Annual report pursuant to Section 13 and 15(d)

SEGMENT REPORTING

v3.19.3.a.u2
SEGMENT REPORTING
12 Months Ended
Dec. 31, 2019
Segment Reporting [Abstract]  
SEGMENT REPORTING SEGMENT REPORTING

New Residential’s portfolio consists of the following segments: (i) Origination, (ii) Servicing, (iii) MSR Related Investments, (iv) Residential Securities and Loans, (v) Consumer Loans and (vi) Corporate, organized based on differences in services and products. The corporate segment consists primarily of general and administrative expenses, management fees and incentive compensation related to the Management Agreement, corporate cash and related interest income.
 
During the fourth quarter of 2019, due to the acquisition of select assets and liabilities from Ditech Holding Corporation that are core to the forward origination and servicing businesses of NewRez, New Residential reevaluated the composition of its reportable segments based on the significance of certain business activities to its operations and performance evaluation, which drive resource allocation. The change to reportable segments is primarily the disaggregation of the origination and servicing businesses from the MSR Related Investments. The new Origination segment includes the origination activities of NewRez and its related title and appraisal ancillary businesses, Avenue 365 and eStreet. The new Servicing segment includes the servicing activities of NewRez. The MSR Related Investments segment includes MSRs, MSR Financing Receivables, Excess MSRs, Servicer Advances Receivable and Servicer Advance Investments, as well as investments in servicing related businesses, including Covius and Guardian. Segment
information for prior periods have been restated to reflect this change. Securities owned by New Residential that are collateralized by servicer advances and consumer loans are included in the MSR Related Investments and Consumer Loans segments, respectively. Secured corporate loans effectively collateralized by Excess MSRs are included in the MSR Related Investments segment.

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 and Origination
 
Residential Securities and Loans
 
 
 
 
 
 
 
 
Origination
 
Servicing
 
MSR Related Investments
 
Elimination(A)
 
Total Servicing and Origination
 
Real Estate
Securities
 
Residential Mortgage Loans
 
Consumer
Loans
 
Corporate
 
Total
Year Ended December 31, 2019
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Interest income
 
$
42,166

 
$
34,013

 
$
530,225

 
$

 
$
606,404

 
$
744,145

 
$
249,673

 
$
165,877

 
$
31

 
$
1,766,130

Interest expense
 
41,949

 
1,043

 
246,294

 

 
289,286

 
453,609

 
158,298

 
32,558

 

 
933,751

Net interest income (expense)
 
217

 
32,970

 
283,931

 

 
317,118

 
290,536

 
91,375

 
133,319

 
31

 
832,379

Impairment
 

 

 

 

 

 
25,174

 
(20,607
)
 
31,010

 

 
35,577

Servicing revenue, net
 
(1,605
)
 
184,763

 
250,580

 
(48,579
)
 
385,159

 

 

 

 

 
385,159

Gain on originated mortgage loans, held-for-sale, net
 
397,252

 
1,029

 
52,991

 
(51,360
)
 
399,912

 

 
75,543

 

 

 
475,455

Other income (loss)
 
9,340

 
5,859

 
(144,231
)
 

 
(129,032
)
 
20,929

 
75,385

 
(9,999
)
 
1,618

 
(41,099
)
Operating expenses
 
258,729

 
145,813

 
344,430

 
(48,579
)
 
700,393

 
3,160

 
52,745

 
22,540

 
189,780

 
968,618

Income (Loss) Before Income Taxes
 
146,475

 
78,808

 
98,841

 
(51,360
)
 
272,764

 
283,131

 
210,165

 
69,770

 
(188,131
)
 
647,699

Income tax (benefit) expense
 
39,768

 
21,396

 
23,744

 
(14,179
)
 
70,729

 

 
(28,461
)
 
(502
)
 

 
41,766

Net Income (Loss)
 
$
106,707

 
$
57,412

 
$
75,097

 
$
(37,181
)
 
$
202,035

 
$
283,131

 
$
238,626

 
$
70,272

 
$
(188,131
)
 
$
605,933

Noncontrolling interests in income (loss) of consolidated subsidiaries
 
$
6,231

 
$

 
$
4,255

 
$

 
$
10,486

 
$

 
$

 
$
32,151

 
$

 
$
42,637

Dividends on Preferred Stock
 
$

 
$

 
$

 
$

 
$

 
$

 
$

 
$

 
$
13,281

 
$
13,281

Net income (loss) attributable to common stockholders
 
$
100,476

 
$
57,412

 
$
70,842

 
$
(37,181
)
 
$
191,549

 
$
283,131

 
$
238,626

 
$
38,121

 
$
(201,412
)
 
$
550,015


 
 
Servicing and Origination
 
Residential Securities
and Loans
 
 
 
 
 
 
 
 
Origination
 
Servicing
 
MSR Related Investments
 
Elimination(A)
 
Total Servicing and Origination
 
Real Estate
Securities
 
Residential Mortgage Loans
 
Consumer
Loans
 
Corporate
 
Total
December 31, 2019
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Investments
 
$
1,414,528

 
$

 
$
6,773,353

 
$

 
$
8,187,881

 
$
19,477,728

 
$
5,843,983

 
$
827,545

 
$

 
$
34,337,137

Cash and cash equivalents
 
77,237

 
32,225

 
318,714

 

 
428,176

 
87,359

 
1,180

 
6,514

 
5,508

 
528,737

Restricted cash
 
6,730

 
15,769

 
107,328

 

 
129,827

 

 

 
32,370

 

 
162,197

Other assets
 
250,709

 
204,723

 
3,420,122

 

 
3,875,554

 
5,590,456

 
174,940

 
78,740

 
85,956

 
9,805,646

Goodwill
 
11,836

 
12,809

 
5,092

 

 
29,737

 

 

 

 

 
29,737

Total assets
 
$
1,761,040

 
$
265,526

 
$
10,624,609

 
$

 
$
12,651,175

 
$
25,155,543

 
$
6,020,103

 
$
945,169

 
$
91,464

 
$
44,863,454

Debt
 
$
1,304,621

 
$
33,412

 
$
6,646,159

 
$

 
$
7,984,192

 
$
22,151,110

 
$
4,676,849

 
$
824,222

 
$

 
$
35,636,373

Other liabilities
 
117,328

 
51,264

 
451,629

 

 
620,221

 
980,415

 
55,121

 
16,795

 
318,269

 
1,990,821

Total liabilities
 
1,421,949

 
84,676

 
7,097,788

 

 
8,604,413

 
23,131,525

 
4,731,970

 
841,017

 
318,269

 
37,627,194

Total equity
 
339,091

 
180,850

 
3,526,821

 

 
4,046,762

 
2,024,018

 
1,288,133

 
104,152

 
(226,805
)
 
7,236,260

Noncontrolling interests in equity of consolidated subsidiaries
 
11,354

 

 
45,025

 

 
56,379

 

 

 
22,171

 

 
78,550

Total New Residential stockholders’ equity
 
$
327,737

 
$
180,850

 
$
3,481,796

 
$

 
$
3,990,383

 
$
2,024,018

 
$
1,288,133

 
$
81,981

 
$
(226,805
)
 
$
7,157,710

Investments in equity method investees
 
$

 
$

 
$
165,848

 
$

 
$
165,848

 
$

 
$

 
$

 
$

 
$
165,848


 
 
Servicing and Origination(B)
 
Residential Securities
and Loans
 
 
 
 
 
 
 
 
Origination
 
Servicing
 
MSR Related Investments
 
Elimination(A)
 
Total Servicing and Origination
 
Real Estate
Securities
 
Residential Mortgage Loans
 
Consumer
Loans
 
Corporate
 
Total
Year Ended December 31, 2018
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Interest income
 
$
12,430

 
$
8,148

 
$
703,387

 
$

 
$
723,965

 
$
573,539

 
$
158,892

 
$
206,321

 
$
1,506

 
$
1,664,223

Interest expense
 
10,018

 
264

 
232,063

 

 
242,345

 
240,615

 
80,910

 
42,563

 

 
606,433

Net interest income (expense)
 
2,412

 
7,884

 
471,324

 

 
481,620

 
332,924

 
77,982

 
163,758

 
1,506

 
1,057,790

Impairment
 

 

 

 

 

 
30,017

 
12,061

 
48,563

 

 
90,641

Servicing revenue, net
 
(450
)
 
63,006

 
476,224

 
(10,185
)
 
528,595

 

 

 

 

 
528,595

Gain on originated mortgage loans, held-for-sale, net
 
100,160

 

 
4,396

 
(17,168
)
 
87,388

 

 
8,757

 

 

 
96,145

Other income (loss)
 
2,067

 

 
12,216

 

 
14,283

 
(72,926
)
 
7,699

 
9,965

 
(10,406
)
 
(51,385
)
Operating expenses
 
96,724

 
52,251

 
222,099

 
(10,185
)
 
360,889

 
1,554

 
32,424

 
35,230

 
179,307

 
609,404

Income (Loss) Before Income Taxes
 
7,465

 
18,639

 
742,061

 
(17,168
)
 
750,997

 
228,427

 
49,953

 
89,930

 
(188,207
)
 
931,100

Income tax (benefit) expense
 

 

 
(8,364
)
 

 
(8,364
)
 

 
(65,279
)
 
212

 

 
(73,431
)
Net Income (Loss)
 
$
7,465

 
$
18,639

 
$
750,425

 
$
(17,168
)
 
$
759,361

 
$
228,427

 
$
115,232

 
$
89,718

 
$
(188,207
)
 
$
1,004,531

Noncontrolling interests in income (loss) of consolidated subsidiaries
 
$
1,599

 
$

 
$
1,978

 
$

 
$
3,577

 
$

 
$

 
$
36,987

 
$

 
$
40,564

Dividends on Preferred Stock
 
$

 
$

 
$

 
$

 
$

 
$

 
$

 
$

 
$

 
$

Net income (loss) attributable to common stockholders
 
$
5,866

 
$
18,639

 
$
748,447

 
$
(17,168
)
 
$
755,784

 
$
228,427

 
$
115,232

 
$
52,731

 
$
(188,207
)
 
$
963,967


 
 
Servicing and Origination
 
Residential Securities
and Loans
 
 
 
 
 
 
 
 
Origination
 
Servicing
 
MSR Related Investments
 
Elimination(A)
 
Total Servicing and Origination
 
Real Estate
Securities
 
Residential Mortgage Loans
 
Consumer
Loans
 
Corporate
 
Total
December 31, 2018
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Investments
 
$
608,701

 
$

 
$
5,860,274

 
$

 
$
6,468,975

 
$
11,636,581

 
$
4,102,649

 
$
1,110,496

 
$

 
$
23,318,701

Cash and cash equivalents
 
40,741

 
35,886

 
160,244

 

 
236,871

 
49

 
927

 
8,279

 
4,932

 
251,058

Restricted cash
 
4,292

 
2,416

 
119,693

 

 
126,401

 

 

 
37,619

 

 
164,020

Other assets
 
43,412

 
84,432

 
3,382,348

 

 
3,510,192

 
4,080,202

 
131,282

 
64,802

 
146,111

 
7,932,589

Goodwill
 
11,836

 
12,809

 

 

 
24,645

 

 

 

 

 
24,645

Total assets
 
$
708,982

 
$
135,543

 
$
9,522,559

 
$

 
$
10,367,084

 
$
15,716,832

 
$
4,234,858

 
$
1,221,196

 
$
151,043

 
$
31,691,013

Debt
 
$
555,423

 
$
28,639

 
$
6,080,273

 
$

 
$
6,664,335

 
$
11,615,364

 
$
3,342,636

 
$
1,033,900

 
$

 
$
22,656,235

Other liabilities
 
468

 
4,591

 
515,156

 

 
520,215

 
2,111,868

 
8,916

 
13,572

 
291,912

 
2,946,483

Total liabilities
 
555,891

 
33,230

 
6,595,429

 

 
7,184,550

 
13,727,232

 
3,351,552

 
1,047,472

 
291,912

 
25,602,718

Total equity
 
153,091

 
102,313

 
2,927,130

 

 
3,182,534

 
1,989,600

 
883,306

 
173,724

 
(140,869
)
 
6,088,295

Noncontrolling interests in equity of consolidated subsidiaries
 
7,998

 

 
52,066

 

 
60,064

 

 

 
30,561

 

 
90,625

Total New Residential stockholders’ equity
 
$
145,093

 
$
102,313

 
$
2,875,064

 
$

 
$
3,122,470

 
$
1,989,600

 
$
883,306

 
$
143,163

 
$
(140,869
)
 
$
5,997,670

Investments in equity method investees
 
$

 
$

 
$
147,964

 
$

 
$
147,964

 
$

 
$

 
$
38,294

 
$

 
$
186,258


(A)
Elimination of intercompany transactions related primarily to servicing fees, loan sales, and MSR recaptures.
(B)
Includes results from July 3, 2018, the date of Shellpoint Acquisition (Note 3).

 
 
Servicing and Origination
 
Residential Securities
and Loans
 
 
 
 
 
 
 
 
Origination
 
Servicing
 
MSR Related Investments
 
Elimination
 
Total Servicing and Origination
 
Real Estate
Securities
 
Residential Mortgage Loans
 
Consumer
Loans
 
Corporate
 
Total
Year Ended December 31, 2017
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Interest income
 
$

 
$

 
$
713,413

 
$

 
$
713,413

 
$
431,706

 
$
110,087

 
$
263,844

 
$
629

 
$
1,519,679

Interest expense
 

 

 
233,587

 

 
233,587

 
122,997

 
51,473

 
52,808

 

 
460,865

Net interest income (expense)
 

 

 
479,826

 

 
479,826

 
308,709

 
58,614

 
211,036

 
629

 
1,058,814

Impairment
 

 

 

 

 

 
10,334

 
12,593

 
63,165

 

 
86,092

Servicing revenue, net
 

 

 
424,349

 

 
424,349

 

 

 

 

 
424,349

Gain on originated mortgage loans, held-for-sale, net
 

 

 

 

 

 

 

 

 

 

Other income (loss)
 

 

 
174,561

 

 
174,561

 
(16,371
)
 
16,175

 
28,075

 
5,346

 
207,786

Operating expenses
 

 

 
186,330

 

 
186,330

 
1,471

 
31,529

 
43,552

 
159,695

 
422,577

Income (Loss) Before Income Taxes
 

 

 
892,406

 

 
892,406

 
280,533

 
30,667

 
132,394

 
(153,720
)
 
1,182,280

Income tax (benefit) expense
 

 

 
166,186

 

 
166,186

 

 
1,272

 
170

 

 
167,628

Net Income (Loss)
 
$

 
$

 
$
726,220

 
$

 
$
726,220

 
$
280,533

 
$
29,395

 
$
132,224

 
$
(153,720
)
 
$
1,014,652

Noncontrolling interests in income of consolidated subsidiaries
 
$

 
$

 
$
11,227

 
$

 
$
11,227

 
$

 
$

 
$
45,892

 
$

 
$
57,119

Dividends on Preferred Stock
 
$

 
$

 
$

 
$

 
$

 
$

 
$

 
$

 
$

 
$

Net income (loss) attributable to common stockholders
 
$

 
$

 
$
714,993

 
$

 
$
714,993

 
$
280,533

 
$
29,395

 
$
86,332

 
$
(153,720
)
 
$
957,533