Quarterly report pursuant to Section 13 or 15(d)

OTHER ASSETS AND LIABILITIES, GENERAL AND ADMINISTRATIVE, AND OTHER ITEMS

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OTHER ASSETS AND LIABILITIES, GENERAL AND ADMINISTRATIVE, AND OTHER ITEMS
9 Months Ended
Sep. 30, 2021
Other Income Assets And Liabilities [Abstract]  
OTHER ASSETS AND LIABILITIES, GENERAL AND ADMINISTRATIVE, AND OTHER ITEMS OTHER ASSETS AND LIABILITIES, GENERAL AND ADMINISTRATIVE, AND OTHER ITEMS
 
Other Assets and Other Liabilities

Other assets and liabilities consist of the following:
Other Assets Accrued Expenses
and Other Liabilities
September 30, 2021 December 31, 2020 September 30, 2021 December 31, 2020
Margin receivable, net(A)
$ 388,528  $ 271,753  Margin payable $ 90,751  $ — 
Servicing fee receivables 146,509  137,426  MSR purchase price holdback 18,555  25,121 
Due from servicers 31,201  67,854  Interest payable 45,983  44,623 
Principal and interest receivable 30,782  41,590  Accounts payable 322,825  87,406 
Equity investments(B)
70,754  55,504  Derivative liabilities 54,766  119,762 
Other receivables 138,209  109,111  Due to servicers 42,201  59,671 
REO 26,569  45,299  Due to agencies 13,262  26,748 
Single-family rental properties 403,651  41,271  Contingent consideration 9,299  14,247 
Goodwill(C)
29,468  29,468  Accrued compensation and benefits 175,273  67,025 
Notes receivable, at fair value(D)
51,663  52,389  Excess spread financing, at fair value —  18,420 
Warrants, at fair value 26,302  23,218  Operating lease liabilities (Note 15) 140,438  31,270 
Recovery asset 11,217  13,006  Reserve for sales recourse 36,782  9,799 
Property and equipment 59,611  26,999  Reserve for servicing losses 22,425  9,288 
Receivable from government agency(E)
7,437  14,369  Deferred tax liability 407,577  7,859 
Intangible assets 73,723  34,125  Other liabilities 85,425  16,063 
Prepaid expenses 81,955  30,949  $ 1,465,562  $ 537,302 
Operating lease right-of-use assets (Note 15) 115,598  26,913 
Derivative assets 266,904  290,144 
Ocwen common stock, at fair value 4,834  11,187 
Loans receivable, at fair value(F)
233,339  — 
Credit facilities receivable(G)
101,505  — 
Loans in process and settlements in process(H)
396,907  — 
Other assets 106,323  35,847 
$ 2,802,989  $ 1,358,422 
(A)Represents collateral posted as a result of changes in fair value of New Residential’s (i) real estate securities securing its secured financing agreements and (ii) derivative instruments.
(B)Represents equity investments in funds that invest in (i) a commercial redevelopment project, and (ii) 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, preferred stock in Valon Mortgage, Inc (“Valon”), a residential mortgage servicing and technology company, and preferred stock in Credijusto Ltd. (“Covalto”), a financial services company.
(C)Includes goodwill derived from the acquisition of Shellpoint Partners LLC (“Shellpoint”) and Guardian Asset Management LLC (“Guardian”).
(D)Represents a subordinated debt facility to Covius and a private note with Matic Insurance Services, Inc. (“Matic”). The loans are accounted for under the fair value option. Electing the fair value option allows the Company to record changes in fair value in the Consolidated Statements of Income and provides users of the financial statements with better information regarding the effect of market factors.
(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.
(F)Represents loans made pursuant to a senior credit agreement and a senior subordinated credit agreement to an entity affiliated with funds managed by an affiliate of the Manager (see Note 16). The loans are accounted for under the fair value option. Electing the fair value option allows the Company to record changes in fair value in the Consolidated Statements of Income and provides users of the financial statements with better information regarding the effect of market factors.
(G)Represents cash deposits and collections associated with certain collateral assets which are held by the lender trust until settled each month.
(H)Loans in process represent timing differences in the disbursing of funds and the closing of the loan. Settlements in process represent timing differences in the receipt of funds and settlement of the loan sale.

Real Estate Owned (REO) and Single-Family Rental Properties (SFR)

The following table presents activity related to the carrying value of investments in REO and SFR:
REO SFR
Balance at December 31, 2020 $ 45,299  $ 41,271 
Purchases 2,269  365,823 
Transfer of loans to REO 27,020  — 
Sales(A)
(45,933) (269)
Depreciation —  (3,174)
Valuation (provision) reversal (2,086) — 
Balance at September 30, 2021 $ 26,569  $ 403,651 
(A)Recognized when control of the property has transferred to the buyer.

As of September 30, 2021 and December 31, 2020, New Residential’s SFR portfolio consisted of approximately 1,882 and 257 units, respectively. During the three and nine months ended September 30, 2021, New Residential acquired approximately 727 and 1,625 SFR units, respectively.

As of September 30, 2021, New Residential had residential mortgage loans that were in the process of foreclosure with an unpaid principal balance of $72.9 million.

Notes and Loans Receivable
The following table summarizes the activity for notes and loans receivable:
Notes Receivable Loans Receivable Total
Balance at December 31, 2020
$ 52,389  $ —  $ 52,389 
Fundings 1,688  250,000  251,688 
Accrued interest paid-in-kind 4,017  2,036  6,053 
Proceeds from repayments (3,188) (18,697) (21,885)
Fair value adjustments due to:
Changes in instrument-specific credit risk —  —  — 
Other factors (3,243) —  (3,243)
Balance at September 30, 2021
$ 51,663  $ 233,339  $ 285,002 
The following table summarizes the difference between the aggregate unpaid principal balance and the aggregate fair value of notes and loans receivable:
September 30, 2021 December 31, 2020
Days Past Due Unpaid Principal Balance Fair Value Fair Value Over (Under) Unpaid Principal Balance Unpaid Principal Balance Fair Value Fair Value Over (Under) Unpaid Principal Balance
Current $ 287,431  $ 285,002  $ (2,429) $ 51,575  $ 52,389  $ 814 
90+ —  —  —  —  —  — 
$ 287,431  $ 285,002  $ (2,429) $ 51,575  $ 52,389  $ 814 

Accretion and Other Amortization

As reflected on the Consolidated Statements of Cash Flows, Accretion and Other Amortization consists of the following:
Three Months Ended
September 30,
Nine Months Ended
September 30,
2021 2020 2021 2020
Accretion of net discount on securities and loans $ 3,317  $ 18,321  $ 25,414  $ 81,112 
Accretion of servicer advances receivable discount and servicer advance investments 398  25,503  7,194  38,967 
Accretion of excess mortgage servicing rights income 4,195  12,595  16,188  25,177 
Amortization of deferred financing costs (2,513) (6,360) (10,890) (12,352)
Amortization of discount on secured notes and bonds payable (14) (379) (14) (379)
Amortization of discount on corporate debt (441) (3,214) (1,333) (5,069)
Total accretion and other amortization
$ 4,942  $ 46,466  $ 36,559  $ 127,456 

General and Administrative Expenses

General and Administrative Expenses consists of the following:
Three Months Ended
September 30,
Nine Months Ended
September 30,
2021 2020 2021 2020
Legal and professional $ 29,419  $ 22,209  $ 66,225  $ 63,798 
Loan origination 52,481  23,596  137,642  59,462 
Occupancy 18,612  9,356  39,183  26,195 
Subservicing 74,156  91,031  234,599  277,367 
Loan servicing 3,976  8,311  13,282  23,313 
Property and maintenance 19,331  10,503  47,216  26,855 
Other miscellaneous general and administrative
47,096  13,239  109,097  69,949 
Total general and administrative expenses $ 245,071  $ 178,245  $ 647,244  $ 546,939 
Change in Fair Value of Investments

Change in Fair Value of Investments consists of the following:
Three Months Ended
September 30,
Nine Months Ended
September 30,
2021 2020 2021 2020
Excess MSRs
$ (4,837) $ (664) $ (13,666) $ (11,773)
Excess MSRs, equity method investees
(1,176) (393) 1,421  (2,902)
Servicer advance investments
(1,662) 3,143  (6,535) 431 
Real estate and other securities
5,538  27,663  (336,009) (531)
Residential mortgage loans
(26,432) 56,940  154,984  (108,306)
Consumer loans held-for-investment (5,708) 1,304  (13,338) (4,446)
Derivative instruments
45,389  23,089  214,367  4,213 
Total change in fair value of investments $ 11,112  $ 111,082  $ 1,224  $ (123,314)

Gain (Loss) on Settlement of Investments, Net

Gain (Loss) on Settlement of Investments, Net consists of the following:
Three Months Ended
September 30,
Nine Months Ended
September 30,
2021 2020 2021 2020
Gain (loss) on sale of real estate securities
$ (63,809) $ 7,658  $ (89,500) $ (753,551)
Sale of acquired residential mortgage loans 66,807  3,751  116,404  (8,343)
Settlement of derivatives (73,978) (23,192) (152,913) (133,099)
Liquidated residential mortgage loans (6,497) 165  (5,868) 2,546 
Sale of REO 371  1,016  (3,814) 2,632 
Extinguishment of debt —  (66,256) 83  (64,795)
Other (21,211) (17,599) (53,311) (14,385)
Total gain (loss) on settlement of investments, net $ (98,317) $ (94,457) $ (188,919) $ (968,995)
Other Income (Loss), Net

Other Income (Loss), Net consists of the following:
Three Months Ended
September 30,
Nine Months Ended
September 30,
2021 2020 2021 2020
Unrealized gain (loss) on secured notes and bonds payable $ 4,029  $ (5,611) $ 5,245  $ 535 
Unrealized gain (loss) on contingent consideration (478) (2,079) (886) (5,949)
Unrealized gain (loss) on equity investments 10,546  (4,716) 5,929  (52,413)
Gain (loss) on transfer of loans to REO (699) 703  3,412  5,010 
Gain (loss) on transfer of loans to other assets (37) (512) (14) (773)
Gain (loss) on Ocwen common stock (489) 4,342  1,050  221 
Provision for servicing losses (3,347) (3,734) (26,148) (19,764)
Bargain purchase gain 3,497  —  3,497  — 
Rental and ancillary revenue 19,072  6,790  39,094  17,851 
Property and maintenance revenue 28,755  16,837  73,765  45,495 
Other income (loss) (1,583) (8,339) (25,248) (29,979)
Total other income (loss), net $ 59,266  $ 3,681  $ 79,696  $ (39,766)