Annual report pursuant to Section 13 and 15(d)

SERVICER ADVANCE INVESTMENTS (Tables)

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SERVICER ADVANCE INVESTMENTS (Tables)
12 Months Ended
Dec. 31, 2020
Investments, All Other Investments [Abstract]  
Schedule of Investment in Servicer Advances
The following types of advances are included in the Servicer Advances Receivable:
December 31,
2020 2019
Principal and interest advances $ 665,538  $ 823,860 
Escrow advances (taxes and insurance advances) 1,547,796  1,666,792 
Foreclosure advances 816,400  760,593 
Total(A)(B)(C)
$ 3,029,734  $ 3,251,245 
(A)Includes $583.9 million and $562.2 million of servicer advances receivable related to Agency MSRs, respectively, recoverable either from the borrower or the Agencies.
(B)Includes $181.2 million and $166.5 million of servicer advances receivable related to Ginnie Mae MSRs, respectively, recoverable from either the borrower or Ginnie Mae. Expected losses for advances associated with Ginnie Mae loans in the MSR portfolio are considered in the MSR fair valuation through a non reimbursable advance loss assumption.
(C)Net of $27.5 million and $50.1 million, respectively, in unamortized advance discount and reserves, net of accruals for advance recoveries. These reserves relate to inactive loans in the foreclosure or liquidation process.
The following is a summary of New Residential’s Servicer Advance Investments, 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)
December 31, 2020
Servicer Advance Investments $ 512,958  $ 538,056  5.2  % 5.7  % 6.0
December 31, 2019
Servicer Advance Investments $ 557,444  $ 581,777  5.3  % 5.7  % 6.3
(A)Carrying value represents the fair value of the Servicer Advance Investments, 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 Advance Investments and related financing:
Loan-to-Value (“LTV”)(A)
Cost of Funds(C)
UPB of Underlying Residential Mortgage Loans Outstanding Servicer Advances Servicer Advances to UPB of Underlying Residential Mortgage Loans Face Amount of Secured Notes and Bonds Payable Gross
Net(B)
Gross Net
December 31, 2020
Servicer Advance Investments(D)
$ 26,061,499  $ 449,150  1.7  % $ 423,144  88.4  % 88.6  % 1.5  % 1.3  %
December 31, 2019
Servicer Advance Investments(D)
$ 31,442,267  $ 462,843  1.5  % $ 443,248  88.3  % 87.2  % 3.4  % 2.8  %
(A)Based on outstanding servicer advances, excluding purchased but unsettled servicer advances.
(B)Ratio of face amount of borrowings to par amount of servicer advance collateral, net of any general reserve.
(C)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.
(D)The following types of advances are included in the Servicer Advance Investments:
December 31,
2020 2019
Principal and interest advances $ 84,976  $ 71,574 
Escrow advances (taxes and insurance advances) 186,426  180,047 
Foreclosure advances 177,748  211,222 
  Total $ 449,150  $ 462,843 
Schedule of Interest Income Related to Investments in Servicer Advances
Interest income recognized by New Residential related to its Servicer Advance Investments was composed of the following:
Year Ended December 31,
2020 2019 2018
Interest income, gross of amounts attributable to servicer compensation $ 34,262  $ 51,940  $ 83,807 
Amounts attributable to basic servicer compensation (3,248) (6,209) (8,491)
Amounts attributable to incentive servicer compensation (12,832) (18,065) (25,098)
Interest income from Servicer Advance Investments $ 18,182  $ 27,666  $ 50,218 
Net Interest Income
December 31,
2020 2019 2018
Interest Income:
Loans held-for-investment, at fair value $ 53,264  $ 60,301  $ 76,129 
Loans held-for-sale, at lower of cost or fair value 50,130  65,926  45,653 
Loans held-for-sale, at fair value 135,729  175,926  51,562 
Total interest income 239,123  302,153  173,344 
Interest Expense:
Loans held-for-investment, at fair value 21,029  19,381  23,618 
Loans held-for-sale, at lower of cost or fair value 22,541  40,067  35,796 
Loans held-for-sale, at fair value 90,064  109,723  24,186 
Total interest expense 133,634  169,171  83,600 
Net interest income $ 105,489  $ 132,982  $ 89,744