Quarterly report pursuant to Section 13 or 15(d)

INVESTMENTS IN CONSUMER LOANS (Tables)

v3.20.1
INVESTMENTS IN CONSUMER LOANS (Tables)
3 Months Ended
Mar. 31, 2020
Investments In Consumer Loans Equity Method Investees [Abstract]  
Summary of the Investment in Consumer Loan Companies
The following table summarizes the investment in consumer loans, held-for-investment held by New Residential:
 
Unpaid Principal Balance

Interest in Consumer Loans

Carrying Value

Weighted Average Coupon

Weighted Average Expected Life (Years)(A)
 
Weighted Average Delinquency(B)
March 31, 2020
 
 
 
 
 
 
 
 
 
 
 
Consumer Loan Companies
 
 
 
 
 
 
 
 
 
 
 
Performing Loans
$
606,120

 
53.5
%
 
$
627,001

 
18.8
%
 
4.0
 
4.7
%
Purchased Credit Deteriorated Loans(C)
158,920

 
53.5
%
 
147,606

 
15.3
%
 
3.7
 
9.7
%
Other - Performing Loans
6,958

 
100.0
%
 
6,214

 
15.1
%
 
0.7
 
5.1
%
Total Consumer Loans, held-for-investment
$
771,998

 
 
 
$
780,821

 
18.0
%
 
3.9
 
5.7
%
December 31, 2019
 
 
 
 
 
 
 
 
 
 
 
Consumer Loan Companies
 
 
 
 
 
 
 
 
 
 
 
Performing Loans
$
644,676

 
53.5
%
 
$
682,310

 
18.8
%
 
4.0
 
4.7
%
Purchased Credit Deteriorated Loans(C)
170,083

 
53.5
%
 
136,633

 
15.5
%
 
3.7
 
10.1
%
Other - Performing Loans
9,158

 
100.0
%
 
8,602

 
15.1
%
 
0.7
 
6.1
%
Total Consumer Loans, held-for-investment
$
823,917

 
 
 
$
827,545

 
18.0
%
 
3.9
 
5.9
%

(A)
Represents the weighted average expected timing of the receipt of expected cash flows for this investment.
(B)
Represents the percentage of the total unpaid principal balance that is 30+ days delinquent. Delinquency status is the primary credit quality indicator as it provides early warning of borrowers who may be experiencing financial difficulties.
(C)
Includes loans with evidence of credit deterioration since origination where it is probable that New Residential will not collect all contractually required principal and interest payments, which are accounted for as PCD loans.

Schedule Of Consumer Loans, Held-For-Investment [Table Text Block]
The following table summarizes the past due status and difference between the aggregate unpaid principal balance and the aggregate fair value of consumer loans as of March 31, 2020:
Days Past Due
 
Unpaid Principal Balance
 
Fair Value
 
Fair Value Over (Under) Unpaid Principal Balance
Under 90 Days
 
755,681

 
764,479

 
8,798

90 days or more past due
 
16,317

 
16,342

 
25

Total
 
771,998

 
780,821

 
8,823


Past Due Financing Receivable
The following table provides past due information regarding New Residential’s Performing Loans, which is an important indicator of credit quality and the establishment of the allowance for credit losses:
 
 
December 31, 2019
Days Past Due
Delinquency Status(A)
Current
 
86.5
%
30-59
 
7.0
%
60-89
 
2.7
%
90-119(B)
 
0.7
%
120+(C)
 
3.1
%
 
 
100.0
%

(A)
Represents the percentage of the total principal balance that corresponds to loans that are in each delinquency status.
(B)
Includes loans 90-119 days past due and still accruing interest because they are generally placed on nonaccrual status at 120 days or more past due.
(C)
Represents nonaccrual loans.
The following table summarizes the difference between the aggregate unpaid principal balance and the aggregate fair value of loans as of March 31, 2020:
Days Past Due
 
Unpaid Principal Balance
 
Fair Value
 
Fair Value Over (Under) Unpaid Principal Balance
90 to 119
 
$
336,910

 
$
275,597

 
$
(61,313
)
120+
 
291,390

 
267,673

 
(23,717
)
 
 
$
628,300

 
$
543,270

 
$
(85,030
)

The following table provides past due information regarding New Residential’s performing consumer loans, held-for-investment, which is an important indicator of credit quality and the establishment of the allowance for loan losses:
 
 
December 31, 2019
Days Past Due
 
Delinquency Status(A)
Current
 
95.3
%
30-59
 
1.8
%
60-89
 
1.2
%
90-119(B)
 
0.7
%
120+(B) (C)
 
1.0
%
 
 
100.0
%

(A)
Represents the percentage of the total unpaid principal balance that corresponds to loans that are in each delinquency status.
(B)
Includes loans more than 90 days past due and still accruing interest.
(C)
Interest is accrued up to the date of charge-off at 180 days past due.

Schedule of Carrying Value of Performing Consumer Loans
Activities related to the fair value of consumer loans, held-for-investment were as follows:
Balance at December 31, 2019
 
$
827,545

Fair value adjustment due to fair value option
 
36,472

Purchases
 

Additional fundings(A)
 
11,002

Proceeds from repayments
 
(61,213
)
Accretion of loan discount and premium amortization, net
 
6,932

Fair value adjustment
 
(39,917
)
Balance at March 31, 2020
 
$
780,821


(A)
Represents draws on consumer loans with revolving privileges.
Equity Method Investments
The following tables summarize the financial results of the Excess MSR joint ventures, accounted for as equity method investees, held by New Residential:
 
 
March 31, 2020
 
December 31, 2019
Excess MSR assets
 
$
214,950

 
$
226,843

Other assets
 
24,954

 
25,035

Other liabilities
 
(687
)
 
(687
)
Equity
 
$
239,217

 
$
251,191

New Residential’s investment
 
$
119,609

 
$
125,596

 
 
 
 
 
New Residential’s ownership
 
50.0
%
 
50.0
%

 
 
Three Months Ended  
 March 31,
 
 
2020
 
2019
Interest income
 
$
7,313

 
$
4,070

Other income (loss)
 
(8,219
)
 
1,170

Expenses
 
(8
)
 
(16
)
Net income (loss)
 
$
(914
)
 
$
5,224


The following table summarizes the activity of New Residential’s investments in equity method investees:
Balance at December 31, 2019
$
125,596

Contributions to equity method investees

Distributions of earnings from equity method investees
(387
)
Distributions of capital from equity method investees
(5,143
)
Change in fair value of investments in equity method investees
(457
)
Balance at March 31, 2020
$
119,609


The following table summarizes the income earned from the Company’s investments in LoanCo and WarrantCo during 2019:
 
 
Three Months Ended  
 March 31,
 
 
2019(A)
Interest income
 
$
7,977

Interest expense
 
(2,822
)
Change in fair value of consumer loans and warrants
 
14,536

Gain on sale of consumer loans(B)
 
(446
)
Other expenses
 
(1,456
)
Net income
 
$
17,789

New Residential’s equity in net income
 
$
4,311

New Residential’s ownership
 
24.2
%


(A)
Data for the period ended February 28, 2019 as a result of the one month reporting lag.
(B)
During the three months ended March 31, 2019, LoanCo sold, through securitizations which were treated as sales for accounting purposes, $406.1 million in UPB of consumer loans. LoanCo retained $83.9 million of residual interest in the securitizations and distributed them to the LoanCo co-investors, including New Residential.

The following is a summary of LoanCo’s consumer loan investments at March 31, 2019:
 
Unpaid Principal Balance
 
Interest in Consumer Loans
 
Carrying Value
 
Weighted Average Coupon
 
Weighted Average Expected Life (Years)(A)
 
Weighted Average Delinquency(B)
March 31, 2019(C)
$
259,618

 
25.0
%
 
$
259,618

 
14.0
%
 
1.3
 
1.4
%

(A)
Represents the weighted average expected timing of the receipt of expected cash flows for this investment.
(B)
Represents the percentage of the total unpaid principal balance that is 30+ days delinquent. Delinquency status is the primary credit quality indicator as it provides early warning of borrowers who may be experiencing financial difficulties.
(C)
Data as of February 28, 2019 as a result of the one month reporting lag.