UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
 
FORM 10-Q
 
x  QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
 
For the quarterly period ended September 30, 2017
 
or
 
¨  TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
 
For the transition period from ________________to________________
 
Commission File Number: 001-35777
New Residential Investment Corp.
(Exact name of registrant as specified in its charter)
Delaware
 
45-3449660
(State or other jurisdiction of
incorporation or organization)
 
(I.R.S. Employer Identification No.)
 
 
 
1345 Avenue of the Americas, New York, NY
 
10105
(Address of principal executive offices)
 
(Zip Code)
 
(212) 798-3150
(Registrant’s telephone number, including area code)
 
(Former name, former address and former fiscal year, if changed since last report) 
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x    No ¨
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulations S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes x    No ¨
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act. (Check one):
Large accelerated filer x  Accelerated filer ¨ Non-accelerated filer ¨ (Do not check if a smaller reporting company) 
Smaller reporting company ¨     Emerging growth company ¨
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ¨    No x
Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the last practicable date.
Common stock, $0.01 par value per share: 307,361,309 shares outstanding as of October 26, 2017.




CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS
 
This report contains certain “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995, which statements involve substantial risks and uncertainties. Such forward-looking statements relate to, among other things, the operating performance of our investments, the stability of our earnings, our financing needs and the size and attractiveness of market opportunities. Forward-looking statements are generally identifiable by use of forward-looking terminology such as “may,” “will,” “should,” “potential,” “intend,” “expect,” “endeavor,” “seek,” “anticipate,” “estimate,” “overestimate,” “underestimate,” “believe,” “could,” “project,” “predict,” “continue” or other similar words or expressions. Forward-looking statements are based on certain assumptions, discuss future expectations, describe future plans and strategies, contain projections of results of operations, cash flows or financial condition or state other forward-looking information. Our ability to predict results or the actual outcome of future plans or strategies is inherently uncertain. Although we believe that the expectations reflected in such forward-looking statements are based on reasonable assumptions, our actual results and performance could differ materially from those set forth in the forward-looking statements. These forward-looking statements involve risks, uncertainties and other factors that may cause our actual results in future periods to differ materially from forecasted results. Factors which could have a material adverse effect on our operations and future prospects include, but are not limited to:
 
reductions in cash flows received from our investments;
the quality and size of the investment pipeline and our ability to take advantage of investment opportunities at attractive risk-adjusted prices;
Servicer advances may not be recoverable or may take longer to recover than we expect, which could cause us to fail to achieve our targeted return on our investment in Servicer Advance Investments and servicer advances receivable;
our ability to deploy capital accretively and the timing of such deployment;
our counterparty concentration and default risks in Nationstar, Ocwen, OneMain, Ditech, PHH and other third parties;
events, conditions or actions that might occur at Nationstar, Ocwen, OneMain, Ditech, PHH and other third parties, as well as the continued effect of previously disclosed events;
a lack of liquidity surrounding our investments, which could impede our ability to vary our portfolio in an appropriate manner;
the impact that risks associated with subprime mortgage loans and consumer loans, as well as deficiencies in servicing and foreclosure practices, may have on the value of our MSRs, Excess MSRs, Servicer Advance Investments, RMBS, residential mortgage loan and consumer loan portfolios;
the risks that default and recovery rates on our MSRs, Excess MSRs, Servicer Advance Investments, RMBS, residential mortgage loans and consumer loans deteriorate compared to our underwriting estimates;
changes in prepayment rates on the loans underlying certain of our assets, including, but not limited to, our MSRs or Excess MSRs;
the risk that projected recapture rates on the loan pools underlying our MSRs or Excess MSRs are not achieved;
the relationship between yields on assets which are paid off and yields on assets in which such monies can be reinvested;
the relative spreads between the yield on the assets in which we invest and the cost of financing;
changes in economic conditions generally and the real estate and bond markets specifically;
adverse changes in the financing markets we access affecting our ability to finance our investments on attractive terms, or at all;
changing risk assessments by lenders that potentially lead to increased margin calls, not extending our repurchase agreements or other financings in accordance with their current terms or not entering into new financings with us;
changes in interest rates and/or credit spreads, as well as the success of any hedging strategy we may undertake in relation to such changes;
impairments in the value of the collateral underlying our investments and the relation of any such impairments to our judgments as to whether changes in the market value of our securities or loans are temporary or not and whether circumstances bearing on the value of such assets warrant changes in carrying values;
the availability and terms of capital for future investments;
competition within the finance and real estate industries;




the legislative/regulatory environment, including, but not limited to, the impact of the Dodd-Frank Act, U.S. government programs intended to grow the economy, potential tax reform, the federal conservatorship of Fannie Mae and Freddie Mac and legislation that permits modification of the terms of residential mortgage loans;
our ability to maintain our qualification as a real estate investment trust (“REIT”) for U.S. federal income tax purposes and the potentially onerous consequences that any failure to maintain such qualification would have on our business;
our ability to maintain our exclusion from registration under the Investment Company Act of 1940 (the “1940 Act”) and the fact that maintaining such exclusion imposes limits on our operations;
the risks related to HLSS liabilities that we have assumed;
the impact of current or future legal proceedings and regulatory investigations and inquiries;
the impact of any material transactions with FIG LLC (the “Manager”) or one of its affiliates, including the impact of any actual, potential or perceived conflicts of interest;
effects of the pending merger of Fortress Investment Group LLC with affiliates of SoftBank Group Corp.; and
the risk that GSE or other regulatory initiatives or actions may adversely affect returns from investments in MSRs and Excess MSRs.

We also direct readers to other risks and uncertainties referenced in this report, including those set forth under “Risk Factors.” We caution that you should not place undue reliance on any of our forward-looking statements. Further, any forward-looking statement speaks only as of the date on which it is made. New risks and uncertainties arise from time to time, and it is impossible for us to predict those events or how they may affect us. Except as required by law, we are under no obligation (and expressly disclaim any obligation) to update or alter any forward-looking statement, whether written or oral, that we may make from time to time, whether as a result of new information, future events or otherwise.
 




SPECIAL NOTE REGARDING EXHIBITS
 
In reviewing the agreements included as exhibits to this Quarterly Report on Form 10-Q, please remember they are included to provide you with information regarding their terms and are not intended to provide any other factual or disclosure information about New Residential Investment Corp. (the “Company,” “New Residential” or “we,” “our” and “us”) or the other parties to the agreements. The agreements contain representations and warranties by each of the parties to the applicable agreement. These representations and warranties have been made solely for the benefit of the other parties to the applicable agreement and:
 
should not in all instances be treated as categorical statements of fact, but rather as a way of allocating the risk to one of the parties if those statements proved to be inaccurate;
have been qualified by disclosures that were made to the other party in connection with the negotiation of the applicable agreement, which disclosures are not necessarily reflected in the agreement;
may apply standards of materiality in a way that is different from what may be viewed as material to you or other investors; and
were made only as of the date of the applicable agreement or such other date or dates as may be specified in the agreement and are subject to more recent developments.

Accordingly, these representations and warranties may not describe the actual state of affairs as of the date they were made or at any other time. Additional information about the Company may be found elsewhere in this Quarterly Report on Form 10-Q and the Company’s other public filings, which are available without charge through the SEC’s website at http://www.sec.gov.
 
The Company acknowledges that, notwithstanding the inclusion of the foregoing cautionary statements, it is responsible for considering whether additional specific disclosures of material information regarding material contractual provisions are required to make the statements in this report not misleading.
 




NEW RESIDENTIAL INVESTMENT CORP.
FORM 10-Q
 
INDEX
 
PAGE
Part I. Financial Information
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 




 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Part II. Other Information
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 




PART I. FINANCIAL INFORMATION
 
ITEM 1. FINANCIAL STATEMENTS
 
NEW RESIDENTIAL INVESTMENT CORP. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(dollars in thousands)
 
September 30, 2017
 
December 31, 2016
 
(Unaudited)
 
Assets
 
 
 
Investments in:
 
 
 
Excess mortgage servicing rights, at fair value
$
1,178,308

 
$
1,399,455

Excess mortgage servicing rights, equity method investees, at fair value
175,633

 
194,788

Mortgage servicing rights, at fair value
1,702,749

 
659,483

Mortgage servicing rights financing receivable, at fair value
607,396

 

Servicer advance investments, at fair value(A)
4,044,802

 
5,706,593

Real estate securities, available-for-sale
6,714,846

 
5,073,858

Residential mortgage loans, held-for-investment
702,227

 
190,761

Residential mortgage loans, held-for-sale(A)
1,426,751

 
696,665

Real estate owned
107,281

 
59,591

Consumer loans, held-for-investment(A)
1,467,933

 
1,799,486

Consumer loans, equity method investees
46,322

 

Cash and cash equivalents(A)
279,760

 
290,602

Restricted cash
152,047

 
163,095

Servicer advances receivable
657,255

 
81,582

Trades receivable
1,785,708

 
1,687,788

Deferred tax asset, net
32,440

 
151,284

Other assets
323,375

 
244,498

 
$
21,404,833

 
$
18,399,529

 
 
 
 
Liabilities and Equity
 
 
 
 
 
 
 
Liabilities
 
 
 
  Repurchase agreements
$
7,848,028

 
$
5,190,631

  Notes and bonds payable(A)
7,236,967

 
7,990,605

  Trades payable
1,076,086

 
1,381,968

  Due to affiliates
79,624

 
47,348

  Dividends payable
153,681

 
115,356

  Accrued expenses and other liabilities
331,243

 
205,444

 
16,725,629

 
14,931,352

 
 
 
 
Commitments and Contingencies


 


 
 
 
 
Equity
 
 
 
Common Stock, $0.01 par value, 2,000,000,000 shares authorized, 307,361,309 and 250,773,117 issued and outstanding at September 30, 2017 and December 31, 2016, respectively
3,074

 
2,507

  Additional paid-in capital
3,760,372

 
2,920,730

  Retained earnings
424,854

 
210,500

  Accumulated other comprehensive income (loss)
383,312

 
126,363

  Total New Residential stockholders’ equity
4,571,612

 
3,260,100

  Noncontrolling interests in equity of consolidated subsidiaries
107,592

 
208,077

    Total Equity
4,679,204

 
3,468,177

 
$
21,404,833

 
$
18,399,529


1



NEW RESIDENTIAL INVESTMENT CORP. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS, CONTINUED
(dollars in thousands)

(A)
New Residential’s Condensed Consolidated Balance Sheets include the assets and liabilities of certain consolidated VIEs, the Buyer (Note 6), the RPL Borrowers (Note 8), and the Consumer Loan SPVs (Note 9), which primarily hold investments in Servicer Advance Investments, residential mortgage loans, and consumer loans, respectively, financed with notes and bonds payable. The balance sheets of the Buyer, the RPL Borrowers and the Consumer Loan SPVs are included in Notes 6, 8 and 9, respectively. The creditors of the Buyer, the RPL Borrowers, and the Consumer Loan SPVs do not have recourse to the general credit of New Residential and the assets of the Buyer, the RPL Borrowers, and the Consumer Loan SPVs are not directly available to satisfy New Residential’s obligations.

See notes to condensed consolidated financial statements.

2



NEW RESIDENTIAL INVESTMENT CORP. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
(dollars in thousands, except per share data)
 
 
Three Months Ended 
 September 30,
 
Nine Months Ended 
 September 30,
 
2017
 
2016
 
2017
 
2016
    Interest income
$
397,722

 
$
282,388

 
$
1,162,212

 
$
749,901

    Interest expense
125,278

 
96,488

 
338,664

 
278,401

Net Interest Income
272,444

 
185,900

 
823,548

 
471,500

 
 
 
 
 
 
 
 
Impairment
 
 
 
 
 
 
 
    Other-than-temporary impairment (OTTI) on securities
1,509

 
1,765

 
8,736

 
7,838

    Valuation and loss provision on loans and real estate owned
26,700

 
18,275

 
65,381

 
41,845

 
28,209

 
20,040

 
74,117

 
49,683

 
 
 
 
 
 
 
 
  Net interest income after impairment
244,235

 
165,860

 
749,431

 
421,817

Servicing revenue, net
58,014

 

 
269,467

 

Other Income
 
 
 
 
 
 
 
Change in fair value of investments in excess mortgage servicing rights
(14,291
)
 
(17,060
)
 
(32,650
)
 
(24,397
)
Change in fair value of investments in excess mortgage servicing rights, equity method investees
2,054

 
6,261

 
6,056

 
8,608

Change in fair value of investments in mortgage servicing rights financing receivable
70,232

 

 
75,828

 

Change in fair value of servicer advance investments
10,941

 
21,606

 
70,469

 
4,328

Gain on consumer loans investment

 

 

 
9,943

Gain on remeasurement of consumer loans investment

 

 

 
71,250

Gain (loss) on settlement of investments, net
1,553

 
(11,165
)
 
1,250

 
(37,682
)
Earnings from investments in consumer loans, equity method investees
6,769

 

 
12,649

 

Other income (loss), net
9,887

 
27,059

 
7,696

 
6,850

 
87,145

 
26,701

 
141,298

 
38,900

 
 
 
 
 
 
 
 
Operating Expenses
 
 
 
 
 
 
 
    General and administrative expenses
19,919

 
8,777

 
47,788

 
28,082

    Management fee to affiliate
14,187

 
10,536

 
41,447

 
30,552

    Incentive compensation to affiliate
19,491

 
7,075

 
72,123

 
13,200

    Loan servicing expense
13,690

 
14,187

 
40,068

 
30,037

    Subservicing expense
49,773

 

 
123,435

 

 
117,060

 
40,575

 
324,861

 
101,871

 
 
 
 
 
 
 
 
Income Before Income Taxes
272,334

 
151,986

 
835,335

 
358,846

Income tax expense (benefit)
32,613

 
20,900

 
121,053

 
18,195

Net Income
$
239,721

 
$
131,086

 
$
714,282

 
$
340,651

Noncontrolling interests in Income of Consolidated Subsidiaries
$
13,600

 
$
32,178

 
$
45,051

 
$
61,355

Net Income Attributable to Common Stockholders
$
226,121

 
$
98,908

 
$
669,231

 
$
279,296

 
 
 
 
 
 
 
 
Net Income Per Share of Common Stock
 
 
 
 
 
 
 
  Basic
$
0.74

 
$
0.41

 
$
2.23

 
$
1.19

  Diluted
$
0.73

 
$
0.41

 
$
2.21

 
$
1.19

 
 
 
 
 
 
 
 
Weighted Average Number of Shares of Common
Stock Outstanding
 
 
 
 
 
 
 
  Basic
307,361,309

 
240,601,691

 
300,511,550

 
233,875,067

  Diluted
309,207,345

 
241,099,381

 
302,357,147

 
234,184,611

 
 
 
 
 
 
 
 
Dividends Declared per Share of Common Stock
$
0.50

 
$
0.46

 
$
1.48

 
$
1.38

 
See notes to condensed consolidated financial statements.


3



NEW RESIDENTIAL INVESTMENT CORP. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (UNAUDITED)
(dollars in thousands)
 
 
Three Months Ended 
 September 30,
 
Nine Months Ended 
 September 30,
 
2017
 
2016
 
2017
 
2016
Comprehensive income (loss), net of tax
 
 
 
 
 
 
 
Net income
$
239,721

 
$
131,086

 
$
714,282

 
$
340,651

Other comprehensive income (loss)
 
 
 
 
 
 
 
Net unrealized gain (loss) on securities
75,845

 
52,138

 
277,805

 
108,679

        Reclassification of net realized (gain)
loss on securities into earnings
(5,833
)
 
2,444

 
(20,856
)
 
(7,234
)
 
70,012

 
54,582

 
256,949

 
101,445

Total comprehensive income
$
309,733

 
$
185,668

 
$
971,231

 
$
442,096

Comprehensive income attributable
to noncontrolling interests
$
13,600

 
$
32,178

 
$
45,051

 
$
61,355

Comprehensive income attributable
to common stockholders
$
296,133

 
$
153,490

 
$
926,180

 
$
380,741

 
See notes to condensed consolidated financial statements.


4



NEW RESIDENTIAL INVESTMENT CORP. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS’ EQUITY (UNAUDITED) 
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2017
(dollars in thousands)
 
 
Common Stock
 
 
 
 
 
 
 
 
 
 
 
 
 
Shares
 
Amount
 
Additional Paid-in Capital
 
Retained Earnings
 
Accumulated Other Comprehensive Income
 
Total New Residential Stockholders’ Equity
 
Noncontrolling
Interests in Equity of Consolidated Subsidiaries
 
Total Equity
Equity - December 31, 2016
250,773,117

 
$
2,507

 
$
2,920,730

 
$
210,500

 
$
126,363

 
$
3,260,100

 
$
208,077

 
$
3,468,177

Dividends declared

 

 

 
(454,877
)
 

 
(454,877
)
 

 
(454,877
)
Capital contributions

 

 

 

 

 

 

 

Capital distributions

 

 

 

 

 

 
(70,493
)
 
(70,493
)
Issuance of common stock
56,545,787

 
566

 
833,963

 

 

 
834,529

 

 
834,529

Purchase of noncontrolling interests in the Buyer

 

 
9,183

 

 

 
9,183

 
(75,043
)
 
(65,860
)
Other dilution

 

 
(4,202
)
 

 

 
(4,202
)
 

 
(4,202
)
Director share grants
42,405

 
1

 
698

 

 

 
699

 

 
699

Comprehensive income (loss)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
   Net income (loss)

 

 

 
669,231

 

 
669,231

 
45,051

 
714,282

   Net unrealized gain (loss) on securities

 

 

 

 
277,805

 
277,805

 

 
277,805

   Reclassification of net realized (gain) loss on securities into earnings

 

 

 

 
(20,856
)
 
(20,856
)
 

 
(20,856
)
Total comprehensive income (loss)


 


 


 


 


 
926,180

 
45,051

 
971,231

Equity - September 30, 2017
307,361,309

 
$
3,074

 
$
3,760,372

 
$
424,854

 
$
383,312

 
$
4,571,612

 
$
107,592


$
4,679,204

 
See notes to condensed consolidated financial statements.


5


NEW RESIDENTIAL INVESTMENT CORP. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
(dollars in thousands)
 
Nine Months Ended  
 September 30,
 
2017
 
2016
Cash Flows From Operating Activities
 
 
 
Net income
$
714,282

 
$
340,651

Adjustments to reconcile net income to net cash provided by (used in) operating activities:
 
 
 
Change in fair value of investments in excess mortgage servicing rights
32,650

 
24,397

Change in fair value of investments in excess mortgage servicing rights, equity method investees
(6,056
)
 
(8,608
)
Change in fair value of investments in mortgage servicing rights financing receivable
(75,828
)
 

Change in fair value of servicer advance investments
(70,469
)
 
(4,328
)
(Gain) / loss on remeasurement of consumer loans investment

 
(71,250
)
(Gain) / loss on settlement of investments (net)
(1,250
)
 
37,682

Earnings from investments in consumer loans, equity method investees
(12,649
)
 

Unrealized (gain) / loss on derivative instruments
124

 
15,112

Unrealized (gain) / loss on other ABS
(340
)
 
226

(Gain) / loss on transfer of loans to REO
(16,791
)
 
(14,660
)
(Gain) / loss on transfer of loans to other assets
(359
)
 
(3,021
)
(Gain) / loss on Excess MSR recapture agreements
(1,948
)
 
(2,188
)
(Gain) / loss on Ocwen common stock
(6,987
)
 

Accretion and other amortization
(811,922
)
 
(514,522
)
Other-than-temporary impairment
8,736

 
7,838

Valuation and loss provision on loans and real estate owned
65,381

 
41,845

Non-cash portions of servicing revenue, net
81,986

 

Non-cash directors’ compensation
699

 
300

Deferred tax provision
114,016

 
12,998

Changes in:
 
 
 
Servicer advances receivable
(7,774
)
 

Other assets
(35,799
)
 
191,939

Due to affiliates
32,276

 
(5,175
)
Accrued expenses and other liabilities
48,442

 
12,136

Other operating cash flows:
 
 
 
Interest received from excess mortgage servicing rights
53,067

 
119,386

Interest received from servicer advance investments
136,431

 
132,758

Interest received from Non-Agency RMBS
170,931

 
73,108

Interest received from residential mortgage loans, held-for-investment
5,906

 
2,815

Interest received from PCD consumer loans, held-for-investment
40,762

 
34,265

Distributions of earnings from investments in excess mortgage servicing rights, equity method investees
11,054

 
18,025

Distributions of earnings from investments in consumer loans, equity method investees
4,291

 

Purchases of residential mortgage loans, held-for-sale
(4,146,740
)
 
(788,824
)
Proceeds from sales of purchased residential mortgage loans, held-for-sale
2,986,992

 
802,110

Principal repayments from purchased residential mortgage loans, held-for-sale
69,069

 
52,805

Net cash provided by (used in) operating activities
(617,817
)
 
507,820



Continued on next page.

6


NEW RESIDENTIAL INVESTMENT CORP. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED), CONTINUED
(dollars in thousands)
 
Nine Months Ended  
 September 30,
 
2017
 
2016
Cash Flows From Investing Activities
 
 
 
Acquisition of investments in excess mortgage servicing rights

 
(2,022
)
SpringCastle Transaction, net of cash acquired

 
(49,943
)
Restricted cash acquired from SpringCastle Transaction

 
74,603

Purchase of servicer advance investments
(9,328,137
)
 
(11,588,537
)
Purchase of MSRs, MSR Financing Receivables and servicer advances receivable
(1,586,063
)
 

Purchase of Agency RMBS
(6,352,488
)
 
(4,763,374
)
Purchase of Non-Agency RMBS
(2,070,898
)
 
(2,154,890
)
Purchase of residential mortgage loans
(585,983
)
 
(319
)
Purchase of derivatives

 
(4,457
)
Purchase of real estate owned and other assets
(25,667
)
 
(10,936
)
Purchase of investment in consumer loans, equity method investees
(344,902
)
 
(92,069
)
Draws on revolving consumer loans
(41,930
)
 
(33,137
)
Payments for settlement of derivatives
(146,898
)
 
(73,570
)
Return of investments in excess mortgage servicing rights
142,626

 
142,718

Return of investments in excess mortgage servicing rights, equity method investees
14,157

 
11,900

Return of investments in consumer loans, equity method investees
276,601

 

Principal repayments from servicer advance investments
10,898,739

 
13,101,409

Principal repayments from Agency RMBS
76,744

 
67,738

Principal repayments from Non-Agency RMBS
615,657

 
364,310

Principal repayments from residential mortgage loans
59,673

 
31,092

Principal repayments from consumer loans
312,132

 
199,022

Proceeds from sale of Agency RMBS
6,205,573

 
4,774,116

Proceeds from sale of Non-Agency RMBS
166,460

 
95,683

Proceeds from settlement of derivatives
81,505

 
9,642

Proceeds from sale of real estate owned
63,476

 
51,941

Net cash provided by (used in) investing activities
(1,569,623
)
 
150,920


Continued on next page.

7


NEW RESIDENTIAL INVESTMENT CORP. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED), CONTINUED
(dollars in thousands)
 
 
Nine Months Ended  
 September 30,
 
2017
 
2016
Cash Flows From Financing Activities
 
 
 
Repayments of repurchase agreements
(34,057,218
)
 
(21,179,260
)
Margin deposits under repurchase agreements and derivatives
(820,678
)
 
(274,645
)
Repayments of notes and bonds payable
(7,323,512
)
 
(6,786,408
)
Payment of deferred financing fees
(5,702
)
 
(19,922
)
Common stock dividends paid
(416,552
)
 
(318,060
)
Borrowings under repurchase agreements
36,713,743

 
22,065,713

Return of margin deposits under repurchase agreements and derivatives
815,903

 
276,634

Borrowings under notes and bonds payable
6,561,390

 
5,568,875

Issuance of common stock
835,465

 
279,600

Costs related to issuance of common stock
(936
)
 
(825
)
Noncontrolling interest in equity of consolidated subsidiaries - contributions

 

Noncontrolling interest in equity of consolidated subsidiaries - distributions
(70,493
)
 
(73,279
)
Purchase of noncontrolling interests in the Buyer
(65,860
)
 

   Net cash provided by (used in) financing activities
2,165,550

 
(461,577
)
 
 
 
 
Net Increase (Decrease) in Cash, Cash Equivalents, and Restricted Cash
(21,890
)
 
197,163

 
 
 
 
Cash, Cash Equivalents, and Restricted Cash, Beginning of Period
453,697

 
344,638

 
 
 
 
Cash, Cash Equivalents, and Restricted Cash, End of Period
$
431,807

 
$
541,801

 
 
 
 
Supplemental Disclosure of Cash Flow Information
 
 
 
Cash paid during the period for interest
$
320,804

 
$
265,114

Cash paid during the period for income taxes
4,956

 
943

 
 
 
 
Supplemental Schedule of Non-Cash Investing and Financing Activities
 
 
 
Dividends declared but not paid
$
153,681

 
$
115,356

Purchase of Agency and Non-Agency RMBS, settled after quarter end
1,076,086

 
1,296,296

Sale of investments, primarily Agency RMBS, settled after quarter end
1,785,708

 
1,530,726

Transfer from residential mortgage loans to real estate owned and other assets
105,750

 
218,467

Non-cash distributions from Consumer Loan Companies

 
25

Non-cash distributions from LoanCo
30,337

 

MSR purchase price holdback
79,045

 

Real estate securities retained from loan securitizations
310,579

 
122,585

Remeasurement of Consumer Loan Companies noncontrolling interest

 
110,438

Transfer of loans from held-for-investment to held-for sale
23,080

 
316,199

Ocwen transaction (Note 5) - excess mortgage servicing rights
71,982

 

Ocwen transaction (Note 5) - servicer advance investments
481,220

 

 
See notes to condensed consolidated financial statements.

8



NEW RESIDENTIAL INVESTMENT CORP. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
September 30, 2017
(dollars in tables in thousands, except share data) 
 

1.
ORGANIZATION AND BASIS OF PRESENTATION
 
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. Drive Shack Inc. (“Drive Shack”), formerly Newcastle Investment Corp., was the sole stockholder of New Residential until the spin-off, which was completed on May 15, 2013. 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 New York Stock Exchange (“NYSE”) under the symbol “NRZ.”
 
New Residential has elected and intends to qualify to be taxed as a REIT for U.S. federal income tax purposes. 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. See Note 17 regarding New Residential’s taxable REIT subsidiaries.
 
New Residential has entered into a management agreement (the “Management Agreement”) with FIG LLC (the “Manager”), an affiliate of Fortress Investment Group LLC (“Fortress”), pursuant to which the Manager provides a management team and other professionals who are responsible for implementing New Residential’s business strategy, 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. The Manager also manages Drive Shack, investment funds that indirectly own a majority of the outstanding interests in Nationstar Mortgage LLC (“Nationstar”), a leading residential mortgage servicer, and investment funds that own a majority of the outstanding common stock of OneMain Holdings, Inc. (formerly Springleaf Holdings, Inc.) (together with its subsidiaries, “OneMain”), former managing member of the Consumer Loan Companies (Note 9).
 
As of September 30, 2017, New Residential conducted its business through the following segments: (i) investments in excess mortgage servicing rights (“Excess MSRs”), (ii) investments in mortgage servicing rights (“MSRs”), (iii) Servicer Advance Investments (including the basic fee component of the related MSRs), (iv) investments in real estate securities, (v) investments in residential mortgage loans, (vi) investments in consumer loans and (vii) corporate.
 
Approximately 2.4 million shares of New Residential’s common stock were held by Fortress, through its affiliates, and its principals as of September 30, 2017. In addition, Fortress, through its affiliates, held options relating to approximately 16.1 million shares of New Residential’s common stock as of September 30, 2017.
 
Interim Financial Statements

The accompanying condensed consolidated financial statements and related notes of New Residential have been prepared in accordance with accounting principles generally accepted in the United States for interim financial reporting and the instructions to Form 10-Q and Rule 10-01 of Regulation S-X. Accordingly, certain information and note disclosures normally included in financial statements prepared under U.S. generally accepted accounting principles have been condensed or omitted. In the opinion of management, all adjustments considered necessary for a fair presentation of New Residential’s financial position, results of operations and cash flows have been included and are of a normal and recurring nature. The operating results presented for interim periods are not necessarily indicative of the results that may be expected for any other interim period or for the entire year. These condensed consolidated financial statements should be read in conjunction with New Residential’s consolidated financial statements for the year ended December 31, 2016 and notes thereto included in New Residential’s Annual Report on Form 10-K filed with the Securities and Exchange Commission (the “SEC”). Capitalized terms used herein, and not otherwise defined, are defined in New Residential’s consolidated financial statements for the year ended December 31, 2016.
 
Certain prior period amounts have been reclassified to conform to the current period’s presentation.


9

NEW RESIDENTIAL INVESTMENT CORP. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
September 30, 2017
(dollars in tables in thousands, except share data) 
 

Recent Accounting Pronouncements

In May 2014, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2014-09, Revenues from Contracts with Customers (Topic 606). The standard’s core principle is that a company will recognize revenue when it transfers promised goods or services to customers in an amount that reflects the consideration to which the company expects to be entitled in exchange for those goods or services. In effect, companies will be required to exercise further judgment and make more estimates prospectively. These may include identifying performance obligations in the contract, estimating the amount of variable consideration to include in the transaction price and allocating the transaction price to each separate performance obligation. ASU No. 2014-09 is effective for New Residential in the first quarter of 2018. Early adoption is only permitted after December 31, 2016. Entities have the option of using either a full retrospective or a modified approach to adopt the guidance in ASU No. 2014-09. New Residential has evaluated the new guidance and determined that interest income, gains and losses on financial instruments and income from servicing residential mortgage loans are outside the scope of ASC No. 606. For income from servicing residential mortgage loans, New Residential considered that the FASB Transition Resource Group members generally agreed that an entity should look to ASC No. 860, Transfers and Servicing, to determine the appropriate accounting for these fees and ASC No. 606 contains a scope exception for contracts that fall under ASC No. 860. As a result, New Residential does not expect the adoption of ASU No. 2014-09 to have a material impact on its condensed consolidated financial statements.

In January 2016, the FASB issued ASU No. 2016-01, Financial Instruments - Overall (Subtopic 825-10) - Recognition and Measurement of Financial Assets and Financial Liabilities. The standard: (i) requires that certain equity investments be measured at fair value, and modifies the assessment of impairment for certain other equity investments, (ii) changes certain disclosure requirements related to the fair value of financial instruments measured at amortized cost, (iii) changes certain disclosure requirements related to liabilities measured at fair value, (iv) requires separate presentation of financial assets and financial liabilities by measurement category and form of financial asset, and (v) clarifies that an entity should evaluate the need for a valuation allowance on a deferred tax asset related to available-for-sale securities in combination with the entity’s other deferred tax assets. ASU No. 2016-01 is effective for New Residential in the first quarter of 2018. Early adoption is generally not permitted. An entity should apply ASU No. 2016-01 by means of a cumulative-effect adjustment to the balance sheet as of the beginning of the fiscal year of adoption. New Residential does not expect the adoption of ASU No. 2016-01 to have a material impact on its condensed consolidated financial statements.

In June 2016, the FASB issued ASU No. 2016-13, Financial Instruments - Credit Losses (Topic 326) - Measurement of Credit Losses on Financial Instruments. The standard requires that a financial asset measured at amortized cost basis be presented at the net amount expected to be collected, net of an allowance for all expected (rather than incurred) credit losses. The measurement of expected credit losses is based on relevant information about past events, including historical experience, current conditions, and reasonable and supportable forecasts that affect the collectibility of the reported amount. The standard also changes the accounting for purchased credit deteriorated assets and available-for-sale securities, which will require the recognition of credit losses through a valuation allowance when fair value is less than amortized cost, regardless of whether the impairment is considered to be other-than-temporary. ASU No. 2016-13 is effective for New Residential in the first quarter of 2020. Early adoption is permitted beginning in 2019. An entity should apply ASU No. 2016-13 by means of a cumulative-effect adjustment to the balance sheet as of the beginning of the fiscal year of adoption. New Residential is currently evaluating the new guidance to determine the impact it may have on its condensed consolidated financial statements, which at the date of adoption is expected to increase the allowance for credit losses with a resulting negative adjustment to retained earnings.

In August 2016, the FASB issued ASU No. 2016-15, Statement of Cash Flows (Topic 230) - Classification of Certain Cash Receipts and Cash Payments. The standard provides guidance on the treatment of certain transactions within the statement of cash flows. ASU No. 2016-15 is effective for New Residential in the first quarter of 2018. Early adoption is permitted. New Residential adopted ASU No. 2016-15 in the third quarter of 2016 and it did not have an impact on its condensed consolidated financial statements.

In October 2016, the FASB issued ASU No. 2016-16, Income Taxes (Topic 740) - Intra-Entity Transfers of Assets Other Than Inventory. The standard requires recognition of the income tax consequences of an intra-entity transfer of an asset other than inventory when the transfer occurs. ASU No. 2016-16 is effective for New Residential in the first quarter of 2018. Early adoption is permitted as of the beginning of an annual reporting period for which financial statements have not been issued. New Residential does not expect the adoption of ASU No. 2016-16 to have a material impact on its condensed consolidated financial statements.

In November 2016, the FASB issued ASU No. 2016-18, Statement of Cash Flows (Topic 230) - Restricted Cash. The standard requires that a statement of cash flows explain the change during the period in the total of cash, cash equivalents, and amounts generally described as restricted cash. ASU No. 2016-18 is effective for New Residential in the first quarter of 2018. Early adoption

10

NEW RESIDENTIAL INVESTMENT CORP. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
September 30, 2017
(dollars in tables in thousands, except share data) 
 

is permitted. New Residential adopted ASU No. 2016-18 in the fourth quarter of 2016 and has included changes in restricted cash in its statements of cash flows for all periods presented.


2.
OTHER INCOME, ASSETS AND LIABILITIES
 
Gain (loss) on settlement of investments, net is comprised of the following:

 
Three Months Ended 
 September 30,
 
Nine Months Ended  
 September 30,
 
2017
 
2016
 
2017
 
2016
Gain (loss) on sale of real estate securities, net
$
7,342

 
$
(679
)
 
$
29,592

 
$
15,072

Gain (loss) on sale of residential mortgage loans, net
9,029

 
8,537

 
37,967

 
9,142

Gain (loss) on settlement of derivatives
(18,756
)
 
(18,925
)
 
(58,326
)
 
(63,699
)
Gain (loss) on liquidated residential mortgage loans
(2,152
)
 
(1,331
)
 
(7,996
)
 
(1,603
)
Gain (loss) on sale of REO
(1,864
)
 
2,207

 
(7,176
)
 
5,193

Other gains (losses)
7,954

 
(974
)
 
7,189

 
(1,787
)
 
$
1,553

 
$
(11,165
)
 
$
1,250

 
$
(37,682
)

Other income (loss), net, is comprised of the following:

 
Three Months Ended 
 September 30,
 
Nine Months Ended  
 September 30,
 
2017
 
2016
 
2017
 
2016
Unrealized gain (loss) on derivative instruments
$
3,560

 
$
21,048

 
$
(124
)
 
$
(15,112
)
Unrealized gain (loss) on other ABS
189

 
724

 
340

 
(226
)
Gain (loss) on transfer of loans to REO
5,179

 
4,373

 
16,791

 
14,660

Gain (loss) on transfer of loans to other assets
66

 
2,743

 
359

 
3,021

Gain on Excess MSR recapture agreements
606

 
768

 
1,948

 
2,188

Gain (loss) on Ocwen common stock
6,987

 

 
6,987

 

Other income (loss)
(6,700
)
 
(2,597
)
 
(18,605
)
 
2,319

 
$
9,887

 
$
27,059

 
$
7,696

 
$
6,850



11

NEW RESIDENTIAL INVESTMENT CORP. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
September 30, 2017
(dollars in tables in thousands, except share data) 
 

Other assets and liabilities are comprised of the following:

 
Other Assets
 
 
 
Accrued Expenses
and Other Liabilities
 
September 30, 2017
 
December 31, 2016
 
 
 
September 30, 2017
 
December 31, 2016
Margin receivable, net
$
60,310

 
$
55,481

 
Interest payable
 
$
30,075

 
$
23,108

Other receivables
20,053

 
16,350

 
Accounts payable
 
85,622

 
31,299

Principal and interest receivable
50,467

 
52,738

 
Derivative liabilities (Note 10)
 
82

 
3,021

Receivable from government agency
43,313

 
54,706

 
Current taxes payable
 
4,553

 
2,314

Call rights
327

 
337

 
Due to servicers
 
58,203

 
77,148

Derivative assets (Note 10)
10,444

 
6,762

 
MSR purchase price holdback
 
139,481

 
60,436

Servicing fee receivables
60,107

 
7,405

 
Other liabilities
 
13,227

 
8,118

Ginnie Mae EBO servicer advance receivable, net
10,863

 
14,829

 
 
 
$
331,243

 
$
205,444

Due from servicers
22,014

 
22,134

 
 
 
 
 
 
Ocwen common stock, at fair value
20,900

 

 
 
 
 
 
 
Prepaid expenses
8,083

 
9,487

 
 
 
 
 
 
Other assets
16,494

 
4,269

 
 
 
 
 
 
 
$
323,375

 
$
244,498

 
 
 
 
 
 

As reflected on the Condensed Consolidated Statements of Cash Flows, accretion and other amortization is comprised of the following:

 
 
Nine Months Ended  
 September 30,
 
 
2017
 
2016
Accretion of servicer advance investment and receivable interest income
 
$
451,824

 
$
257,877

Accretion of excess mortgage servicing rights income
 
75,237

 
106,848

Accretion of net discount on securities and loans(A)
 
295,753

 
164,806

Amortization of deferred financing costs
 
(9,525
)
 
(13,889
)
Amortization of discount on notes and bonds payable
 
(1,367
)
 
(1,120
)
 
 
$
811,922

 
$
514,522


(A)
Includes accretion of the accretable yield on PCD loans.


3.
SEGMENT REPORTING
 
New Residential conducts its business through the following segments: (i) investments in Excess MSRs, (ii) investments in MSRs, (iii) Servicer Advance Investments, (iv) investments in real estate securities, (v) investments in residential mortgage loans, (vi) investments in consumer loans, and (vii) corporate. The corporate segment consists primarily of (i) general and administrative expenses, (ii) the management fees and incentive compensation related to the Management Agreement and (iii) corporate cash and related interest income. Securities owned by New Residential (Note 7) that are collateralized by servicer advances and consumer loans are included in the Servicer Advances and Consumer Loans segments, respectively. Secured corporate loans effectively collateralized by Excess MSRs are included in the Excess MSRs segment.


12

NEW RESIDENTIAL INVESTMENT CORP. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
September 30, 2017
(dollars in tables in thousands, except share data) 
 

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 and Loans
 
 
 
 
 
 
 
Excess MSRs
 
MSRs
 
Servicer Advances
 
Real Estate Securities
 
Residential Mortgage Loans
 
Consumer Loans
 
Corporate
 
Total
Three Months Ended September 30, 2017
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Interest income
$
25,691

 
$
31,707

 
$
130,796

 
$
114,181

 
$
31,645

 
$
63,527

 
$
175

 
$
397,722

Interest expense
10,225

 
15,262

 
35,931

 
35,211

 
15,487

 
13,162

 

 
125,278

Net interest income (expense)
15,466

 
16,445

 
94,865

 
78,970

 
16,158

 
50,365

 
175

 
272,444

Impairment

 

 

 
1,509

 
14,099

 
12,601

 

 
28,209

Servicing revenue, net

 
58,014

 

 

 

 

 

 
58,014

Other income (loss)
(12,034
)
 
70,047

 
18,732

 
(6,035
)
 
2,653

 
6,796

 
6,986

 
87,145

Operating expenses
152

 
53,634

 
1,212

 
351

 
9,759

 
10,764

 
41,188

 
117,060

Income (Loss) Before Income Taxes
3,280

 
90,872

 
112,385

 
71,075

 
(5,047
)
 
33,796

 
(34,027
)
 
272,334

Income tax expense (benefit)

 
11,156

 
31,097

 

 
(9,640
)
 

 

 
32,613

Net Income (Loss)
$
3,280

 
$
79,716

 
$
81,288

 
$
71,075

 
$
4,593

 
$
33,796

 
$
(34,027
)
 
$
239,721

Noncontrolling interests in income (loss) of consolidated subsidiaries
$

 
$

 
$
1,224

 
$

 
$

 
$
12,376

 
$

 
$
13,600

Net income (loss) attributable to common stockholders
$
3,280

 
$
79,716

 
$
80,064

 
$
71,075

 
$
4,593

 
$
21,420

 
$
(34,027
)
 
$
226,121


 
Servicing Related Assets
 
Residential Securities and Loans
 
 
 
 
 
 
 
Excess MSRs
 
MSRs
 
Servicer Advances
 
Real Estate Securities
 
Residential Mortgage Loans
 
Consumer Loans
 
Corporate
 
Total
Nine Months Ended September 30, 2017
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Interest income
$
75,237

 
$
34,267

 
$
451,808

 
$
321,464

 
$
75,276

 
$
203,631

 
$
529

 
$
1,162,212

Interest expense
29,302

 
26,849

 
120,527

 
85,663

 
34,655

 
41,668

 

 
338,664

Net interest income (expense)
45,935

 
7,418

 
331,281

 
235,801

 
40,621

 
161,963

 
529

 
823,548

Impairment

 

 

 
8,736

 
17,342

 
48,039

 

 
74,117

Servicing revenue, net

 
269,467

 

 

 

 

 

 
269,467

Other income (loss)
(25,049
)
 
75,856

 
75,307

 
(27,005
)
 
22,491

 
12,712

 
6,986

 
141,298

Operating expenses
350

 
132,675

 
2,641

 
979

 
24,018

 
33,746

 
130,452

 
324,861

Income (Loss) Before Income Taxes
20,536

 
220,066

 
403,947

 
199,081

 
21,752

 
92,890

 
(122,937
)
 
835,335

Income tax expense (benefit)

 
(789
)
 
128,836

 

 
(7,164
)
 
170

 

 
121,053

Net Income (Loss)
$
20,536

 
$
220,855

 
$
275,111

 
$
199,081

 
$
28,916

 
$
92,720

 
$
(122,937
)
 
$
714,282

Noncontrolling interests in income (loss) of consolidated subsidiaries
$

 
$

 
$
10,372

 
$

 
$

 
$
34,679

 
$

 
$
45,051

Net income (loss) attributable to common stockholders
$
20,536

 
$
220,855

 
$
264,739

 
$
199,081

 
$
28,916

 
$
58,041

 
$
(122,937
)
 
$
669,231



13

NEW RESIDENTIAL INVESTMENT CORP. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
September 30, 2017
(dollars in tables in thousands, except share data) 
 

 
Servicing Related Assets
 
Residential Securities and Loans
 
 
 
 
 
 
 
Excess MSRs
 
MSRs
 
Servicer Advances
 
Real Estate Securities
 
Residential Mortgage Loans
 
Consumer Loans
 
Corporate
 
Total
September 30, 2017
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Investments
$
1,353,941

 
$
2,310,145

 
$
4,044,802

 
$
6,714,846

 
$
2,236,259

 
$
1,514,255

 
$

 
$
18,174,248

Cash and cash equivalents
210

 
132,361

 
74,993

 
3,341

 
4,747

 
33,430

 
30,678

 
279,760

Restricted cash
12,360

 
28,839

 
60,615

 

 

 
50,233

 

 
152,047

Other assets
8,757

 
712,765

 
44,312

 
1,840,028

 
126,767

 
31,632

 
34,517

 
2,798,778

Total assets
$
1,375,268

 
$
3,184,110

 
$
4,224,722

 
$
8,558,215

 
$
2,367,773

 
$
1,629,550

 
$
65,195

 
$
21,404,833

Debt
$
583,415

 
$
1,672,101

 
$
3,567,862

 
$
6,003,165

 
$
1,830,731

 
$
1,427,721

 
$

 
$
15,084,995

Other liabilities
1,042

 
241,919

 
23,542

 
1,092,745

 
34,542

 
6,308

 
240,536

 
1,640,634

Total liabilities
584,457

 
1,914,020

 
3,591,404

 
7,095,910

 
1,865,273

 
1,434,029

 
240,536

 
16,725,629

Total equity
790,811

 
1,270,090

 
633,318

 
1,462,305

 
502,500

 
195,521

 
(175,341
)
 
4,679,204

Noncontrolling interests in equity of consolidated subsidiaries

 

 
73,316

 

 

 
34,276

 

 
107,592

Total New Residential stockholders’ equity
$
790,811

 
$
1,270,090

 
$
560,002

 
$
1,462,305

 
$
502,500

 
$
161,245

 
$
(175,341
)
 
$
4,571,612

Investments in equity method investees
$
175,633

 
$

 
$

 
$

 
$

 
$
46,322

 
$

 
$
221,955

 

Servicing Related Assets

Residential Securities and Loans







Excess MSRs

Servicer Advances

Real Estate Securities

Residential Mortgage Loans

Consumer Loans

Corporate

Total
Three Months Ended September 30, 2016













Interest income
$
30,617


$
101,359


$
58,855


$
13,947


$
77,231


$
379


$
282,388

Interest expense
4,002


54,802


13,008


6,153


18,523




96,488

Net interest income (expense)
26,615


46,557


45,847


7,794


58,708


379


185,900

Impairment




1,765


(291
)

18,566




20,040

Servicing revenue, net

 

 

 

 

 

 

Other income (loss)
(10,052
)

21,430


1,392


13,931






26,701

Operating expenses
536


1,029


369


4,251


11,976


22,414


40,575

Income (Loss) Before Income Taxes
16,027

 
66,958

 
45,105

 
17,765

 
28,166

 
(22,035
)

151,986

Income tax expense (benefit)

 
16,348

 

 
4,556

 

 
(4
)

20,900

Net Income (Loss)
$
16,027

 
$
50,610

 
$
45,105

 
$
13,209

 
$
28,166

 
$
(22,031
)

$
131,086

Noncontrolling interests in income (loss) of consolidated subsidiaries
$

 
$
18,853

 
$

 
$

 
$
13,325

 
$


$
32,178

Net income (loss) attributable to common stockholders
$
16,027

 
$
31,757

 
$
45,105

 
$
13,209

 
$
14,841

 
$
(22,031
)

$
98,908



14

NEW RESIDENTIAL INVESTMENT CORP. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
September 30, 2017
(dollars in tables in thousands, except share data) 
 

 
Servicing Related Assets
 
Residential Securities and Loans
 
 
 
 
 
 
 
Excess MSRs
 
Servicer Advances
 
Real Estate Securities
 
Residential Mortgage Loans
 
Consumer Loans
 
Corporate
 
Total
Nine Months Ended September 30, 2016
 
 
 
 
 
 
 
 
 
 
 
 
 
Interest income
$
106,848