unable to obtain rating information. For each security rated by multiple rating agencies, the lowest rating is used. New Residential used an implied AAA rating for the Agency ARM RMBS. Ratings provided were determined by third party rating agencies, represent the most recent credit ratings available as of the reporting date and may not be current. | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
(C) | The weighted average life is based on the timing of expected principal reduction on the assets. | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
(D) | Percentage of the outstanding face amount of securities and residual interests that is subordinate to New Residential’s investments. | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
(E) | Includes securities issued or guaranteed by U.S. Government agencies such as the Federal National Mortgage Association (“Fannie Mae”) or the Federal Home Loan Mortgage Corporation (“Freddie Mac”). | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
(F) | Amortized cost basis and carrying value include principal receivable of $10.6 million. | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
(G) | The total outstanding face amount was $6.6 million for fixed rate securities and $2.2 billion for floating rate securities. | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Real Estate Securities in an Unrealized Loss Position | ' | ' | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
The following table summarizes New Residential’s securities in an unrealized loss position as of December 31, 2013. | The following table summarizes New Residential’s securities in an unrealized loss position as of December 31, 2012. | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Amortized Cost Basis | Weighted Average | GrossUnrealized | Weighted Average | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Securities in an | Outstanding | Before | Other- | After | Gross | Carrying | Number | Rating | Coupon | Yield | Life | Securities in an | Outstanding | Amortized | Gains | Losses | Carrying | Number of | Rating | Coupon | Yield | Maturity | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Unrealized Loss Position | Face | Impairment | Than- | Impairment | Unrealized | Value | of | (B) | (Years) | Unrealized Loss Position | Face Amount | Cost Basis | Value | Securities | (Years) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Amount | Temporary | Losses | Securities | Less than Twelve Months | $ | 15,747 | $ | 9,945 | $ | — | $ | (330 | ) | $ | 9,615 | 4 | CC | 1.46 | % | 5.91 | % | 7.2 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Impairment | Twelve of More Months | — | — | — | — | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
(A) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Total | $ | 15,747 | $ | 9,945 | $ | — | $ | (330 | ) | $ | 9,615 | 4 | CC | 1.46 | % | 5.91 | % | 7.2 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Less than Twelve Months | $ | 878,993 | $ | 827,517 | $ | (1,470 | ) | $ | 826,047 | $ | (7,542 | ) | $ | 818,505 | 78 | A- | 2.54 | % | 2.07 | % | 5.5 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Twelve or More Months | 48,078 | 51,930 | (601 | ) | 51,329 | (296 | ) | 51,033 | 7 | AAA | 3.36 | % | 1.28 | % | 3.3 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Total/Weighted Average | $ | 927,071 | $ | 879,447 | $ | (2,071 | ) | $ | 877,376 | $ | (7,838 | ) | $ | 869,538 | 85 | A- | 2.58 | % | 2.03 | % | 5.4 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
(A) | This amount represents other-than-temporary impairment recorded on securities that are in an unrealized loss position as of December 31, 2013. | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
(B) | The rating of securities in an unrealized loss position for less than twelve months excludes the rating of one bond for which New Residential was unable to obtain rating information. | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
New Residential performed an assessment of all of its debt securities that are in an unrealized loss position (unrealized loss position exists when a security’s amortized cost basis, excluding the effect of OTTI, exceeds its fair value) and determined the following: | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
December 31, 2013 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Unrealized Losses | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value | Amortized Cost Basis | Credit (A) | Non-Credit (B) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
After Impairment | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Securities New Residential intends to sell (C) | $ | 164,666 | $ | 164,666 | $ | (988 | ) | $ | — | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Securities New Residential is more likely | — | — | — | N/A | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
than not to be required to sell (D) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Securities New Residential has no intent to sell | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
and is not more likely than not to be required | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
to sell: | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Credit impaired securities | 288,306 | 290,487 | (2,071 | ) | (2,181 | ) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Non-credit impaired securities | 581,232 | 586,889 | — | (5,657 | ) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Total debt securities in an unrealized loss position | $ | 1,034,204 | $ | 1,042,042 | $ | (3,059 | ) | $ | (7,838 | ) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
(A) | This amount is required to be recorded as other-than-temporary impairment through earnings. In measuring the portion of credit losses, New Residential’s management estimates the expected cash flow for each of the securities. This evaluation includes a review of the credit status and the performance of the collateral supporting those securities, including the credit of the issuer, key terms of the securities and the effect of local, industry and broader economic trends. Significant inputs in estimating the cash flows include management’s expectations of prepayment speeds, default rates and loss severities. Credit losses are measured as the decline in the present value of the expected future cash flows discounted at the investment’s effective interest rate. | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
(B) | This amount represents unrealized losses on securities that are due to non-credit factors and recorded through other comprehensive income. | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
(C) | Securities New Residential intends to sell have a fair value equal to their amortized cost basis after impairment, and, therefore do not have unrealized losses reflected in other comprehensive income as of December 31, 2013. | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
(D) | New Residential may, at times, be more likely than not to be required to sell certain securities for liquidity purposes. While the amount of the securities to be sold may be an estimate, and the securities to be sold have not yet been identified, New Residential must make its best estimate, which is subject to significant judgment regarding future events, and may differ materially from actual future sales. | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of credit losses on debt securities | ' | ' | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
The following table summarizes the activity related to credit losses on debt securities: | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2013 | 2012 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Beginning balance of credit losses on debt securities for which a portion | $ | — | $ | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
of an OTTI was recognized in other comprehensive income | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Additions for credit losses on securities for which an OTTI was not | 4,993 | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
previously recognized | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Reduction for credit losses on securities for which no OTTI was | (2,878 | ) | — | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
recognized in other comprehensive income at the current measurement | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
date | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Reduction for securities sold during the period | (44 | ) | — | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Ending balance of credit losses on debt securities for which a portion of | $ | 2,071 | $ | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
an OTTI was recognized in other comprehensive income | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of geographic distribution of collateral securing non-agency RMBS | ' | ' | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
The table below summarizes the geographic distribution of the collateral securing New Residential’s Non-Agency RMBS as of December 31, 2013: | The table below summarizes the geographic distribution of the collateral securing New Residential’s real estate securities at December 31, 2012: | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Geographic Location | Outstanding Face | Percentage of Total | December 31, 2012 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Amount | Outstanding | Geographic Location | Outstanding | Percentage | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Western U.S. | $ | 317,111 | 36.3 | % | Face | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Southeastern U.S. | 198,298 | 22.7 | % | Amount | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Northeastern U.S. | 164,481 | 18.9 | % | Western U.S. | $ | 151,227 | 34.9 | % | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Midwestern U.S. | 98,682 | 11.3 | % | Southeastern U.S. | 100,636 | 23.2 | % | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Southwestern U.S. | 51,425 | 5.9 | % | Northeastern U.S. | 95,565 | 22 | % | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Other (A) | 42,869 | 4.9 | % | Midwestern U.S. | 43,230 | 10 | % | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Southwestern U.S | 42,852 | 9.9 | % | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
$ | 872,866 | 100 | % | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
$ | 433,510 | 100 | % | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
(A) | Represents collateral for which New Residential was unable to obtain geographic information. | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Real Estate Securities with a deteriorated credit quality rating | ' | ' | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
The following is the outstanding face amount and carrying value for securities as of December 31, 2013 and December 31, 2012, for which, as of the acquisition date, it was probable that New Residential would be unable to collect all contractually required payments: | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Outstanding Face | Carrying | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Amount | Value | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
December 31, 2013 | $ | 729,895 | $ | 483,680 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
December 31, 2012 | $ | 342,013 | $ | 212,129 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of accretable yield of real estate securities | ' | ' | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
The following is a summary of the changes in accretable yield for these securities: | The following is a summary of the changes in accretable yield for these securities during the year ended December 31, 2012. | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Year Ended December 31, | For the year ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2013 | 2012 | December 31, 2012 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Beginning Balance | $ | 90,077 | $ | — | Balance at December 31, 2011 | $ | — | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Additions | 155,854 | 80,636 | Additions | 80,636 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Accretion | (19,939 | ) | (3,195 | ) | Accretion | (3,195 | ) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Reclassifications from non-accretable difference | 40,785 | 12,636 | Reclassifications from nonaccretable difference | 12,636 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Disposals | (123,710 | ) | — | Disposals | — | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Ending Balance | $ | 143,067 | $ | 90,077 | Balance at December 31, 2012 | $ | 90,077 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
INVESTMENT_IN_RESIDENTIAL_MORT1
INVESTMENT IN RESIDENTIAL MORTGAGE LOANS (Tables) | 12 Months Ended | ||||||||||||||||||||||||||||||||
Dec. 31, 2013 | |||||||||||||||||||||||||||||||||
Investment In Residential Mortgage Loans Tables | ' | ||||||||||||||||||||||||||||||||
Schedule of residential mortgage loans | ' | ||||||||||||||||||||||||||||||||
The following is a summary of residential mortgage loans as of December 31, 2013, all of which are classified as held for investment: | |||||||||||||||||||||||||||||||||
December 31, 2013 | |||||||||||||||||||||||||||||||||
Loan Type | Outstanding | Carrying | Loan | Wtd. | Weighted | Weighted | Floating | Delinquent | |||||||||||||||||||||||||
Face Amount | Value (A) | Count | Avg. | Average | Average | Rate Loans | Face Amount | ||||||||||||||||||||||||||
(A) | Yield | Coupon | Life | as a % of | (A)(D) | ||||||||||||||||||||||||||||
(B) | (Years) (C) | Face Amount | |||||||||||||||||||||||||||||||
Residential Mortgage Loans Held-for-Investment (E) | $ | 57,552 | $ | 33,539 | 328 | 10.3 | % | 5.1 | % | 3.7 | 22 | % | $ | 48,696 | |||||||||||||||||||
(A) | Represents a 70% interest New Residential holds in the reverse mortgage loans, which had an aggregate United States federal income tax basis of $33.9 million. The average loan balance outstanding based on total UPB is $0.2 million. | ||||||||||||||||||||||||||||||||
(B) | Represents the stated interest rate on the loans. Accrued interest on reverse mortgage loans is generally added to the principal balance and paid when the loan is resolved. | ||||||||||||||||||||||||||||||||
(C) | The weighted average life is based on the expected timing of the receipt of cash flows. | ||||||||||||||||||||||||||||||||
(D) | Includes loans that have either experienced (i) a termination event or (ii) an event of default, substantially all of which are more than 90 days past the time at which they were considered delinquent or real estate owned (“REO”). Collateral value underlying loans considered delinquent is generally sufficient, however $1.6 million face amount of REO loans, representing New Residential’s 70% interest therein, was on non-accrual status resulting from the uncertainty of cash collections as of December 31, 2013. | ||||||||||||||||||||||||||||||||
(E) | 82% of these loans have reached a termination event. As a result, the borrower can no longer make draws on these loans. Each loan matures upon the occurrence of a termination event. | ||||||||||||||||||||||||||||||||
Schedule of activity in carrying value and valuation allowance of residential mortgage loans | ' | ||||||||||||||||||||||||||||||||
Activities related to the carrying value of residential mortgage loans are as follows: | |||||||||||||||||||||||||||||||||
Year Ended | |||||||||||||||||||||||||||||||||
December 31, | |||||||||||||||||||||||||||||||||
2013 | |||||||||||||||||||||||||||||||||
Balance as of December 31, 2012 | $ | — | |||||||||||||||||||||||||||||||
Purchases/additional fundings | 35,138 | ||||||||||||||||||||||||||||||||
Proceeds from repayments | (3,788 | ) | |||||||||||||||||||||||||||||||
Accretion of loan discount and other amortization | 2,650 | ||||||||||||||||||||||||||||||||
Valuation allowance | (461 | ) | |||||||||||||||||||||||||||||||
Balance as of December 31, 2013 | $ | 33,539 | |||||||||||||||||||||||||||||||
Residential Mortgage | |||||||||||||||||||||||||||||||||
Loans | |||||||||||||||||||||||||||||||||
Balance as of December 31, 2011 | $ | — | |||||||||||||||||||||||||||||||
Charge-offs | — | ||||||||||||||||||||||||||||||||
Valuation allowance on loans | — | ||||||||||||||||||||||||||||||||
Balance as of December 31, 2012 | — | ||||||||||||||||||||||||||||||||
Charge-offs | — | ||||||||||||||||||||||||||||||||
Valuation allowance on loans | 461 | ||||||||||||||||||||||||||||||||
Balance as of December 31, 2013 | $ | 461 | |||||||||||||||||||||||||||||||
Schedule of geographic distribution of residential mortgage loans | ' | ||||||||||||||||||||||||||||||||
The table below summarizes the geographic distribution of the underlying residential mortgage loans as of December 31, 2013: | |||||||||||||||||||||||||||||||||
State Concentration | Percentage of | ||||||||||||||||||||||||||||||||
Total | |||||||||||||||||||||||||||||||||
Outstanding | |||||||||||||||||||||||||||||||||
Unpaid | |||||||||||||||||||||||||||||||||
Principal Amount | |||||||||||||||||||||||||||||||||
New York | 22 | % | |||||||||||||||||||||||||||||||
Florida | 21.2 | % | |||||||||||||||||||||||||||||||
Illinois | 7.7 | % | |||||||||||||||||||||||||||||||
New Jersey | 6.9 | % | |||||||||||||||||||||||||||||||
California | 5.7 | % | |||||||||||||||||||||||||||||||
Massachusetts | 4.1 | % | |||||||||||||||||||||||||||||||
Washington | 3.9 | % | |||||||||||||||||||||||||||||||
Connecticut | 3.9 | % | |||||||||||||||||||||||||||||||
Virginia | 3.3 | % | |||||||||||||||||||||||||||||||
Texas | 2.8 | % | |||||||||||||||||||||||||||||||
Other U.S. | 18.5 | % | |||||||||||||||||||||||||||||||
100 | % | ||||||||||||||||||||||||||||||||
INVESTMENTS_IN_CONSUMER_LOANS_1
INVESTMENTS IN CONSUMER LOANS EQUITY METHOD INVESTEES (Tables) | 12 Months Ended | ||||||||||||||||||||||||
Dec. 31, 2013 | |||||||||||||||||||||||||
Investments In Consumer Loans Equity Method Investees Tables | ' | ||||||||||||||||||||||||
Schedule of investments in consumer loan equity method investees | ' | ||||||||||||||||||||||||
The following tables summarize the investment in the Consumer Loan Companies held by New Residential: | |||||||||||||||||||||||||
December 31, 2013 | |||||||||||||||||||||||||
Consumer Loan Assets | $ | 2,572,577 | |||||||||||||||||||||||
Other Assets | 192,830 | ||||||||||||||||||||||||
Debt (A) | (2,010,433 | ) | |||||||||||||||||||||||
Other Liabilities | (32,712 | ) | |||||||||||||||||||||||
Equity | $ | 722,262 | |||||||||||||||||||||||
New Residential’s investment | $ | 215,062 | |||||||||||||||||||||||
New Residential’s ownership | 30 | % | |||||||||||||||||||||||
(A) | Represents the Class A asset-backed notes with a face amount of $1.7 billion, an interest rate of 3.75% and a maturity of April 2021 and the Class B asset-backed notes with a face amount of $0.4 billion, an interest rate of 4.0%, and a maturity of December 2024. Substantially all of the net cash flow generated by the Consumer Loan Companies is required to be used to pay down the Class A notes. When the balance of the outstanding Class A notes is reduced to 50% of the outstanding UPB of the performing consumer loans, 70% of the net cash flow generated is required to be used to pay down the Class A notes and the equity holders of the Consumer Loan Companies and holders of the Class B notes will each be entitled to receive 15% of the net cash flow of the Consumer Loan Companies on a periodic basis. | ||||||||||||||||||||||||
Year Ended | |||||||||||||||||||||||||
December 31, 2013 | |||||||||||||||||||||||||
Interest income | $ | 481,056 | |||||||||||||||||||||||
Interest expense | (71,639 | ) | |||||||||||||||||||||||
Provision for finance receivable losses | (60,619 | ) | |||||||||||||||||||||||
Other expenses, net | (67,225 | ) | |||||||||||||||||||||||
Net income | $ | 281,573 | |||||||||||||||||||||||
New Residential’s equity in net income | $ | 82,856 | |||||||||||||||||||||||
New Residential’s ownership | 30 | % | |||||||||||||||||||||||
Schedule of consumer loan investments made through equity method investees | ' | ||||||||||||||||||||||||
The following is a summary of New Residential’s consumer loan investments made through equity method investees: | |||||||||||||||||||||||||
December 31, 2013 | |||||||||||||||||||||||||
Unpaid | Interest in | Carrying Value | Weighted | Weighted | Weighted | ||||||||||||||||||||
Principal | Consumer | (A) | Average | Average | Average | ||||||||||||||||||||
Balance | Loan | Coupon (B) | Asset Yield | Expected Life | |||||||||||||||||||||
Companies | (Years) (C) | ||||||||||||||||||||||||
Consumer Loans | $ | 3,298,769 | 30 | % | $ | 2,572,577 | 18.3 | % | 15.9 | % | 3.2 | ||||||||||||||
(A) | Represents the carrying value of the consumer loans held by the Consumer Loan Companies. | ||||||||||||||||||||||||
(B) | Substantially all of the cash flows received on the loans is required to be used to make payments on the notes described above. | ||||||||||||||||||||||||
(C) | Weighted Average Life represents the weighted average expected timing of the receipt of expected cash flows for this investment. | ||||||||||||||||||||||||
Schedule of change in investments in consumer loan equity method investees | ' | ||||||||||||||||||||||||
New Residential’s investments in consumer loans, equity method investees changed during the year ended December 31, 2013 as follows: | |||||||||||||||||||||||||
Year Ended | |||||||||||||||||||||||||
December 31, 2013 | |||||||||||||||||||||||||
Balance as of December 31, 2012 | $ | — | |||||||||||||||||||||||
Contributions to equity method investees | 245,421 | ||||||||||||||||||||||||
Distributions of earnings from equity method investees | (82,856 | ) | |||||||||||||||||||||||
Distributions of capital from equity method investees | (30,359 | ) | |||||||||||||||||||||||
Earnings from investments in consumer loan equity method investees | 82,856 | ||||||||||||||||||||||||
Balance as of December 31, 2013 | $ | 215,062 | |||||||||||||||||||||||
DERIVATIVES_Tables
DERIVATIVES (Tables) | 12 Months Ended | ||||||||||
Dec. 31, 2013 | |||||||||||
Derivatives Tables | ' | ||||||||||
Schedule of Derivatives | ' | ||||||||||
New Residential’s derivatives are recorded at fair value on the Consolidated Balance Sheets as follows: | |||||||||||
December 31, | |||||||||||
Balance Sheet Location | 2013 | 2012 | |||||||||
Real Estate Securities | Derivative assets | $ | 1,452 | $ | — | ||||||
Non-Performing Loans | Derivative assets | 34,474 | — | ||||||||
$ | 35,926 | $ | — | ||||||||
The following table summarizes gains (losses) recorded in relation to derivatives: | |||||||||||
Year Ended | |||||||||||
December 31, | |||||||||||
Income Statement Location | 2013 | 2012 | |||||||||
Real Estate Securities | Other Income | $ | (11 | ) | $ | — | |||||
Non-Performing Loans | Other Income | 1,831 | — | ||||||||
$ | 1,820 | $ | — | ||||||||
The following table presents both gross and net information about linked transactions: | |||||||||||
December 31, | |||||||||||
2013 | 2012 | ||||||||||
Real Estate Securities | |||||||||||
Real estate securities, at fair value (A) | $ | 9,952 | $ | — | |||||||
Repurchase agreements (B) | (8,500 | ) | — | ||||||||
1,452 | — | ||||||||||
Non-Performing Loans | |||||||||||
Non-performing loans, at fair value (C) | 95,014 | — | |||||||||
Repurchase agreements (B) | (60,540 | ) | — | ||||||||
34,474 | — | ||||||||||
Net assets recognized as linked transactions | $ | 35,926 | $ | — | |||||||
(A) | Real estate securities that had a current face amount of $10.0 million as of December 31, 2013, which represents the notional amount of the linked transaction. | ||||||||||
(B) | Represents their face amount that approximates fair value. Amounts for repurchase agreements related to non-performing loans also includes $0.4 million of accrued interest and deferred financing costs. | ||||||||||
(C) | Non-performing loans that had a UPB of $164.6 million as of December 31, 2013, which represents the notional amount of the linked transaction. |
DEBT_OBLIGATIONS_Tables
DEBT OBLIGATIONS (Tables) | 12 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Dec. 31, 2013 | Dec. 31, 2012 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Debt Obligations Tables | ' | ' | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of debt obligations | ' | ' | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
The following table presents certain information regarding New Residential’s debt obligations: | The following table presents certain information regarding New Residential’s debt obligations at December 31, 2012: | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
December 31, 2013 (A) | December 31, 2012 | December 31, 2012 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Collateral | Collateral | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Debt Obligations/Collateral | Month | Outstanding | Carrying | Final | Weighted | Weighted | Outstanding | Amortized | Carrying | Weighted | Outstanding | Carrying | Debt Obligation/ | Month | Outstanding | Carrying | Final | Contractual | Weighted | Weighted | Face | Outstanding | Amortized | Carrying | Weighted | Floating | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Issued | Face | Value | Stated | Average | Average | Face | Cost Basis | Value | Average | Face | Value | Collateral | Issued | Face Amount | Value | Stated | Weighted | Average | Average | Amount of | Face Amount | Cost Basis | Value | Average | Rate Face | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Maturity | Funding | Life | Life | Maturity | Average | Funding | Maturity | Floating | Maturity | Amount | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Cost | (Years) | (Years) | Funding Cost | Cost | (Years) | Rate Debt | (Years) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Repurchase Agreements (B) | Repurchase Agreements(A) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Agency ARM RMBS (C) | Various | $ | 1,332,954 | $ | 1,332,954 | 14-Mar | 0.39 | % | 0.3 | $ | 1,277,570 | $ | 1,353,630 | $ | 1,353,719 | 4.1 | $ | — | $ | — | Non-Agency RMBS (B)(C) | Various | $ | 150,922 | $ | 150,922 | Jan 2013 | LIBOR+ | 2.21 | % | 0.1 | $ | 150,922 | $ | 344,177 | $ | 215,034 | $ | 228,493 | 6.9 | $ | 344,177 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Non-Agency RMBS (D) | Various | 287,757 | 287,757 | Jan-14 to | 1.85 | % | 0.1 | 576,146 | 388,855 | 392,360 | 8.2 | 150,922 | 150,922 | 2 | % | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
14-Oct | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
(A) | These repurchase agreements had approximately $55 thousand of associated accrued interest payable at December 31, 2012. $151 million face amount of these repurchase agreements were renewed subsequent to December 31, 2012. | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Total Repurchase Agreements | 1,620,711 | 1,620,711 | 0.65 | % | 0.2 | 1,853,716 | 1,742,485 | 1,746,079 | 5.4 | 150,922 | 150,922 | (B) | The counterparty of these repurchase agreements is Credit Suisse. | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
(C) | Newcastle is the guarantor of these repurchase agreements, which are subject to customary margin call provisions. | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Notes Payable | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Secured Corporate Loan (E) | 13-Dec | 75,000 | 75,000 | 14-Mar | 4.17 | % | 0.3 | 36,907,851 | 126,773 | 146,243 | 6 | — | — | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Servicer Advances (F) | 13-Dec | 2,390,778 | 2,390,778 | 14-Sep | 4.04 | % | 0.8 | 2,661,130 | 2,665,551 | 2,665,551 | 2.7 | — | — | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Residential Mortgage | 13-Dec | 22,840 | 22,840 | 14-Sep | 3.42 | % | 0.7 | 57,552 | 33,539 | 33,539 | 3.7 | — | — | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Loans (G) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Total Notes Payable | 2,488,618 | 2,488,618 | 4.04 | % | 0.8 | 39,626,533 | 2,825,863 | 2,845,333 | 5.8 | — | — | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Total | $ | 4,109,329 | $ | 4,109,329 | 2.7 | % | 0.6 | $ | 41,480,249 | $ | 4,568,348 | $ | 4,591,412 | 5.8 | $ | 150,922 | $ | 150,922 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
(A) | Excludes debt related to linked transactions (Note 10). | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
(B) | These repurchase agreements had approximately $0.7 million of associated accrued interest payable as of December 31, 2013. All of the repurchase agreements that matured during the first quarter of 2014 were renewed or refinanced subsequent to December 31, 2013. | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
(C) | The counterparties of these repurchase agreements are Mizuho ($186.8 million), Barclays ($410.7 million), Royal Bank of Canada ($101.8 million), Citi ($129.3 million), Morgan Stanley ($169.7 million) and Daiwa ($334.7 million) and were subject to customary margin call provisions. | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
(D) | The counterparties of these repurchase agreements are Barclays ($42.3 million), Credit Suisse ($104.0 million), Royal Bank of Scotland ($26.2 million) and Royal Bank of Canada ($115.3 million) and were subject to customary margin call provisions. All of the Non-Agency repurchase agreements have LIBOR-based floating interest rates. Includes $104.0 million borrowed under a $414.2 million master repurchase agreement, which bears interest at one-month LIBOR plus 1.75%. | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
(E) | The loan bears interest equal to the sum of (i) a floating rate index rate equal to one-month LIBOR and (ii) a margin of 4.0%. The outstanding face of the collateral represents the UPB of the residential mortgage loans underlying the Excess MSRs that secure this corporate loan. | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
(F) | The notes bore interest equal to the sum of (i) a floating rate index rate equal to one-month LIBOR or a cost of funds rate, as applicable, and (ii) a margin ranging from 2.0% to 2.6%. | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
(G) | The note is payable to Nationstar and bears interest equal to one-month LIBOR and a margin of 3.25%. | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of contractual maturities of debt | ' | ' | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
New Residential’s debt obligations as of December 31, 2013 had contractual maturities as follows (in thousands): | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Year | Nonrecourse | Recourse (A) | Total | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2014 | $ | 2,548,387 | $ | 1,560,942 | $ | 4,109,329 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
(A) | Excludes recourse debt related to linked transactions (Note 10). | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of borrowing capacity | ' | ' | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
The following table represents New Residential’s borrowing capacity as of December 31, 2013: | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Debt Obligations / Collateral | Collateral Type | Borrowing | Balance | Available | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Capacity | Outstanding | Financing | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Notes Payable | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Secured Corporate Loan | Excess MSRs | $ | 75,000 | $ | 75,000 | $ | — | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Servicer Advances (A) | Servicer Advances | 3,900,000 | 2,390,778 | 1,509,222 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Repurchase Agreements | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Residential Mortgage Loans (B) | Real Estate Loans | 300,000 | 60,102 | 239,898 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
$ | 4,275,000 | $ | 2,525,880 | $ | 1,749,120 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
(A) | New Residential’s unused borrowing capacity is available if New Residential has additional eligible collateral to pledge and meets other borrowing conditions. New Residential pays a 0.5% fee on the unused borrowing capacity. | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
(B) | Financing related to linked transaction (Note 10). |
FAIR_VALUE_OF_FINANCIAL_INSTRU1
FAIR VALUE OF FINANCIAL INSTRUMENTS (Tables) | 12 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Dec. 31, 2013 | Dec. 31, 2012 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value Of Financial Instruments Tables | ' | ' | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of fair value of assets measured on a recurring basis | ' | ' | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
The carrying values and fair values of New Residential’s financial assets recorded at fair value on a recurring basis, as well as other financial instruments for which fair value is disclosed, as of December 31, 2013 were as follows: | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Principal Balance | Carrying | Level 1 | Level 2 | Level 3 | Total | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
or Notional | Value | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Amount | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Assets: | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Investments in: | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Excess mortgage servicing rights, at fair | $ | 78,953,614 | $ | 324,151 | $ | — | $ | — | $ | 324,151 | $ | 324,151 | ||||||||||||||||||||||||||||||||||||||||||||||||||
value (A) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Excess mortgage servicing rights, equity | 173,619,478 | 352,766 | — | — | 352,766 | 352,766 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
method investees, at fair value (A) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Servicer advances | 2,661,130 | 2,665,551 | — | — | 2,665,551 | 2,665,551 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Real estate securities, available-for-sale | 2,186,996 | 1,973,189 | — | 1,402,764 | 570,425 | 1,973,189 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Residential mortgage loans, held for | 57,552 | 33,539 | — | — | 33,539 | 33,539 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
investment (B) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Non-hedge derivative investments (C) | 101,775 | 35,926 | — | — | 35,926 | 35,926 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Cash and restricted cash | 305,332 | 305,332 | 305,332 | — | — | 305,332 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
$ | 257,885,877 | $ | 5,690,454 | $ | 305,332 | $ | 1,402,764 | $ | 3,982,358 | $ | 5,690,454 | |||||||||||||||||||||||||||||||||||||||||||||||||||
Liabilities: | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Repurchase agreements | $ | 1,620,711 | $ | 1,620,711 | $ | — | $ | 1,620,711 | $ | — | $ | 1,620,711 | ||||||||||||||||||||||||||||||||||||||||||||||||||
Notes payable | 2,488,618 | 2,488,618 | — | — | 2,488,618 | 2,488,618 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
$ | 4,109,329 | $ | 4,109,329 | $ | — | $ | 1,620,711 | $ | 2,488,618 | $ | 4,109,329 | |||||||||||||||||||||||||||||||||||||||||||||||||||
(A) | The notional amount represents the total unpaid principal balance of the mortgage loans underlying the Excess MSRs. New Residential does not receive an excess mortgage servicing amount on nonperforming loans in Agency portfolios. | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
(B) | Represents New Residential’s 70% interest in the total unpaid principal balance of the Residential Mortgage Loans. | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
(C) | Notional amount consists of the aggregate current face and UPB amounts of the securities and loans, respectively, that comprise the asset portion of the linked transaction. | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of fair value of assets and liabilities measured on a recurring basis | ' | ' | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
The carrying value and fair value of New Residential’s financial assets and liabilities at December 31, 2012 were as follows: | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Principal | Fair Value | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Balance or | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Notional | Carrying | Level 2 | Level 3 | Total | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Amount | Value | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Assets: | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Investments in Excess MSRs (A) | $ | 76,560,751 | $ | 245,036 | $ | — | $ | 245,036 | $ | 245,036 | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Real estate securities, available-for-sale | $ | 433,510 | $ | 289,756 | $ | — | $ | 289,756 | $ | 289,756 | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Liabilities: | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Repurchase agreements | $ | 150,922 | $ | 150,922 | $ | 150,922 | $ | — | $ | 150,922 | ||||||||||||||||||||||||||||||||||||||||||||||||||||
(A) | The notional amount represents the total unpaid principal balance of the mortgage loans underlying the Excess MSRs. Generally, New Residential does not receive an excess mortgage servicing amount on nonperforming loans. | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of inputs used in valuing Excess MSRs owned directly and through equity method investees | ' | ' | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
The following table summarizes certain information regarding the inputs used in valuing the Excess MSRs owned directly and through equity method investees as of December 31, 2013: | The following table summarizes certain information regarding the inputs used in valuing the Excess MSRs as of December 31, 2012 and 2011: | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Significant Inputs | Significant Input Ranges (December 31, 2011) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Held Directly (Note 4) | Prepayment | Delinquency | Recapture | Excess Mortgage | Discount | Prepayment | Delinquency | Recapture | Excess | Discount | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Speed (A) | (B) | Rate | Servicing Amount | Rate | Speed (A) | (B) | Rate (C) | Mortgage | Rate | |||||||||||||||||||||||||||||||||||||||||||||||||||||
(C) | (D) | Servicing | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
MSR Pool 1 | 13.1 | % | 8.9 | % | 35.8 | % | 27 bps | 12.5 | % | Amount (D) | ||||||||||||||||||||||||||||||||||||||||||||||||||||
MSR Pool 1 - Recapture Agreement | 8 | % | 5 | % | 35 | % | 21 bps | 12.5 | % | Pool 1 | 20 | % | 10 | % | 35 | % | 29 bps | 20 | % | |||||||||||||||||||||||||||||||||||||||||||
MSR Pool 2 | 13 | % | 10.1 | % | 35.8 | % | 22 bps | 12.5 | % | Pool 1—Recapture Agreement | 8 | % | 10 | % | 35 | % | 21 bps | 20 | % | |||||||||||||||||||||||||||||||||||||||||||
MSR Pool 2 - Recapture Agreement | 8 | % | 5 | % | 35 | % | 21 bps | 12.5 | % | |||||||||||||||||||||||||||||||||||||||||||||||||||||
MSR Pool 3 | 13.2 | % | 11.2 | % | 35.9 | % | 22 bps | 12.5 | % | |||||||||||||||||||||||||||||||||||||||||||||||||||||
MSR Pool 3 - Recapture Agreement | 8 | % | 5 | % | 35 | % | 21 bps | 12.5 | % | Significant Input Ranges (December 31, 2012) | ||||||||||||||||||||||||||||||||||||||||||||||||||||
MSR Pool 4 | 15.7 | % | 15 | % | 36.9 | % | 17 bps | 12.5 | % | Prepayment | Delinquency | Recapture | Excess | Discount | ||||||||||||||||||||||||||||||||||||||||||||||||
MSR Pool 4 - Recapture Agreement | 8 | % | 5 | % | 35 | % | 21 bps | 12.5 | % | Speed (A) | (B) | Rate (C) | Mortgage | Rate | ||||||||||||||||||||||||||||||||||||||||||||||||
MSR Pool 5 | 11.6 | % | N/A | (E) | 9 | % | 13 bps | 12.5 | % | Servicing | ||||||||||||||||||||||||||||||||||||||||||||||||||||
MSR Pool 5 - Recapture Agreement | 8 | % | N/A | (E) | 35 | % | 21 bps | 12.5 | % | Amount (D) | ||||||||||||||||||||||||||||||||||||||||||||||||||||
MSR Pool 11 | 7.6 | % | 5 | % | 34 | % | 19 bps | 12.5 | % | Pool 1 | 17.1 | % | 10 | % | 35 | % | 29 bps | 18 | % | |||||||||||||||||||||||||||||||||||||||||||
MSR Pool 11 - Recapture Agreement | 8 | % | 5 | % | 35 | % | 19 bps | 12.5 | % | Pool 1—Recapture Agreement | 8 | % | 10 | % | 35 | % | 21 bps | 18 | % | |||||||||||||||||||||||||||||||||||||||||||
MSR Pool 12 | 15.4 | % | — | 8.8 | % | 26 bps | 16.4 | % | Pool 2 | 16.7 | % | 11 | % | 35 | % | 23 bps | 17.3 | % | ||||||||||||||||||||||||||||||||||||||||||||
MSR Pool 12 - Recapture Agreement | 8 | % | N/A | (E) | 35 | % | 19 bps | 16.4 | % | Pool 2—Recapture Agreement | 8 | % | 10 | % | 35 | % | 21 bps | 17.3 | % | |||||||||||||||||||||||||||||||||||||||||||
MSR Pool 18 | 15 | % | N/A | (E) | 9 | % | 15 bps | 15.3 | % | Pool 3 | 16.9 | % | 12.1 | % | 35 | % | 23 bps | 17.6 | % | |||||||||||||||||||||||||||||||||||||||||||
MSR Pool 18 - Recapture Agreement | 10 | % | N/A | (E) | 35 | % | 19 bps | 15.3 | % | Pool 3—Recapture Agreement | 8 | % | 10 | % | 35 | % | 21 bps | 17.6 | % | |||||||||||||||||||||||||||||||||||||||||||
Pool 4 | 18.6 | % | 15.9 | % | 35 | % | 17 bps | 17.9 | % | |||||||||||||||||||||||||||||||||||||||||||||||||||||
Held through Equity Method Investees (Note 5) | Pool 4—Recapture Agreement | 8 | % | 10 | % | 35 | % | 21 bps | 17.9 | % | ||||||||||||||||||||||||||||||||||||||||||||||||||||
MSR Pool 6 | 16 | % | 8.2 | % | 30.4 | % | 25 bps | 12.5 | % | Pool 5 | 15 | % | N/A | (E) | 20 | % | 13 bps | 17.5 | % | |||||||||||||||||||||||||||||||||||||||||||
MSR Pool 6 - Recapture Agreement | 8 | % | 5 | % | 35 | % | 23 bps | 12.5 | % | Pool 5—Recapture Agreement | 8 | % | N/A | (E) | 20 | % | 21 bps | 17.5 | % | |||||||||||||||||||||||||||||||||||||||||||
MSR Pool 7 | 13.1 | % | 7.8 | % | 35.9 | % | 16 bps | 12.5 | % | |||||||||||||||||||||||||||||||||||||||||||||||||||||
MSR Pool 7 - Recapture Agreement | 8 | % | 5 | % | 35 | % | 19 bps | 12.5 | % | (A) | Projected annualized weighted average lifetime voluntary and involuntary prepayment rate using a prepayment vector. | |||||||||||||||||||||||||||||||||||||||||||||||||||
MSR Pool 8 | 14.6 | % | 6.8 | % | 35.9 | % | 20 bps | 12.5 | % | (B) | Projected percentage of mortgage loans in the pool that will miss their mortgage payments. | |||||||||||||||||||||||||||||||||||||||||||||||||||
MSR Pool 8 - Recapture Agreement | 8 | % | 5 | % | 35 | % | 19 bps | 12.5 | % | (C) | Percentage of voluntarily prepaid loans that are expected to be refinanced by Nationstar. | |||||||||||||||||||||||||||||||||||||||||||||||||||
MSR Pool 9 | 16.2 | % | 5 | % | 30.1 | % | 22 bps | 12.5 | % | (D) | Weighted average total mortgage servicing amount in excess of the basic fee. | |||||||||||||||||||||||||||||||||||||||||||||||||||
MSR Pool 9 - Recapture Agreement | 8 | % | 5 | % | 35 | % | 26 bps | 12.5 | % | (E) | The Excess MSR will be paid on the total UPB of the mortgage portfolio (including both performing and delinquent loans until REO). | |||||||||||||||||||||||||||||||||||||||||||||||||||
MSR Pool 10 | 11.4 | % | N/A | (E) | 9 | % | 11 bps | 12.5 | % | |||||||||||||||||||||||||||||||||||||||||||||||||||||
MSR Pool 10 - Recapture Agreement | 8 | % | N/A | (E) | 35 | % | 19 bps | 12.5 | % | |||||||||||||||||||||||||||||||||||||||||||||||||||||
MSR Pool 11 | 15.2 | % | 9.6 | % | 37 | % | 16 bps | 12.5 | % | |||||||||||||||||||||||||||||||||||||||||||||||||||||
MSR Pool 11 - Recapture Agreement | 7.9 | % | 5 | % | 35 | % | 19 bps | 12.5 | % | |||||||||||||||||||||||||||||||||||||||||||||||||||||
(A) | Projected annualized weighted average lifetime voluntary and involuntary prepayment rate using a prepayment vector. | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
(B) | Projected percentage of mortgage loans in the pool that will miss their mortgage payments. | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
(C) | Percentage of voluntarily prepaid loans that are expected to be refinanced by Nationstar. | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
(D) | Weighted average total mortgage servicing amount in excess of the basic fee. | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
(E) | The Excess MSR will be paid on the total UPB of the mortgage portfolio (including both performing and delinquent loans until REO). | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Excess MSRs owned directly and through equity method investments valued on a recurring basis using Level 3 inputs | ' | ' | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Excess MSRs, owned directly (Note 4), measured at fair value on a recurring basis using Level 3 inputs changed during the year ended December 31, 2013 as follows: | Excess MSRs measured at fair value on a recurring basis using Level 3 inputs changed during the period December 8, 2011 (Commencement of operations) through December 31, 2011 and the year ended December 31, 2012 as follows: | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Level 3 (A) | Level 3 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
MSR | MSR | MSR | MSR | MSR | MSR | MSR | MSR | Total | Pool 1 (A) | Pool 2 (A) | Pool 3 (A) | Pool 4 (A) | Pool 5 (A) | Total | ||||||||||||||||||||||||||||||||||||||||||||||||
Pool 1 | Pool 2 | Pool 3 | Pool 4 | Pool 5 | Pool 11 | Pool 12 | Pool 18 | Balance at December 8, 2011 (Commencement of operations) | $ | — | $ | — | $ | — | $ | — | $ | — | $ | — | ||||||||||||||||||||||||||||||||||||||||||
Balance as of December 31, 2011 | $ | 43,971 | $ | — | $ | — | $ | — | $ | — | $ | — | $ | — | $ | — | $ | 43,971 | Transfers (B) | |||||||||||||||||||||||||||||||||||||||||||
Transfers (B) | Transfers from Level 3 | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
Transfers from Level 3 | — | — | — | — | — | — | — | — | — | Transfers into Level 3 | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||
Transfers to Level 3 | — | — | — | — | — | — | — | — | — | Total gains (losses) included in net income (C) | 367 | — | — | — | — | 367 | ||||||||||||||||||||||||||||||||||||||||||||||
Gains (losses) included in net income (C) | 5,877 | 1,226 | 2,780 | 1,004 | (1,864 | ) | — | — | — | 9,023 | Interest income | 1,260 | — | — | — | — | 1,260 | |||||||||||||||||||||||||||||||||||||||||||||
Interest income | 7,955 | 3,450 | 3,409 | 1,381 | 11,293 | — | — | — | 27,488 | Purchases, sales and repayments | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Purchases, sales and repayments | Purchases | 43,742 | — | — | — | — | 43,742 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
Purchases | — | 43,872 | 36,218 | 15,439 | 124,813 | — | — | — | 220,342 | Proceeds from sales | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||
Purchase adjustments | (178 | ) | (1,522 | ) | — | — | — | — | — | — | (1,700 | ) | Proceeds from repayments | (1,398 | ) | — | — | — | — | (1,398 | ) | |||||||||||||||||||||||||||||||||||||||||
Proceeds from sales | — | — | — | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||||||||
Proceeds from repayments | (16,715 | ) | (7,704 | ) | (6,973 | ) | (2,788 | ) | (19,908 | ) | — | — | — | (54,088 | ) | Balance at December 31, 2011 | $ | 43,971 | $ | — | $ | — | $ | — | $ | — | $ | 43,971 | ||||||||||||||||||||||||||||||||||
Balance as of December 31, 2012 | $ | 40,910 | $ | 39,322 | $ | 35,434 | $ | 15,036 | $ | 114,334 | $ | — | $ | — | $ | — | $ | 245,036 | Transfers (B) | |||||||||||||||||||||||||||||||||||||||||||
Transfers from Level 3 | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Transfers (B) | — | Transfers into Level 3 | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
Transfers from Level 3 | — | — | — | — | — | — | — | — | — | Total gains (losses) included in net income (C) | 5,877 | 1,226 | 2,780 | 1,004 | (1,864 | ) | 9,023 | |||||||||||||||||||||||||||||||||||||||||||||
Transfers to Level 3 | — | — | — | — | — | — | — | — | — | Interest income | 7,955 | 3,450 | 3,409 | 1,381 | 11,293 | 27,488 | ||||||||||||||||||||||||||||||||||||||||||||||
Gains (losses) included in net income (C) | 9,424 | 9,125 | 9,393 | 4,748 | 21,334 | (30 | ) | (173 | ) | (489 | ) | 53,332 | Purchases, sales and repayments | |||||||||||||||||||||||||||||||||||||||||||||||||
Interest income | 5,839 | 4,885 | 5,767 | 2,842 | 20,637 | 83 | 678 | 190 | 40,921 | Purchases | — | 43,872 | 36,218 | 15,439 | 124,813 | 220,342 | ||||||||||||||||||||||||||||||||||||||||||||||
Purchases, sales and repayments | — | — | — | — | — | — | — | — | — | Purchase adjustments | (178 | ) | (1,522 | ) | — | — | — | (1,700 | ) | |||||||||||||||||||||||||||||||||||||||||||
Purchases | — | — | — | — | 26,637 | 2,391 | 17,393 | 17,013 | 63,434 | Proceeds from sales | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||
Purchase adjustments | — | — | — | — | — | — | — | — | — | Proceeds from repayments | (16,715 | ) | (7,704 | ) | (6,973 | ) | (2,788 | ) | (19,908 | ) | (54,088 | ) | ||||||||||||||||||||||||||||||||||||||||
Proceeds from sales | — | — | — | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||||||||
Proceeds from repayments | (13,118 | ) | (11,511 | ) | (11,053 | ) | (4,698 | ) | (36,699 | ) | (129 | ) | (1,364 | ) | — | (78,572 | ) | Balance at December 31, 2012 | $ | 40,910 | $ | 39,322 | $ | 35,434 | $ | 15,036 | $ | 114,334 | $ | 245,036 | ||||||||||||||||||||||||||||||||
Balance as of December 31, 2013 | $ | 43,055 | $ | 41,821 | $ | 39,541 | $ | 17,928 | $ | 146,243 | $ | 2,315 | $ | 16,534 | $ | 16,714 | $ | 324,151 | ||||||||||||||||||||||||||||||||||||||||||||
(A) | Includes the recapture agreement for each respective pool. | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
(B) | Transfers are assumed to occur at the beginning of the respective period. | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
(A) | Includes the Recapture Agreement for each respective pool. | (C) | The gains (losses) recorded in earnings during the period are attributable to the change in unrealized gains (losses) relating to Level 3 assets still held at the reporting dates. These gains (losses) represent the change in fair value of the Excess MSRs and are recorded in “Change in fair value of investments in excess mortgage servicing rights” in the consolidated statements of income. | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
(B) | Transfers are assumed to occur at the beginning of the respective period. | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
(C) | The gains (losses) recorded in earnings during the period are attributable to the change in unrealized gains (losses) relating to Level 3 assets still held at the reporting dates. These gains (losses) represent the change in fair value of the Excess MSRs and are recorded in “Change in fair value of investments in excess mortgage servicing rights” in the Consolidated Statements of Income. | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Excess MSR joint ventures (Note 5), measured at fair value on a recurring basis using Level 3 inputs changed during the year ended December 31, 2013 as follows: | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Level 3 (A) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
MSR Pool | MSR Pool | MSR Pool | MSR Pool | MSR Pool | MSR Pool | Total | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
6 | 7 | 8 | 9 | 10 | 11 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Balance as of December 31, 2012 | $ | — | $ | — | $ | — | $ | — | $ | — | $ | — | $ | — | ||||||||||||||||||||||||||||||||||||||||||||||||
Purchases, sales and repayments | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Purchases | 57,803 | 137,469 | 70,440 | 147,015 | 229,430 | 75,572 | 717,729 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
Purchase adjustments | — | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
Proceeds from sales | — | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
Proceeds from repayments | (17,458 | ) | (33,012 | ) | (15,516 | ) | (16,258 | ) | (20,395 | ) | (10,243 | ) | (112,882 | ) | ||||||||||||||||||||||||||||||||||||||||||||||||
Transfers (B) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Transfers from Level 3 | — | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
Transfers to Level 3 | — | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
Gains (losses) included in net income (C) | 10,958 | 12,887 | 6,025 | 24,181 | (4,494 | ) | 4,407 | 53,964 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
Interest income | 7,336 | 11,982 | 5,558 | 8,669 | 10,193 | 2,983 | 46,721 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
Balance as of December 31, 2013 | $ | 58,639 | $ | 129,326 | $ | 66,507 | $ | 163,607 | $ | 214,734 | $ | 72,719 | $ | 705,532 | ||||||||||||||||||||||||||||||||||||||||||||||||
(A) | Includes the Recapture Agreement for each respective pool. Amounts represent all of the Excess MSRs held by the respective joint ventures in which New Residential has a 50% interest. | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
(B) | Transfers are assumed to occur at the beginning of the respective period. | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
(C) | The gains (losses) recorded in earnings during the period are attributable to the change in unrealized gains (losses) relating to Level 3 assets still held at the reporting dates. These gains (losses) represent the change in fair value of the Excess MSRs and are recorded in “Change in fair value of investments in excess mortgage servicing rights” in the Consolidated Statements of Income. | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of investments in equity method investees valued on a recurring basis using Level 3 inputs | ' | ' | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
New Residential’s investments in equity method investees measured at fair value on a recurring basis using Level 3 inputs changed during the year ended December 31, 2013 as follows: | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Balance as of December 31, 2012 | $ | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Contributions to equity method investees | 358,864 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Distributions of earnings from equity method investees | (33,189 | ) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Distributions of capital from equity method investees | (23,252 | ) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Change in fair value of investments in equity method investees | 50,343 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Balance as of December 31, 2013 | $ | 352,766 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of inputs in valuing servicer advances | ' | ' | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
The following table summarizes certain information regarding the inputs used in valuing the servicer advances as of December 31, 2013: | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Significant Inputs | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Weighted Average | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Outstanding | Prepayment | Delinquency | Mortgage | Discount | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Servicer Advances | Speed | Servicing | Rate | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
to UPB of Underlying | Amount | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Residential Mortgage | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Loans | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Servicer advances | 2.70% | 13.30% | 20.00% | 21.2 bps | 4.40% | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of servicer advances valuation | ' | ' | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Servicer advances measured at fair value on a recurring basis using Level 3 inputs changed during the year ended December 31, 2013 as follows: | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Balance as of December 31, 2012 | $ | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Transfers (A) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Transfers from Level 3 | — | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Transfers to Level 3 | — | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Gains (losses) included in net income | — | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Interest income | 4,421 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Purchases, sales and repayments | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Purchases | 2,764,524 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Purchase adjustments | — | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Proceeds from sales | — | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Proceeds from repayments | (103,394 | ) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Balance as of December 31, 2013 | $ | 2,665,551 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
(A) | Transfers are assumed to occur at the beginning of the respective period. | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of real estate securities valuation methodology and results | ' | ' | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
As of December 31, 2013, New Residential’s securities valuation methodology and results are further detailed as follows: | As of December 31, 2012 New Residential’s securities valuation methodology and results are further detailed as follows: | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value | Fair Value | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Asset Type | Outstanding | Amortized | Multiple | Total | Level | Asset Type | Outstanding | Amortized | Multiple | Single | Total | |||||||||||||||||||||||||||||||||||||||||||||||||||
Face Amount | Cost Basis | Quotes (A) | Face Amount | Cost Basis | Quotes (A) | Quote (B) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
ABS-Subprime | $ | 433,510 | $ | 274,230 | $ | 265,556 | $ | 24,200 | $ | 289,756 | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Agency ARM RMBS | $ | 1,314,130 | $ | 1,403,215 | $ | 1,402,764 | $ | 1,402,764 | 2 | |||||||||||||||||||||||||||||||||||||||||||||||||||||
Non-Agency RMBS | 872,866 | 566,760 | 570,425 | 570,425 | 3 | (A) | Management generally obtained pricing service quotations or broker quotations from two sources, one of which was generally the seller (the party that sold us the security). Management selected one of the quotes received as being most representative of the fair value and did not use an average of the quotes. Even if New Residential receives two or more quotes on a particular security that come from non-selling brokers or pricing services, it does not use an average because management believes using an actual quote more closely represents a transactable price for the security than an average level. Furthermore, in some cases there is a wide disparity between the quotes New Residential receives. Management believes using an average of the quotes in these cases would not represent the fair value of the asset. Based on New Residential’s own fair value analysis using internal models, management selects one of the quotes which is believed to more accurately reflect fair value. New Residential never adjusts quotes received. These quotations are generally received via email and contain disclaimers which state that they are “indicative” and not “actionable” — meaning that the party giving the quotation is not bound to actually purchase the security at the quoted price. | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
(B) | Management was unable to obtain quotations from more than one source on these securities. The one source was generally the seller (the party that sold us the security) or a pricing service. | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Total | $ | 2,186,996 | $ | 1,969,975 | $ | 1,973,189 | $ | 1,973,189 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
(A) | Management generally obtained pricing service quotations or broker quotations from two sources, one of which was generally the seller (the party that sold New Residential the security) for Non-Agency RMBS. Management selected one of the quotes received as being most representative of the fair value and did not use an average of the quotes. Even if New Residential receives two or more quotes on a particular security that come from non-selling brokers or pricing services, it does not use an average because management believes using an actual quote more closely represents a transactable price for the security than an average level. Furthermore, in some cases there is a wide disparity between the quotes New Residential receives. Management believes using an average of the quotes in these cases would not represent the fair value of the asset. Based on New Residential’s own fair value analysis, management selects one of the quotes which is believed to more accurately reflect fair value. New Residential never adjusts quotes received. These quotations are generally received via email and contain disclaimers which state that they are “indicative” and not “actionable” — meaning that the party giving the quotation is not bound to actually purchase the security at the quoted price. | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of non-agency RMBS valued on a recurring basis using Level 3 inputs | ' | ' | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair value estimates of New Residential’s Non-Agency RMBS were based on third party indications as of December 31, 2013 and classified as Level 3. Securities measured at fair value on a recurring basis using Level 3 inputs changed during the year ended December 31, 2013 as follows: | Securities measured at fair value on a recurring basis using Level 3 inputs changed during the year ended December 31, 2012 as follows: | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Level 3 | Level 3 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Non-Agency | ABS- | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
RMBS | Subprime | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Balance at December 31, 2011 | $ | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Balance as of December 31, 2012 | $ | 289,756 | Transfers (A) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Transfer (A) | Transfers from Level 3 | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Transfers from Level 3 | — | Transfers into Level 3 | — | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Transfers into Level 3 | — | Total gains (losses) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Included in net income | — | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Total gains (losses) | Included in other comprehensive income (B) | 15,526 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Included in net income as impairment | (978 | ) | Amortization included in interest income | 5,339 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Gain on settlement of securities | 52,657 | Purchases, contributions in-kind, sales and repayments | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Included in comprehensive income (B) | (11,604 | ) | Purchases | 121,262 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Contributions in-kind | 164,142 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Amortization included in interest income | 20,556 | Proceeds from sales | — | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Purchases, sales and repayments | Proceeds from repayments | (16,513 | ) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Purchases/contributions from Newcastle | 825,871 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Sales | (521,865 | ) | Balance at December 31, 2012 | $ | 289,756 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Proceeds from repayments | (83,968 | ) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
(A) | Transfers are assumed to occur at the beginning of the respective period. | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Balance as of December 31, 2013 | $ | 570,425 | (B) | These gains (losses) were included in net unrealized gain (loss) on securities in the consolidated statements of comprehensive income. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
(A) | Transfers are assumed to occur at the beginning of the respective period. | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
(B) | These gains (losses) were included in net unrealized gain (loss) on securities in the Consolidated Statements of Comprehensive Income. | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of inputs used in valuing reverse mortgage loans | ' | ' | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
New Residential’s loans held-for-investment are categorized within Level 3 of the fair value hierarchy. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Significant Inputs | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Loan Type | Outstanding | Carrying | Fair | Valuation | Discount | Weighted | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Face | Value | Value | Allowance/ | Rate | Average | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Amount (A) | (A) | (Reversal) | Life | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
In Current | (Years) (B) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Year | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Reverse Mortgage Loans | $ | 57,552 | $ | 33,539 | $ | 33,539 | $ | 461 | 10.3 | % | 3.7 | |||||||||||||||||||||||||||||||||||||||||||||||||||
(A) | Represents a 70% interest New Residential holds in the reverse mortgage loans. | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
(B) | The weighted average life is based on the expected timing of the receipt of cash flows. | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of derivative valuation | ' | ' | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
The linked transactions, which are categorized as Level 3 and recorded as a non-hedge derivative instrument on a net basis, changed during the year ended December 31, 2013 as follows: | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Balance as of December 31, 2012 | $ | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Transfers (A) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Transfers from Level 3 | — | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Transfers into Level 3 | — | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Gains (losses) included in net income (B) | 1,820 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Purchases, sales and repayments | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Purchases | 34,106 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Sales | — | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Balance as of December 31, 2013 | $ | 35,926 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
(A) | Transfers are assumed to occur at the beginning of the respective period. | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
(B) | The gains (losses) recorded in earnings during the period are attributable to the change in unrealized gains (losses) relating to Level 3 assets still held at the reporting dates. These gains (losses) represent the change in fair value of the non-hedge derivative instruments and are recorded in “Other Income” in the Consolidated Statements of Income. |
EQUITY_AND_EARNINGS_PER_SHARE_
EQUITY AND EARNINGS PER SHARE (Tables) | 12 Months Ended | ||||||||||||||||||||||||
Dec. 31, 2013 | |||||||||||||||||||||||||
Equity And Earnings Per Share Tables | ' | ||||||||||||||||||||||||
Schedule of outstanding options | ' | ||||||||||||||||||||||||
As of December 31, 2013, New Residential’s outstanding options were summarized as follows: | |||||||||||||||||||||||||
December 31, 2013 | December 31, 2012 | ||||||||||||||||||||||||
Issued Prior to | Issued in 2011- | Total | Issued Prior to | Issued in 2011 | Total | ||||||||||||||||||||
2011 | 2013 | 2011 | and 2012 | ||||||||||||||||||||||
Held by the Manager | 1,496,555 | 16,176,333 | 17,672,888 | 1,751,172 | 7,934,166 | 9,685,338 | |||||||||||||||||||
Issued to the Manager and | 535,570 | 2,510,000 | 3,045,570 | 701,937 | 2,860,000 | 3,561,937 | |||||||||||||||||||
subsequently transferred to | |||||||||||||||||||||||||
certain of the Manager’s employees | |||||||||||||||||||||||||
Issued to the independent directors | 2,000 | 10,000 | 12,000 | 2,000 | 2,000 | 4,000 | |||||||||||||||||||
Total | 2,034,125 | 18,696,333 | 20,730,458 | 2,455,109 | 10,796,166 | 13,251,275 | |||||||||||||||||||
The following table summarizes New Residential’s outstanding options as of December 31, 2013. The last sales price on the New York Stock Exchange for New Residential’s common stock in the year ended December 31, 2013 was $6.68 per share. | |||||||||||||||||||||||||
Recipient | Date of | Number of | Options | Weighted | Intrinsic | ||||||||||||||||||||
Grant/ | Options | Exercisable | Average | Value as of | |||||||||||||||||||||
Exercise (A) | as of | Exercise | December 31, | ||||||||||||||||||||||
December 31, | Price (B) | 2013 | |||||||||||||||||||||||
2013 | (millions) | ||||||||||||||||||||||||
Directors | Various | 12,000 | 12,000 | $ | 7.76 | — | |||||||||||||||||||
Manager (C) | 2003 - 2007 | 2,453,109 | 2,032,125 | $ | 15.28 | — | |||||||||||||||||||
Manager (C) | 11-Mar | 1,676,833 | 1,580,166 | $ | 3.29 | $ | 5.4 | ||||||||||||||||||
Manager (C) | 11-Sep | 2,539,833 | 2,170,850 | $ | 2.49 | $ | 9.1 | ||||||||||||||||||
Manager (C) | 12-Apr | 1,897,500 | 1,244,778 | $ | 3.41 | $ | 4.1 | ||||||||||||||||||
Manager (C) | 12-May | 2,300,000 | 1,421,667 | $ | 3.67 | $ | 4.3 | ||||||||||||||||||
Manager (C) | 12-Jul | 2,530,000 | 1,416,195 | $ | 3.67 | $ | 4.3 | ||||||||||||||||||
Manager (C) | 13-Jan | 5,750,000 | 2,108,333 | $ | 5.12 | $ | 3.3 | ||||||||||||||||||
Manager (C) | 13-Feb | 2,300,000 | 766,667 | $ | 5.74 | $ | 0.7 | ||||||||||||||||||
Exercised (D) | 2013 | (307,833 | ) | N/A | $ | 3.08 | N/A | ||||||||||||||||||
Expired unexercised | 2003 | (420,984 | ) | N/A | N/A | N/A | |||||||||||||||||||
Outstanding | 20,730,458 | 12,752,781 | |||||||||||||||||||||||
(A) | Options expire on the tenth anniversary from date of grant. | ||||||||||||||||||||||||
(B) | The strike prices are subject to adjustment in connection with return of capital dividends. | ||||||||||||||||||||||||
(C) | The Manager assigned certain of its options to Fortress’s employees as follows: | ||||||||||||||||||||||||
Date of Grant | Range of Strike | Total Unexercised | |||||||||||||||||||||||
Prices | Inception to Date | ||||||||||||||||||||||||
2004 - 2007 | $13.86 - $16.95 | 535,570 | |||||||||||||||||||||||
2011 | $2.49 - $3.29 | 1,210,000 | |||||||||||||||||||||||
2012 | $3.41 - $3.67 | 1,300,000 | |||||||||||||||||||||||
Total | 3,045,570 | ||||||||||||||||||||||||
(D) | Exercised by employees of Fortress subsequent to their assignment. The options exercised had an intrinsic value of $1.0 million. |
TRANSACTIONS_WITH_AFFILIATES_A1
TRANSACTIONS WITH AFFILIATES AND AFFILIATED ENTITIES (Tables) | 12 Months Ended | |||||||||||||||||
Dec. 31, 2013 | Dec. 31, 2012 | |||||||||||||||||
Transactions With Affiliates And Affiliated Entities Tables | ' | ' | ||||||||||||||||
Schedule of affiliate transactions | ' | ' | ||||||||||||||||
Due to affiliate is comprised of the following amounts: | Due to Newcastle is comprised of the following amounts due to Newcastle as of December 31, 2012 and 2011: | |||||||||||||||||
December 31, | December 31, | December 31, | ||||||||||||||||
2013 | 2012 | 2012 | 2011 | |||||||||||||||
Management fees | $ | 1,495 | $ | 3,392 | Management fees payable to Newcastle | $ | 3,392 | $ | 39 | |||||||||
Incentive compensation | 16,847 | — | Reimbursable expenses payable to Newcastle | 1,744 | 119 | |||||||||||||
Expense reimbursements and other | 827 | — | ||||||||||||||||
Purchase price payable | — | 1,744 | $ | 5,136 | $ | 158 | ||||||||||||
Total | $ | 19,169 | $ | 5,136 | ||||||||||||||
Affiliate expenses and fees were comprised of: | ||||||||||||||||||
Year Ended December 31, | ||||||||||||||||||
2013 | 2012 | |||||||||||||||||
Management fees | $ | 15,343 | $ | 3,353 | ||||||||||||||
Incentive compensation | 16,847 | — | ||||||||||||||||
Expense reimbursements(A) | 500 | — | ||||||||||||||||
Total | $ | 32,690 | $ | 3,353 | ||||||||||||||
(A) | Included in General and Administrative Expenses in the Consolidated Statements of Income. |
RECLASSIFICATION_FROM_ACCUMULA1
RECLASSIFICATION FROM ACCUMULATED OTHER COMPREHENSIVE INCOME INTO NET INCOME (Tables) | 12 Months Ended | ||||||||||||||
Dec. 31, 2013 | |||||||||||||||
Reclassification From Accumulated Other Comprehensive Income Into Net Income Tables | ' | ||||||||||||||
Schedule of reclassification from accumulated other comprehensive income into net income | ' | ||||||||||||||
The following table summarizes the amounts reclassified out of accumulated other comprehensive income into net income: | |||||||||||||||
Accumulated Other Comprehensive Income | Statement of Income Location | Year Ended December 31, | December 8 | ||||||||||||
Components | through | ||||||||||||||
December 31, | |||||||||||||||
2013 | 2012 | 2011 | |||||||||||||
Reclassification of net realized (gain) loss on securities into earnings | Gain on settlement of securities | $ | (52,657 | ) | $ | — | $ | — | |||||||
Reclassification of net realized (gain) loss on securities into earnings | Other-than-temporary impairment on securities | 4,993 | — | — | |||||||||||
Total reclassifications | $ | (47,664 | ) | $ | — | $ | — | ||||||||
INCOME_TAXES_Tables
INCOME TAXES (Tables) | 12 Months Ended | ||||||||||||||||
Dec. 31, 2013 | |||||||||||||||||
Income Taxes Tables | ' | ||||||||||||||||
Schedule of tax treatment of common stock dividend distribution | ' | ||||||||||||||||
Common stock distributions were taxable as follows: | |||||||||||||||||
Year | Dividends | Ordinary | Long-term | Return | |||||||||||||
per Share | Income | Capital | of | ||||||||||||||
Gain | Capital | ||||||||||||||||
2013 | $ | 0.495 | $ | 0.445561 | $ | 0.049439 | $ | — |
SUMMARY_OF_QUARTERLY_CONSOLIDA1
SUMMARY OF QUARTERLY CONSOLIDATED FINANCIAL INFORMATION (UNAUDITED) (Tables) | 12 Months Ended | ||||||||||||||||||||
Dec. 31, 2013 | |||||||||||||||||||||
Summary Of Quarterly Consolidated Financial Information Tables | ' | ||||||||||||||||||||
Schedule of quarterly unaudited summary information | ' | ||||||||||||||||||||
The following is an unaudited summary information on New Residential’s quarterly operations. | |||||||||||||||||||||
2013 | Quarter Ended | Year Ended | |||||||||||||||||||
March 31 | June 30 | September 30 | December 31 | December 31 | |||||||||||||||||
Interest income | $ | 16,191 | $ | 22,999 | $ | 21,885 | $ | 26,492 | $ | 87,567 | |||||||||||
Interest expense | 899 | 2,651 | 3,443 | 8,031 | 15,024 | ||||||||||||||||
Net interest income | 15,292 | 20,348 | 18,442 | 18,461 | 72,543 | ||||||||||||||||
Impairment | |||||||||||||||||||||
Other-than-temporary impairment (“OTTI”) on Securities | — | 3,756 | — | 1,237 | 4,993 | ||||||||||||||||
Valuation allowance on loans | — | — | — | 461 | 461 | ||||||||||||||||
— | 3,756 | — | 1,698 | 5,454 | |||||||||||||||||
Net interest income after impairment | 15,292 | 16,592 | 18,442 | 16,763 | 67,089 | ||||||||||||||||
Other income (A) | 2,827 | 98,182 | 56,195 | 83,804 | 241,008 | ||||||||||||||||
2,827 | 98,182 | 56,195 | 83,804 | 241,008 | |||||||||||||||||
Operating Expenses | 5,044 | 5,552 | 11,492 | 20,386 | 42,474 | ||||||||||||||||
5,044 | 5,552 | 11,492 | 20,386 | 42,474 | |||||||||||||||||
Income (Loss) Before Income Taxes | 13,075 | 109,222 | 63,145 | 80,181 | 265,623 | ||||||||||||||||
Income tax expense | — | — | — | — | — | ||||||||||||||||
Net Income (Loss) | 13,075 | 109,222 | 63,145 | 80,181 | 265,623 | ||||||||||||||||
Noncontrolling Interests in Income of | — | — | — | (326 | ) | (326 | ) | ||||||||||||||
Consolidated Subsidiaries | |||||||||||||||||||||
Net Income (Loss) Attributable to Common | $ | 13,075 | $ | 109,222 | $ | 63,145 | $ | 80,507 | $ | 265,949 | |||||||||||
Stockholders | |||||||||||||||||||||
Net Income Per Share of Common Stock | |||||||||||||||||||||
Basic | $ | 0.05 | $ | 0.43 | $ | 0.25 | $ | 0.32 | $ | 1.05 | |||||||||||
Diluted | $ | 0.05 | $ | 0.43 | $ | 0.24 | $ | 0.31 | $ | 1.03 | |||||||||||
Weighted Average Number of Shares of | |||||||||||||||||||||
Common Stock Outstanding | |||||||||||||||||||||
Basic | 253,025,645 | 253,025,645 | 253,072,788 | 253,186,406 | 253,078,048 | ||||||||||||||||
Diluted | 253,025,645 | 256,659,488 | 259,889,285 | 259,796,493 | 257,368,255 | ||||||||||||||||
Dividends Declared per Share of Common Stock | $ | — | $ | 0.07 | $ | 0.175 | $ | 0.25 | $ | 0.495 | |||||||||||
2012 | Quarter Ended | Year Ended | |||||||||||||||||||
March 31 | June 30 | September 30 | December 31 | December 31 | |||||||||||||||||
Interest income | $ | 2,037 | $ | 4,479 | $ | 12,295 | $ | 14,948 | $ | 33,759 | |||||||||||
Interest expense | — | — | 298 | 406 | 704 | ||||||||||||||||
Net interest income | 2,037 | 4,479 | 11,997 | 14,542 | 33,055 | ||||||||||||||||
Impairment | |||||||||||||||||||||
Other-than-temporary impairment (“OTTI”) on Securities | — | — | — | — | — | ||||||||||||||||
Net interest income after impairment | 2,037 | 4,479 | 11,997 | 14,542 | 33,055 | ||||||||||||||||
Other income | 1,216 | 3,523 | 1,774 | 10,910 | 17,423 | ||||||||||||||||
1,216 | 3,523 | 1,774 | 10,910 | 17,423 | |||||||||||||||||
Operating Expenses | 565 | 1,528 | 2,003 | 5,135 | 9,231 | ||||||||||||||||
565 | 1,528 | 2,003 | 5,135 | 9,231 | |||||||||||||||||
Net Income (Loss) | $ | 2,688 | $ | 6,474 | $ | 11,768 | $ | 20,317 | $ | 41,247 | |||||||||||
Net Income Per Share of Common Stock | |||||||||||||||||||||
Basic | $ | 0.01 | $ | 0.03 | $ | 0.05 | $ | 0.08 | $ | 0.16 | |||||||||||
Diluted | $ | 0.01 | $ | 0.03 | $ | 0.05 | $ | 0.08 | $ | 0.16 | |||||||||||
Weighted average number of shares of | |||||||||||||||||||||
common stock outstanding | |||||||||||||||||||||
Basic | 253,025,645 | 253,025,645 | 253,025,645 | 253,025,645 | 253,025,645 | ||||||||||||||||
Diluted | 253,025,645 | 253,025,645 | 253,025,645 | 253,025,645 | 253,025,645 | ||||||||||||||||
Dividends Declared per Share of Common Stock | $ | — | $ | — | $ | — | $ | — | $ | — | |||||||||||
(A) | Earnings from investments in equity method investees is included in other income. |
ORGANIZATION_Details_Narrative
ORGANIZATION (Details Narrative) | Dec. 31, 2013 | 15-May-13 | Dec. 31, 2012 |
REIT Distribution Threshold for Nontaxation | 90.00% | ' | 90.00% |
Shares held by Fortress and affiliates in Newcastle | 5,314,416 | ' | ' |
Stock Options outstanding | 20,730,458 | ' | ' |
Manager | ' | ' | ' |
Stock Options outstanding | 17,672,888 | 21,500,000 | 9,685,338 |
SUMMARY_OF_SIGNIFICANT_ACCOUNT3
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Interest Income (Details) (USD $) | 1 Months Ended | 3 Months Ended | 12 Months Ended | |||||||||
In Thousands, unless otherwise specified | Dec. 31, 2011 | Dec. 31, 2013 | Sep. 30, 2013 | Jun. 30, 2013 | Mar. 31, 2013 | Dec. 31, 2012 | Sep. 30, 2012 | Jun. 30, 2012 | Mar. 31, 2012 | Dec. 31, 2013 | Dec. 31, 2012 | |
Interest income | $1,260 | $26,492 | $21,885 | $22,999 | $16,191 | $14,948 | $12,295 | $4,479 | $2,037 | $87,567 | [1] | $33,759 |
Rights to MSRs | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | |
Interest income, gross of amounts attributable to servicer compensation | ' | ' | ' | ' | ' | ' | ' | ' | ' | 6,708 | ' | |
Amounts attributable to servicer compensation | ' | ' | ' | ' | ' | ' | ' | ' | ' | -2,287 | ' | |
Interest income | ' | ' | ' | ' | ' | ' | ' | ' | ' | $4,421 | ' | |
[1] | Represents our historical consolidated statement of income for the year ended December 31, 2013. |
SUMMARY_OF_SIGNIFICANT_ACCOUNT4
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Accretion of Discount and Other Amortization (Details 1) (USD $) | 1 Months Ended | 12 Months Ended | |
In Thousands, unless otherwise specified | Dec. 31, 2011 | Dec. 31, 2013 | Dec. 31, 2012 |
Accretion of discount and other amortization: | ' | ' | ' |
Accretion of net discount on securities and loans | ' | $14,676 | $5,339 |
Amortization of deferred financing costs | ' | -768 | ' |
Accretion of net discount on securities and loans | ' | $13,908 | $5,339 |
SUMMARY_OF_SIGNIFICANT_ACCOUNT5
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Other Income (Details 2) (USD $) | 12 Months Ended | ||
In Thousands, unless otherwise specified | Dec. 31, 2013 | Dec. 31, 2012 | |
Other income (loss), net | ' | ' | |
Gain (loss) on non-hedge derivative instruments | $1,820 | ' | |
Other income (loss) | ' | 8,400 | |
Total Other income (loss), net | $1,820 | [1] | $8,400 |
[1] | Represents our historical consolidated statement of income for the year ended December 31, 2013. |
SUMMARY_OF_SIGNIFICANT_ACCOUNT6
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Other Assets and Other Liabilities (Details 3) (USD $) | Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2011 | |
In Thousands, unless otherwise specified | ||||
Other Assets | ' | ' | ' | |
Margin Receivable | $40,132 | [1] | ' | ' |
Interest and other receivables | 7,548 | 84 | ' | |
Deferred financing costs | 5,541 | [2] | ' | ' |
Accumulated amortization | -768 | ' | ' | |
Other | 689 | ' | ' | |
Other assets | 53,142 | [3] | 84 | ' |
Other Liabilities | ' | ' | ' | |
Interest payable | 4,010 | 55 | ' | |
Accounts Payable | 2,829 | 348 | ' | |
Other | 18 | 59 | ' | |
Accrued expenses and other liabilities | $6,857 | [3] | $462 | $755 |
[1] | Margin receivable represents amounts due to New Residential from counterparties resulting from changes in the counterparties' estimated value of the underlying collateral of New Residential's financed investments resulting from market fluctuations and principal paydowns. Brief periods of time may lapse between the time New Residential pays, or receives, margin from one counterparty relative to other counterparties. | |||
[2] | Deferred financing costs consist primarily of costs incurred in obtaining financing, which are amortized over the term of the financing generally using the effective interest method. | |||
[3] | Represents our historical consolidated balance sheet at December 31, 2013. |
SUMMARY_OF_SIGNIFICANT_ACCOUNT7
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details Narrative) (USD $) | 12 Months Ended | ||
In Thousands, unless otherwise specified | Dec. 31, 2012 | Dec. 31, 2013 | |
Summary Of Significant Accounting Policies Details Narrative | ' | ' | |
Management fee rate (percent) | 1.50% | ' | |
Breakup-fee fee paid for ResCap bankruptcy | $8,400 | ' | |
Restricted cash related to financing of servicer advances | ' | $33,338 | [1] |
[1] | Represents our historical consolidated balance sheet at December 31, 2013. |
SEGMENT_REPORTING_Details
SEGMENT REPORTING (Details) (USD $) | 1 Months Ended | 3 Months Ended | 12 Months Ended | ||||||||||||||||||
In Thousands, unless otherwise specified | Dec. 31, 2011 | Dec. 31, 2013 | Sep. 30, 2013 | Jun. 30, 2013 | Mar. 31, 2013 | Dec. 31, 2012 | Sep. 30, 2012 | Jun. 30, 2012 | Mar. 31, 2012 | Dec. 31, 2013 | Dec. 31, 2012 | ||||||||||
Interest income | $1,260 | $26,492 | $21,885 | $22,999 | $16,191 | $14,948 | $12,295 | $4,479 | $2,037 | $87,567 | [1] | $33,759 | |||||||||
Interest expense | ' | 8,031 | 3,443 | 2,651 | 899 | 406 | 298 | ' | ' | 15,024 | [1] | 704 | |||||||||
Net interest income | 1,260 | 18,461 | 18,442 | 20,348 | 15,292 | 14,542 | 11,997 | 4,479 | 2,037 | 72,543 | [1] | 33,055 | |||||||||
Impairment | ' | 1,698 | ' | 3,756 | ' | ' | ' | ' | ' | 5,454 | [1] | ' | |||||||||
Other income | 367 | 83,804 | [2] | 56,195 | [2] | 98,182 | [2] | 2,827 | [2] | 10,910 | [2] | 1,774 | [2] | 3,523 | [2] | 1,216 | [2] | 241,008 | [1],[2] | 17,423 | [2] |
Operating expenses | 913 | 20,386 | 11,492 | 5,552 | 5,044 | 5,135 | 2,003 | 1,528 | 565 | 42,474 | [1] | 9,231 | |||||||||
Income (Loss) before Income Taxes | 714 | 80,181 | 63,145 | 109,222 | 13,075 | ' | ' | ' | ' | 265,623 | [1] | 41,247 | |||||||||
Net Income (Loss) | 714 | 80,181 | 63,145 | 109,222 | 13,075 | 20,317 | 11,768 | 6,474 | 2,688 | 265,623 | [1] | 41,247 | |||||||||
Noncontrolling Interests in Income (Loss) of Consolidated Subsidiaries | ' | -326 | ' | ' | ' | ' | ' | ' | ' | -326 | [1] | ' | |||||||||
Net income attributable to common shareholders | 714 | 80,507 | 63,145 | 109,222 | 13,075 | ' | ' | ' | ' | 265,949 | [1] | 41,247 | |||||||||
Investments | ' | 5,564,258 | ' | ' | ' | 534,792 | ' | ' | ' | 5,564,258 | 534,792 | ||||||||||
Cash and restricted cash | ' | 305,332 | ' | ' | ' | ' | ' | ' | ' | 305,332 | ' | ||||||||||
Derivative assets | ' | 35,926 | [3] | ' | ' | ' | ' | ' | ' | ' | 35,926 | [3] | ' | ||||||||
Other assets | ' | 53,142 | [3] | ' | ' | ' | 84 | ' | ' | ' | 53,142 | [3] | 84 | ||||||||
Total assets | 43,971 | 5,958,658 | [3] | ' | ' | ' | 534,876 | ' | ' | ' | 5,958,658 | [3] | 534,876 | ||||||||
Debt | ' | 4,109,329 | ' | ' | ' | 150,922 | ' | ' | ' | 4,109,329 | 150,922 | ||||||||||
Other liabilities | ' | 336,254 | ' | ' | ' | 5,598 | ' | ' | ' | 336,254 | 5,598 | ||||||||||
Total liabilities | 4,163 | 4,445,583 | [3] | ' | ' | ' | 156,520 | ' | ' | ' | 4,445,583 | [3] | 156,520 | ||||||||
Total Equity | 39,808 | 1,513,075 | [3] | ' | ' | ' | 378,356 | ' | ' | ' | 1,513,075 | [3] | 378,356 | ||||||||
Noncontrolling interests in equity of consolidated subsidiaries | ' | 247,225 | [3] | ' | ' | ' | ' | ' | ' | ' | 247,225 | [3] | ' | ||||||||
Total New Residential stockholders' equity | 39,808 | 1,265,850 | [3] | ' | ' | ' | 378,356 | ' | ' | ' | 1,265,850 | [3] | 378,356 | ||||||||
Investments in equity method investees at fair value | ' | 567,828 | ' | ' | ' | ' | ' | ' | ' | 567,828 | ' | ||||||||||
Excess MSRs | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ||||||||||
Interest income | 1,260 | ' | ' | ' | ' | ' | ' | ' | ' | 40,921 | 27,496 | ||||||||||
Net interest income | 1,260 | ' | ' | ' | ' | ' | ' | ' | ' | 40,921 | 27,496 | ||||||||||
Other income | 367 | ' | ' | ' | ' | ' | ' | ' | ' | 103,675 | 17,423 | ||||||||||
Operating expenses | 809 | ' | ' | ' | ' | ' | ' | ' | ' | 215 | 5,449 | ||||||||||
Income (Loss) before Income Taxes | 818 | ' | ' | ' | ' | ' | ' | ' | ' | 144,381 | 39,470 | ||||||||||
Net Income (Loss) | 818 | ' | ' | ' | ' | ' | ' | ' | ' | 144,381 | 39,470 | ||||||||||
Net income attributable to common shareholders | 818 | ' | ' | ' | ' | ' | ' | ' | ' | 144,381 | 39,470 | ||||||||||
Investments | ' | 676,917 | ' | ' | ' | 245,036 | ' | ' | ' | 676,917 | 245,036 | ||||||||||
Other assets | ' | 2 | ' | ' | ' | 32 | ' | ' | ' | 2 | 32 | ||||||||||
Total assets | 43,971 | 676,919 | ' | ' | ' | 245,068 | ' | ' | ' | 676,919 | 245,068 | ||||||||||
Other liabilities | ' | 80 | ' | ' | ' | 174 | ' | ' | ' | 80 | 174 | ||||||||||
Total liabilities | ' | 80 | ' | ' | ' | 174 | ' | ' | ' | 80 | 174 | ||||||||||
Total Equity | ' | 676,839 | ' | ' | ' | 244,894 | ' | ' | ' | 676,839 | 244,894 | ||||||||||
Total New Residential stockholders' equity | ' | 679,839 | ' | ' | ' | 244,894 | ' | ' | ' | 679,839 | 244,894 | ||||||||||
Investments in equity method investees at fair value | ' | 352,766 | ' | ' | ' | ' | ' | ' | ' | 352,766 | ' | ||||||||||
Servicer Advances | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ||||||||||
Interest income | ' | ' | ' | ' | ' | ' | ' | ' | ' | 4,421 | ' | ||||||||||
Interest expense | ' | ' | ' | ' | ' | ' | ' | ' | ' | 3,901 | ' | ||||||||||
Net interest income | ' | ' | ' | ' | ' | ' | ' | ' | ' | 520 | ' | ||||||||||
Operating expenses | ' | ' | ' | ' | ' | ' | ' | ' | ' | 2,077 | ' | ||||||||||
Income (Loss) before Income Taxes | ' | ' | ' | ' | ' | ' | ' | ' | ' | -1,557 | ' | ||||||||||
Net Income (Loss) | ' | ' | ' | ' | ' | ' | ' | ' | ' | -1,557 | ' | ||||||||||
Noncontrolling Interests in Income (Loss) of Consolidated Subsidiaries | ' | ' | ' | ' | ' | ' | ' | ' | ' | -326 | ' | ||||||||||
Net income attributable to common shareholders | ' | ' | ' | ' | ' | ' | ' | ' | ' | -1,231 | ' | ||||||||||
Investments | ' | 2,665,551 | ' | ' | ' | ' | ' | ' | ' | 2,665,551 | ' | ||||||||||
Cash and restricted cash | ' | 85,243 | ' | ' | ' | ' | ' | ' | ' | 85,243 | ' | ||||||||||
Other assets | ' | 7,062 | ' | ' | ' | ' | ' | ' | ' | 7,062 | ' | ||||||||||
Total assets | ' | 2,757,856 | ' | ' | ' | ' | ' | ' | ' | 2,757,856 | ' | ||||||||||
Debt | ' | 2,390,778 | ' | ' | ' | ' | ' | ' | ' | 2,390,778 | ' | ||||||||||
Other liabilities | ' | 4,271 | ' | ' | ' | ' | ' | ' | ' | 4,271 | ' | ||||||||||
Total liabilities | ' | 2,395,049 | ' | ' | ' | ' | ' | ' | ' | 2,395,049 | ' | ||||||||||
Total Equity | ' | 362,807 | ' | ' | ' | ' | ' | ' | ' | 362,807 | ' | ||||||||||
Noncontrolling interests in equity of consolidated subsidiaries | ' | 247,225 | ' | ' | ' | ' | ' | ' | ' | 247,225 | ' | ||||||||||
Total New Residential stockholders' equity | ' | 115,582 | ' | ' | ' | ' | ' | ' | ' | 115,582 | ' | ||||||||||
Real Estate Securities | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ||||||||||
Interest income | ' | ' | ' | ' | ' | ' | ' | ' | ' | 39,533 | 6,263 | ||||||||||
Interest expense | ' | ' | ' | ' | ' | ' | ' | ' | ' | 10,876 | 704 | ||||||||||
Net interest income | ' | ' | ' | ' | ' | ' | ' | ' | ' | 28,657 | 5,559 | ||||||||||
Impairment | ' | ' | ' | ' | ' | ' | ' | ' | ' | 4,993 | ' | ||||||||||
Other income | ' | ' | ' | ' | ' | ' | ' | ' | ' | 52,645 | ' | ||||||||||
Operating expenses | ' | ' | ' | ' | ' | ' | ' | ' | ' | 312 | ' | ||||||||||
Income (Loss) before Income Taxes | ' | ' | ' | ' | ' | ' | ' | ' | ' | 75,997 | 5,559 | ||||||||||
Net Income (Loss) | ' | ' | ' | ' | ' | ' | ' | ' | ' | 75,997 | 5,559 | ||||||||||
Net income attributable to common shareholders | ' | ' | ' | ' | ' | ' | ' | ' | ' | 75,997 | 5,559 | ||||||||||
Investments | ' | 1,973,189 | ' | ' | ' | 289,756 | ' | ' | ' | 1,973,189 | 289,756 | ||||||||||
Cash and restricted cash | ' | 51,627 | ' | ' | ' | ' | ' | ' | ' | 51,627 | ' | ||||||||||
Derivative assets | ' | 1,452 | ' | ' | ' | ' | ' | ' | ' | 1,452 | ' | ||||||||||
Other assets | ' | 44,848 | ' | ' | ' | 52 | ' | ' | ' | 44,848 | 52 | ||||||||||
Total assets | ' | 2,071,116 | ' | ' | ' | 289,808 | ' | ' | ' | 2,071,116 | 289,808 | ||||||||||
Debt | ' | 1,620,711 | ' | ' | ' | 150,922 | ' | ' | ' | 1,620,711 | 150,922 | ||||||||||
Other liabilities | ' | 215,159 | ' | ' | ' | 56 | ' | ' | ' | 215,159 | 56 | ||||||||||
Total liabilities | ' | 1,835,870 | ' | ' | ' | 150,978 | ' | ' | ' | 1,835,870 | 150,978 | ||||||||||
Total Equity | ' | 235,246 | ' | ' | ' | 138,830 | ' | ' | ' | 235,246 | 138,830 | ||||||||||
Total New Residential stockholders' equity | ' | 235,246 | ' | ' | ' | 138,830 | ' | ' | ' | 235,246 | 138,830 | ||||||||||
Loans | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ||||||||||
Interest income | ' | ' | ' | ' | ' | ' | ' | ' | ' | 2,650 | ' | ||||||||||
Net interest income | ' | ' | ' | ' | ' | ' | ' | ' | ' | 2,650 | ' | ||||||||||
Impairment | ' | ' | ' | ' | ' | ' | ' | ' | ' | 461 | ' | ||||||||||
Other income | ' | ' | ' | ' | ' | ' | ' | ' | ' | 1,832 | ' | ||||||||||
Operating expenses | ' | ' | ' | ' | ' | ' | ' | ' | ' | 357 | ' | ||||||||||
Income (Loss) before Income Taxes | ' | ' | ' | ' | ' | ' | ' | ' | ' | 3,664 | ' | ||||||||||
Net Income (Loss) | ' | ' | ' | ' | ' | ' | ' | ' | ' | 3,664 | ' | ||||||||||
Net income attributable to common shareholders | ' | ' | ' | ' | ' | ' | ' | ' | ' | 3,664 | ' | ||||||||||
Investments | ' | 33,539 | ' | ' | ' | ' | ' | ' | ' | 33,539 | ' | ||||||||||
Cash and restricted cash | ' | 22,840 | ' | ' | ' | ' | ' | ' | ' | 22,840 | ' | ||||||||||
Derivative assets | ' | 34,474 | ' | ' | ' | ' | ' | ' | ' | 34,474 | ' | ||||||||||
Total assets | ' | 90,853 | ' | ' | ' | ' | ' | ' | ' | 90,853 | ' | ||||||||||
Debt | ' | 22,840 | ' | ' | ' | ' | ' | ' | ' | 22,840 | ' | ||||||||||
Other liabilities | ' | 32,553 | ' | ' | ' | ' | ' | ' | ' | 32,553 | ' | ||||||||||
Total liabilities | ' | 55,393 | ' | ' | ' | ' | ' | ' | ' | 55,393 | ' | ||||||||||
Total Equity | ' | 35,460 | ' | ' | ' | ' | ' | ' | ' | 35,460 | ' | ||||||||||
Total New Residential stockholders' equity | ' | 35,460 | ' | ' | ' | ' | ' | ' | ' | 35,460 | ' | ||||||||||
Consumer Loans | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ||||||||||
Other income | ' | ' | ' | ' | ' | ' | ' | ' | ' | 82,856 | ' | ||||||||||
Operating expenses | ' | ' | ' | ' | ' | ' | ' | ' | ' | 2,076 | ' | ||||||||||
Income (Loss) before Income Taxes | ' | ' | ' | ' | ' | ' | ' | ' | ' | 80,780 | ' | ||||||||||
Net Income (Loss) | ' | ' | ' | ' | ' | ' | ' | ' | ' | 80,780 | ' | ||||||||||
Net income attributable to common shareholders | ' | ' | ' | ' | ' | ' | ' | ' | ' | 80,780 | ' | ||||||||||
Investments | ' | 215,062 | ' | ' | ' | ' | ' | ' | ' | 215,062 | ' | ||||||||||
Total assets | ' | 215,062 | ' | ' | ' | ' | ' | ' | ' | 215,062 | ' | ||||||||||
Other liabilities | ' | 33 | ' | ' | ' | ' | ' | ' | ' | 33 | ' | ||||||||||
Total liabilities | ' | 33 | ' | ' | ' | ' | ' | ' | ' | 33 | ' | ||||||||||
Total Equity | ' | 215,029 | ' | ' | ' | ' | ' | ' | ' | 215,029 | ' | ||||||||||
Total New Residential stockholders' equity | ' | 215,029 | ' | ' | ' | ' | ' | ' | ' | 215,029 | ' | ||||||||||
Investments in equity method investees at fair value | ' | 215,062 | ' | ' | ' | ' | ' | ' | ' | 215,062 | ' | ||||||||||
Corporate | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ||||||||||
Interest income | ' | ' | ' | ' | ' | ' | ' | ' | ' | 42 | ' | ||||||||||
Interest expense | ' | ' | ' | ' | ' | ' | ' | ' | ' | 247 | ' | ||||||||||
Net interest income | ' | ' | ' | ' | ' | ' | ' | ' | ' | -205 | ' | ||||||||||
Operating expenses | 104 | ' | ' | ' | ' | ' | ' | ' | ' | 37,437 | 3,782 | ||||||||||
Income (Loss) before Income Taxes | -104 | ' | ' | ' | ' | ' | ' | ' | ' | -37,642 | -3,782 | ||||||||||
Net Income (Loss) | -104 | ' | ' | ' | ' | ' | ' | ' | ' | -37,642 | -3,782 | ||||||||||
Net income attributable to common shareholders | -104 | ' | ' | ' | ' | ' | ' | ' | ' | -37,642 | -3,782 | ||||||||||
Cash and restricted cash | ' | 145,622 | ' | ' | ' | ' | ' | ' | ' | 145,622 | ' | ||||||||||
Other assets | ' | 1,230 | ' | ' | ' | ' | ' | ' | ' | 1,230 | ' | ||||||||||
Total assets | ' | 146,852 | ' | ' | ' | ' | ' | ' | ' | 146,852 | ' | ||||||||||
Debt | ' | 75,000 | ' | ' | ' | ' | ' | ' | ' | 75,000 | ' | ||||||||||
Other liabilities | ' | 84,158 | ' | ' | ' | 5,368 | ' | ' | ' | 84,158 | 5,368 | ||||||||||
Total liabilities | ' | 159,158 | ' | ' | ' | 5,368 | ' | ' | ' | 159,158 | 5,368 | ||||||||||
Total Equity | ' | -12,306 | ' | ' | ' | -5,368 | ' | ' | ' | -12,306 | -5,368 | ||||||||||
Total New Residential stockholders' equity | ' | ($12,306) | ' | ' | ' | ($5,368) | ' | ' | ' | ($12,306) | ($5,368) | ||||||||||
[1] | Represents our historical consolidated statement of income for the year ended December 31, 2013. | ||||||||||||||||||||
[2] | Earnings from investments in equity method investees is included in other income. | ||||||||||||||||||||
[3] | Represents our historical consolidated balance sheet at December 31, 2013. |
INVESTMENTS_IN_EXCESS_MORTGAGE4
INVESTMENTS IN EXCESS MORTGAGE SERVICING RIGHTS AT FAIR VALUE - Direct Investments (Details) (USD $) | 1 Months Ended | 12 Months Ended | 1 Months Ended | 12 Months Ended | 12 Months Ended | 12 Months Ended | 12 Months Ended | 12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
In Thousands, unless otherwise specified | Dec. 31, 2011 | Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2011 | Dec. 31, 2013 | Dec. 31, 2012 | Dec. 13, 2011 | Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2013 | Dec. 31, 2012 | Jun. 05, 2012 | Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2013 | 20-May-13 | Dec. 31, 2013 | Dec. 31, 2013 | Sep. 23, 2013 | Dec. 31, 2013 | Dec. 31, 2013 | Dec. 31, 2013 | Dec. 31, 2013 | Dec. 31, 2012 | Nov. 30, 2012 | |||||||||||||||||||||||||||||
MSRs Pool 1 | MSRs Pool 1 | MSRs Pool 1 | MSRs Pool 1 | MSR Pool 1 Recapture Agreement | MSR Pool 1 Recapture Agreement | MSRs Pool 2 | MSRs Pool 2 | MSRs Pool 2 | MSR Pool 2 Recapture Agreement | MSR Pool 2 Recapture Agreement | MSRs Pool 3 | MSRs Pool 3 | MSR Pool 3 Recapture Agreement | MSR Pool 3 Recapture Agreement | MSRs Pool 4 | MSRs Pool 4 | MSR Pool 4 Recapture Agreement | MSR Pool 4 Recapture Agreement | MSRs Pool 5 | MSRs Pool 5 | MSR Pool 5 Recapture Agreement | MSR Pool 5 Recapture Agreement | MSRs Pool 11 | MSRs Pool 11 | MSR Pool 11 Recapture Agreement | MSRs Pool 12 | MSRs Pool 12 | MSR Pool 12 Recapture Agreement | MSRs Pool 18 | MSR Pool 18 Recapture Agreement | MSRs | MSRs | MSRs | |||||||||||||||||||||||||||||||||
Unpaid principal balance of underlying loans | ' | ' | ' | ' | $6,873,942 | $8,403,211 | ' | ' | ' | $7,924,920 | $9,397,120 | ' | ' | ' | $7,822,453 | $9,069,726 | ' | ' | $5,076,470 | $5,788,133 | ' | ' | $36,907,851 | [1] | $43,902,561 | ' | ' | $436,241 | ' | ' | $5,152,877 | [1] | ' | ' | $8,758,860 | [2] | ' | $78,953,614 | $76,560,751 | $13,000,000 | ||||||||||||||||||||||||||
Interest in Excess MSR | ' | ' | ' | ' | 65.00% | 6.50% | 65.00% | 65.00% | 6.50% | 65.00% | 6.50% | 65.00% | 65.00% | 6.50% | 65.00% | 6.50% | 65.00% | 6.50% | 65.01% | 6.50% | 65.00% | 6.50% | 80.00% | [1] | 6.50% | 80.00% | 6.50% | 66.70% | 66.00% | 66.70% | 40.00% | [1] | 40.00% | 40.00% | 40.00% | [2] | 40.00% | ' | ' | 67.00% | ||||||||||||||||||||||||||
Amortized Cost Basis | ' | ' | ' | ' | 26,279 | [3] | 30,237 | [3] | ' | 1,109 | [3] | 4,430 | [3] | 30,217 | [3] | 32,890 | [3] | ' | 1,252 | [3] | 5,206 | [3] | 24,636 | [3] | 27,618 | [3] | 2,733 | [3] | 5,036 | [3] | 9,876 | [3] | 11,130 | [3] | 2,300 | [3] | 2,902 | [3] | 117,544 | [1],[3] | 107,704 | [3] | 9,229 | [3] | 8,493 | [3] | 2,091 | [3] | ' | 254 | [3] | 16,233 | [1],[3] | ' | 474 | [3] | 16,075 | [2],[3] | 1,127 | [3] | 261,429 | [3] | 235,646 | [3] | ' | |
Carrying Value | ' | ' | ' | ' | 36,235 | [4] | 35,974 | [4] | ' | 6,820 | [4] | 4,936 | [4] | 35,234 | [4] | 33,935 | [4] | ' | 6,587 | [4] | 5,387 | [4] | 32,899 | [4] | 30,474 | [4] | 6,642 | [4] | 4,960 | [4] | 13,823 | [4] | 12,149 | [4] | 4,105 | [4] | 2,887 | [4] | 140,634 | [1],[4] | 109,682 | [4] | 5,609 | [4] | 4,652 | [4] | 2,080 | [4] | ' | 235 | [4] | 16,294 | [1],[4] | ' | 240 | [4] | 16,079 | [2],[4] | 635 | [4] | 324,151 | [4] | 245,036 | [4] | ' | |
Weighted average yield | ' | 2.66% | ' | ' | 12.50% | 18.00% | ' | 12.50% | 18.00% | 12.50% | 17.30% | ' | 12.50% | 17.30% | 12.50% | 17.60% | 12.50% | 17.60% | 12.50% | 17.90% | 12.50% | 17.90% | 12.50% | [1] | 17.50% | 12.50% | 17.50% | 12.50% | ' | 12.50% | 16.40% | [1] | ' | 16.40% | 15.30% | [2] | 15.30% | 12.90% | 17.60% | ' | ||||||||||||||||||||||||||
Weighted average life years | ' | '5 years 8 months 12 days | [5] | ' | ' | '5 years 2 months 12 days | [6] | '4 years 9 months 18 days | [6] | ' | '11 years 10 months 24 days | [6] | '10 years 9 months 18 days | [6] | '5 years 6 months | [6] | '5 years | [6] | ' | '12 years 6 months | [6] | '11 years 9 months 18 days | [6] | '5 years 1 month 6 days | [6] | '4 years 8 months 12 days | [6] | '12 years 1 month 6 days | [6] | '11 years 3 months 18 days | [6] | '4 years 10 months 24 days | [6] | '4 years 7 months 6 days | [6] | '12 years | [6] | '11 years 1 month 6 days | [6] | '5 years 4 months 24 days | [1],[6] | '4 years 9 months 18 days | [6] | '13 years 4 months 24 days | [6] | '11 years 8 months 12 days | [6] | '6 years 6 months | [6] | ' | '14 years 3 months 18 days | [6] | '4 years 6 months | [1],[6] | ' | '13 years 2 months 12 days | [6] | '4 years 7 months 6 days | [2],[6] | '12 years 3 months 18 days | [6] | '5 years 9 months 18 days | [6] | '5 years 4 months 24 days | [6] | ' |
Change in fair value of investments recorded in other income | $367 | $53,332 | [7] | $9,023 | $400 | $4,219 | [8] | $5,569 | [8] | ' | $5,205 | [8] | $307 | [8] | $3,971 | [8] | $1,045 | [8] | ' | $5,154 | [8] | $181 | [8] | $5,408 | [8] | $2,856 | [8] | $3,985 | [8] | ($76) | [8] | $2,929 | [8] | $1,019 | [8] | $1,819 | [8] | ($15) | [8] | $21,113 | [1],[8] | $1,978 | [8] | $221 | [8] | ($3,841) | [8] | ($11) | [8] | ' | ($19) | [8] | $60 | [1],[8] | ' | ($233) | [8] | $3 | [2],[8] | ($492) | [8] | $53,332 | [8] | $9,023 | [8] | ' |
[1] | Pool in which New Residential also invested in related servicer advances, including the basic fee component of the related MSR subsequent to December 31, 2013 (Note 18). | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
[2] | Pool in which New Residential also invested in related servicer advances, including the basic fee component of the related MSR as of December 31, 2013 (Note 6). | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
[3] | The amortized cost basis of the Recapture Agreements is determined based on the relative fair values of the Recapture Agreements and related Excess MSRs at the time they were acquired. | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
[4] | Carrying Value represents the fair value of the pools or Recapture Agreements, as applicable. | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
[5] | The weighted average life is based on the timing of expected principal reduction on the assets. | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
[6] | Weighted Average Life represents the weighted average expected timing of the receipt of expected cash flows for this investment. | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
[7] | Represents our historical consolidated statement of income for the year ended December 31, 2013. | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
[8] | The portion of the change in fair value of the Recapture Agreements relating to loans recaptured to date is reflected in the respective pool. For the year ended December 31, 2011 the change in fair value recorded in other income relating to Pool 1 was $0.4 million. |
INVESTMENTS_IN_EXCESS_MORTGAGE5
INVESTMENTS IN EXCESS MORTGAGE SERVICING RIGHTS AT FAIR VALUE - Geographic Distribution (Details 1) (MSRs) | Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2011 | ||
Percentage of UPB | 100.00% | 100.00% | [1] | 100.00% | [1] |
California | ' | ' | ' | ||
Percentage of UPB | 31.50% | 32.00% | [1] | 19.40% | [1] |
Florida | ' | ' | ' | ||
Percentage of UPB | 9.80% | 10.10% | [1] | 11.10% | [1] |
New York | ' | ' | ' | ||
Percentage of UPB | 4.90% | 4.30% | [1] | ' | |
Texas | ' | ' | ' | ||
Percentage of UPB | 4.00% | 3.60% | [1] | 6.70% | [1] |
Washington | ' | ' | ' | ||
Percentage of UPB | 3.90% | 4.30% | [1] | 3.20% | [1] |
Arizona | ' | ' | ' | ||
Percentage of UPB | 3.50% | 3.90% | [1] | 4.80% | [1] |
Maryland | ' | ' | ' | ||
Percentage of UPB | 3.50% | 3.40% | [1] | 3.10% | [1] |
New Jersey | ' | ' | ' | ||
Percentage of UPB | 3.30% | 3.10% | [1] | 3.10% | [1] |
Colorado | ' | ' | ' | ||
Percentage of UPB | 3.20% | 3.50% | [1] | ' | |
Virginia | ' | ' | ' | ||
Percentage of UPB | 3.10% | 3.00% | [1] | 3.50% | [1] |
Other US Locations | ' | ' | ' | ||
Percentage of UPB | 29.30% | 2.88% | [1] | 39.40% | [1] |
Illinois | ' | ' | ' | ||
Percentage of UPB | ' | ' | 3.00% | [1] | |
Nevada | ' | ' | ' | ||
Percentage of UPB | ' | ' | 2.70% | [1] | |
[1] | Based on the information provided by the loan servicer as of the most recent remittance for the respective dates. |
INVESTMENTS_IN_EXCESS_MORTGAGE6
INVESTMENTS IN EXCESS MORTGAGE SERVICING RIGHTS AT FAIR VALUE (Details Narrative) (USD $) | 1 Months Ended | 12 Months Ended | 0 Months Ended | 1 Months Ended | 12 Months Ended | 0 Months Ended | 12 Months Ended | 0 Months Ended | 1 Months Ended | 12 Months Ended | 0 Months Ended | 12 Months Ended | 0 Months Ended | 12 Months Ended | 3 Months Ended | 12 Months Ended | 0 Months Ended | 12 Months Ended | 12 Months Ended | |||||||||||||||||||||||||||||||
In Thousands, unless otherwise specified | Dec. 31, 2011 | Dec. 31, 2013 | Dec. 31, 2012 | Dec. 13, 2011 | Dec. 31, 2011 | Dec. 31, 2013 | Dec. 31, 2012 | Dec. 13, 2011 | Jun. 05, 2012 | Dec. 31, 2013 | Dec. 31, 2012 | Jun. 05, 2012 | Jun. 29, 2012 | Sep. 30, 2013 | Dec. 31, 2013 | Dec. 31, 2012 | Jun. 29, 2012 | 20-May-13 | Dec. 31, 2013 | Sep. 23, 2013 | Dec. 31, 2013 | Dec. 31, 2013 | Dec. 31, 2013 | Dec. 31, 2013 | Dec. 31, 2012 | Nov. 30, 2012 | Jun. 29, 2012 | Dec. 31, 2013 | Dec. 31, 2012 | Jun. 29, 2012 | Dec. 31, 2013 | Dec. 31, 2012 | Jun. 29, 2012 | |||||||||||||||||
MSRs Pool 1 | MSRs Pool 1 | MSRs Pool 1 | MSRs Pool 1 | MSRs Pool 1 | MSRs Pool 2 | MSRs Pool 2 | MSRs Pool 2 | MSRs Pool 2 | MSR Pools 3, 4 and 5 | MSRs Pool 5 | MSRs Pool 5 | MSRs Pool 5 | MSRs Pool 5 | MSRs Pool 11 | MSRs Pool 11 | MSRs Pool 12 | MSRs Pool 12 | MSRs Pool 18 | MSRs Pool 18 | MSRs | MSRs | MSRs | MSRs | MSRs Pool 3 | MSRs Pool 3 | MSRs Pool 3 | MSRs Pool 4 | MSRs Pool 4 | MSRs Pool 4 | |||||||||||||||||||||
As reported at 12/31/12 | As reported at 12/31/12 | As reported at 12/31/12 | As reported at 12/31/12 | As reported at 12/31/12 | As reported at 12/31/12 | |||||||||||||||||||||||||||||||||||||||||||||
Percentage of Investment co-owned by Nationstar | ' | ' | ' | 35.00% | ' | ' | ' | 35.00% | 35.00% | ' | ' | 35.00% | 35.00% | ' | ' | ' | ' | 34.00% | ' | 20.00% | ' | 20.00% | 20.00% | ' | ' | 33.00% | 35.00% | ' | ' | ' | ' | ' | ' | |||||||||||||||||
Percentage of Investment owned by New Residential | ' | ' | ' | 65.00% | ' | 65.00% | 6.50% | 65.00% | 65.00% | 65.00% | 6.50% | 65.00% | 65.00% | ' | 80.00% | [1] | 6.50% | ' | 66.00% | 66.70% | 40.00% | 40.00% | [1] | 40.00% | [2] | 40.00% | [2] | ' | ' | 67.00% | 65.00% | 65.00% | 6.50% | ' | 65.01% | 6.50% | ' | |||||||||||||
Amount invested | ' | ' | ' | $43,700 | ' | ' | ' | $44,000 | $42,300 | ' | ' | $44,000 | $176,500 | $26,600 | ' | ' | ' | $2,400 | ' | $17,400 | ' | $17,000 | ' | ' | ' | ' | $176,500 | ' | ' | ' | ' | ' | ' | |||||||||||||||||
Percentage of loans in private label securitizations portfolio | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 75.00% | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 75.00% | ' | ' | ' | ' | ' | ' | |||||||||||||||||
Conforming loans in GSE pools of portfolio (percent) | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 25.00% | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 25.00% | ' | ' | ' | ' | ' | ' | |||||||||||||||||
Repurchase agreements | ' | 1,620,711 | [3] | 150,922 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ||||||||||||||||
Additional percentage of investment purchased by New Residential | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 15.00% | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | |||||||||||||||||
Percentage of Investment owned by Fortress-managed (affiliated funds) | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 40.00% | ' | 40.00% | 40.00% | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | |||||||||||||||||
Change in fair value of investments recorded in other income | 367 | 53,332 | [4] | 9,023 | ' | 400 | 4,219 | [5] | 5,569 | [5] | ' | ' | 3,971 | [5] | 1,045 | [5] | ' | ' | ' | 21,113 | [1],[5] | 1,978 | [5] | ' | ' | -11 | [5] | ' | 60 | [1],[5] | ' | 3 | [2],[5] | 53,332 | [5] | 9,023 | [5] | ' | ' | 5,408 | [5] | 2,856 | [5] | ' | 2,929 | [5] | 1,019 | [5] | ' | |
Unpaid principal balance of underlying mortgage | ' | ' | ' | ' | ' | ' | ' | $9,900,000 | ' | ' | ' | $10,400,000 | ' | ' | ' | ' | $47,600,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | $63,700,000 | ' | ' | $9,800,000 | ' | ' | $6,300,000 | |||||||||||||||||
[1] | Pool in which New Residential also invested in related servicer advances, including the basic fee component of the related MSR subsequent to December 31, 2013 (Note 18). | |||||||||||||||||||||||||||||||||||||||||||||||||
[2] | Pool in which New Residential also invested in related servicer advances, including the basic fee component of the related MSR as of December 31, 2013 (Note 6). | |||||||||||||||||||||||||||||||||||||||||||||||||
[3] | Represents our historical consolidated balance sheet at December 31, 2013. | |||||||||||||||||||||||||||||||||||||||||||||||||
[4] | Represents our historical consolidated statement of income for the year ended December 31, 2013. | |||||||||||||||||||||||||||||||||||||||||||||||||
[5] | The portion of the change in fair value of the Recapture Agreements relating to loans recaptured to date is reflected in the respective pool. For the year ended December 31, 2011 the change in fair value recorded in other income relating to Pool 1 was $0.4 million. |
INVESTMENTS_IN_EXCESS_MORTGAGE7
INVESTMENTS IN EXCESS MORTGAGE SERVICING RIGHTS EQUITY METHOD INVESTEES - Summary of Investments (Details) (USD $) | 12 Months Ended | |
In Thousands, unless otherwise specified | Dec. 31, 2013 | |
Summarized financial information: | ' | |
Investments in equity method investees at fair value | $352,766 | [1] |
Excess Mortgage Servicing Rights Investees | ' | |
Summarized financial information: | ' | |
Excess MSR assets | 703,681 | |
Other assets | 5,534 | |
Other liabilities | -3,683 | |
Equity | 705,532 | |
Investments in equity method investees at fair value | 352,766 | |
Ownership percentage in equity method investees | 50.00% | |
Interest income | 50,306 | |
Other income | 53,964 | |
Expenses | -3,585 | |
Net income | $100,685 | |
[1] | Represents our historical consolidated balance sheet at December 31, 2013. |
INVESTMENTS_IN_EXCESS_MORTGAGE8
INVESTMENTS IN EXCESS MORTGAGE SERVICING RIGHTS EQUITY METHOD INVESTEES - Excess MSR Investments (Details 1) (USD $) | 12 Months Ended | 12 Months Ended | 12 Months Ended | 12 Months Ended | 12 Months Ended | 12 Months Ended | 12 Months Ended | ||||||||||||||||||||||||||||||||||||||||
In Thousands, unless otherwise specified | Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2013 | Dec. 31, 2013 | Dec. 31, 2013 | Dec. 31, 2012 | Nov. 30, 2012 | Dec. 31, 2013 | Dec. 31, 2013 | Jan. 04, 2013 | Dec. 31, 2013 | Dec. 31, 2013 | Dec. 31, 2013 | Dec. 31, 2013 | Dec. 31, 2013 | Dec. 31, 2013 | Dec. 31, 2013 | Dec. 31, 2013 | Dec. 31, 2013 | Dec. 31, 2013 | Dec. 31, 2013 | Dec. 31, 2013 | Dec. 31, 2013 | Dec. 31, 2013 | 20-May-13 | Dec. 31, 2013 | Dec. 31, 2013 | ||||||||||||||||||||
MSRs Pool 6 | MSRs Pool 11 | MSR Pool 11 Recapture Agreement | MSRs | MSRs | MSRs | Excess Mortgage Servicing Rights Investees | Excess Mortgage Servicing Rights Investees | Excess Mortgage Servicing Rights Investees | Excess Mortgage Servicing Rights Investees | Excess Mortgage Servicing Rights Investees | Excess Mortgage Servicing Rights Investees | Excess Mortgage Servicing Rights Investees | Excess Mortgage Servicing Rights Investees | Excess Mortgage Servicing Rights Investees | Excess Mortgage Servicing Rights Investees | Excess Mortgage Servicing Rights Investees | Excess Mortgage Servicing Rights Investees | Excess Mortgage Servicing Rights Investees | Excess Mortgage Servicing Rights Investees | Excess Mortgage Servicing Rights Investees | Excess Mortgage Servicing Rights Investees | Excess Mortgage Servicing Rights Investees | Excess Mortgage Servicing Rights Investees | Excess Mortgage Servicing Rights Investees | Excess Mortgage Servicing Rights Investees | ||||||||||||||||||||||
MSRs Pool 6 | MSRs Pool 6 | MSR Pool 6 Recapture Agreement | MSRs Pool 7 | MSR Pool 7 Recapture Agreement | MSRs Pool 8 | MSR Pool 8 Recapture Agreement | MSRs Pool 9 | MSR Pool 9 Recapture Agreement | MSRs Pool 10 | MSRs Pool 10 | MSRs Pool 10 | MSR Pool 10 Recapture Agreement | MSR Pool 10 Recapture Agreement | MSR Pool 10 Recapture Agreement | MSRs Pool 11 | MSRs Pool 11 | MSR Pool 11 Recapture Agreement | MSRs | |||||||||||||||||||||||||||||
Lower Range | Upper Range | Lower Range | Upper Range | ||||||||||||||||||||||||||||||||||||||||||||
Unpaid principal balance of underlying loans | ' | ' | $436,241 | ' | $78,953,614 | $76,560,751 | $13,000,000 | ' | $10,152,488 | ' | ' | $31,518,733 | ' | $14,040,636 | ' | $30,814,192 | ' | $68,890,509 | [1] | ' | ' | ' | ' | ' | $18,202,920 | ' | ' | $173,619,478 | |||||||||||||||||||
Investee Interest in Excess MSR | ' | ' | ' | ' | ' | ' | ' | ' | 66.70% | ' | 66.70% | 66.70% | 66.70% | 66.70% | 66.70% | 66.70% | 66.70% | ' | 66.70% | [2] | 77.00% | [2] | ' | 66.70% | 77.00% | 66.70% | ' | 66.70% | ' | ||||||||||||||||||
Ownership percentage in equity method investees | ' | 50.00% | ' | ' | ' | ' | 50.00% | 50.00% | 50.00% | 50.00% | 50.00% | 50.00% | 50.00% | 50.00% | 50.00% | 50.00% | 50.00% | 50.00% | [1] | ' | ' | 50.00% | ' | ' | 50.00% | 50.00% | 50.00% | ' | |||||||||||||||||||
Amortized Cost Basis | ' | ' | 2,091 | [3] | 254 | [3] | 261,429 | [3] | 235,646 | [3] | ' | ' | 38,488 | [4] | ' | 7,666 | [4] | 99,743 | [4] | 16,706 | [4] | 55,905 | [4] | 7,542 | [4] | 103,713 | [4] | 33,905 | [4] | 205,975 | [1],[4] | ' | ' | 13,739 | [4] | ' | ' | 43,157 | [4] | ' | 23,178 | [4] | 649,717 | [4] | |||
Carrying Value | ' | ' | $2,080 | [5] | $235 | [5] | $324,151 | [5] | $245,036 | [5] | ' | ' | $47,144 | [6] | ' | $9,969 | [6] | $102,947 | [6] | $26,388 | [6] | $54,759 | [6] | $14,713 | [6] | $127,646 | [6] | $34,154 | [6] | $208,055 | [1],[6] | ' | ' | $7,165 | [6] | ' | ' | $51,687 | [6] | ' | $19,054 | [6] | $703,681 | [6] | |||
Weighted average yield | 2.66% | ' | 12.50% | 12.50% | 12.90% | 17.60% | ' | ' | 12.50% | ' | 12.50% | 12.50% | 12.50% | 12.50% | 12.50% | 12.50% | 12.50% | 12.50% | [1] | ' | ' | 12.50% | ' | ' | 12.50% | ' | 12.50% | 12.50% | |||||||||||||||||||
Weighted average life (years) | '5 years 8 months 12 days | [7] | ' | '6 years 6 months | [8] | '14 years 3 months 18 days | [8] | '5 years 9 months 18 days | [8] | '5 years 4 months 24 days | [8] | ' | ' | '5 years | [9] | ' | '11 years 10 months 24 days | [9] | '5 years 1 month 6 days | [9] | '12 years 3 months 18 days | [9] | '5 years 1 month 6 days | [9] | '11 years 10 months 24 days | [9] | '4 years 9 months 18 days | [9] | '11 years 10 months 24 days | [9] | '5 years 4 months 24 days | [1],[9] | ' | ' | '13 years 4 months 24 days | [9] | ' | ' | '5 years 6 months | [9] | ' | '11 years 1 month 6 days | [9] | '6 years 3 months 18 days | [9] | ||
[1] | Pool in which New Residential also invested in related servicer advances, including the basic fee component of the related MSR as of December 31, 2013 (Note 6). | ||||||||||||||||||||||||||||||||||||||||||||||
[2] | Pool in which New Residential also invested in related servicer advances, including the basic fee component of the related MSR subsequent to December 31, 2013 (Note 18). | ||||||||||||||||||||||||||||||||||||||||||||||
[3] | The amortized cost basis of the Recapture Agreements is determined based on the relative fair values of the Recapture Agreements and related Excess MSRs at the time they were acquired. | ||||||||||||||||||||||||||||||||||||||||||||||
[4] | Represents the amortized cost basis of the equity method investees in which New Residential holds a 50% interest. The amortized cost basis of the Recapture Agreements is determined based on the relative fair values of the Recapture Agreements and related Excess MSRs at the time they were acquired. | ||||||||||||||||||||||||||||||||||||||||||||||
[5] | Carrying Value represents the fair value of the pools or Recapture Agreements, as applicable. | ||||||||||||||||||||||||||||||||||||||||||||||
[6] | Represents the carrying value of the Excess MSRs held in equity method investees, in which New Residential effectively holds a 50% interest. Carrying value represents the fair value of the pools or Recapture Agreements, as applicable. | ||||||||||||||||||||||||||||||||||||||||||||||
[7] | The weighted average life is based on the timing of expected principal reduction on the assets. | ||||||||||||||||||||||||||||||||||||||||||||||
[8] | Weighted Average Life represents the weighted average expected timing of the receipt of expected cash flows for this investment. | ||||||||||||||||||||||||||||||||||||||||||||||
[9] | The weighted average life represents the weighted average expected timing of the receipt of cash flows of each investment. |
INVESTMENTS_IN_EXCESS_MORTGAGE9
INVESTMENTS IN EXCESS MORTGAGE SERVICING RIGHTS EQUITY METHOD INVESTEES - Geographic Distribution (Details 2) (Excess Mortgage Servicing Rights Investees) | Dec. 31, 2013 |
Percentage of UPB | 100.00% |
California | ' |
Percentage of UPB | 23.50% |
Florida | ' |
Percentage of UPB | 9.20% |
New York | ' |
Percentage of UPB | 5.30% |
Texas | ' |
Percentage of UPB | 4.90% |
Georgia | ' |
Percentage of UPB | 4.00% |
New Jersey | ' |
Percentage of UPB | 3.70% |
Illinois | ' |
Percentage of UPB | 3.50% |
Virginia | ' |
Percentage of UPB | 3.10% |
Maryland | ' |
Percentage of UPB | 3.10% |
Washington | ' |
Percentage of UPB | 2.80% |
Other US Locations | ' |
Percentage of UPB | 36.90% |
Recovered_Sheet1
INVESTMENTS IN EXCESS MORTGAGE SERVICING RIGHTS EQUITY METHOD INVESTEES (Details Narrative) (USD $) | Dec. 31, 2012 | 20-May-13 | Dec. 31, 2013 | Dec. 31, 2013 | Jan. 04, 2013 | Dec. 31, 2013 | Jan. 06, 2013 | Sep. 30, 2013 | Dec. 31, 2013 | Sep. 30, 2013 | Dec. 31, 2013 | 20-May-13 | Dec. 31, 2013 | Dec. 31, 2013 | |
In Thousands, unless otherwise specified | MSRs Pool 6 | MSRs Pool 11 | MSRs Pool 11 | Excess Mortgage Servicing Rights Investees | Excess Mortgage Servicing Rights Investees | Excess Mortgage Servicing Rights Investees | Excess Mortgage Servicing Rights Investees | Excess Mortgage Servicing Rights Investees | Excess Mortgage Servicing Rights Investees | Excess Mortgage Servicing Rights Investees | Excess Mortgage Servicing Rights Investees | Excess Mortgage Servicing Rights Investees | Lower Range | Upper Range | |
MSRs Pool 6 | MSRs Pool 6 | MSR Pools 7, 8, 9, 10 | MSRs Pool 10 | MSRs Pool 10 | MSRs Pool 10 | MSRs Pool 11 | MSRs Pool 11 | ||||||||
Fortress-managed Affiliate | |||||||||||||||
Ownership percentage of nonconsolidated Excess MSR investments | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 33.30% | 38.50% | |
Amount contributed to acquire joint venture | ' | ' | ' | ' | $28,900 | ' | ' | ' | ' | ' | ' | ' | ' | ' | |
Amount committed to invest in joint venture | ' | ' | ' | ' | ' | ' | 340,000 | ' | ' | ' | ' | 37,800 | ' | ' | |
Percentage ownership acquired in joint venture | 50.00% | ' | ' | 50.00% | 50.00% | 50.00% | 50.00% | ' | 50.00% | [1] | ' | 50.00% | 50.00% | ' | ' |
Percentage of Investment co-owned by Nationstar | ' | 34.00% | ' | ' | 33.00% | ' | 33.00% | ' | ' | ' | ' | 33.00% | ' | ' | |
Percentage of Investment owned by New Residential | ' | 66.00% | 66.70% | ' | 67.00% | ' | 67.00% | ' | ' | ' | ' | 67.00% | ' | ' | |
Percentage of loans in private label securitizations portfolio | ' | ' | ' | ' | ' | ' | 53.00% | ' | ' | ' | ' | ' | ' | ' | |
Amount invested | ' | $2,400 | ' | ' | ' | ' | ' | $13,900 | ' | $13,900 | ' | ' | ' | ' | |
Additional percentage interest acquired by New Residential | ' | ' | ' | ' | ' | ' | ' | 10.00% | ' | 10.00% | ' | ' | ' | ' | |
[1] | Pool in which New Residential also invested in related servicer advances, including the basic fee component of the related MSR as of December 31, 2013 (Note 6). |
INVESTMENTS_IN_SERVICER_ADVANC2
INVESTMENTS IN SERVICER ADVANCES - Investment in Servicer Advances (Details) (USD $) | Dec. 31, 2013 | Dec. 17, 2013 | |
In Thousands, unless otherwise specified | |||
Servicer advances | $2,665,551 | [1] | ' |
Servicer Advance Joint Venture | ' | ' | |
Servicer advance fee, amortized cost basis | 2,665,551 | ' | |
Servicer advances | $2,665,551 | [2] | $3,200,000 |
Weighted Average Yield | 4.40% | ' | |
Weighted Average Life | '2 years 7 months 6 days | [3] | ' |
[1] | Represents our historical consolidated balance sheet at December 31, 2013. | ||
[2] | Carrying value represents the fair value of the investment in servicer advances, including the basic fee component of the related MSRs. | ||
[3] | Weighted Average Life represents the weighted average expected timing of the receipt of expected net cash flows for this investment. |
INVESTMENTS_IN_SERVICER_ADVANC3
INVESTMENTS IN SERVICER ADVANCES - JV Investment in Servicer Advances (Details 1) (USD $) | Dec. 31, 2013 | Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2013 | Dec. 17, 2013 | Dec. 31, 2013 | |||
In Thousands, unless otherwise specified | Servicer Advances | Servicer Advances | Servicer Advance Joint Venture | Servicer Advance Joint Venture | Servicer Advance Joint Venture | ||||
Servicer Advances | |||||||||
Unpaid principal balance of underlying loans | ' | ' | ' | ' | ' | $43,444,216 | [1] | ||
Servicer Advances | 2,665,551 | [2] | 2,665,551 | 0 | 2,665,551 | [3] | 3,200,000 | 2,661,130 | [1] |
Servicer Advances to UPB of underlying loans | ' | ' | ' | ' | ' | 6.10% | [1] | ||
Notes payable | ' | ' | ' | ' | ' | $2,390,778 | [1] | ||
Gross Loan-to-Value | ' | ' | ' | ' | ' | 89.80% | [1] | ||
Net Loan-to-Value | ' | ' | ' | ' | ' | 88.60% | [1],[4] | ||
Gross cost of funds | ' | ' | ' | ' | ' | 4.00% | [1],[5] | ||
Net cost of funds | ' | ' | ' | ' | ' | 2.30% | [1],[5] | ||
[1] | The following types of advances comprise the investment in servicer advances (See Schedule of Components of Servicer Advances). | ||||||||
[2] | Represents our historical consolidated balance sheet at December 31, 2013. | ||||||||
[3] | Carrying value represents the fair value of the investment in servicer advances, including the basic fee component of the related MSRs. | ||||||||
[4] | Ratio of face amount of borrowings to value of servicer advance collateral, net of an interest reserve maintained by the Buyer. | ||||||||
[5] | Annualized measure of the cost associated with borrowings. Gross Cost of Funds primarily includes interest expense and facility fees. Net Cost of Funds excludes facility fees. |
INVESTMENTS_IN_SERVICER_ADVANC4
INVESTMENTS IN SERVICER ADVANCES - Components of Funded Advances (Details 2) (Servicer Advance Joint Venture, Servicer Advances, USD $) | Dec. 31, 2013 |
In Thousands, unless otherwise specified | |
Servicer Advance Joint Venture | Servicer Advances | ' |
Principal and Interest Advances | $1,516,715 |
Escrow Advances | 934,525 |
Foreclosure Advances | 209,890 |
Match funded advances | $2,661,130 |
INVESTMENTS_IN_SERVICER_ADVANC5
INVESTMENTS IN SERVICER ADVANCES (Details Narrative) (USD $) | 0 Months Ended | ||
In Thousands, unless otherwise specified | Dec. 17, 2013 | Dec. 31, 2013 | |
Servicer advances | ' | $2,665,551 | [1] |
Servicer base fee to be paid to Nationstar | ' | 8.60% | |
Servicer Advance Joint Venture | ' | ' | |
Servicer advances | 3,200,000 | 2,665,551 | [2] |
Settled servicer advance investments | 2,700,000 | ' | |
Notes payable issued for purchase | 2,400,000 | ' | |
Percentage ownership in joint venture | ' | 32.00% | |
Amount committed to invest in joint venture | ' | 172,400 | |
Servicer Advance Joint Venture | Noncontrolling third-party investors | ' | ' | |
Amount committed to invest in joint venture | ' | 247,600 | |
Amount invested in joint venture | ' | $115,700 | |
[1] | Represents our historical consolidated balance sheet at December 31, 2013. | ||
[2] | Carrying value represents the fair value of the investment in servicer advances, including the basic fee component of the related MSRs. |
INVESTMENTS_IN_REAL_ESTATE_SEC2
INVESTMENTS IN REAL ESTATE SECURITIES - Available for Sale (Details) (USD $) | 12 Months Ended | |||
In Thousands, unless otherwise specified | Dec. 31, 2013 | Dec. 31, 2012 | ||
Securities | Securities | |||
Outstanding face amount | $2,186,996 | [1] | ' | |
Amortized cost basis | 1,969,975 | ' | ||
Gains - gross unrealized | 11,052 | ' | ||
Losses - gross unrealized | -7,838 | ' | ||
Carrying value | 1,973,189 | [2],[3] | 289,756 | |
Number of securities | 214 | ' | ||
Weighted average rating | 'BBB+ | [4] | ' | |
Weighted average coupon | 2.28% | ' | ||
Weighted average yield | 2.66% | ' | ||
Weighted average life (years) | '5 years 8 months 12 days | [5] | ' | |
Agency RMBS | ' | ' | ||
Outstanding face amount | 1,314,130 | [6] | 433,510 | [6],[7] |
Amortized cost basis | 1,403,215 | [6],[8] | 274,230 | [6],[7] |
Gains - gross unrealized | 3,434 | [6] | 15,856 | [6],[7] |
Losses - gross unrealized | -3,885 | [6] | -330 | [6],[7] |
Carrying value | 1,402,764 | [2],[6],[8] | 289,756 | [2],[6],[7],[9] |
Number of securities | 114 | [6] | 29 | [6],[7] |
Weighted average rating | 'AAA | [4],[6] | 'CC | [10],[4],[6],[7] |
Weighted average coupon | 3.18% | [6] | 0.63% | [6],[7] |
Weighted average yield | 1.33% | [6] | 6.55% | [6],[7] |
Weighted average life (years) | '4 years 1 month 6 days | [5],[6] | '6 years 9 months 18 days | [11],[5],[6],[7] |
Principal Subordination - Weighted Average | ' | 10.00% | [12],[7] | |
Non-Agency RMBS | ' | ' | ||
Outstanding face amount | 872,866 | 433,510 | ||
Amortized cost basis | 566,760 | ' | ||
Gains - gross unrealized | 7,618 | ' | ||
Losses - gross unrealized | -3,953 | ' | ||
Carrying value | $570,425 | [2] | ' | |
Number of securities | 100 | ' | ||
Weighted average rating | 'CCC- | [4] | ' | |
Weighted average coupon | 0.94% | ' | ||
Weighted average yield | 4.68% | ' | ||
Weighted average life (years) | '8 years | [5] | ' | |
Principal Subordination - Weighted Average | 7.40% | [12] | ' | |
[1] | The total outstanding face amount was $6.6 million for fixed rate securities and $2.2 billion for floating rate securities. | |||
[2] | Fair value, which is equal to carrying value for all securities. See Note 12 regarding the estimation of fair value. | |||
[3] | Represents our historical consolidated balance sheet at December 31, 2013. | |||
[4] | Represents the weighted average of the ratings of all securities in each asset type, expressed as an S&P equivalent rating. This excludes the ratings of two non-agency bonds with a face amount of $6.3 million for which New Residential was unable to obtain rating information. For each security rated by multiple rating agencies, the lowest rating is used. New Residential used an implied AAA rating for the Agency ARM RMBS. Ratings provided were determined by third party rating agencies, represent the most recent credit ratings available as of the reporting date and may not be current. | |||
[5] | The weighted average life is based on the timing of expected principal reduction on the assets. | |||
[6] | Includes securities issued or guaranteed by U.S. Government agencies such as the Federal National Mortgage Association ("Fannie Mae") or the Federal Home Loan Mortgage Corporation ("Freddie Mac"). | |||
[7] | The total outstanding face amount of fixed rate securities was $1.1 million, and of floating rate securities was $432.4 million. | |||
[8] | Amortized cost basis and carrying value include principal receivable of $10.6 million. | |||
[9] | Fair value, which is equal to carrying value for all securities. See Note 7 regarding the estimation of fair value. | |||
[10] | Represents the weighted average of the ratings of all securities in each asset type, expressed as an S&P equivalent rating. For each security rated by multiple rating agencies, the lowest rating is used. Ratings provided were determined by third party rating agencies as of a particular date, may not be current and are subject to change at any time. | |||
[11] | The weighted average maturity is based on the timing of expected principal reduction on the assets. | |||
[12] | Percentage of the outstanding face amount of securities and residual interests that is subordinate to New Residential's investments. |
INVESTMENTS_IN_REAL_ESTATE_SEC3
INVESTMENTS IN REAL ESTATE SECURITIES - Holdings in an Unrealized Loss Position (Details 1) (USD $) | 12 Months Ended | ||
In Thousands, unless otherwise specified | Dec. 31, 2013 | Dec. 31, 2012 | |
Securities | Securities | ||
Outstanding face amount | $2,186,996 | [1] | ' |
Other Than Temporary Impairment | -2,071 | 0 | |
Amortized cost basis | 1,969,975 | ' | |
Weighted average rating | 'BBB+ | [2] | ' |
Weighted average coupon | 2.28% | ' | |
Weighted average yield | 2.66% | ' | |
Weighted average life (years) | '5 years 8 months 12 days | [3] | ' |
Securities in an Unrealized Loss Position Less than Twelve Months | ' | ' | |
Outstanding face amount | 878,993 | 15,747 | |
Before Impairment - Amortized Cost Basis | 827,517 | ' | |
Other Than Temporary Impairment | -1,470 | [4] | ' |
Amortized cost basis | 826,047 | 9,945 | |
Gross unrealized losses - less than twelve months | -7,542 | -330 | |
Carrying value - less than twelve months | ' | 9,615 | |
Total fair value | 818,505 | ' | |
Number of securities, less than twelve months | 78 | 4 | |
Weighted average rating | 'A- | [5] | 'CC |
Weighted average coupon | 2.54% | 1.46% | |
Weighted average yield | 2.07% | 5.91% | |
Weighted average life (years) | '5 years 6 months | '7 years 2 months 12 days | |
Securities in an Unrealized Loss Position Greater than Twelve Months | ' | ' | |
Outstanding face amount | 48,078 | ' | |
Before Impairment - Amortized Cost Basis | 51,930 | ' | |
Other Than Temporary Impairment | -601 | [4] | ' |
Amortized cost basis | 51,329 | ' | |
Gross unrealized losses - twelve months or more | -296 | ' | |
Total fair value | 51,033 | ' | |
Number of securities, greater than twelve months | 7 | ' | |
Weighted average rating | 'AAA | [5] | ' |
Weighted average coupon | 3.36% | ' | |
Weighted average yield | 1.28% | ' | |
Weighted average life (years) | '3 years 3 months 18 days | ' | |
Securities in a Loss Position | ' | ' | |
Outstanding face amount | 927,071 | 15,747 | |
Before Impairment - Amortized Cost Basis | 879,447 | ' | |
Other Than Temporary Impairment | -2,071 | [4] | ' |
Amortized cost basis | 877,376 | 9,945 | |
Total gross unrealized losses | -7,838 | -330 | |
Carrying value - less than twelve months | ' | 9,615 | |
Total fair value | $869,538 | ' | |
Number of securities | 85 | 4 | |
Weighted average rating | 'A- | [5] | 'CC |
Weighted average coupon | 2.58% | 1.46% | |
Weighted average yield | 2.03% | 5.91% | |
Weighted average life (years) | '5 years 4 months 24 days | '7 years 2 months 12 days | |
[1] | The total outstanding face amount was $6.6 million for fixed rate securities and $2.2 billion for floating rate securities. | ||
[2] | Represents the weighted average of the ratings of all securities in each asset type, expressed as an S&P equivalent rating. This excludes the ratings of two non-agency bonds with a face amount of $6.3 million for which New Residential was unable to obtain rating information. For each security rated by multiple rating agencies, the lowest rating is used. New Residential used an implied AAA rating for the Agency ARM RMBS. Ratings provided were determined by third party rating agencies, represent the most recent credit ratings available as of the reporting date and may not be current. | ||
[3] | The weighted average life is based on the timing of expected principal reduction on the assets. | ||
[4] | This amount represents other-than-temporary impairment recorded on securities that are in an unrealized loss position as of December 31, 2013. | ||
[5] | The rating of securities in an unrealized loss position for less than twelve months excludes the rating of one bond for which New Residential was unable to obtain rating information. |
INVESTMENTS_IN_REAL_ESTATE_SEC4
INVESTMENTS IN REAL ESTATE SECURITIES - Holdings in an Unrealized Loss Position and the Associated Intent to Sell (Details 2) (USD $) | Dec. 31, 2013 | |
In Thousands, unless otherwise specified | ||
Securities Intended To Sell | ' | |
Fair Value | $164,666 | [1] |
Amortized Cost Basis after impairment | 164,666 | [1] |
Unrealized Credit Losses | -988 | [1],[2] |
Securities More Likely To Sell | ' | |
Fair Value | ' | [3] |
Securities No Intent To Sell - Credit Impaired | ' | |
Fair Value | 288,306 | |
Amortized Cost Basis after impairment | 290,487 | |
Unrealized Credit Losses | -2,071 | [2] |
Unrealized Non-Credit Losses | -2,181 | [4] |
Securities No Intent To Sell - Non-Credit Impaired | ' | |
Fair Value | 581,232 | |
Amortized Cost Basis after impairment | 586,889 | |
Unrealized Non-Credit Losses | -5,657 | [4] |
Securities in an Unrealized Loss Position | ' | |
Fair Value | 1,034,204 | |
Amortized Cost Basis after impairment | 1,042,042 | |
Unrealized Credit Losses | -3,059 | [2] |
Unrealized Non-Credit Losses | ($7,838) | [4] |
[1] | Securities New Residential intends to sell have a fair value equal to amortized cost basis after impairment, and, therefore do not have unrealized losses reflected in other comprehensive income as of December 31, 2013. | |
[2] | This amount is required to be recorded as other-than-temporary impairment through earnings. In measuring the portion of credit losses, New Residential's management estimates the expected cash flow for each of the securities. This evaluation includes a review of the credit status and the performance of the collateral supporting those securities, including the credit of the issuer, key terms of the securities and the effect of local, industry and broader economic trends. Significant inputs in estimating the cash flows include management's expectations of prepayment speeds, default rates and loss severities. Credit losses are measured as the decline in the present value of the expected future cash flows discounted at the investment's effective interest rate. | |
[3] | New Residential may, at times, be more likely than not to be required to sell certain securities for liquidity purposes. While the amount of the securities to be sold may be an estimate, and the securities to be sold have not yet been identified, New Residential must make its best estimate, which is subject to significant judgment regarding future events, and may differ materially from actual future sales. | |
[4] | This amount represents unrealized losses on securities that are due to non-credit factors and recorded through other comprehensive income. |
INVESTMENTS_IN_REAL_ESTATE_SEC5
INVESTMENTS IN REAL ESTATE SECURITIES - Credit Losses on Debt Securities (Details 3) (USD $) | 12 Months Ended |
In Thousands, unless otherwise specified | Dec. 31, 2013 |
Other than Temporary Impairment, Credit Losses Recognized in Earnings [Roll Forward] | ' |
Beginning balance of credit losses on debt securities for which a portion of an OTTI was recognized in other comprehensive income | $0 |
Additions for credit losses on securities for which an OTTI was not previously recognized | 4,993 |
Reduction for credit losses on securities for which no OTTI was recognized in other comprehensive income at the current measurement date | -2,878 |
Reduction for securities sold during the period | -44 |
Other Than Temporary Impairment | $2,071 |
INVESTMENTS_IN_REAL_ESTATE_SEC6
INVESTMENTS IN REAL ESTATE SECURITIES - Geographic Distribution of Collateral (Details 4) (USD $) | Dec. 31, 2013 | Dec. 31, 2012 | |
In Thousands, unless otherwise specified | |||
Principal balance | $2,186,996 | [1] | ' |
Non-Agency RMBS | ' | ' | |
Principal balance | 872,866 | 433,510 | |
Percentage of principal balance | 100.00% | 100.00% | |
Non-Agency RMBS | Western US | ' | ' | |
Principal balance | 317,111 | 151,227 | |
Percentage of principal balance | 36.30% | 34.90% | |
Non-Agency RMBS | Southeastern US | ' | ' | |
Principal balance | 198,298 | 100,636 | |
Percentage of principal balance | 22.70% | 23.20% | |
Non-Agency RMBS | Northeastern US | ' | ' | |
Principal balance | 164,481 | 95,565 | |
Percentage of principal balance | 18.90% | 22.00% | |
Non-Agency RMBS | Midwestern US | ' | ' | |
Principal balance | 98,682 | 43,230 | |
Percentage of principal balance | 11.30% | 10.00% | |
Non-Agency RMBS | Southwestern US | ' | ' | |
Principal balance | 51,425 | 42,852 | |
Percentage of principal balance | 5.90% | 9.90% | |
Non-Agency RMBS | Other US Locations | ' | ' | |
Principal balance | $42,869 | [2] | ' |
Percentage of principal balance | 4.90% | [2] | ' |
[1] | The total outstanding face amount was $6.6 million for fixed rate securities and $2.2 billion for floating rate securities. | ||
[2] | Represents collateral for which New Residential was unable to obtain geographic information. |
INVESTMENTS_IN_REAL_ESTATE_SEC7
INVESTMENTS IN REAL ESTATE SECURITIES - Credit Quality (Details 5) (USD $) | Dec. 31, 2013 | Dec. 31, 2012 |
In Thousands, unless otherwise specified | ||
Investments In Real Estate Securities - Credit Quality Details 5 | ' | ' |
Real estate securities acquired with credit quality deterioration, face amount | $729,895 | $342,013 |
Real estate securities acquired with credit quality deterioration, carrying value | $483,680 | $212,129 |
INVESTMENTS_IN_REAL_ESTATE_SEC8
INVESTMENTS IN REAL ESTATE SECURITIES - Changes in Accretable Yields (Details 6) (USD $) | 12 Months Ended | |
In Thousands, unless otherwise specified | Dec. 31, 2013 | Dec. 31, 2012 |
Investments In Real Estate Securities - Changes In Accretable Yields Details 6 | ' | ' |
Balance, beginning | $90,077 | ' |
Additions | 155,854 | 80,636 |
Accretion | -19,939 | -3,195 |
Reclassifications from non-accretable difference | 40,785 | 12,636 |
Disposals | -123,710 | ' |
Balance, ending | $143,067 | $90,077 |
INVESTMENTS_IN_REAL_ESTATE_SEC9
INVESTMENTS IN REAL ESTATE SECURITIES (Details Narrative) (USD $) | 1 Months Ended | 3 Months Ended | 12 Months Ended | 12 Months Ended | 0 Months Ended | 12 Months Ended | 0 Months Ended | 12 Months Ended | 12 Months Ended | |||||||||||||
In Thousands, unless otherwise specified | Jan. 31, 2014 | Dec. 31, 2013 | Jun. 30, 2013 | Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2013 | Mar. 06, 2014 | Dec. 31, 2013 | Dec. 31, 2012 | Jun. 27, 2013 | Apr. 03, 2013 | Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2013 | Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2013 | Dec. 31, 2012 | ||||
Assets Held Prior to Spin-Off | Non-Agency RMBS | Non-Agency RMBS | Non-Agency RMBS | Agency RMBS | Agency RMBS | Agency RMBS | Agency RMBS | Non-Agency RMBS Under Clean-Up Option | Fixed Rate Securities | Fixed Rate Securities | Floating Rate Securities | Floating Rate Securities | ||||||||||
Face amount of securities purchased | ' | ' | ' | ' | ' | ' | $625,000 | $1,300,000 | $193,800 | $22,700 | ' | $608,900 | ' | ' | ' | ' | ' | ' | ||||
Purchase of Agency ARM RMBS | ' | ' | ' | 605,114 | ' | ' | 553,000 | 835,600 | 121,300 | 1,200 | ' | 645,500 | ' | ' | ' | ' | ' | ' | ||||
Agency RMBS contributed from Newcastle, face amount | ' | ' | ' | 1,000,000 | ' | ' | ' | ' | ' | ' | 1,000,000 | ' | ' | ' | ' | ' | ' | ' | ||||
Face amount of securities sold | ' | ' | ' | ' | ' | ' | ' | 729,700 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ||||
Proceeds from sale of real estate securities | ' | ' | ' | 521,865 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ||||
Gain on sale of real estate securities | ' | ' | ' | ' | ' | ' | ' | 52,700 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ||||
Face amount of securities paid down | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 2,600 | ' | ' | ' | ' | ||||
Carrying value of securities paid down | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 2,100 | ' | ' | ' | ' | ||||
Interest Income recognized on securities paid down | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 600 | ' | ' | ' | ' | ||||
Non-agency bonds that could not be rated | ' | 6,300 | ' | 6,300 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ||||
RMBS principal receivable | ' | 10,600 | ' | 10,600 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ||||
Outstanding face amount | ' | 2,186,996 | [1] | ' | 2,186,996 | [1] | ' | ' | ' | 872,866 | 433,510 | ' | ' | 1,314,130 | [2] | 433,510 | [2],[3] | ' | 6,600 | 1,100 | 2,200,000 | 432,400 |
Other-than-temporary impairment ("OTTI") on securities | 1,000 | 1,237 | 3,756 | 4,993 | [4] | ' | 3,800 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | |||
OTTI - credit loss related to securities in an unrealized loss position | 300 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ||||
Real estate securities acquired during the period with credit quality deterioration, face amount | ' | 1,100,000 | ' | 1,100,000 | 351,800 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ||||
Real estate securities acquired during the period with credit quality deterioration, expected cash flows | ' | 900,000 | ' | 900,000 | 285,900 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ||||
Real estate securities acquired during the period with credit quality deterioration, fair value | ' | 700,000 | ' | 700,000 | 205,300 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ||||
Non-Agency RMBS contributed from Newcastle, face amount | ' | ' | ' | ' | ' | ' | ' | ' | 258,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ||||
Non-Agency RMBS contributed from Newcastle, fair value | ' | ' | ' | ' | ' | ' | ' | ' | 164,100 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ||||
Real estate securities with credit quality deterioration, face amount at period end | ' | ' | ' | ' | 342,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ||||
Real estate securities with credit quality deterioration, carrying value at period end | ' | $483,680 | ' | $483,680 | $212,129 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ||||
[1] | The total outstanding face amount was $6.6 million for fixed rate securities and $2.2 billion for floating rate securities. | |||||||||||||||||||||
[2] | Includes securities issued or guaranteed by U.S. Government agencies such as the Federal National Mortgage Association ("Fannie Mae") or the Federal Home Loan Mortgage Corporation ("Freddie Mac"). | |||||||||||||||||||||
[3] | The total outstanding face amount of fixed rate securities was $1.1 million, and of floating rate securities was $432.4 million. | |||||||||||||||||||||
[4] | Represents our historical consolidated statement of income for the year ended December 31, 2013. |
INVESTMENT_IN_RESIDENTIAL_MORT2
INVESTMENT IN RESIDENTIAL MORTGAGE LOANS - Residential Mortgage Loans (Details) (USD $) | 12 Months Ended | |
In Thousands, unless otherwise specified | Dec. 31, 2013 | |
Weighted average yield | 2.66% | |
Weighted average coupon | 2.28% | |
Weighted average life (years) | '5 years 8 months 12 days | [1] |
Residential Mortgage Loans Held-for-Investment | ' | |
Outstanding face amount | 57,552 | [2],[3] |
Carrying value | 33,539 | [2],[3] |
Loan count | 328 | [3] |
Weighted average yield | 10.30% | [3] |
Weighted average coupon | 5.10% | [3],[4] |
Weighted average life (years) | '3 years 8 months 12 days | [3],[5] |
Floating rate loans as a percent of face amount | 22.00% | [3] |
Delinquent Face Amount | 48,696 | [3],[6],[7] |
[1] | The weighted average life is based on the timing of expected principal reduction on the assets. | |
[2] | Represents a 70% interest New Residential holds in the reverse mortgage loans, which had an aggregate United States federal income tax basis of $33.9 million. The average loan balance outstanding based on total UPB is $0.2 million. | |
[3] | 82% of these loans have reached a termination event. As a result, the borrower can no longer make draws on these loans. Each loan matures upon the occurrence of a termination event. | |
[4] | Represents the stated interest rate on the loans. Accrued interest on reverse mortgage loans is generally added to the principal balance and paid when the loan is resolved. | |
[5] | The weighted average life is based on the expected timing of the receipt of cash flows. | |
[6] | Includes loans that have either experienced (i) a termination event or (ii) an event of default, substantially all of which are more than 90 days past the time at which they were considered delinquent or real estate owned ("REO"). Collateral value underlying loans considered delinquent is generally sufficient, however $1.6 million face amount of REO loans, representing New Residential's 70% interest therein, was on non-accrual status resulting from the uncertainty of cash collections as of December 31, 2013. | |
[7] | Represents New Residential's 70% interest in the total unpaid principal balance of the Residential Mortgage Loans. |
INVESTMENT_IN_RESIDENTIAL_MORT3
INVESTMENT IN RESIDENTIAL MORTGAGE LOANS - Carrying Value of Residential Mortgage Loans (Details 1) (Residential Mortgage Loans Held-for-Investment, USD $) | 12 Months Ended | |
In Thousands, unless otherwise specified | Dec. 31, 2013 | |
Residential Mortgage Loans Held-for-Investment | ' | |
Purchases / additional fundings | $35,138 | |
Proceeds from repayments | -3,788 | |
Accretion of loan discount and other amortization | 2,650 | |
Valuation allowance | -461 | |
Balance, ending | $33,539 | [1],[2] |
[1] | Represents a 70% interest New Residential holds in the reverse mortgage loans, which had an aggregate United States federal income tax basis of $33.9 million. The average loan balance outstanding based on total UPB is $0.2 million. | |
[2] | 82% of these loans have reached a termination event. As a result, the borrower can no longer make draws on these loans. Each loan matures upon the occurrence of a termination event. |
INVESTMENT_IN_RESIDENTIAL_MORT4
INVESTMENT IN RESIDENTIAL MORTGAGE LOANS - Valuation Allowance on Residential Mortgage Loans (Details 2) (USD $) | 3 Months Ended | 12 Months Ended | ||
In Thousands, unless otherwise specified | Dec. 31, 2013 | Dec. 31, 2013 | ||
Valuation allowance on loans | $461 | $461 | [1] | |
Residential Mortgage Loans Held-for-Investment | ' | ' | ||
Valuation allowance | ' | 0 | ||
Valuation allowance on loans | ' | 461 | [2] | |
Valuation allowance | $461 | [2] | $461 | [2] |
[1] | Represents our historical consolidated statement of income for the year ended December 31, 2013. | |||
[2] | The allowance for loan losses was determined based on the amortized cost basis in excess of fair value. |
INVESTMENT_IN_RESIDENTIAL_MORT5
INVESTMENT IN RESIDENTIAL MORTGAGE LOANS - Geographic Distribution of Residential Mortgage Loans (Details 3) (Residential Mortgage Loans Held-for-Investment) | Dec. 31, 2013 |
Total outstanding (percent) | 100.00% |
New York | ' |
Total outstanding (percent) | 22.00% |
Florida | ' |
Total outstanding (percent) | 21.20% |
Illinois | ' |
Total outstanding (percent) | 7.70% |
New Jersey | ' |
Total outstanding (percent) | 6.90% |
California | ' |
Total outstanding (percent) | 5.70% |
Massachusetts | ' |
Total outstanding (percent) | 4.10% |
Washington | ' |
Total outstanding (percent) | 3.90% |
Connecticut | ' |
Total outstanding (percent) | 3.90% |
Virginia | ' |
Total outstanding (percent) | 3.30% |
Texas | ' |
Total outstanding (percent) | 2.80% |
Other US Locations | ' |
Total outstanding (percent) | 18.50% |
INVESTMENT_IN_RESIDENTIAL_MORT6
INVESTMENT IN RESIDENTIAL MORTGAGE LOANS (Details Narrative) (USD $) | 1 Months Ended | 3 Months Ended | 12 Months Ended | 12 Months Ended | |||||||||||||
In Thousands, unless otherwise specified | Dec. 31, 2011 | Dec. 31, 2013 | Sep. 30, 2013 | Jun. 30, 2013 | Mar. 31, 2013 | Dec. 31, 2012 | Sep. 30, 2012 | Jun. 30, 2012 | Mar. 31, 2012 | Dec. 31, 2013 | Dec. 31, 2012 | Feb. 27, 2013 | Dec. 31, 2012 | Dec. 31, 2013 | Dec. 31, 2013 | ||
Reverse Mortgage Loans | Reverse Mortgage Loans | Residential Mortgage Loans Held-for-Investment | Residential Mortgage Loans Held-for-Investment | ||||||||||||||
Repurchase Agreements | |||||||||||||||||
Barclays | |||||||||||||||||
Percentage of Investment co-owned by Nationstar | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 30.00% | ' | ' | ' | ||
Percentage of Investment owned by New Residential | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 70.00% | ' | ' | ' | ||
Unpaid principal balance of underlying reverse mortgage loans | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | $83,100 | ' | ' | ||
Residential mortgage loans, held-for-investment | ' | 33,539 | [1] | ' | ' | ' | ' | ' | ' | ' | 33,539 | [1] | ' | 35,100 | ' | ' | ' |
Federal income tax basis | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 33,900 | ' | ||
Average loan balance outstanding | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 200 | ' | ||
Loans on non-accrual status | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 1,600 | ' | ||
Percentage of loans that have reached a termination event | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 82.00% | ' | ||
Average carrying amount | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 33,800 | ' | ||
Interest revenue | 1,260 | 26,492 | 21,885 | 22,999 | 16,191 | 14,948 | 12,295 | 4,479 | 2,037 | 87,567 | [2] | 33,759 | ' | ' | 2,700 | ' | |
Repurchase agreements | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | $22,800 | ||
[1] | Represents our historical consolidated balance sheet at December 31, 2013. | ||||||||||||||||
[2] | Represents our historical consolidated statement of income for the year ended December 31, 2013. |
INVESTMENTS_IN_CONSUMER_LOANS_2
INVESTMENTS IN CONSUMER LOANS EQUITY METHOD INVESTEES - Summary of Investments (Details) (USD $) | 12 Months Ended | |||
In Thousands, unless otherwise specified | Dec. 31, 2013 | Apr. 02, 2013 | Dec. 31, 2012 | |
Summarized financial information: | ' | ' | ' | |
New Residential's investment | $215,062 | [1] | ' | ' |
New Residential's equity in net income | 82,856 | [2] | ' | ' |
Consumer Loan Investees | ' | ' | ' | |
Summarized financial information: | ' | ' | ' | |
Consumer Loan Assets | 2,752,777 | ' | ' | |
Other assets | 192,830 | ' | ' | |
Debt | -2,010,433 | [3] | ' | ' |
Other Liabilities | -32,712 | ' | ' | |
Equity | 722,262 | ' | ' | |
New Residential's investment | 215,062 | ' | 0 | |
Ownership percentage in equity method investees | 30.00% | 30.00% | ' | |
Interest income | 481,056 | ' | ' | |
Other income (loss) | -71,639 | ' | ' | |
Provision for finance receivable losses | -60,619 | ' | ' | |
Other expenses | -67,225 | ' | ' | |
New Residential's equity in net income | 82,856 | ' | ' | |
Net income | $281,573 | ' | ' | |
[1] | Represents our historical consolidated balance sheet at December 31, 2013. | |||
[2] | Represents our historical consolidated statement of income for the year ended December 31, 2013. | |||
[3] | Represents the Class A asset-backed notes with a face amount of $1.7 billion, an interest rate of 3.75% and a maturity of April 2021 and the Class B asset-backed notes with a face amount of $372.0 million, an interest rate of 4.0% and a maturity of December 2024. Substantially all of the net cash flow generated by the Consumer Loan Companies is required to be used to pay down the Class A notes. When the balance of the outstanding Class A notes is reduced to 50% of the outstanding UPB of the performing consumer loans, 70% of the net cash flow generated is required to be used to pay down the Class A notes and the equity holders of the Consumer Loan Companies and holders of the Class B notes will each be entitled to receive 15% of the net cash flow of the Consumer Loan Companies on a periodic basis. |
INVESTMENTS_IN_CONSUMER_LOANS_3
INVESTMENTS IN CONSUMER LOANS EQUITY METHOD INVESTEES - Consumer Loans (Details 1) (USD $) | 12 Months Ended | ||
In Thousands, unless otherwise specified | Dec. 31, 2013 | Apr. 02, 2013 | |
Weighted average coupon | 2.28% | ' | |
Weighted Average Yield | 2.66% | ' | |
Weighted average life (years) | '5 years 8 months 12 days | [1] | ' |
Consumer Loan Investees | ' | ' | |
Unpaid principal balance of underlying loans | $3,298,769 | $4,200,000 | |
Ownership percentage in equity method investees | 30.00% | 30.00% | |
Carrying value | $2,572,577 | [2] | ' |
Weighted average coupon | 18.30% | [3] | ' |
Weighted Average Yield | 15.90% | ' | |
Weighted average life (years) | '3 years 2 months 12 days | [4] | ' |
[1] | The weighted average life is based on the timing of expected principal reduction on the assets. | ||
[2] | Represents the carrying value of the consumer loans held by the Consumer Loan Companies. | ||
[3] | Substantially all of the cash flows received on the loans is required to be used to make payments on the notes described above. | ||
[4] | Weighted Average Life represents the weighted average expected timing of the receipt of expected cash flows for this investment. |
INVESTMENTS_IN_CONSUMER_LOANS_4
INVESTMENTS IN CONSUMER LOANS EQUITY METHOD INVESTEES - Rollforward (Details 2) (USD $) | 12 Months Ended | |
In Thousands, unless otherwise specified | Dec. 31, 2013 | |
Distributions of earnings from equity method investees | ($44,454) | |
Should be distributions of capital / return of capital | 82,856 | |
Earnings from investments in consumer loan equity method investees | 82,856 | [1] |
Consumer loan equity method investees, ending | 215,062 | [2] |
Consumer Loan Investees | ' | |
Consumer loan equity method investees, beginning | 0 | |
Contributions to consumer loan equity method investees | 245,421 | |
Distributions of earnings from equity method investees | -82,856 | |
Should be distributions of capital / return of capital | -30,359 | |
Earnings from investments in consumer loan equity method investees | 82,856 | |
Consumer loan equity method investees, ending | $215,062 | |
[1] | Represents our historical consolidated statement of income for the year ended December 31, 2013. | |
[2] | Represents our historical consolidated balance sheet at December 31, 2013. |
INVESTMENTS_IN_CONSUMER_LOANS_5
INVESTMENTS IN CONSUMER LOANS EQUITY METHOD INVESTEES (Details Narrative) (USD $) | 12 Months Ended | 0 Months Ended | |||||
In Thousands, unless otherwise specified | Dec. 31, 2013 | Apr. 02, 2013 | Apr. 02, 2013 | Apr. 02, 2013 | Dec. 31, 2013 | Dec. 31, 2013 | Dec. 31, 2013 |
Affilate of Blackstone Tactical Opportunities Advisors LLC | Fortress-managed Affiliate | Consumer Loan Investees | Consumer Loan Investees | Consumer Loan Investees | Consumer Loan Investees | ||
Number | Class B Asset Backed Notes | Class A Asset Backed Notes | |||||
Unpaid principal balance of underlying loans | ' | ' | ' | $4,200,000 | $3,298,769 | ' | ' |
Number of loans in portfolio | ' | ' | ' | 400,000 | ' | ' | ' |
Acquisitions of investments in consumer loan equity method investees | ' | ' | ' | 250,000 | ' | ' | ' |
Ownership percentage in equity method investees | ' | ' | ' | 30.00% | 30.00% | ' | ' |
Percentage of portfolio co-invested by other parties | ' | 23.00% | 47.00% | 70.00% | ' | ' | ' |
Purchase price of portfolio financed by asset-backed notes | ' | ' | ' | 2,200,000 | ' | ' | ' |
Purchase price of portfolio | ' | ' | ' | 3,000,000 | ' | ' | ' |
Interest Rate | ' | ' | ' | ' | ' | 4.00% | 3.75% |
Percentage of UPB of loans against outstanding debt where cash can be released | ' | ' | ' | ' | ' | 50.00% | 50.00% |
Additional asset-backed notes issued and sold, face amount | $4,109,329 | ' | ' | ' | ' | $400,000 | $1,700,000 |
Percentage of par at which notes were sold | 96.00% | ' | ' | ' | ' | ' | ' |
Percentage of cash flows required to be paid against notes when threshold is reached | ' | ' | ' | ' | ' | 70.00% | 15.00% |
DERIVATIVES_Details
DERIVATIVES (Details) (USD $) | 12 Months Ended | |
In Thousands, unless otherwise specified | Dec. 31, 2013 | |
Derivative Assets at Fair Value | $35,926 | |
Gain on derivatives | 1,820 | |
Linked Transactions Derivatives | 35,926 | |
Real Estate Securities Derivatives | ' | |
Derivative Assets at Fair Value | 1,452 | |
Gain on derivatives | -11 | |
Linked Transactions Derivatives | 9,952 | [1] |
Real Estate Securities Repurchase Agreements Derivatives | ' | |
Linked Transactions Derivatives | -8,500 | [2] |
Non-Performing Loans Derivatives | ' | |
Derivative Assets at Fair Value | 34,474 | |
Gain on derivatives | 1,831 | |
Linked Transactions Derivatives | 95,014 | [3] |
Non-Performing Loans Repurchase Agreements Derivatives | ' | |
Linked Transactions Derivatives | ($60,540) | [2] |
[1] | Real estate securities that had a current face amount of $10.0 million, as of December 31, 2013, which represents the notional amount of the linked transaction. | |
[2] | Represents their face amount that approximates fair value. Amounts for repurchase agreements related to non-performing loans also includes $0.4 million of accrued interest and deferred financing costs. | |
[3] | Non-performing loans that had a UPB of $164.6 million as of December 31, 2013, which represents the notional amount of the linked transaction. |
DERIVATIVES_Details_Narrative
DERIVATIVES (Details Narrative) (USD $) | Dec. 31, 2013 |
In Thousands, unless otherwise specified | |
Real Estate Securities Derivatives | ' |
Notional amount of linked transactions | $10,000 |
Accrued interest and deferred financing costs | 400 |
Non-Performing Loans Derivatives | ' |
Notional amount of linked transactions | $164,600 |
DEBT_OBLIGATIONS_Debt_Obligati
DEBT OBLIGATIONS - Debt Obligations (Details) (USD $) | 12 Months Ended | 12 Months Ended | 12 Months Ended | 0 Months Ended | 12 Months Ended | 12 Months Ended | |||||||||||||||||||||||||||||||||
In Thousands, unless otherwise specified | Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2013 | Dec. 31, 2013 | Nov. 25, 2013 | Dec. 31, 2013 | Nov. 25, 2013 | Nov. 25, 2013 | Dec. 31, 2013 | Dec. 31, 2013 | Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2013 | Dec. 31, 2013 | Dec. 31, 2013 | Oct. 29, 2013 | Dec. 31, 2012 | Dec. 31, 2013 | Dec. 31, 2013 | Dec. 31, 2013 | Dec. 31, 2013 | Dec. 31, 2013 | Dec. 31, 2013 | Dec. 31, 2013 | Dec. 31, 2013 | Dec. 31, 2013 | Dec. 31, 2013 | Dec. 31, 2012 | |||||||||
Collateral | Residential Mortgage Loans | Residential Mortgage Loans | Residential Mortgage Loans | Lower Range | Upper Range | Agency RMBS Repurchase Agreements | Agency RMBS Repurchase Agreements | Non-agency RMBS Repurchase Agreements | Non-agency RMBS Repurchase Agreements | Non-agency RMBS Repurchase Agreements | Non-agency RMBS Repurchase Agreements | Non-agency RMBS Repurchase Agreements | Non-agency RMBS Repurchase Agreements | Total Repurchase Agreements | Total Repurchase Agreements | Total Repurchase Agreements | Total Repurchase Agreements | Secured Corporate Loan | Secured Corporate Loan | Secured Corporate Loan | Secured Corporate Loan | Servicer Advance Notes | Servicer Advance Notes | Total Notes Payable | Total Notes Payable | Total Debt | Total Debt | ||||||||||||
Collateral | Residential Mortgage Loans | Residential Mortgage Loans | Collateral | Collateral | Collateral | Lower Range | Upper Range | Collateral | Collateral | Lower Range | Upper Range | Collateral | Collateral | ||||||||||||||||||||||||||
Month Issued | ' | ' | ' | 'Dec 2013 | ' | ' | ' | ' | 'Various | ' | 'Various | 'Various | ' | ' | ' | ' | ' | ' | ' | ' | 'Dec 2013 | ' | ' | ' | 'Dec 2013 | ' | ' | ' | ' | ' | |||||||||
Debt face amount | $4,109,329 | ' | ' | $22,840 | [1] | $300,000 | ' | ' | ' | $1,332,954 | [2] | ' | $287,757 | [3] | $150,922 | [4],[5],[6] | ' | ' | ' | ' | $1,620,711 | [7] | $342,900 | $150,922 | [4] | ' | $75,000 | [8] | ' | ' | ' | $2,390,778 | ' | $2,488,618 | ' | ' | $150,922 | ||
Carrying value | 4,109,329 | 150,922 | ' | 22,840 | [1] | ' | ' | ' | ' | 1,332,954 | [2] | ' | 287,757 | [3] | 150,922 | [4],[5],[6] | ' | ' | ' | ' | 1,620,711 | [7] | ' | 150,922 | [4] | ' | 75,000 | [8] | ' | ' | ' | 2,390,778 | [9] | ' | 2,488,618 | ' | ' | 150,922 | |
Final stated maturity | ' | ' | ' | '2014-09 | ' | ' | ' | ' | '2014-03 | ' | ' | '2013-01 | ' | ' | '2014-01 | '2014-10 | ' | ' | ' | ' | '2014-03 | ' | ' | ' | '2014-09 | ' | ' | ' | ' | ' | |||||||||
Weighted average funding cost | 2.70% | ' | ' | 3.42% | ' | ' | ' | ' | 0.39% | ' | 1.85% | 2.21% | ' | ' | ' | ' | 0.65% | ' | ' | ' | 4.17% | [8] | ' | ' | ' | 4.04% | [10] | ' | 4.04% | ' | ' | ' | |||||||
Contractual Weighted average funding cost | ' | ' | ' | 'One-month LIBOR | ' | ' | ' | ' | ' | ' | 'One-month LIBOR or cost of funds rate | 'LIBOR | ' | ' | ' | ' | ' | ' | ' | ' | 'One-month LIBOR or cost of funds rate | ' | ' | ' | 'One-month LIBOR | ' | ' | ' | ' | ' | |||||||||
Variable Rate Spread | ' | ' | ' | 3.25% | ' | ' | 2.50% | 2.75% | ' | ' | 1.75% | 2.00% | ' | ' | ' | ' | ' | ' | ' | ' | 4.00% | ' | 2.00% | 2.60% | ' | ' | ' | ' | ' | ' | |||||||||
Weighted average life (years) | '5 years 8 months 12 days | [11] | ' | '5 years 9 months 18 days | '0 years 8 months 12 days | ' | '3 years 8 months 12 days | ' | ' | '0 years 3 months 18 days | '4 years 1 month 6 days | '0 years 1 month 6 days | '0 years 1 month 6 days | '8 years 2 months 12 days | '6 years 10 months 24 days | ' | ' | '0 years 2 months 12 days | ' | ' | '5 years 4 months 24 days | '0 years 3 months 18 days | '6 years | ' | ' | '0 years 9 months 18 days | '2 years 8 months 12 days | '0 years 9 months 18 days | '5 years 9 months 18 days | '0 years 7 months 6 days | ' | ||||||||
Outstanding Face Amount of Collateral | 41,480,249 | ' | ' | ' | ' | 57,552 | ' | ' | ' | 1,277,570 | ' | ' | 576,146 | 344,177 | ' | ' | ' | ' | ' | 1,853,716 | ' | 36,907,851 | ' | ' | ' | 2,661,130 | ' | 39,626,533 | ' | ' | |||||||||
Amortized Cost Basis of Collateral | 4,568,348 | ' | ' | ' | ' | 33,539 | ' | ' | ' | 1,353,630 | ' | ' | 388,855 | 215,034 | ' | ' | ' | ' | ' | 1,742,485 | ' | 126,773 | ' | ' | ' | 2,665,551 | ' | 2,825,863 | ' | ' | |||||||||
Carrying Value of Collateral | $4,591,412 | ' | ' | ' | ' | $33,539 | ' | ' | ' | $1,353,719 | ' | ' | $392,360 | $228,493 | ' | ' | ' | ' | ' | $1,746,079 | ' | $146,243 | ' | ' | ' | $2,665,551 | ' | $2,845,333 | ' | ' | |||||||||
[1] | The note is payable to Nationstar and bears interest equal to one-month LIBOR and a margin of 3.25%. | ||||||||||||||||||||||||||||||||||||||
[2] | The counterparties of these repurchase agreements are Mizuho ($186.8 million), Barclays ($410.7 million), Royal Bank of Canada ($101.8 million), Citi ($129.3 million), Morgan Stanley ($169.7 million) and Daiwa ($334.7 million) and were subject to customary margin call provisions. | ||||||||||||||||||||||||||||||||||||||
[3] | The counterparties of these repurchase agreements are Barclays ($42.3 million), Credit Suisse ($104.0 million), Royal Bank of Scotland ($26.2 million) and Royal Bank of Canada ($115.3 million) and were subject to customary margin call provisions. All of the Non-Agency repurchase agreements have LIBOR-based floating interest rates. Includes $104.0 million borrowed under a $414.2 million master repurchase agreement, which bears interest at one-month LIBOR plus 1.75%. | ||||||||||||||||||||||||||||||||||||||
[4] | These repurchase agreements had approximately $55 thousand of associated accrued interest payable at December 31, 2012. $151 million face amount of these repurchase agreements were renewed subsequent to December 31, 2012. | ||||||||||||||||||||||||||||||||||||||
[5] | The counterparty of these repurchase agreements is Credit Suisse. | ||||||||||||||||||||||||||||||||||||||
[6] | Newcastle is the guarantor of these repurchase agreements, which are subject to customary margin call provisions. | ||||||||||||||||||||||||||||||||||||||
[7] | These repurchase agreements had approximately $0.7 million of associated accrued interest payable as of December 31, 2013. All of the repurchase agreements that matured during the first quarter of 2014 were renewed or refinanced subsequent to December 31, 2013. | ||||||||||||||||||||||||||||||||||||||
[8] | The loan bears interest equal to the sum of (i) a floating rate index rate equal to one-month LIBOR and (ii) a margin of 4.0%. The outstanding face of the collateral represents the UPB of the residential mortgage loans underlying the Excess MSRs that secure this corporate loan. | ||||||||||||||||||||||||||||||||||||||
[9] | New Residential's unused borrowing capacity is available if New Residential has additional eligible collateral to pledge and meets other borrowing conditions. New Residential pays a 0.5% fee on the unused borrowing capacity. | ||||||||||||||||||||||||||||||||||||||
[10] | The notes bear interest equal to the sum of (i) a floating rate index rate equal to one-month LIBOR or a cost of funds rate, as applicable, and (ii) a margin ranging from 2.0% to 2.6%. | ||||||||||||||||||||||||||||||||||||||
[11] | The weighted average life is based on the timing of expected principal reduction on the assets. |
DEBT_OBLIGATIONS_Contractual_M
DEBT OBLIGATIONS - Contractual Maturity of Debt (Details 1) (USD $) | Dec. 31, 2013 | |
In Thousands, unless otherwise specified | ||
Debt maturing in: | ' | |
2014 | $4,109,329 | |
Nonrecourse | ' | |
Debt maturing in: | ' | |
2014 | 2,548,387 | |
Recourse | ' | |
Debt maturing in: | ' | |
2014 | $1,560,942 | [1] |
[1] | Excludes recourse debt related to linked transactions (Note 10). |
DEBT_OBLIGATIONS_Borrowing_Cap
DEBT OBLIGATIONS - Borrowing Capacity (Details 2) (USD $) | Dec. 31, 2013 | Dec. 31, 2012 | |
In Thousands, unless otherwise specified | |||
Balance outstanding | $4,109,329 | $150,922 | |
Secured Corporate Loan | ' | ' | |
Borrowing capacity | 75,000 | ' | |
Balance outstanding | 75,000 | [1] | ' |
Servicer Advance Notes | ' | ' | |
Borrowing capacity | 3,900,000 | [2] | ' |
Balance outstanding | 2,390,778 | [2] | ' |
Available financing | 1,509,222 | [2] | ' |
Loan | ' | ' | |
Borrowing capacity | 300,000 | [3] | ' |
Balance outstanding | 60,102 | [3] | ' |
Available financing | 239,898 | [3] | ' |
Total Debt, without Repurchase Agreements and Residential Mortgage Loans | ' | ' | |
Borrowing capacity | 4,275,000 | ' | |
Balance outstanding | 2,525,880 | ' | |
Available financing | $1,749,120 | ' | |
[1] | The loan bears interest equal to the sum of (i) a floating rate index rate equal to one-month LIBOR and (ii) a margin of 4.0%. The outstanding face of the collateral represents the UPB of the residential mortgage loans underlying the Excess MSRs that secure this corporate loan. | ||
[2] | New Residential's unused borrowing capacity is available if New Residential has additional eligible collateral to pledge and meets other borrowing conditions. New Residential pays a 0.5% fee on the unused borrowing capacity. | ||
[3] | Financing related to linked transaction (Note 10) |
DEBT_OBLIGATIONS_Details_Narra
DEBT OBLIGATIONS (Details Narrative) (USD $) | 12 Months Ended | 12 Months Ended | 12 Months Ended | 0 Months Ended | 12 Months Ended | 12 Months Ended | 0 Months Ended | |||||||||||||||||||||||||||||||||
In Thousands, unless otherwise specified | Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2013 | Nov. 25, 2013 | Dec. 31, 2013 | Nov. 25, 2013 | Nov. 25, 2013 | Oct. 30, 2013 | Dec. 31, 2013 | Oct. 29, 2013 | Dec. 31, 2012 | Dec. 31, 2013 | Dec. 31, 2013 | Dec. 31, 2013 | Dec. 31, 2013 | Dec. 31, 2013 | Dec. 31, 2013 | Dec. 31, 2013 | Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2013 | Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2013 | Dec. 31, 2013 | Dec. 31, 2013 | Dec. 31, 2013 | Dec. 31, 2013 | Dec. 31, 2013 | Oct. 30, 2013 | Dec. 13, 2013 | |||||||||
Residential Mortgage Loans | Residential Mortgage Loans | Subsequent Event | Lower Range | Upper Range | Alpine Securitization Corp. | Total Repurchase Agreements | Total Repurchase Agreements | Total Repurchase Agreements | Agency RMBS Repurchase Agreements | Agency RMBS Repurchase Agreements | Agency RMBS Repurchase Agreements | Agency RMBS Repurchase Agreements | Agency RMBS Repurchase Agreements | Agency RMBS Repurchase Agreements | Agency RMBS Repurchase Agreements | Non-agency RMBS Repurchase Agreements | Non-agency RMBS Repurchase Agreements | Non-agency RMBS Repurchase Agreements | Non-agency RMBS Repurchase Agreements | Non-agency RMBS Repurchase Agreements | Non-agency RMBS Repurchase Agreements | Non-agency RMBS Repurchase Agreements | Secured Corporate Loan | Secured Corporate Loan | Secured Corporate Loan | Servicer Advance Notes | Alpine Securitization Corp. | Excess MSR Notes | ||||||||||||
Residential Mortgage Loans | Residential Mortgage Loans | Mizuho | Barclays | Royal Bank of Canada | Citi | Morgan Stanley | Daiwa | Barclays | Credit Suisse | Credit Suisse | Royal Bank of Scotland | Royal Bank of Canada | Lower Range | Upper Range | ||||||||||||||||||||||||||
Interest payable | $4,010 | $55 | ' | ' | ' | ' | ' | ' | $7,000 | ' | $55 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | |||||||||
Repurchase agreements | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 186,800 | 410,700 | 101,800 | 129,300 | 169,700 | 334,700 | ' | ' | 42,300 | 104,000 | 150,922 | 26,200 | 115,300 | ' | ' | ' | ' | ' | ' | |||||||||
Amounts borred under repurchase agreement | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 104,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | |||||||||
Debt face amount | 4,109,329 | ' | 22,840 | [1] | 300,000 | ' | ' | ' | 414,200 | 1,620,711 | [2] | 342,900 | 150,922 | [3] | 1,332,954 | [4] | ' | ' | ' | ' | ' | ' | 287,757 | [5] | 150,922 | [3],[6],[7] | ' | ' | ' | ' | ' | 75,000 | [8] | ' | ' | 2,390,778 | ' | 75,000 | ||
Carrying value | 4,109,329 | 150,922 | 22,840 | [1] | ' | ' | ' | ' | ' | 1,620,711 | [2] | ' | 150,922 | [3] | 1,332,954 | [4] | ' | ' | ' | ' | ' | ' | 287,757 | [5] | 150,922 | [3],[6],[7] | ' | ' | ' | ' | ' | 75,000 | [8] | ' | ' | 2,390,778 | [9] | ' | ' | |
Equity decline trigger - 12 month period | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 50.00% | 50.00% | |||||||||
Equity decline trigger - 3 month period | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 35.00% | 35.00% | |||||||||
Indebtedness to tangible worth provision trigger | ' | ' | ' | 4 | ' | ' | ' | 4 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 4 | |||||||||
Variable interest rate basis description | ' | ' | 'One-month LIBOR | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 'One-month LIBOR or cost of funds rate | 'LIBOR | ' | ' | ' | ' | ' | 'One-month LIBOR or cost of funds rate | ' | ' | 'One-month LIBOR | 'One-month LIBOR | 'One-month LIBOR | |||||||||
Variable Interest Rate Spread | ' | ' | 3.25% | ' | ' | 2.50% | 2.75% | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 1.75% | 2.00% | ' | ' | ' | ' | ' | 4.00% | 2.00% | 2.60% | ' | 1.75% | 4.00% | |||||||||
Advance rate | ' | ' | ' | ' | ' | 65.00% | 85.00% | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | |||||||||
Maximum borrowing capacity | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 75,000 | ' | ' | 3,900,000 | [9] | ' | ' | ||||||||
Unused borrowing capacity fee | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 0.50% | ' | ' | |||||||||
Repayments of notes payable | 59,149 | ' | ' | ' | 5,900 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | |||||||||
Minimum liquidity requirement | ' | ' | ' | 15,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | |||||||||
Minimum tangible net worth | ' | ' | ' | 540,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | |||||||||
Loans purchased | ' | ' | 92,700 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | |||||||||
Amounts borrowed to finance purchase of loans | ' | ' | 60,100 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | |||||||||
Notes payable issued for purchase | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 2,400,000 | ' | ' | |||||||||
Restricted cash, pledged for interest and fees payable | $33,338 | [10] | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ||||||||
[1] | The note is payable to Nationstar and bears interest equal to one-month LIBOR and a margin of 3.25%. | |||||||||||||||||||||||||||||||||||||||
[2] | These repurchase agreements had approximately $0.7 million of associated accrued interest payable as of December 31, 2013. All of the repurchase agreements that matured during the first quarter of 2014 were renewed or refinanced subsequent to December 31, 2013. | |||||||||||||||||||||||||||||||||||||||
[3] | These repurchase agreements had approximately $55 thousand of associated accrued interest payable at December 31, 2012. $151 million face amount of these repurchase agreements were renewed subsequent to December 31, 2012. | |||||||||||||||||||||||||||||||||||||||
[4] | The counterparties of these repurchase agreements are Mizuho ($186.8 million), Barclays ($410.7 million), Royal Bank of Canada ($101.8 million), Citi ($129.3 million), Morgan Stanley ($169.7 million) and Daiwa ($334.7 million) and were subject to customary margin call provisions. | |||||||||||||||||||||||||||||||||||||||
[5] | The counterparties of these repurchase agreements are Barclays ($42.3 million), Credit Suisse ($104.0 million), Royal Bank of Scotland ($26.2 million) and Royal Bank of Canada ($115.3 million) and were subject to customary margin call provisions. All of the Non-Agency repurchase agreements have LIBOR-based floating interest rates. Includes $104.0 million borrowed under a $414.2 million master repurchase agreement, which bears interest at one-month LIBOR plus 1.75%. | |||||||||||||||||||||||||||||||||||||||
[6] | The counterparty of these repurchase agreements is Credit Suisse. | |||||||||||||||||||||||||||||||||||||||
[7] | Newcastle is the guarantor of these repurchase agreements, which are subject to customary margin call provisions. | |||||||||||||||||||||||||||||||||||||||
[8] | The loan bears interest equal to the sum of (i) a floating rate index rate equal to one-month LIBOR and (ii) a margin of 4.0%. The outstanding face of the collateral represents the UPB of the residential mortgage loans underlying the Excess MSRs that secure this corporate loan. | |||||||||||||||||||||||||||||||||||||||
[9] | New Residential's unused borrowing capacity is available if New Residential has additional eligible collateral to pledge and meets other borrowing conditions. New Residential pays a 0.5% fee on the unused borrowing capacity. | |||||||||||||||||||||||||||||||||||||||
[10] | Represents our historical consolidated balance sheet at December 31, 2013. |
FAIR_VALUE_OF_FINANCIAL_INSTRU2
FAIR VALUE OF FINANCIAL INSTRUMENTS - Recurring Basis (Details) (USD $) | Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2011 | ||
In Thousands, unless otherwise specified | |||||
Investments in: | ' | ' | ' | ||
Excess mortgage servicing rights | $324,151 | [1] | $245,036 | $43,971 | |
Equity method investees at fair value | 352,766 | [1] | ' | ' | |
Servicer advances | 2,665,551 | [1] | ' | ' | |
Real estate securities, available-for-sale | 1,973,189 | [1],[2] | 289,756 | ' | |
Residential mortgage loans, held-for-investment | 33,539 | [1] | ' | ' | |
Derivative assets | 35,926 | [1] | ' | ' | |
Cash and restricted cash | 305,332 | ' | ' | ||
Liabilities | ' | ' | ' | ||
Repurchase agreements | 1,620,711 | [1] | 150,922 | ' | |
Notes Payable | 2,488,618 | [1] | ' | ' | |
Recurring Basis | Level 1 Inputs | ' | ' | ' | ||
Investments in: | ' | ' | ' | ||
Cash and restricted cash | 305,332 | ' | ' | ||
[AssetsFairValueDisclosure] | 305,332 | ' | ' | ||
Recurring Basis | Level 2 Inputs | ' | ' | ' | ||
Investments in: | ' | ' | ' | ||
Real estate securities, available-for-sale | 1,402,764 | ' | ' | ||
[AssetsFairValueDisclosure] | 1,402,764 | ' | ' | ||
Liabilities | ' | ' | ' | ||
Repurchase agreements | 1,620,711 | ' | ' | ||
[us-gaap:LiabilitiesFairValueDisclosure] | 1,620,711 | ' | ' | ||
Recurring Basis | Level 3 Inputs | ' | ' | ' | ||
Investments in: | ' | ' | ' | ||
Excess mortgage servicing rights | 324,151 | ' | ' | ||
Equity method investees at fair value | 352,766 | 0 | ' | ||
Servicer advances | 2,665,551 | ' | ' | ||
Real estate securities, available-for-sale | 570,425 | ' | ' | ||
Residential mortgage loans, held-for-investment | 33,539 | ' | ' | ||
Derivative assets | 35,926 | ' | ' | ||
[AssetsFairValueDisclosure] | 3,982,358 | ' | ' | ||
Liabilities | ' | ' | ' | ||
Notes Payable | 2,488,618 | ' | ' | ||
[us-gaap:LiabilitiesFairValueDisclosure] | 2,488,618 | ' | ' | ||
Recurring Basis | Principal Balance or Notional Amount | ' | ' | ' | ||
Investments in: | ' | ' | ' | ||
Excess mortgage servicing rights | 78,953,614 | [3] | 76,560,751 | [4] | ' |
Equity method investees at fair value | 173,619,478 | [3] | ' | ' | |
Servicer advances | 2,661,130 | ' | ' | ||
Real estate securities, available-for-sale | 2,186,996 | 433,510 | ' | ||
Residential mortgage loans, held-for-investment | 57,552 | [5] | ' | ' | |
Derivative assets | 101,775 | [6] | ' | ' | |
Cash and restricted cash | 305,332 | ' | ' | ||
[AssetsFairValueDisclosure] | 257,885,877 | ' | ' | ||
Liabilities | ' | ' | ' | ||
Repurchase agreements | 1,620,711 | 150,922 | ' | ||
Notes Payable | 2,488,618 | ' | ' | ||
[us-gaap:LiabilitiesFairValueDisclosure] | 4,109,329 | ' | ' | ||
Recurring Basis | Carrying Value | ' | ' | ' | ||
Investments in: | ' | ' | ' | ||
Excess mortgage servicing rights | 324,151 | 245,036 | [4] | ' | |
Equity method investees at fair value | 352,766 | ' | ' | ||
Servicer advances | 2,665,551 | ' | ' | ||
Real estate securities, available-for-sale | 1,973,189 | 289,756 | ' | ||
Residential mortgage loans, held-for-investment | 33,539 | ' | ' | ||
Derivative assets | 35,926 | ' | ' | ||
Cash and restricted cash | 305,332 | ' | ' | ||
[AssetsFairValueDisclosure] | 5,690,454 | ' | ' | ||
Liabilities | ' | ' | ' | ||
Repurchase agreements | 1,620,711 | 150,922 | ' | ||
Notes Payable | 2,488,618 | ' | ' | ||
[us-gaap:LiabilitiesFairValueDisclosure] | 4,109,329 | ' | ' | ||
Recurring Basis | Fair Value | ' | ' | ' | ||
Investments in: | ' | ' | ' | ||
Excess mortgage servicing rights | 324,151 | 245,036 | [4] | ' | |
Equity method investees at fair value | 352,766 | ' | ' | ||
Servicer advances | 2,665,551 | ' | ' | ||
Real estate securities, available-for-sale | 1,973,189 | 289,756 | ' | ||
Residential mortgage loans, held-for-investment | 33,539 | ' | ' | ||
Derivative assets | 35,926 | ' | ' | ||
Cash and restricted cash | 305,332 | ' | ' | ||
[AssetsFairValueDisclosure] | 5,690,454 | ' | ' | ||
Liabilities | ' | ' | ' | ||
Repurchase agreements | 1,620,711 | 150,922 | ' | ||
Notes Payable | 2,488,618 | ' | ' | ||
[us-gaap:LiabilitiesFairValueDisclosure] | 4,109,329 | ' | ' | ||
Recurring Basis | Level 2 Inputs | ' | ' | ' | ||
Investments in: | ' | ' | ' | ||
Excess mortgage servicing rights | ' | ' | [4] | ' | |
Real estate securities, available-for-sale | ' | ' | ' | ||
Liabilities | ' | ' | ' | ||
Repurchase agreements | ' | 150,922 | ' | ||
Recurring Basis | Level 3 Inputs | ' | ' | ' | ||
Investments in: | ' | ' | ' | ||
Excess mortgage servicing rights | ' | 245,036 | [4] | ' | |
Real estate securities, available-for-sale | ' | 289,756 | ' | ||
Liabilities | ' | ' | ' | ||
Repurchase agreements | ' | ' | ' | ||
[1] | Represents our historical consolidated balance sheet at December 31, 2013. | ||||
[2] | Fair value, which is equal to carrying value for all securities. See Note 12 regarding the estimation of fair value. | ||||
[3] | The notional amount represents the total unpaid principal balance of the mortgage loans underlying the Excess MSRs. New Residential does not receive an excess mortgage servicing amount on nonperforming loans in Agency portfolios. | ||||
[4] | The notional amount represents the total unpaid principal balance of the mortgage loans underlying the Excess MSRs. Generally, New Residential does not receive an excess mortgage servicing amount on nonperforming loans. | ||||
[5] | Represents New Residential's 70% interest in the total unpaid principal balance of the Residential Mortgage Loans. | ||||
[6] | Notional amount consists of the aggregate current face and UPB amounts of the securities and loans, respectively, that comprise the asset portion of the linked transaction. |
FAIR_VALUE_OF_FINANCIAL_INSTRU3
FAIR VALUE OF FINANCIAL INSTRUMENTS - Inputs Excess MSRs (Details 1) | 1 Months Ended | 12 Months Ended | ||||
Dec. 31, 2011 | Dec. 31, 2013 | Dec. 31, 2012 | ||||
MSRs Pool 1 | ' | ' | ' | |||
Held Directly (Note 3): | ' | ' | ' | |||
Prepayment speed | 20.00% | [1] | 13.10% | [1] | 17.10% | [1] |
Delinquency | 10.00% | [2] | 8.90% | [2] | 10.00% | [2] |
Recapture rate | 35.00% | [3] | 35.80% | [3] | 35.00% | [3] |
Excess mortgage servicing amount | 0.29% | [4] | 0.27% | [4] | 0.29% | [4] |
Discount rate | 20.00% | 12.50% | 18.00% | |||
MSR Pool 1 Recapture Agreement | ' | ' | ' | |||
Held Directly (Note 3): | ' | ' | ' | |||
Prepayment speed | 8.00% | [1] | 8.00% | [1] | 8.00% | [1] |
Delinquency | 10.00% | [2] | 5.00% | [2] | 10.00% | [2] |
Recapture rate | 35.00% | [3] | 35.00% | [3] | 35.00% | [3] |
Excess mortgage servicing amount | 0.21% | [4] | 0.21% | [4] | 0.21% | [4] |
Discount rate | 20.00% | 12.50% | 18.00% | |||
MSRs Pool 2 | ' | ' | ' | |||
Held Directly (Note 3): | ' | ' | ' | |||
Prepayment speed | ' | 13.00% | [1] | 16.70% | [1] | |
Delinquency | ' | 10.10% | [2] | 11.00% | [2] | |
Recapture rate | ' | 35.80% | [3] | 35.00% | [3] | |
Excess mortgage servicing amount | ' | 0.22% | [4] | 0.23% | [4] | |
Discount rate | ' | 12.50% | 17.30% | |||
MSR Pool 2 Recapture Agreement | ' | ' | ' | |||
Held Directly (Note 3): | ' | ' | ' | |||
Prepayment speed | ' | 8.00% | [1] | 8.00% | [1] | |
Delinquency | ' | 5.00% | [2] | 10.00% | [2] | |
Recapture rate | ' | 35.00% | [3] | 35.00% | [3] | |
Excess mortgage servicing amount | ' | 0.21% | [4] | 0.21% | [4] | |
Discount rate | ' | 12.50% | 17.30% | |||
MSRs Pool 3 | ' | ' | ' | |||
Held Directly (Note 3): | ' | ' | ' | |||
Prepayment speed | ' | 13.20% | [1] | 16.90% | [1] | |
Delinquency | ' | 11.20% | [2] | 12.10% | [2] | |
Recapture rate | ' | 35.90% | [3] | 35.00% | [3] | |
Excess mortgage servicing amount | ' | 0.22% | [4] | 0.23% | [4] | |
Discount rate | ' | 12.50% | 17.60% | |||
MSR Pool 3 Recapture Agreement | ' | ' | ' | |||
Held Directly (Note 3): | ' | ' | ' | |||
Prepayment speed | ' | 8.00% | [1] | 8.00% | [1] | |
Delinquency | ' | 5.00% | [2] | 10.00% | [2] | |
Recapture rate | ' | 35.00% | [3] | 35.00% | [3] | |
Excess mortgage servicing amount | ' | 0.21% | [4] | 0.21% | [4] | |
Discount rate | ' | 12.50% | 17.60% | |||
MSRs Pool 4 | ' | ' | ' | |||
Held Directly (Note 3): | ' | ' | ' | |||
Prepayment speed | ' | 15.70% | [1] | 18.60% | [1] | |
Delinquency | ' | 15.00% | [2] | 15.90% | [2] | |
Recapture rate | ' | 36.90% | [3] | 35.00% | [3] | |
Excess mortgage servicing amount | ' | 0.17% | [4] | 0.17% | [4] | |
Discount rate | ' | 12.50% | 17.90% | |||
MSR Pool 4 Recapture Agreement | ' | ' | ' | |||
Held Directly (Note 3): | ' | ' | ' | |||
Prepayment speed | ' | 8.00% | [1] | 8.00% | [1] | |
Delinquency | ' | 5.00% | [2] | 10.00% | [2] | |
Recapture rate | ' | 35.00% | [3] | 35.00% | [3] | |
Excess mortgage servicing amount | ' | 0.21% | [4] | 0.21% | [4] | |
Discount rate | ' | 12.50% | 17.90% | |||
MSRs Pool 5 | ' | ' | ' | |||
Held Directly (Note 3): | ' | ' | ' | |||
Prepayment speed | ' | 11.60% | [1] | 15.00% | [1] | |
Recapture rate | ' | 9.00% | [3] | 20.00% | [3] | |
Excess mortgage servicing amount | ' | 0.13% | [4] | 0.13% | [4] | |
Discount rate | ' | 12.50% | 17.50% | |||
MSR Pool 5 Recapture Agreement | ' | ' | ' | |||
Held Directly (Note 3): | ' | ' | ' | |||
Prepayment speed | ' | 8.00% | [1] | 8.00% | [1] | |
Recapture rate | ' | 35.00% | [3] | 20.00% | [3] | |
Excess mortgage servicing amount | ' | 0.21% | [4] | 0.21% | [4] | |
Discount rate | ' | 12.50% | 17.50% | |||
MSRs Pool 11 | ' | ' | ' | |||
Held Directly (Note 3): | ' | ' | ' | |||
Prepayment speed | ' | 7.60% | [1] | ' | ||
Delinquency | ' | 5.00% | [2] | ' | ||
Recapture rate | ' | 34.00% | [3] | ' | ||
Excess mortgage servicing amount | ' | 0.19% | [4] | ' | ||
Discount rate | ' | 12.50% | ' | |||
MSR Pool 11 Recapture Agreement | ' | ' | ' | |||
Held Directly (Note 3): | ' | ' | ' | |||
Prepayment speed | ' | 8.00% | [1] | ' | ||
Delinquency | ' | 5.00% | [2] | ' | ||
Recapture rate | ' | 35.00% | [3] | ' | ||
Excess mortgage servicing amount | ' | 0.19% | [4] | ' | ||
Discount rate | ' | 12.50% | ' | |||
MSRs Pool 12 | ' | ' | ' | |||
Held Directly (Note 3): | ' | ' | ' | |||
Prepayment speed | ' | 15.40% | [1] | ' | ||
Recapture rate | ' | 8.80% | [3] | ' | ||
Excess mortgage servicing amount | ' | 0.26% | [4] | ' | ||
Discount rate | ' | 16.40% | ' | |||
MSR Pool 12 Recapture Agreement | ' | ' | ' | |||
Held Directly (Note 3): | ' | ' | ' | |||
Prepayment speed | ' | 8.00% | [1] | ' | ||
Recapture rate | ' | 35.00% | [3] | ' | ||
Excess mortgage servicing amount | ' | 0.19% | [4] | ' | ||
Discount rate | ' | 16.40% | ' | |||
MSRs Pool 18 | ' | ' | ' | |||
Held Directly (Note 3): | ' | ' | ' | |||
Prepayment speed | ' | 15.00% | [1] | ' | ||
Recapture rate | ' | 9.00% | [3] | ' | ||
Excess mortgage servicing amount | ' | 0.15% | [4] | ' | ||
Discount rate | ' | 15.30% | ' | |||
MSR Pool 18 Recapture Agreement | ' | ' | ' | |||
Held Directly (Note 3): | ' | ' | ' | |||
Prepayment speed | ' | 10.00% | [1] | ' | ||
Recapture rate | ' | 35.00% | [3] | ' | ||
Excess mortgage servicing amount | ' | 0.19% | [4] | ' | ||
Discount rate | ' | 15.30% | ' | |||
[1] | Projected annualized weighted average lifetime voluntary and involuntary prepayment rate using a prepayment vector. | |||||
[2] | Projected percentage of mortgage loans in the pool that will miss their mortgage payments. | |||||
[3] | Percentage of voluntarily prepaid loans that are expected to be refinanced by Nationstar. | |||||
[4] | Weighted average total mortgage servicing amount in excess of the basic fee. |
FAIR_VALUE_OF_FINANCIAL_INSTRU4
FAIR VALUE OF FINANCIAL INSTRUMENTS - Inputs Excess MSRs (Details 2) | 12 Months Ended | |
Dec. 31, 2013 | ||
MSRs Pool 11 | ' | |
Held through Equity Method Investees (Note 6): | ' | |
Prepayment speed | 7.60% | [1] |
Delinquency | 5.00% | [2] |
Recapture rate | 34.00% | [3] |
Excess mortgage servicing amount | 0.19% | [4] |
Discount rate | 12.50% | |
MSR Pool 11 Recapture Agreement | ' | |
Held through Equity Method Investees (Note 6): | ' | |
Prepayment speed | 8.00% | [1] |
Delinquency | 5.00% | [2] |
Recapture rate | 35.00% | [3] |
Excess mortgage servicing amount | 0.19% | [4] |
Discount rate | 12.50% | |
Excess Mortgage Servicing Rights Investees | MSRs Pool 6 | ' | |
Held through Equity Method Investees (Note 6): | ' | |
Prepayment speed | 16.00% | [1] |
Delinquency | 8.20% | [2] |
Recapture rate | 30.40% | [3] |
Excess mortgage servicing amount | 0.25% | [4] |
Discount rate | 12.50% | |
Excess Mortgage Servicing Rights Investees | MSR Pool 6 Recapture Agreement | ' | |
Held through Equity Method Investees (Note 6): | ' | |
Prepayment speed | 8.00% | [1] |
Delinquency | 5.00% | [2] |
Recapture rate | 35.00% | [3] |
Excess mortgage servicing amount | 0.23% | [4] |
Discount rate | 12.50% | |
Excess Mortgage Servicing Rights Investees | MSRs Pool 7 | ' | |
Held through Equity Method Investees (Note 6): | ' | |
Prepayment speed | 13.10% | [1] |
Delinquency | 7.80% | [2] |
Recapture rate | 35.90% | [3] |
Excess mortgage servicing amount | 0.16% | [4] |
Discount rate | 12.50% | |
Excess Mortgage Servicing Rights Investees | MSR Pool 7 Recapture Agreement | ' | |
Held through Equity Method Investees (Note 6): | ' | |
Prepayment speed | 8.00% | [1] |
Delinquency | 5.00% | [2] |
Recapture rate | 35.00% | [3] |
Excess mortgage servicing amount | 0.19% | [4] |
Discount rate | 12.50% | |
Excess Mortgage Servicing Rights Investees | MSRs Pool 8 | ' | |
Held through Equity Method Investees (Note 6): | ' | |
Prepayment speed | 14.60% | [1] |
Delinquency | 6.80% | [2] |
Recapture rate | 35.90% | [3] |
Excess mortgage servicing amount | 0.20% | [4] |
Discount rate | 12.50% | |
Excess Mortgage Servicing Rights Investees | MSR Pool 8 Recapture Agreement | ' | |
Held through Equity Method Investees (Note 6): | ' | |
Prepayment speed | 8.00% | [1] |
Delinquency | 5.00% | [2] |
Recapture rate | 35.00% | [3] |
Excess mortgage servicing amount | 0.19% | [4] |
Discount rate | 12.50% | |
Excess Mortgage Servicing Rights Investees | MSRs Pool 9 | ' | |
Held through Equity Method Investees (Note 6): | ' | |
Prepayment speed | 16.20% | [1] |
Delinquency | 5.00% | [2] |
Recapture rate | 30.10% | [3] |
Excess mortgage servicing amount | 0.22% | [4] |
Discount rate | 12.50% | |
Excess Mortgage Servicing Rights Investees | MSR Pool 9 Recapture Agreement | ' | |
Held through Equity Method Investees (Note 6): | ' | |
Prepayment speed | 8.00% | [1] |
Delinquency | 5.00% | [2] |
Recapture rate | 35.00% | [3] |
Excess mortgage servicing amount | 0.26% | [4] |
Discount rate | 12.50% | |
Excess Mortgage Servicing Rights Investees | MSRs Pool 10 | ' | |
Held through Equity Method Investees (Note 6): | ' | |
Prepayment speed | 11.40% | [1] |
Recapture rate | 9.00% | [3] |
Excess mortgage servicing amount | 0.11% | [4] |
Discount rate | 12.50% | |
Excess Mortgage Servicing Rights Investees | MSR Pool 10 Recapture Agreement | ' | |
Held through Equity Method Investees (Note 6): | ' | |
Prepayment speed | 8.00% | [1] |
Recapture rate | 35.00% | [3] |
Excess mortgage servicing amount | 0.19% | [4] |
Discount rate | 12.50% | |
Excess Mortgage Servicing Rights Investees | MSRs Pool 11 | ' | |
Held through Equity Method Investees (Note 6): | ' | |
Prepayment speed | 15.20% | [1] |
Delinquency | 9.60% | [2] |
Recapture rate | 37.00% | [3] |
Excess mortgage servicing amount | 0.16% | [4] |
Discount rate | 12.50% | |
Excess Mortgage Servicing Rights Investees | MSR Pool 11 Recapture Agreement | ' | |
Held through Equity Method Investees (Note 6): | ' | |
Prepayment speed | 7.90% | [1] |
Delinquency | 5.00% | [2] |
Recapture rate | 35.00% | [3] |
Excess mortgage servicing amount | 0.19% | [4] |
Discount rate | 12.50% | |
[1] | Projected annualized weighted average lifetime voluntary and involuntary prepayment rate using a prepayment vector. | |
[2] | Projected percentage of mortgage loans in the pool that will miss their mortgage payments. | |
[3] | Percentage of voluntarily prepaid loans that are expected to be refinanced by Nationstar. | |
[4] | Weighted average total mortgage servicing amount in excess of the basic fee. |
FAIR_VALUE_OF_FINANCIAL_INSTRU5
FAIR VALUE OF FINANCIAL INSTRUMENTS - Excess MSRs Fair Value (Details 3) (Level 3 Inputs, USD $) | 12 Months Ended | |||||
In Thousands, unless otherwise specified | Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2011 | |||
MSRs Pool 1 | ' | ' | ' | |||
Balance, beginning | $40,910 | [1] | $43,971 | [1] | ' | [1] |
Gains (losses) included in net income | 9,424 | [2] | 5,877 | [2] | 367 | [2] |
Interest income | 5,839 | 7,955 | 1,260 | |||
Purchases, sales and repayments | ' | ' | ' | |||
Purchases | ' | ' | 43,742 | |||
Purchase adjustments | ' | -178 | ' | |||
Proceeds from repayments | -13,118 | -16,715 | -1,398 | |||
Balance, ending | 43,055 | [1] | 40,910 | [1] | 43,971 | [1] |
MSRs Pool 2 | ' | ' | ' | |||
Balance, beginning | 39,322 | [1] | ' | ' | ||
Gains (losses) included in net income | 9,125 | [2] | 1,226 | [2] | ' | |
Interest income | 4,885 | 3,450 | ' | |||
Purchases, sales and repayments | ' | ' | ' | |||
Purchases | ' | 43,872 | ' | |||
Purchase adjustments | ' | -1,522 | ' | |||
Proceeds from repayments | -11,511 | -7,704 | ' | |||
Balance, ending | 41,821 | [1] | 39,322 | [1] | ' | |
MSRs Pool 3 | ' | ' | ' | |||
Balance, beginning | 35,434 | [1] | ' | ' | ||
Gains (losses) included in net income | 9,393 | [2] | 2,780 | [2] | ' | |
Interest income | 5,767 | 3,409 | ' | |||
Purchases, sales and repayments | ' | ' | ' | |||
Purchases | ' | 36,218 | ' | |||
Proceeds from repayments | -11,053 | -6,973 | ' | |||
Balance, ending | 39,541 | [1] | 35,434 | [1] | ' | |
MSRs Pool 4 | ' | ' | ' | |||
Balance, beginning | 15,036 | [1] | ' | ' | ||
Gains (losses) included in net income | 4,748 | [2] | 1,004 | [2] | ' | |
Interest income | 2,842 | 1,381 | ' | |||
Purchases, sales and repayments | ' | ' | ' | |||
Purchases | ' | 15,439 | ' | |||
Proceeds from repayments | -4,698 | -2,788 | ' | |||
Balance, ending | 17,928 | [1] | 15,036 | [1] | ' | |
MSRs Pool 5 | ' | ' | ' | |||
Balance, beginning | 114,334 | [1] | ' | ' | ||
Gains (losses) included in net income | 21,334 | [2] | -1,864 | [2] | ' | |
Interest income | 20,637 | 11,293 | ' | |||
Purchases, sales and repayments | ' | ' | ' | |||
Purchases | 26,637 | 124,813 | ' | |||
Proceeds from repayments | -36,699 | -19,908 | ' | |||
Balance, ending | 146,243 | [1] | 114,334 | [1] | ' | |
MSRs Pool 11 | ' | ' | ' | |||
Gains (losses) included in net income | -30 | [2] | ' | ' | ||
Interest income | 83 | ' | ' | |||
Purchases, sales and repayments | ' | ' | ' | |||
Purchases | 2,391 | ' | ' | |||
Proceeds from repayments | -129 | ' | ' | |||
Balance, ending | 2,315 | [1] | ' | ' | ||
MSRs Pool 12 | ' | ' | ' | |||
Gains (losses) included in net income | -173 | [2] | ' | ' | ||
Interest income | 678 | ' | ' | |||
Purchases, sales and repayments | ' | ' | ' | |||
Purchases | 17,393 | ' | ' | |||
Proceeds from repayments | -1,364 | ' | ' | |||
Balance, ending | 16,534 | [1] | ' | ' | ||
MSRs Pool 18 | ' | ' | ' | |||
Gains (losses) included in net income | -489 | [2] | ' | ' | ||
Interest income | 190 | ' | ' | |||
Purchases, sales and repayments | ' | ' | ' | |||
Purchases | 17,013 | ' | ' | |||
Balance, ending | 16,714 | [1] | ' | ' | ||
MSRs | ' | ' | ' | |||
Balance, beginning | 245,036 | [1] | 43,971 | [1] | ' | [1] |
Gains (losses) included in net income | 53,332 | [2] | 9,023 | [2] | 367 | [2] |
Interest income | 40,921 | 27,488 | 1,260 | |||
Purchases, sales and repayments | ' | ' | ' | |||
Purchases | 63,434 | 220,342 | 43,742 | |||
Purchase adjustments | ' | -1,700 | ' | |||
Proceeds from repayments | -78,572 | -54,088 | -1,398 | |||
Balance, ending | $324,151 | [1] | $245,036 | [1] | $43,971 | [1] |
[1] | Includes the recapture agreement for each respective pool. | |||||
[2] | The gains (losses) recorded in earnings during the period are attributable to the change in unrealized gains (losses) relating to Level 3 assets still held at the reporting dates. These gains (losses) represent the change in fair value of the Excess MSRs and are recorded in "Change in fair value of investments in excess mortgage servicing rights" in the Consolidated Statements of Income. |
FAIR_VALUE_OF_FINANCIAL_INSTRU6
FAIR VALUE OF FINANCIAL INSTRUMENTS - Excess MSR Joint Ventures Fair Value (Details 4) (USD $) | 12 Months Ended | |
In Thousands, unless otherwise specified | Dec. 31, 2013 | |
Purchases, sales and repayments | ' | |
Purchases | $717,729 | |
Proceeds from repayments | -112,882 | |
Transfers | ' | |
Gains (losses) included in net income | 53,964 | [1] |
Interest income | 46,721 | |
Balance at December 31, 2013 | 705,532 | |
MSRs Pool 6 | ' | |
Purchases, sales and repayments | ' | |
Purchases | 57,803 | |
Proceeds from repayments | -17,458 | |
Transfers | ' | |
Gains (losses) included in net income | 10,958 | [1] |
Interest income | 7,336 | |
Balance at December 31, 2013 | 58,639 | |
MSRs Pool 7 | ' | |
Purchases, sales and repayments | ' | |
Purchases | 137,469 | |
Proceeds from repayments | -33,012 | |
Transfers | ' | |
Gains (losses) included in net income | 12,887 | [1] |
Interest income | 11,982 | |
Balance at December 31, 2013 | 129,326 | |
MSRs Pool 8 | ' | |
Purchases, sales and repayments | ' | |
Purchases | 70,440 | |
Proceeds from repayments | -15,516 | |
Transfers | ' | |
Gains (losses) included in net income | 6,025 | [1] |
Interest income | 5,558 | |
Balance at December 31, 2013 | 66,507 | |
MSRs Pool 9 | ' | |
Purchases, sales and repayments | ' | |
Purchases | 147,015 | |
Proceeds from repayments | -16,258 | |
Transfers | ' | |
Gains (losses) included in net income | 24,181 | [1] |
Interest income | 8,669 | |
Balance at December 31, 2013 | 163,607 | |
MSRs Pool 10 | ' | |
Purchases, sales and repayments | ' | |
Purchases | 229,430 | |
Proceeds from repayments | -20,395 | |
Transfers | ' | |
Gains (losses) included in net income | -4,494 | [1] |
Interest income | 10,193 | |
Balance at December 31, 2013 | 214,734 | |
MSRs Pool 11 | ' | |
Purchases, sales and repayments | ' | |
Purchases | 75,572 | |
Proceeds from repayments | -10,243 | |
Transfers | ' | |
Gains (losses) included in net income | 4,407 | [1] |
Interest income | 2,983 | |
Balance at December 31, 2013 | $72,719 | |
[1] | Management generally obtained pricing service quotations or broker quotations from two sources, one of which was generally the seller (the party that sold New Residential the security) for Non-Agency RMBS. Management selected one of the quotes received as being most representative of the fair value and did not use an average of the quotes. Even if New Residential receives two or more quotes on a particular security that come from non-selling brokers or pricing services, it does not use an average because management believes using an actual quote more closely represents a transactable price for the security than an average level. Furthermore, in some cases there is a wide disparity between the quotes New Residential receives. Management believes using an average of the quotes in these cases would not represent the fair value of the asset. Based on New Residential's own fair value analysis, management selects one of the quotes which is believed to more accurately reflect fair value. |
FAIR_VALUE_OF_FINANCIAL_INSTRU7
FAIR VALUE OF FINANCIAL INSTRUMENTS - Investments in Equity Method Investees Fair Value (Details 5) (USD $) | 12 Months Ended | |
In Thousands, unless otherwise specified | Dec. 31, 2013 | |
Distributions of earnings from equity method investees | ($44,454) | |
Distributions of capital from equity method investees | -4,018 | |
Change in fair value of investments in equity method investees | 50,343 | [1] |
Investments in equity method investees at fair value, ending | 352,766 | [2] |
Recurring Basis | Level 3 Inputs | ' | |
Investments in equity method investees at fair value, beginning | 0 | |
Contributions to equity method investees | 358,864 | |
Distributions of earnings from equity method investees | -33,189 | |
Distributions of capital from equity method investees | -23,252 | |
Change in fair value of investments in equity method investees | 50,343 | |
Investments in equity method investees at fair value, ending | $352,766 | |
[1] | Represents our historical consolidated statement of income for the year ended December 31, 2013. | |
[2] | Represents our historical consolidated balance sheet at December 31, 2013. |
FAIR_VALUE_OF_FINANCIAL_INSTRU8
FAIR VALUE OF FINANCIAL INSTRUMENTS - Inputs Servicer Advances (Details 6) (Servicer Advances) | 12 Months Ended |
Dec. 31, 2013 | |
Servicer Advances | ' |
Servicer Advances to UPB of underlying loans | 2.70% |
Prepayment Speed | 13.30% |
Delinquency | 20.00% |
Excess mortgage servicing amount | 0.21% |
Discount Rate | 4.40% |
FAIR_VALUE_OF_FINANCIAL_INSTRU9
FAIR VALUE OF FINANCIAL INSTRUMENTS - Servicer Advances (Details 7) (USD $) | 12 Months Ended | |
In Thousands, unless otherwise specified | Dec. 31, 2013 | |
Purchases, sales and repayments | ' | |
Servicer advances, ending | $2,665,551 | [1] |
Servicer Advances | ' | |
Servicer advances, beginning | 0 | |
Interest income | 4,421 | |
Purchases, sales and repayments | ' | |
Purchases | 2,764,524 | |
Proceeds from repayments | -103,394 | |
Servicer advances, ending | $2,665,551 | |
[1] | Represents our historical consolidated balance sheet at December 31, 2013. |
Recovered_Sheet2
FAIR VALUE OF FINANCIAL INSTRUMENTS - Real Estate Securities Valuation (Details 8) (USD $) | Dec. 31, 2013 | Dec. 31, 2012 | ||
In Thousands, unless otherwise specified | ||||
Outstanding face amount | $2,186,996 | [1] | ' | |
Amortized cost basis | 1,969,975 | ' | ||
Total Fair Value | 1,973,189 | ' | ||
Multiple Quotes | ' | ' | ||
Total Fair Value | 1,973,189 | [2] | ' | |
Agency RMBS | ' | ' | ||
Outstanding face amount | 1,314,130 | [3] | 433,510 | [3],[4] |
Amortized cost basis | 1,403,215 | [3],[5] | 274,230 | [3],[4] |
Total Fair Value | 1,402,764 | ' | ||
Agency RMBS | Multiple Quotes | Level 2 Inputs | ' | ' | ||
Total Fair Value | 1,402,764 | [2] | ' | |
Non-Agency RMBS | ' | ' | ||
Outstanding face amount | 872,866 | 433,510 | ||
Amortized cost basis | 566,760 | ' | ||
Total Fair Value | 570,425 | ' | ||
Non-Agency RMBS | Multiple Quotes | Level 3 Inputs | ' | ' | ||
Total Fair Value | 570,425 | [2] | ' | |
Asset Backed Securities | ' | ' | ||
Outstanding face amount | ' | 433,510 | ||
Amortized cost basis | ' | 274,230 | ||
Total Fair Value | ' | 289,756 | ||
Asset Backed Securities | Multiple Quotes | ' | ' | ||
Total Fair Value | ' | 265,556 | [6] | |
Asset Backed Securities | Single Quotes | ' | ' | ||
Total Fair Value | ' | $24,200 | [7] | |
[1] | The total outstanding face amount was $6.6 million for fixed rate securities and $2.2 billion for floating rate securities. | |||
[2] | Management generally obtained pricing service quotations or broker quotations from two sources, one of which was generally the seller (the party that sold New Residential the security) for Non-Agency RMBS. Management selected one of the quotes received as being most representative of the fair value and did not use an average of the quotes. Even if New Residential receives two or more quotes on a particular security that come from non-selling brokers or pricing services, it does not use an average because management believes using an actual quote more closely represents a transactable price for the security than an average level. Furthermore, in some cases there is a wide disparity between the quotes New Residential receives. Management believes using an average of the quotes in these cases would not represent the fair value of the asset. Based on New Residential's own fair value analysis, management selects one of the quotes which is believed to more accurately reflect fair value. | |||
[3] | Includes securities issued or guaranteed by U.S. Government agencies such as the Federal National Mortgage Association ("Fannie Mae") or the Federal Home Loan Mortgage Corporation ("Freddie Mac"). | |||
[4] | The total outstanding face amount of fixed rate securities was $1.1 million, and of floating rate securities was $432.4 million. | |||
[5] | Amortized cost basis and carrying value include principal receivable of $10.6 million. | |||
[6] | Management generally obtained pricing service quotations or broker quotations from two sources, one of which was generally the seller (the party that sold us the security). Management selected one of the quotes received as being most representative of the fair value and did not use an average of the quotes. Even if New Residential receives two or more quotes on a particular security that come from non-selling brokers or pricing services, it does not use an average because management believes using an actual quote more closely represents a transactable price for the security than an average level. Furthermore, in some cases there is a wide disparity between the quotes New Residential receives. Management believes using an average of the quotes in these cases would not represent the fair value of the asset. Based on New Residential's own fair value analysis using internal models, management selects one of the quotes which is believed to more accurately reflect fair value. New Residential never adjusts quotes | |||
[7] | Management was unable to obtain quotations from more than one source on these securities. The one source was generally the seller (the party that sold us the security) or a pricing service. |
Recovered_Sheet3
FAIR VALUE OF FINANCIAL INSTRUMENTS - Non-Agency RMBS Fair Value (Details 9) (USD $) | 1 Months Ended | 12 Months Ended | |||
In Thousands, unless otherwise specified | Dec. 31, 2011 | Dec. 31, 2013 | Dec. 31, 2012 | ||
Gain on settlement of securities | ' | $52,657 | [1] | ' | |
Amortization included in interest income | ' | 13,908 | 5,339 | ||
Recurring Basis | Non-Agency RMBS | Level 3 Inputs | ' | ' | ' | ||
Balance, beginning | ' | 289,756 | ' | ||
Gains (losses) included in net income as impairment | ' | -978 | ' | ||
Gain on settlement of securities | ' | 52,657 | ' | ||
Gains (losses) included in comprehensive income | ' | -11,604 | [2] | 15,526 | [3] |
Amortization included in interest income | ' | 20,556 | 5,339 | ||
Purchases, sales and repayments | ' | ' | ' | ||
Purchases/contributions from Newcastle | ' | 825,871 | 121,262 | ||
Sales | ' | -521,865 | ' | ||
Proceeds from repayments | ' | -83,968 | -16,513 | ||
Balance, ending | ' | $570,425 | $289,756 | ||
[1] | Represents our historical consolidated statement of income for the year ended December 31, 2013. | ||||
[2] | These gains (losses) were included in net unrealized gain (loss) on securities in the Consolidated Statements of Comprehensive Income. | ||||
[3] | These gains (losses) were included in net unrealized gain (loss) on securities in the consolidated statements of comprehensive income. |
Recovered_Sheet4
FAIR VALUE OF FINANCIAL INSTRUMENTS - Reverse Mortgage Loans (Details 10) (USD $) | 3 Months Ended | 12 Months Ended | ||
In Thousands, unless otherwise specified | Dec. 31, 2013 | Dec. 31, 2013 | ||
Valuation allowance/(reversal) in current year | $461 | $461 | [1] | |
Weighted average life (years) | ' | '5 years 8 months 12 days | [2] | |
Reverse Mortgage Loans | ' | ' | ||
Outstanding face amount | 57,552 | [3] | 57,552 | [3] |
Carrying value | 33,539 | [3] | 33,539 | [3] |
Fair value | 33,539 | 33,539 | ||
Valuation allowance/(reversal) in current year | ' | $461 | ||
Discount rate | ' | 10.30% | ||
Weighted average life (years) | ' | '3 years 8 months 12 days | [4] | |
[1] | Represents our historical consolidated statement of income for the year ended December 31, 2013. | |||
[2] | The weighted average life is based on the timing of expected principal reduction on the assets. | |||
[3] | Represents a 70% interest New Residential holds in the reverse mortgage loans. | |||
[4] | The weighted average life is based on the expected timing of the receipt of cash flows. |
Recovered_Sheet5
FAIR VALUE OF FINANCIAL INSTRUMENTS - Derivative Valuation (Details 11) (USD $) | 12 Months Ended | |
In Thousands, unless otherwise specified | Dec. 31, 2013 | |
Purchases, sales and repayments | ' | |
Derivative assets | $35,926 | [1] |
Nonhedge Derivative | ' | |
Derivative assets | 0 | |
Gains (losses) included in net income | 1,820 | [2] |
Purchases, sales and repayments | ' | |
Purchases | 34,106 | |
Derivative assets | $35,926 | |
[1] | Represents our historical consolidated balance sheet at December 31, 2013. | |
[2] | The gains (losses) recorded in earnings during the period are attributable to the change in unrealized gains (losses) relating to Level 3 assets still held at the reporting dates. These gains (losses) represent the change in fair value of the non-hedge derivative instruments and are recorded in "Other Income" in the Consolidated Statements of Income. |
EQUITY_AND_EARNINGS_PER_SHARE_1
EQUITY AND EARNINGS PER SHARE - Outstanding Options Summary (Details) | Dec. 31, 2013 | 15-May-13 | Dec. 31, 2012 |
Stock Options outstanding | 20,730,458 | ' | ' |
Manager | ' | ' | ' |
Issued Prior to 2011 | 14,965,555 | ' | 1,751,172 |
Issued in 2011-2013 | 16,176,333 | ' | 7,934,166 |
Stock Options outstanding | 17,672,888 | 21,500,000 | 9,685,338 |
Manager's Employees | ' | ' | ' |
Issued Prior to 2011 | 535,570 | ' | 701,937 |
Issued in 2011-2013 | 2,510,000 | ' | 2,860,000 |
Stock Options outstanding | 3,045,570 | ' | 3,561,937 |
Independent Directors | ' | ' | ' |
Issued Prior to 2011 | 2,000 | ' | 2,000 |
Issued in 2011-2013 | 10,000 | ' | 2,000 |
Stock Options outstanding | 12,000 | ' | 4,000 |
Total Affiliates | ' | ' | ' |
Issued Prior to 2011 | 2,034,125 | ' | 2,455,109 |
Issued in 2011-2013 | 18,696,333 | ' | 10,796,166 |
Stock Options outstanding | 20,730,458 | ' | 13,251,275 |
EQUITY_AND_EARNINGS_PER_SHARE_2
EQUITY AND EARNINGS PER SHARE - Outstanding Options (Details 1) (USD $) | 12 Months Ended | 12 Months Ended | ||||||||||||||||||||
In Thousands, except Share data, unless otherwise specified | Dec. 31, 2013 | Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2013 | Dec. 31, 2013 | Dec. 31, 2013 | Dec. 31, 2013 | Dec. 31, 2013 | Dec. 31, 2013 | Dec. 31, 2013 | Dec. 31, 2013 | Dec. 31, 2013 | ||||||||||
Independent Directors | Independent Directors | Independent Directors | Manager | Manager | Manager | Manager | Manager | Manager | Manager | Manager | ||||||||||||
Stock Options | Stock Options | Stock Options | Stock Options | Stock Options | Stock Options | Stock Options | Stock Options | Stock Options | ||||||||||||||
Recipient | ' | ' | ' | 'Directors | 'Manager | 'Manager | 'Manager | 'Manager | 'Manager | 'Manager | ' | ' | ||||||||||
Date of Grant | ' | ' | ' | 'Various | [1] | '2003-2007 | [1] | 'Mar-11 | [1] | 'Sep-11 | [1] | 'Apr-12 | [1] | 'May-12 | [1] | 'Jul-12 | [1] | 'Jan-13 | [1] | 'Feb-13 | [1] | |
Date of grant of expired options | '2003 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ||||||||||
Stock Options outstanding | 20,730,458 | 12,000 | 4,000 | 12,000 | 2,453,109 | [2] | 1,676,833 | [2] | 2,539,833 | [2] | 1,897,500 | [2] | 2,300,000 | [2] | 2,530,000 | [2] | 5,750,000 | [2] | 2,300,000 | [2] | ||
Options Exercised | -307,833 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ||||||||||
Options expired unexercised | -420,984 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ||||||||||
Options Exercisable | 12,752,781 | ' | ' | 12,000 | 2,032,125 | 1,580,166 | 2,170,850 | 1,244,778 | 1,421,667 | 1,416,195 | 2,108,333 | 766,667 | ||||||||||
Weighted Average Strike Price | $5.25 | [3] | ' | ' | $7.76 | [3] | $15.28 | [3] | $3.29 | [3] | $2.49 | [3] | $3.41 | [3] | $3.67 | [3] | $3.67 | [3] | $5.12 | [3] | $5.74 | [3] |
Exercises - Weighted Average Strike Price | $3.08 | [3] | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | |||||||||
Intrinsic Value | ' | ' | ' | ' | ' | $5,400 | $9,100 | $4,100 | $4,300 | $4,300 | $3,300 | $700 | ||||||||||
[1] | Options expire on the tenth anniversary from date of grant. | |||||||||||||||||||||
[2] | The Manager assigned certain of its options to Fortress's employees as follows (See Schedule of Options Assigned). | |||||||||||||||||||||
[3] | The strike prices are subject to adjustment in connection with return of capital dividends. |
EQUITY_AND_EARNINGS_PER_SHARE_3
EQUITY AND EARNINGS PER SHARE - Options Assigned (Details 2) (USD $) | Dec. 31, 2013 | 15-May-13 | Dec. 31, 2012 | |
Strike Price | 5.25 | [1] | ' | ' |
Stock Options outstanding | 20,730,458 | ' | ' | |
Manager | ' | ' | ' | |
Stock Options outstanding | 17,672,888 | 21,500,000 | 9,685,338 | |
Options Granted in 2004 to 2007 | ' | ' | ' | |
Stock Options outstanding | 535,570 | ' | ' | |
Options Granted in 2004 to 2007 | Lower Range | ' | ' | ' | |
Year of Grant | '2004 | ' | ' | |
Strike Price | 13.86 | ' | ' | |
Options Granted in 2004 to 2007 | Upper Range | ' | ' | ' | |
Year of Grant | '2007 | ' | ' | |
Strike Price | 16.95 | ' | ' | |
Options Granted in 2011 | ' | ' | ' | |
Year of Grant | '2011 | ' | ' | |
Stock Options outstanding | 1,210,000 | ' | ' | |
Options Granted in 2011 | Lower Range | ' | ' | ' | |
Strike Price | 2.49 | ' | ' | |
Options Granted in 2011 | Upper Range | ' | ' | ' | |
Strike Price | 3.29 | ' | ' | |
Options Granted in 2012 | ' | ' | ' | |
Year of Grant | '2012 | ' | ' | |
Stock Options outstanding | 1,300,000 | ' | ' | |
Options Granted in 2012 | Lower Range | ' | ' | ' | |
Strike Price | 3.41 | ' | ' | |
Options Granted in 2012 | Upper Range | ' | ' | ' | |
Strike Price | 3.67 | ' | ' | |
Options Assigned | Manager | ' | ' | ' | |
Stock Options outstanding | 3,045,570 | ' | ' | |
[1] | The strike prices are subject to adjustment in connection with return of capital dividends. |
EQUITY_AND_EARNINGS_PER_SHARE_4
EQUITY AND EARNINGS PER SHARE (Details Narrative) (USD $) | 0 Months Ended | 3 Months Ended | 12 Months Ended | 0 Months Ended | 12 Months Ended | ||||||||||||||||||||||||||||
In Thousands, except Share data, unless otherwise specified | Mar. 19, 2014 | Dec. 31, 2013 | Sep. 30, 2013 | Jun. 30, 2013 | Dec. 31, 2013 | 15-May-13 | 6-May-13 | Apr. 29, 2013 | Dec. 31, 2013 | 15-May-13 | Dec. 31, 2012 | Dec. 31, 2013 | Dec. 31, 2012 | 15-May-13 | Dec. 31, 2013 | Dec. 31, 2013 | Dec. 31, 2013 | Dec. 31, 2013 | Dec. 31, 2013 | Dec. 31, 2013 | Dec. 31, 2013 | Dec. 31, 2013 | Dec. 31, 2013 | Dec. 31, 2013 | |||||||||
Manager | Manager | Manager | Independent Directors | Independent Directors | Independent Directors | Independent Directors | Former Employee of Manager | Manager | Manager | Manager | Manager | Manager | Manager | Manager | Manager | ||||||||||||||||||
Stock Options | Stock Options | Stock Options | Stock Options | Stock Options | Stock Options | Stock Options | Stock Options | Stock Options | Stock Options | ||||||||||||||||||||||||
Per share exchange ratio in spin-off | ' | ' | ' | ' | ' | ' | $1 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | |||||||||
Common stock, par value | ' | $0.01 | ' | ' | $0.01 | ' | ' | $0.01 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | |||||||||
Common stock, shares authorized | ' | 2,000,000,000 | ' | ' | 2,000,000,000 | ' | ' | 2,000,000,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | |||||||||
Preferred stock, par value | ' | ' | ' | ' | ' | ' | ' | $0.01 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | |||||||||
Preferred stock, shares authorized | ' | ' | ' | ' | ' | ' | ' | 100,000,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | |||||||||
Common stock, shares outstanding | ' | 253,197,974 | ' | ' | 253,197,974 | ' | 253,025,645 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | |||||||||
Dividend declared per share | $0.18 | $0.25 | $0.18 | $0.07 | $0.50 | [1] | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ||||||||
Dividends | ' | $63,300 | $44,300 | $17,700 | $125,317 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | |||||||||
Quarterly dividend declared, prior to any special dividends | ' | $0.18 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | |||||||||
Special cash dividend | ' | $0.08 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | |||||||||
Shares held by Fortress and affiliates in Newcastle | ' | 5,314,416 | ' | ' | 5,314,416 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | |||||||||
Shares reserved for options | ' | ' | ' | ' | ' | 30,000,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | |||||||||
Stock option plan term | ' | ' | ' | ' | ' | '10 years | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | |||||||||
Yearly increase in number of shares available for options (percentage) | ' | ' | ' | ' | ' | 10.00% | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | |||||||||
Threshold percentage for options that may be issued to the Manager | ' | ' | ' | ' | ' | 10.00% | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | |||||||||
Stock Options outstanding | ' | 20,730,458 | ' | ' | 20,730,458 | ' | ' | ' | 17,672,888 | 21,500,000 | 9,685,338 | 12,000 | 4,000 | ' | 12,000 | ' | 2,453,109 | [2] | 1,676,833 | [2] | 2,539,833 | [2] | 1,897,500 | [2] | 2,300,000 | [2] | 2,530,000 | [2] | 5,750,000 | [2] | 2,300,000 | [2] | |
Options granted | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 8,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | |||||||||
Options exercised | ' | ' | ' | ' | -307,833 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 307,833 | ' | ' | ' | ' | ' | ' | ' | ' | |||||||||
Weighted average exercise price | ' | ' | ' | ' | $3.08 | [3] | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | $3.08 | ' | ' | ' | ' | ' | ' | ' | ' | ||||||||
Shares issued in option exercise | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 160,634 | ' | ' | ' | ' | ' | ' | ' | ' | |||||||||
Intrinsic value of options exercised | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | $1,000 | ' | ' | ' | ' | ' | ' | ' | ' | |||||||||
Unvested Options forfeited | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 192,167 | ' | ' | ' | ' | ' | ' | ' | ' | |||||||||
Vested Options forfeited | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 2,170 | ' | ' | ' | ' | ' | ' | ' | ' | |||||||||
Share price | ' | $6.68 | ' | ' | $6.68 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | |||||||||
Dilutive Common Stock Equivalents | ' | ' | ' | ' | 4,290,207 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | |||||||||
[1] | Represents our historical consolidated statement of income for the year ended December 31, 2013. | ||||||||||||||||||||||||||||||||
[2] | The Manager assigned certain of its options to Fortress's employees as follows (See Schedule of Options Assigned). | ||||||||||||||||||||||||||||||||
[3] | The strike prices are subject to adjustment in connection with return of capital dividends. |
COMMITMENTS_AND_CONTINGENCIES_
COMMITMENTS AND CONTINGENCIES (Details Narrative) (USD $) | Dec. 31, 2012 | Dec. 31, 2013 | Jan. 17, 2014 | Dec. 31, 2013 | Nov. 30, 2012 | Dec. 31, 2012 |
In Thousands, unless otherwise specified | Servicer Advances | MSRs Pool 17 | MSRs | MSRs | MSRs Pool 6 | |
Amount invested | ' | ' | $19,100 | ' | ' | ' |
Amount committed to invest in Excess MSRs | ' | ' | ' | 52,900 | ' | ' |
Unpaid principal balance of underlying mortgage | ' | 54,600,000 | 8,100,000 | ' | ' | ' |
Capital Commitment | $27,300 | ' | ' | ' | ' | ' |
Percentage ownership acquired in joint venture | ' | ' | ' | ' | 50.00% | 50.00% |
TRANSACTIONS_WITH_AFFILIATES_A2
TRANSACTIONS WITH AFFILIATES AND AFFILIATED ENTITIES - Affiliate Transactions (Details) (USD $) | 12 Months Ended | 12 Months Ended | |||||
In Thousands, unless otherwise specified | Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2011 | Dec. 31, 2013 | Dec. 31, 2012 | ||
Manager | Manager | ||||||
Management fees payable | ' | ' | $39 | $1,495 | $3,392 | ||
Incentive compensation payable | ' | ' | ' | 16,847 | ' | ||
Expense reimbursements and other | ' | ' | ' | 827 | ' | ||
Due to Newcastle | ' | ' | 119 | ' | 1,744 | ||
Due to Affiliate, Total | 19,169 | [1] | 5,136 | 158 | 19,169 | 5,136 | |
Management fee to affiliate | 11,209 | [2] | ' | ' | 15,343 | 3,353 | |
Incentive compensation to affiliate | 16,847 | [2] | ' | ' | 16,847 | ' | |
Expense Reimbursements | ' | ' | ' | 500 | [3] | ' | |
Total payments to affiliate | ' | ' | ' | $32,690 | $3,353 | ||
[1] | Represents our historical consolidated balance sheet at December 31, 2013. | ||||||
[2] | Represents our historical consolidated statement of income for the year ended December 31, 2013. | ||||||
[3] | Included in General and Administrative Expenses in the Consolidated Statements of Income. |
TRANSACTIONS_WITH_AFFILIATES_A3
TRANSACTIONS WITH AFFILIATES AND AFFILIATED ENTITIES (Details Narrative) (USD $) | 12 Months Ended | 0 Months Ended | 12 Months Ended | 0 Months Ended | 12 Months Ended | ||||||||||
In Thousands, unless otherwise specified | Dec. 31, 2013 | Dec. 31, 2012 | Jun. 27, 2013 | Dec. 31, 2013 | Dec. 31, 2012 | Mar. 06, 2014 | Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2013 | Dec. 31, 2012 | |||
Agency RMBS | Agency RMBS | Agency RMBS | Non-Agency RMBS | Non-Agency RMBS | Non-Agency RMBS | Manager | Manager | Nationstar | Nationstar | ||||||
Non-Agency RMBS | Non-Agency RMBS | ||||||||||||||
Management fee rate (percent) | ' | 1.50% | ' | ' | ' | ' | ' | ' | 1.50% | 1.50% | ' | ' | |||
Incentive compensation percentage | ' | ' | ' | ' | ' | ' | ' | ' | 25.00% | ' | ' | ' | |||
Interest rate for incentive compensation | ' | ' | ' | ' | ' | ' | ' | ' | 10.00% | ' | ' | ' | |||
Face amount of securities purchased | ' | ' | $22,700 | $608,900 | ' | $625,000 | $1,300,000 | $193,800 | ' | ' | ' | ' | |||
Purchase of real estate securities | 605,114 | ' | 1,200 | 645,500 | ' | 553,000 | 835,600 | 121,300 | ' | ' | ' | ' | |||
Outstanding face amount | 2,186,996 | [1] | ' | ' | 1,314,130 | [2] | 433,510 | [2],[3] | ' | 872,866 | 433,510 | ' | ' | 848,600 | 433,500 |
Unpaid principal balance of underlying loans | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | $17,100,000 | $5,700,000 | |||
[1] | The total outstanding face amount was $6.6 million for fixed rate securities and $2.2 billion for floating rate securities. | ||||||||||||||
[2] | Includes securities issued or guaranteed by U.S. Government agencies such as the Federal National Mortgage Association ("Fannie Mae") or the Federal Home Loan Mortgage Corporation ("Freddie Mac"). | ||||||||||||||
[3] | The total outstanding face amount of fixed rate securities was $1.1 million, and of floating rate securities was $432.4 million. |
RECLASSIFICATION_FROM_ACCUMULA2
RECLASSIFICATION FROM ACCUMULATED OTHER COMPREHENSIVE INCOME INTO NET INCOME (Details) (USD $) | 12 Months Ended |
In Thousands, unless otherwise specified | Dec. 31, 2013 |
Reclassification of net realized (gain) loss on securities into earnings | ($47,664) |
Gain on settlement of securities | ' |
Gain on settlement of securities | -52,657 |
Other-Than-Temporary Investment | ' |
Gain on settlement of securities | $4,993 |
INCOME_TAXES_Tax_Treatment_of_
INCOME TAXES - Tax Treatment of Common Stock Distributions (Details) (USD $) | 12 Months Ended |
Dec. 31, 2013 | |
Income Taxes - Tax Treatment Of Common Stock Distributions Details | ' |
Dividends per share | $0.50 |
Ordinary Income | 44.56% |
Long-Term Capital Gain | 4.94% |
Return of Capital | 0.00% |
RECENT_ACTIVITIES_Details_Narr
RECENT ACTIVITIES (Details Narrative) (USD $) | 0 Months Ended | 3 Months Ended | 12 Months Ended | 0 Months Ended | 12 Months Ended | 0 Months Ended | 12 Months Ended | 0 Months Ended | 1 Months Ended | 12 Months Ended | 0 Months Ended | ||||||||||||||||||||||||||||
In Thousands, except Per Share data, unless otherwise specified | Mar. 19, 2014 | Dec. 31, 2013 | Sep. 30, 2013 | Jun. 30, 2013 | Dec. 31, 2013 | Mar. 25, 2014 | Dec. 31, 2012 | Jan. 08, 2014 | Jun. 27, 2013 | Dec. 31, 2013 | Mar. 14, 2014 | Mar. 06, 2014 | Dec. 31, 2013 | Dec. 31, 2012 | Mar. 07, 2014 | Feb. 28, 2014 | Dec. 17, 2013 | Dec. 31, 2013 | Mar. 18, 2014 | Mar. 18, 2014 | Mar. 18, 2014 | Mar. 18, 2014 | Mar. 18, 2014 | Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2013 | Dec. 31, 2013 | Dec. 31, 2013 | Jan. 15, 2014 | Jan. 15, 2014 | Jan. 15, 2014 | Jan. 15, 2014 | Jan. 17, 2014 | Dec. 31, 2013 | Dec. 31, 2012 | Nov. 30, 2012 | Dec. 31, 2013 | Dec. 31, 2013 | |
Master Credit Suisse Repurchase Agreement | Agency RMBS | Agency RMBS | Agency RMBS | Non-Agency RMBS | Non-Agency RMBS | Non-Agency RMBS | Servicer Advance Joint Venture | Servicer Advance Joint Venture | Servicer Advance Joint Venture | Servicer Advance Joint Venture | NRART Master Trust | NRART Master Trust | NRART Master Trust | NRART Master Trust | NRART Master Trust | Subsequent Event | Subsequent Event | Subsequent Event | Subsequent Event | Subsequent Event | Nonperforming Residential Mortgage Loans Tranche 1 | Nonperforming Residential Mortgage Loans Tranche 1 | Nonperforming Residential Mortgage Loans Tranche 2 | Nonperforming Residential Mortgage Loans Tranche 2 | MSRs Pool 17 | MSRs | MSRs | MSRs | MSRs | MSRs | |||||||||
Prepaid Variable Funding Notes | Prepaid Variable Funding Notes | Prepaid Variable Funding Notes | Prepaid Term Notes | Agency RMBS | Non-Agency RMBS | Servicer Advance Joint Venture | Royal Bank of Scotland | Credit Suisse | Excess Mortgage Servicing Rights Investees | Excess Mortgage Servicing Rights Investees | |||||||||||||||||||||||||||||
Lower Range | Upper Range | GSE Residential Mortgage Loans | |||||||||||||||||||||||||||||||||||||
Servicer advance investments settled | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | $509,400 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | |
Purchase of servicer advance investments | ' | ' | ' | ' | 670,820 | ' | ' | ' | ' | ' | ' | ' | ' | ' | 299,100 | 756,200 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 2,100,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | |
Notes payable issued for purchase | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 2,400,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 1,700,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | |
Increase in restricted cash | ' | ' | ' | ' | 2,790 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 9,800 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | |
Nationstar payment made for targeted return shortfall | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 9,800 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | |
Contributions from co-investor | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 37,000 | 105,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | |
Amount invested | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 19,100 | ' | ' | ' | ' | ' | |
Unpaid principal balance of underlying mortgage | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 8,100,000 | ' | ' | ' | ' | 13,100,000 | |
Amount committed to invest in joint venture | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 172,400 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 1,500 | ' | ' | ' | ' | 32,300 | |
Additional UPB to be acquired by New Residential | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 900,000 | ' | ' | ' | ' | ' | |
Repayments of notes payable | ' | ' | ' | ' | 59,149 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 5,900 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | |
Increase in UPB if MSRs are closed | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 900,000 | ' | ' | ' | ' | ' | |
Face amount of securities purchased | ' | ' | ' | ' | ' | ' | ' | ' | 22,700 | 608,900 | ' | 625,000 | 1,300,000 | 193,800 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 391,700 | ' | 740,600 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | |
Purchase of real estate securities | ' | ' | ' | ' | 605,114 | ' | ' | ' | 1,200 | 645,500 | ' | 553,000 | 835,600 | 121,300 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 242,800 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | |
Face amount of securities sold | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 729,700 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 154,200 | 437,900 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | |
Proceeds from sale of real estate securities | ' | ' | ' | ' | 521,865 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 162,900 | 248,500 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | |
Gain on sale of real estate securities | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 52,700 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 700 | 3,800 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | |
Unpaid principal balance of underlying loans | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 170,100 | 300,000 | 65,600 | 25,300 | ' | 78,953,614 | 76,560,751 | 13,000,000 | 173,619,478 | ' | |
Purchases of non-performing loans | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 92,700 | 60,100 | 33,700 | ' | ' | ' | ' | ' | ' | ' | |
Debt face amount | ' | 4,109,329 | ' | ' | 4,109,329 | ' | ' | 150,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 1,100,000 | ' | ' | 1,000,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | |
Variable interest rate basis description | ' | ' | ' | ' | ' | ' | ' | 'One-month LIBOR | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 'One-month LIBOR | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 'One-month LIBOR | ' | ' | ' | ' | ' | ' | |
Variable Interest Rate Spread | ' | ' | ' | ' | ' | ' | ' | 4.00% | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 1.38% | 2.50% | ' | ' | ' | ' | ' | ' | ' | ' | ' | 3.00% | ' | ' | ' | ' | ' | ' | |
Interest rate | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 1.90% | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | |
Carrying value | ' | 4,109,329 | ' | ' | 4,109,329 | ' | 150,922 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 1,900,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | |
TBA agreements with a long notional amount | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 625,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | |
TBA agreements with a short notional amount | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 750,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | |
Short-term US Treasury Note held | ' | ' | ' | ' | ' | 300,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | |
Percentage of mezzanine and subordinate tranche purchased | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 75.00% | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | |
Mortgage loans pledged | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | $900,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | |
Dividend declared per share | $0.18 | $0.25 | $0.18 | $0.07 | $0.50 | [1] | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
[1] | Represents our historical consolidated statement of income for the year ended December 31, 2013. |
RECENT_ACTIVITIES_Details_Narr1
RECENT ACTIVITIES (Details Narrative 1) (USD $) | 12 Months Ended | 0 Months Ended | 12 Months Ended | 0 Months Ended | 1 Months Ended | 12 Months Ended | ||||||||||||
In Thousands, unless otherwise specified | Dec. 31, 2013 | Apr. 03, 2013 | Jun. 27, 2013 | Apr. 03, 2013 | Dec. 31, 2013 | Apr. 02, 2013 | Apr. 02, 2013 | Apr. 02, 2013 | Dec. 31, 2013 | Feb. 27, 2013 | Dec. 31, 2012 | Nov. 30, 2012 | Dec. 31, 2013 | Dec. 31, 2012 | Jan. 06, 2013 | Dec. 31, 2012 | Nov. 30, 2012 | Dec. 31, 2012 |
Agency RMBS | Agency RMBS | Agency RMBS | Affilate of Blackstone Tactical Opportunities Advisors LLC | Fortress-managed Affiliate | Consumer Loan Investees | Consumer Loan Investees | Reverse Mortgage Loans | Reverse Mortgage Loans | MSRs | MSRs | MSRs | MSRs - 4 Pools | MSRs - 4 Pools | MSRs - 4 Pools | Subsequent Event | |||
Number | ||||||||||||||||||
Face amount of securities purchased | ' | ' | $22,700 | ' | $608,900 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | $391,700 |
Amount committed to invest in joint venture | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 340,000 | ' | ' | ' |
Purchase of real estate securities | 605,114 | ' | 1,200 | ' | 645,500 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 242,800 |
Unpaid principal balance of underlying loans | ' | ' | ' | ' | ' | ' | ' | 4,200,000 | 3,298,769 | ' | 83,100 | 13,000,000 | 78,953,614 | 76,560,751 | ' | 58,000,000 | 215,000,000 | ' |
Amount contributed to acquire joint venture | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 27,300 | ' | ' | ' | ' | ' | ' |
Percentage ownership acquired in joint venture | ' | ' | ' | ' | ' | ' | ' | 30.00% | 30.00% | ' | ' | 50.00% | ' | ' | 50.00% | ' | ' | ' |
Percentage of Investment co-owned by Nationstar | ' | ' | ' | ' | ' | ' | ' | ' | ' | 30.00% | ' | 33.00% | ' | ' | 33.00% | ' | ' | ' |
Percentage of Investment owned by New Residential | ' | ' | ' | ' | ' | ' | ' | ' | ' | 70.00% | ' | 67.00% | ' | ' | 67.00% | ' | ' | ' |
Loans in private label securitizations portfolio (percent) | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 53.00% | ' | ' | ' |
Repurchase agreements | ' | 158,000 | ' | 1,000,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Number of loans in portfolio | ' | ' | ' | ' | ' | ' | ' | 400,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Percentage of portfolio co-invested by other parties | ' | ' | ' | ' | ' | 23.00% | 47.00% | 70.00% | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Acquisitions of investments in consumer loan equity method investees | ' | ' | ' | ' | ' | ' | ' | 250,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Purchase price of portfolio financed by asset-backed notes | ' | ' | ' | ' | ' | ' | ' | 2,200,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Purchase price of portfolio | ' | ' | ' | ' | ' | ' | ' | 3,000,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Agency RMBS contributed from Newcastle, face amount | $1,000,000 | ' | ' | $1,000,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
SUMMARY_OF_QUARTERLY_CONSOLIDA2
SUMMARY OF QUARTERLY CONSOLIDATED FINANCIAL INFORMATION (UNAUDITED) (Details) (USD $) | 0 Months Ended | 1 Months Ended | 3 Months Ended | 12 Months Ended | |||||||||||||||||||
In Thousands, except Share data, unless otherwise specified | Mar. 19, 2014 | Jan. 31, 2014 | Dec. 31, 2011 | Dec. 31, 2013 | Sep. 30, 2013 | Jun. 30, 2013 | Mar. 31, 2013 | Dec. 31, 2012 | Sep. 30, 2012 | Jun. 30, 2012 | Mar. 31, 2012 | Dec. 31, 2013 | Dec. 31, 2012 | ||||||||||
Summary Of Quarterly Consolidated Financial Information Details | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ||||||||||
Interest income | ' | ' | $1,260 | $26,492 | $21,885 | $22,999 | $16,191 | $14,948 | $12,295 | $4,479 | $2,037 | $87,567 | [1] | $33,759 | |||||||||
Interest expense | ' | ' | ' | 8,031 | 3,443 | 2,651 | 899 | 406 | 298 | ' | ' | 15,024 | [1] | 704 | |||||||||
Net interest income | ' | ' | 1,260 | 18,461 | 18,442 | 20,348 | 15,292 | 14,542 | 11,997 | 4,479 | 2,037 | 72,543 | [1] | 33,055 | |||||||||
Impairment | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ||||||||||
Other-than-temporary impairment ("OTTI") on securities | ' | 1,000 | ' | 1,237 | ' | 3,756 | ' | ' | ' | ' | ' | 4,993 | [1] | ' | |||||||||
Valuation allowance on loans | ' | ' | ' | 461 | ' | ' | ' | ' | ' | ' | ' | 461 | [1] | ' | |||||||||
Impairment Net Of The Reversal Of Prior Valuation Allowances On Loans | ' | ' | ' | 1,698 | ' | 3,756 | ' | ' | ' | ' | ' | 5,454 | [1] | ' | |||||||||
Net interest income after impairment | ' | ' | 1,260 | 16,763 | 18,442 | 16,592 | 15,292 | 14,542 | 11,997 | 4,479 | 2,037 | 67,089 | [1] | 33,055 | |||||||||
Other income | ' | ' | 367 | 83,804 | [2] | 56,195 | [2] | 98,182 | [2] | 2,827 | [2] | 10,910 | [2] | 1,774 | [2] | 3,523 | [2] | 1,216 | [2] | 241,008 | [1],[2] | 17,423 | [2] |
Operating Expenses | ' | ' | 913 | 20,386 | 11,492 | 5,552 | 5,044 | 5,135 | 2,003 | 1,528 | 565 | 42,474 | [1] | 9,231 | |||||||||
Income (Loss) Before Income Taxes | ' | ' | 714 | 80,181 | 63,145 | 109,222 | 13,075 | ' | ' | ' | ' | 265,623 | [1] | 41,247 | |||||||||
Net Income (Loss) | ' | ' | 714 | 80,181 | 63,145 | 109,222 | 13,075 | 20,317 | 11,768 | 6,474 | 2,688 | 265,623 | [1] | 41,247 | |||||||||
Noncontrolling Interests in Income (Loss) of Consolidated Subsidiaries | ' | ' | ' | -326 | ' | ' | ' | ' | ' | ' | ' | -326 | [1] | ' | |||||||||
Net Income (Loss) Attributible to Common Shareholders | ' | ' | $714 | $80,507 | $63,145 | $109,222 | $13,075 | ' | ' | ' | ' | $265,949 | [1] | $41,247 | |||||||||
Net Income Per Share of Common Stock | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ||||||||||
Basic (in dollars per share) | ' | ' | ' | $0.32 | $0.25 | $0.43 | $0.05 | $0.08 | $0.05 | $0.03 | $0.01 | $1.05 | [1] | $0.16 | |||||||||
Diluted (in dollars per share) | ' | ' | ' | $0.31 | $0.24 | $0.43 | $0.05 | $0.08 | $0.05 | $0.03 | $0.01 | $1.03 | [1] | $0.16 | |||||||||
Weighted Average Number of Shares of Common Stock Outstanding | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ||||||||||
Basic (in share) | ' | ' | 253,025,645 | 253,186,406 | 253,072,788 | 253,025,645 | 253,025,645 | 253,025,645 | 253,025,645 | 253,025,645 | 253,025,645 | 253,078,048 | [1] | 253,025,645 | |||||||||
Diluted (in share) | ' | ' | 253,025,645 | 259,796,493 | 259,889,285 | 256,659,488 | 253,025,645 | 253,025,645 | 253,025,645 | 253,025,645 | 253,025,645 | 257,368,255 | [1] | 253,025,645 | |||||||||
Dividends Declared per Share of Common Stock (in dollars per share) | $0.18 | ' | ' | $0.25 | $0.18 | $0.07 | ' | ' | ' | ' | ' | $0.50 | [1] | ' | |||||||||
[1] | Represents our historical consolidated statement of income for the year ended December 31, 2013. | ||||||||||||||||||||||
[2] | Earnings from investments in equity method investees is included in other income. |