Quarterly report pursuant to Section 13 or 15(d)

DEBT OBLIGATIONS

v3.5.0.2
DEBT OBLIGATIONS
9 Months Ended
Sep. 30, 2016
Debt Disclosure [Abstract]  
DEBT OBLIGATIONS
DEBT OBLIGATIONS
 
The following table presents certain information regarding New Residential’s debt obligations:

 
September 30, 2016
 
December 31, 2015
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Collateral
 
 
Debt Obligations/Collateral
 
Month Issued
 
Outstanding Face Amount
 
Carrying Value(A)
 
Final Stated Maturity(B)
 
Weighted Average Funding Cost
 
Weighted Average Life (Years)
 
Outstanding Face
 
Amortized Cost Basis
 
Carrying Value
 
Weighted Average Life (Years)
 
Carrying Value(A)
Repurchase Agreements(C)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Agency RMBS(D)
 
Various
 
$
1,614,256

 
$
1,614,256

 
Oct-16 to Dec-16
 
0.70
%
 
0.1
 
$
1,591,692

 
$
1,684,858

 
$
1,680,197

 
0.5
 
$
1,683,305

Non-Agency RMBS (E)
 
Various
 
2,622,466

 
2,622,466

 
Oct-16 to Mar-17
 
2.24
%
 
0.1
 
6,312,788

 
3,396,357

 
3,502,317

 
7.0
 
1,333,852

Residential Mortgage Loans(F)
 
Various
 
556,538

 
554,991

 
Oct-16 to Sep-18
 
3.01
%
 
0.5
 
882,312

 
685,345

 
682,916

 
3.0
 
907,993

Real Estate Owned(G)(H)
 
Various
 
85,403

 
85,163

 
Oct-16 to Sep-18
 
3.09
%
 
0.4
 
N/A

 
N/A

 
108,051

 
N/A
 
77,458

Consumer Loan Investment(I)
 
Apr-15
 
53,068

 
53,068

 
Oct-16
 
5.61
%
 
0.1
 
N/A

 
N/A

 
123,184

 
4.1
 
40,446

Total Repurchase Agreements
 
 
 
4,931,731

 
4,929,944

 
 
 
1.87
%
 
0.1
 
 
 
 
 
 
 
 
 
4,043,054

Notes and Bonds Payable
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Secured Corporate Notes(J)
 
Various
 
270,511

 
268,290

 
Apr-18 to Jun-19
 
5.28
%
 
1.8
 
247,538,861

 
801,924

 
940,117

 
5.9
 
182,978

Servicer Advances(K)
 
Various
 
5,907,803

 
5,897,747

 
Mar-17 to Jun-19
 
3.52
%
 
1.0
 
6,017,968

 
6,012,315

 
6,043,369

 
4.5
 
7,047,061

Residential Mortgage Loans(L)
 
Oct-15
 
9,789

 
9,614

 
Oct-16
 
3.39
%
 
0.1
 
14,243

 
8,086

 
8,086

 
4.5
 
19,529

Consumer Loans(M) (N)
 
Various
 
1,659,453

 
1,654,129

 
Sep-19 to Apr-34
 
4.31
%
 
3.1
 
1,822,593

 
1,812,730

 
1,811,115

 
4.0
 

Receivable from government agency(L)
 
Oct-15
 
3,429

 
3,429

 
Oct-16
 
3.39
%
 
0.1
 
N/A

 
N/A

 
4,068

 
N/A
 

Total Notes and Bonds Payable
 
 
 
7,850,985

 
7,833,209

 
 
 
3.74
%
 
1.5
 
 
 
 
 
 
 
 
 
7,249,568

Total/ Weighted Average
 
 
 
$
12,782,716

 
$
12,763,153

 
 
 
3.02
%
 
1.0
 
 
 
 
 
 
 
 
 
$
11,292,622



(A)
Net of deferred financing costs.
(B)
All debt obligations with a stated maturity of October 2016 were refinanced, extended, or repaid.
(C)
These repurchase agreements had approximately $6.7 million of associated accrued interest payable as of September 30, 2016.
(D)
All of the Agency RMBS repurchase agreements have a fixed rate. Collateral amounts include approximately $1.5 billion of related trade and other receivables.
(E)
All of the Non-Agency RMBS repurchase agreements have LIBOR-based floating interest rates. This includes repurchase agreements of $89.2 million on retained servicer advance bonds.
(F)
All of these repurchase agreements have LIBOR-based floating interest rates.
(G)
All of these repurchase agreements have LIBOR-based floating interest rates.
(H)
Includes financing collateralized by receivables including claims from FHA on Ginnie Mae EBO loans for which foreclosure has been completed and for which New Residential has made or intends to make a claim on the FHA guarantee.
(I)
The repurchase agreement bears interest equal to three-month LIBOR plus 5.00% and is collateralized by 56% of New Residential’s interest in the Consumer Loan Companies (Note 9).
(J)
The loans bear interest equal to the sum of (i) a floating rate index equal to one-month LIBOR and (ii) a margin of 4.75%. The outstanding face amount of the collateral represents the UPB of the residential mortgage loans underlying the Excess MSRs that secure these notes.
(K)
$2.2 billion face amount of the notes have a fixed rate while the remaining notes bear interest equal to the sum of (i) a floating rate index rate equal to one-month LIBOR or a cost of funds rate, as applicable, and (ii) a margin ranging from 2.1% to 2.2%.
(L)
The note is payable to Nationstar and bears interest equal to one-month LIBOR plus 2.875%.
(M)
Includes the debt assumed in the SpringCastle Transaction (Note 1), which is comprised of the following classes of asset-backed notes (collectively, the “2014-A Notes”) held by third parties: $637.1 million UPB of Class A notes with a coupon of 2.7% and a stated maturity date in May 2023 (the “Class A Notes”); $427.0 million UPB of Class B notes with a coupon of 4.61% and a stated maturity date in October 2027 (the “Class B Notes”); $331.2 million UPB of Class C notes with a coupon of 5.59% and a stated maturity date in October 2033 (the “Class C Notes”); and $199.8 million UPB of Class D notes with a coupon of 6.82% and a stated maturity date in April 2034 (the “Class D Notes”). Prior to the payment date in October 2016, the redemption price for any class of the outstanding 2014-A Notes shall be the sum of (i) 100% of the UPB of the 2014-A Notes of the applicable class to be redeemed, plus (ii) the applicable Specified Call Premium Amount (as defined below) for such 2014-A Notes, plus (iii) accrued and unpaid interest and fees in respect of such 2014-A Notes. On or after the payment date occurring in October 2016, the redemption price for any class of 2014-A Notes shall be the sum of (i) 100% of the UPB of the 2014-A Notes of the applicable class to be redeemed, plus (ii) accrued and unpaid interest and fees in respect of such 2014-A Notes. The “Specified Call Premium Amount” on any payment date for any class of 2014-A Notes shall mean (i) in the case of Class A Notes, an amount equal to 1.00% of the UPB of the Class A Notes to be redeemed and (ii) in the case of the Class B Notes, the Class C Notes and the Class D Notes, an amount equal to (a) the product of (1) with respect to the Class B Notes, 0.75%, with respect to the Class C Notes, 1.00% and with respect to the Class D Notes, 2.00%, times (2) the UPB of the 2014-A Notes of such class to be redeemed on such payment date, times (3) the number of days, computed on a 30/360 basis, from and including such payment date to but excluding the payment date occurring in October 2016, divided by (b) 360.
(N)
Includes a $64.3 million face amount note collateralized by newly originated consumer loans which bears interest equal to one-month LIBOR plus 3.25%.

General

Certain of the debt obligations included above are obligations of New Residential’s consolidated subsidiaries, which own the related collateral. In some cases, including the Servicer Advances and Consumer Loans, such collateral is not available to other creditors of New Residential.

New Residential has margin exposure on $4.9 billion of repurchase agreements as of September 30, 2016. To the extent that the value of the collateral underlying these repurchase agreements declines, New Residential may be required to post margin, which could significantly impact its liquidity.
 
Activities related to the carrying value of New Residential’s debt obligations were as follows:
 
Excess MSRs
 
Servicer Advances(A)
 
Real Estate Securities
 
Real Estate Loans and REO
 
Consumer Loans
 
Total
Balance at December 31, 2015
$
182,978

 
$
7,047,061

 
$
3,017,157

 
$
1,004,980

 
$
40,446

 
$
11,292,622

Repurchase Agreements:
 
 
 
 
 
 
 
 
 
 
 
Borrowings

 

 
21,719,656

 
326,174

 
21,458

 
22,067,288

Repayments

 

 
(20,500,091
)
 
(670,333
)
 
(8,836
)
 
(21,179,260
)
Capitalized deferred financing costs, net of amortization

 

 

 
(1,138
)
 

 
(1,138
)
Notes and Bonds Payable:
 
 
 
 
 
 
 
 
 
 

Acquired borrowings, net of discount

 

 

 

 
1,803,192

 
1,803,192

Borrowings
401,740

 
5,101,227

 

 

 
64,342

 
5,567,309

Repayments
(315,662
)
 
(6,251,482
)
 

 
(6,311
)
 
(212,953
)
 
(6,786,408
)
Discount on borrowings, net of amortization
1,420

 

 

 

 
147

 
1,567

Capitalized deferred financing costs, net of amortization
(2,186
)
 
941

 

 
(175
)
 
(599
)
 
(2,019
)
Balance at September 30, 2016
$
268,290

 
$
5,897,747

 
$
4,236,722

 
$
653,197

 
$
1,707,197

 
$
12,763,153


(A)
New Residential net settles daily borrowings and repayments of the Notes and Bonds Payable on its Servicer Advances.

Excess MSRs

In April 2016, New Residential entered into a $225.0 million corporate loan secured by Agency Excess MSRs. The loan bears interest equal to the sum of one-month LIBOR plus 4.75% and matures in April 2018.

In June 2016, New Residential entered into a $101.2 million corporate loan secured by Non-Agency Excess MSRs with a maximum capacity of $300.0 million. The loan bears interest equal to the sum of one-month LIBOR plus 4.75% and matures in June 2019.

Servicer Advances

On March 31, 2016, the HSART facility was paid off and, in anticipation of such pay off, New Residential increased the capacity of, and transferred the related collateral to, various existing servicer advance financing facilities. As a result, New Residential recorded $0.1 million of loss on extinguishment of debt related to a write-off of unamortized deferred financing costs.

On May 9, 2016, a Buyer facility was paid off and replaced by a new 2-year servicer advance facility with a different lender. The maximum capacity of the new facility is $185.0 million.

In May 2016, New Residential increased the capacity and extended the maturity on a $950.0 million servicer advance financing facility.

On June 30, 2016, New Residential, through its wholly-owned subsidiary, NRZ Advance Receivables Trust 2016-T1, issued servicer advance backed notes consisting of $400.0 million of term notes with a maturity date of June 17, 2019, of which approximately $20.9 million was voluntarily retained.

On July 15, 2016, the NRART 2015-T1 notes with principal balance of $400.0 million were repaid in full, using proceeds from the $400.0 million of term notes with a maturity date of June 17, 2019 issued on June 30, 2016. Upon such paydown, the term notes were replaced with existing capacity at the advance facility VFN with the same lender. As a result, New Residential recorded $0.2 million of loss on extinguishment of debt related to a write-off of unamortized deferred financing costs.

On August 15, 2016, the NRART 2015-T3 notes with principal balance of $400.0 million were repaid in full and replaced with existing capacity at the advance facility VFN with the same lender. As a result, New Residential recorded $0.7 million of loss on extinguishment of debt related to a write-off of unamortized deferred financing costs and a redemption payment.

On September 15, 2016, a Buyer VFN facility was refinanced and downsized, and the reduction in capacity of the VFN was exchanged for the same capacity through issuance of NSART-BAM Series 2016 VF-1 Class B-TF1 Mezzanine Notes.

Maturities
 
New Residential’s debt obligations as of September 30, 2016 had contractual maturities as follows:
Year
 
Nonrecourse
 
Recourse
 
Total
October 1 through December 31, 2016
 
$

 
$
4,176,165

 
$
4,176,165

2017
 
5,088,249

 
680,321

 
5,768,570

2018
 
501,636

 
247,272

 
748,908

2019
 
443,451

 
50,511

 
493,962

2020
 

 

 

2021 and thereafter
 
1,595,111

 

 
1,595,111

 
 
$
7,628,447

 
$
5,154,269

 
$
12,782,716



Borrowing Capacity

The following table represents New Residential’s borrowing capacity as of September 30, 2016:
Debt Obligations / Collateral
 
Collateral Type
 
Borrowing Capacity
 
Balance Outstanding
 
Available Financing
Repurchase Agreements
 
 
 
 
 
 
 
 
Residential Mortgage Loans
 
Real Estate Loans and REO
 
$
2,065,000

 
$
641,941

 
$
1,423,059

Notes and Bonds Payable
 
 
 
 
 
 
 
 
Secured Corporate Loan
 
Excess MSRs
 
525,000

 
270,511

 
254,489

Servicer Advances(A)
 
Servicer Advances
 
7,274,860

 
5,907,803

 
1,367,057

Consumer Loans
 
Consumer Loans
 
125,000

 
64,342

 
60,658

 
 
 
 
$
9,989,860

 
$
6,884,597

 
$
3,105,263



(A)
New Residential’s unused borrowing capacity is available if New Residential has additional eligible collateral to pledge and meets other borrowing conditions as set forth in the applicable agreements, including any applicable advance rate. New Residential pays a 0.2% fee on the unused borrowing capacity. Excludes borrowing capacity and outstanding debt for retained non-agency bonds with a current face amount of $110.1 million.

Certain of the debt obligations are subject to customary debt covenants and event of default provisions, including event of default provisions triggered by a 50% equity decline over any 12-month period, or a 35% decline over any three-month period, as of a quarter end, and a 4:1 indebtedness to tangible net worth provision. New Residential was in compliance with all of its debt covenants as of September 30, 2016.