Annual report pursuant to Section 13 and 15(d)

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Tables)

v3.20.4
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Tables)
12 Months Ended
Dec. 31, 2020
Accounting Policies [Abstract]  
Schedule of Other Assets and Other Liabilities
Other Assets and Other Liabilities — Other assets and liabilities are composed of the following:
Other Assets Accrued Expenses and Other Liabilities
December 31, December 31,
2020 2019 2020 2019
Margin receivable, net(A)
$ 271,753  $ 280,176  MSRs purchase price holdback $ 25,121  $ 75,348 
Servicing fee receivables 137,426  159,607  Interest payable 44,623  68,668 
Due from servicers 67,854  163,961  Accounts payable 87,406  119,771 
Principal and interest receivable 41,589  85,191  Derivative liabilities (Note 11) 119,762  6,885 
Equity investment(B)
55,504  114,763  Due to servicers 59,671  102,411 
Other receivables 109,111  117,045  Due to Agencies 26,748  25,435 
REO 45,299  93,672  Contingent consideration 14,247  55,222 
Single-family rental properties 41,271  24,133  Accrued compensation and benefits 67,025  41,228 
Goodwill(C)
29,468  29,737  Excess spread financing, at fair value 18,420  31,777 
Notes receivable(D)
52,389  37,001  Operating lease liability 31,270  38,520 
Warrants, at fair value 23,218  28,042  Reserve for sales recourse 9,799  12,549 
Recovery asset 13,006  23,100  Reserve for servicing losses 9,288  — 
Property and equipment 27,493  18,018  Deferred tax liability 7,859  — 
Receivable from government agency(E)
14,369  19,670  Other liabilities 16,063  22,976 
Intangible assets 34,125  40,963  $ 537,302  $ 600,790 
Prepaid expenses 30,949  19,249 
Operating lease right-of-use assets 26,913  32,120 
Derivative assets (Note 11) 290,144  41,501 
Ocwen common stock, at fair value 11,187  7,952 
Deferred tax asset —  8,669 
Deferred financing costs, net 886  — 
Other assets 34,468  51,230 
$ 1,358,422  $ 1,395,800 
(A)Represents collateral posted primarily as a result of changes in fair value of New Residential’s 1) real estate securities securing its secured financing agreements and 2) derivative instruments.
(B)Represents equity investments in funds that invest in 1) a commercial redevelopment project, 2) operating companies in the single-family housing industry. The indirect investments are accounted for at fair value based on the net asset value of New Residential’s investment and as an equity method investment, respectively. Equity investments also includes an investment in Covius Holding Inc. (“Covius”), a provider of various technology-enabled services to the mortgage and real estate industries.
(C)Includes goodwill derived from the acquisition of Shellpoint Partners LLC (“Shellpoint”) and DGG RE Investments d/b/a Guardian Asset Management LLC (“Guardian”).
(D)Represents a four-year subordinated debt facility to Covius.
(E)Represents claims receivable from the FHA on early buyout (“EBO”) and reverse mortgage loans for which foreclosure has been completed and for which New Residential has made or intends to make a claim on the FHA guarantee.
Schedule of Real Estate Owned
The following table presents activity related to the carrying value of New Residential’s investments in REO:
Real Estate Owned
Balance at December 31, 2018 $ 113,410 
Purchases 68,024 
Transfer of loans to real estate owned 86,167 
Sales(A)
(150,431)
Valuation (provision) reversal on REO 635 
Balance at December 31, 2019 $ 117,805 
Purchases 23,640 
Transfer of loans to real estate owned 43,409 
Sales(A)
(101,035)
Valuation (provision) reversal on REO 2,751 
Balance at December 31, 2020 $ 86,570 
(A)Recognized when control of the property has transferred to the buyer.
Schedule of Accretion and Other Amortization As reflected on the Consolidated Statements of Cash Flows, this item is composed of the following:
Year Ended December 31,
2020 2019 2018
Accretion of net discount on securities and loans(A)
$ 96,148  $ 323,652  $ 452,500 
Accretion of servicer advances receivable discount and servicer advance investments
55,664  28,094  214,876 
Accretion of excess mortgage servicing rights income 28,352  32,647  44,440 
Amortization of deferred financing costs (22,733) (4,019) (7,795)
Amortization of discount on secured notes and bonds payable (388) (1,245) (2,054)
Amortization of discount on term loan (5,503)    
$ 151,540  $ 379,129  $ 701,967 
(A)    Includes accretion of the accretable yield on PCD loans.
Change in Fair Value of Investments This item is composed of the following:
Year Ended December 31,
2020 2019 2018
Excess mortgage servicing rights
$ (16,232) $ (10,505) $ (58,656)
Excess mortgage servicing rights, equity method investees
(3,489) 6,800  8,357 
Mortgage servicing rights financing receivables
(279,168) (189,023) 31,550 
Servicer advance investments
763  10,288  (89,332)
Real estate and other securities
28,455  2,101  10,283 
Residential mortgage loans
(107,604) (70,914) 69,820 
Consumer loans held-for-investment (6,384) —  — 
Derivative instruments
(53,467) (56,143) (108,234)
$ (437,126) $ (307,396) $ (136,212)
Schedule of Gain (Loss) on Settlement of Investments, Net This item is composed of the following:
Year Ended December 31,
2020 2019 2018
Gain (loss) on sale of real estate securities $ (753,713) $ 205,989  $ (29,936)
Gain (loss) on sale of acquired residential mortgage loans (5,662) 153,174  (7,677)
Gain (loss) on settlement of derivatives (74,812) (129,923) 54,867 
Gain (loss) on liquidated residential mortgage loans 4,644  (4,872) (3,734)
Gain (loss) on sale of REO (21,925) (11,521) (12,424)
Gain (loss) on extinguishment of debt (66,233) (8,532) (624)
Gain on settlement of investments in excess MSRs and Servicer advance investments —  —  113,002 
Other gains (losses) (12,430) 23,666  (17,410)
$ (930,131) $ 227,981  $ 96,064 
Schedule of Other Income (Loss), Net This item is composed of the following:
Year Ended December 31,
2020 2019 2018
Unrealized gain (loss) on secured notes and bonds payable $ (966) $ (1,236) $ (684)
Unrealized gain (loss) on contingent consideration (6,568) (10,487) (1,581)
Unrealized gain (loss) on equity investments (54,455) (3,096) (677)
Gain (loss) on transfer of loans to REO 7,945  11,842  19,519 
Gain (loss) on transfer of loans to other assets (939) (1,144) (1,977)
Gain (loss) on Ocwen common stock 3,235  174  (10,860)
Provision for servicing losses (15,330) (9,102) (27)
Bargain purchase gain(A)
—  49,539  — 
Rental and ancillary revenue 25,409  6,732  — 
Property and maintenance revenue 70,527  14,449  — 
Other income (loss) (31,655) (17,852) (25,697)
$ (2,797) $ 39,819  $ (21,984)
(A)    Partly driven by transition, integration, relocation and training costs related to the Ditech Acquisition (see Note 3).
Schedule of General and Administrative Expenses General and administrative expenses are expensed as incurred and is composed of the following:
Year Ended December 31,
2020 2019 2018
Compensation and benefits expense $ 230,009  $ 121,004  $ 47,084 
Compensation and benefits expense, origination 341,637  164,485  62,786 
Legal and professional expense 70,502  89,489  45,234 
Loan origination expense 92,081  45,483  6,820 
Occupancy expense 36,799  19,388  8,868 
Subservicing expense 201,444  227,482  176,784 
Loan servicing expense 14,126  31,737  43,547 
Property and maintenance expense 42,508  8,112  — 
Other(A)
90,981  74,791  50,763 
$ 1,120,087  $ 781,971  $ 441,886 
(A)    Represents miscellaneous general and administrative expenses.