Quarterly report pursuant to Section 13 or 15(d)

INVESTMENTS IN SERVICER ADVANCES (Tables)

v3.2.0.727
INVESTMENTS IN SERVICER ADVANCES (Tables)
6 Months Ended
Jun. 30, 2015
Investments, All Other Investments [Abstract]  
Summary of Investments 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:
 
Amortized Cost Basis

Carrying Value(A)

Weighted Average Discount Rate
 
Weighted Average Yield

Weighted Average Life (Years)(B)
June 30, 2015
 
 
 
 
 
 
 
 
 
Servicer advances
$
8,081,258

 
$
8,182,400

 
5.5
%
 
5.6
%
 
4.3
As of December 31, 2014
 
 
 
 
 
 
 
 
 
Servicer advances
$
3,186,622

 
$
3,270,839

 
5.4
%
 
5.4
%
 
4.0
  
(A)
Carrying value represents the fair value of the investments 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.
 
 
Three Months Ended June 30,
 
Six Months Ended June 30,
 
 
2015

2014

2015

2014
Changes in Fair Value Recorded in Other Income
 
$
24,562

 
$
82,877

 
$
16,893

 
$
82,877


The following is additional information regarding the servicer advances and related financing:
 
 
 
 
 
 
 
 
 
 
Loan-to-Value
 
Cost of Funds(B)
 
 
UPB of Underlying Residential Mortgage Loans
 
Outstanding Servicer Advances
 
Servicer Advances to UPB of Underlying Residential Mortgage Loans
 
Face Amount of Notes Payable
 
Gross
 
Net(A)
 
Gross
 
Net
June 30, 2015
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Servicer advances(C)
 
$
238,526,743

 
$
8,278,685

 
3.5
%
 
$
7,687,572

 
92.9
%
 
91.6
%
 
3.0
%
 
2.2
%
December 31, 2014
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Servicer advances(C)
 
$
96,547,773

 
$
3,102,492

 
3.2
%
 
$
2,890,230

 
91.4
%
 
90.4
%
 
3.0
%
 
2.3
%
 
(A)
Ratio of face amount of borrowings to par amount 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 investments in servicer advances:
    


June 30, 2015

December 31, 2014
Principal and interest advances

$
2,467,831


$
729,713

Escrow advances (taxes and insurance advances)

4,135,900


1,600,713

Foreclosure advances

1,674,954


772,066

Total

$
8,278,685

 
$
3,102,492

Schedule of Interest Income Related to Investments in Servicer Advances
Interest income recognized by New Residential related to its investments in servicer advances was comprised of the following:


Three Months Ended June 30,
 
Six Months Ended June 30,


2015

2014

2015

2014
Interest income, gross of amounts attributable to servicer compensation

$
226,961


$
86,546


$
290,318


$
153,684

Amounts attributable to base servicer compensation

(31,957
)

(43,026
)

(38,558
)

(49,306
)
Amounts attributable to incentive servicer compensation

(86,416
)

13,587


(100,823
)

(1,555
)
Interest income from investments in servicer advances

$
108,588

 
$
57,107

 
$
150,937

 
$
102,823


Others’ interests in the equity of the Buyer is computed as follows:
 
 
June 30, 2015
 
December 31, 2014
Total Advance Purchaser LLC equity
 
$
417,481

 
$
457,545

Others’ ownership interest
 
55.5
%
 
55.5
%
Others’ interest in equity of consolidated subsidiary
 
$
231,652

 
$
253,836


Others’ interests in the Buyer’s net income is computed as follows:
 
 
Three Months Ended June 30,
 
Six Months Ended June 30,
 
 
2015
 
2014
 
2015
 
2014
Net Advance Purchaser LLC income
 
$
16,725

 
$
105,882

 
$
27,222

 
$
119,393

Others’ ownership interest as a percent of total(A)
 
55.5
%
 
55.4
%
 
55.5
%
 
55.9
%
Others’ interest in net income (loss) of consolidated subsidiaries(B)
 
$
9,279

 
$
58,705

 
$
15,102

 
$
66,798


(A)
As a result, New Residential owned 44.5% and 44.6% of the Buyer, on average during the three months ended June 30, 2015 and 2014, respectively, and 44.5% and 44.1% of the Buyer, on average during the six months ended June 30, 2015 and 2014, respectively.
(B)
Excludes HLSS shareholders’ interests in the net income (loss) of HLSS of $5.1 million, $0.0 million, $5.1 million, and $0.0 million during these periods, respectively.