Quarterly report pursuant to Section 13 or 15(d)

DEBT OBLIGATIONS

v3.21.2
DEBT OBLIGATIONS
9 Months Ended
Sep. 30, 2021
Debt Disclosure [Abstract]  
DEBT OBLIGATIONS DEBT OBLIGATIONS
 
The following table presents certain information regarding Secured Financing Agreements and Secured Notes and Bonds Payable debt obligations:
September 30, 2021 December 31, 2020
Collateral
Debt Obligations/Collateral 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)
Secured Financing Agreements(C)
Repurchase Agreements:
Warehouse Credit Facilities-Residential Mortgage Loans(F)
$ 12,923,024  $ 12,919,922  Oct-21 to Sep-25 2.01  % 0.8 $ 13,774,859  $ 13,775,860  $ 13,803,756  23.9 $ 4,039,564 
Agency RMBS(D)
8,956,064  8,956,064  Oct-21 to Jan-22 0.16  % 0.1 8,876,431  9,158,455  9,321,370  6.6 12,682,427 
Non-Agency RMBS(E)
723,486  723,486  Oct-21 to Dec-21 2.52  % 0.0 13,927,317  905,336  987,803  3.3 817,209 
Real Estate Owned(G)(H)
160,512  160,513  Oct-21 to Sep-25 2.91  % 1.2 N/A 230,128  224,580  4.5 8,480 
Total Secured Financing Agreements 22,763,086  22,759,985  1.31  % 0.5 17,547,680 
Secured Notes and Bonds Payable
Excess MSRs(I)
248,061  248,061   Aug-25 3.74  % 3.9 84,829,582  281,142  348,080  6.3 275,088 
MSRs(J)
3,629,810  3,617,850  Mar-22 to Jul-26 3.69  % 3.2 531,851,913  6,029,066  6,477,289  6.1 2,691,791 
Servicer Advance Investments(K)
381,286  380,420  Apr-22 to Dec-22 1.30  % 1.1 408,085  453,442  472,004  6.0 423,144 
Servicer Advances(K)
2,347,819  2,342,335  Nov-21 to Sep-23 2.34  % 1.4 2,796,796  2,782,622  2,782,622  0.7 2,585,575 
Residential Mortgage Loans(L)
1,170,838  1,162,080  Sep-22 to Jul-43 2.10  % 3.6 1,192,146  1,311,940  1,313,998  20.0 1,039,838 
Consumer Loans(M)
492,999  497,346  Sep-37 2.04  % 3.6 485,966  496,573  547,548  3.3 628,759 
Total Secured Notes and Bonds Payable 8,270,813  8,248,092  2.87  % 2.7 7,644,195 
Total/ Weighted Average $ 31,033,899  $ 31,008,077  1.72  % 1.1 $ 25,191,875 
(A)Net of deferred financing costs.
(B)All debt obligations with a stated maturity through the date of issuance were refinanced, extended or repaid.
(C)These secured financing agreements had approximately $65.7 million of associated accrued interest payable as of September 30, 2021.
(D)All Agency RMBS repurchase agreements have a fixed rate. Collateral carrying value includes $341.8 million margin receivable.
(E)All Non-Agency RMBS secured financing agreements have LIBOR-based floating interest rates. This also includes repurchase agreements and related collateral of $12.3 million and $16.5 million, respectively, on retained bonds collateralized by Agency MSRs. Collateral carrying value includes $2.4 million margin receivable.
(F)Includes $266.4 million of repurchase agreements which bear interest at a fixed rate of 4.0%. All remaining repurchase agreements have LIBOR-based floating interest rates.
(G)All 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 as well as $152.6 million of financing collateralized by a portion of our single family rental portfolio.
(I)Includes $248.1 million of corporate loans which bear interest at a fixed rate of 3.7%.
(J)Includes $1.3 billion of MSR notes which bear interest equal to the sum of (i) a floating rate index equal to one-month LIBOR and (ii) a margin ranging from 2.8% to 4.5%; $99.9 million of MSR notes which bear interest equal to the sum of (i) a floating rate index equal to one-month LIBOR and (ii) a margin of 3.9%; and $2.2 billion of capital markets notes with fixed interest rates ranging 3.0% to 5.4%. The outstanding face amount of the collateral represents the UPB of the residential mortgage loans underlying the MSRs and MSR Financing Receivables that secure these notes.
(K)$1.8 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 equal to one-month LIBOR or a cost of funds rate, as applicable, and (ii) a margin ranging from 1.1% to 1.9%. Collateral includes Servicer Advance Investments, as well as servicer advances receivable related to the mortgage servicing rights and MSR financing receivables owned by NRM.
(L)Represents (i) a $5.8 million note payable to Mr. Cooper which includes a $1.6 million receivable from government agency and bears interest equal to one-month LIBOR plus 2.9%, (ii) $30.4 million face amount of SAFT 2013-1
mortgage-backed securities issued with a fixed interest rate of 3.8% (see Note 12 for fair value details), (iii) $46.5 million of MDST Trusts asset-backed notes held by third parties which bear interest equal to 6.6% (see Note 12 for fair value details), (iv) $232.2 million of bonds held by third parties which bear interest at a fixed rate ranging from 3.6% to 5.0%, (v) a $105.8 million note payable collateralized by SFR with a fixed interest rate of 2.75%, and (vi) $750.0 million securitization backed by a revolving warehouse facility to finance newly originated first-lien, fixed- and adjustable-rate mortgage loans which bears interest equal to one-month LIBOR plus 1.13% (refer to Note 13 for further discussion).
(M)Includes the SpringCastle debt, which is primarily composed of the following classes of asset-backed notes held by third parties: $440.0 million UPB of Class A notes with a coupon of 2.0% and a stated maturity date in September 2037 and $53.0 million UPB of Class B notes with a coupon of 2.7% and a stated maturity date in September 2037 (collectively, “SCFT 2020-A”).

General

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

As of September 30, 2021, New Residential has margin exposure on $22.8 billion of secured financing agreements. To the extent that the value of the collateral underlying these secured financing agreements declines, New Residential may be required to post margin, which could significantly impact its liquidity.
 
Activities related to the carrying value of debt obligations were as follows:
Excess MSRs MSRs
Servicer Advances(A)
Real Estate Securities Residential Mortgage Loans and REO Consumer Loans Total
Balance at December 31, 2020 $ 275,088  $ 2,691,791  $ 3,008,719  $ 13,499,636  $ 5,087,882  $ 628,759  $ 25,191,875 
Secured Financing Agreements
Acquired borrowings, net of discount —  —  —  —  7,090,577  —  7,090,577 
Borrowings —  —  —  54,297,394  90,195,545  —  144,492,939 
Repayments —  —  —  (58,118,431) (88,254,304) —  (146,372,735)
Capitalized deferred financing costs, net of amortization
—  —  —  951  573  —  1,524 
Secured Notes and Bonds Payable
Acquired borrowings, net of discount —  1,045,000  76,772  —  —  —  1,121,772 
Borrowings —  2,422,470  2,124,459  —  855,890  —  5,402,819 
Repayments (27,027) (2,544,885) (2,488,913) —  (727,452) (132,167) (5,920,444)
Unrealized gain on notes, fair value —  —  —  —  (5,999) 754  (5,245)
Capitalized deferred financing costs, net of amortization
—  3,474  1,718  —  (197) —  4,995 
Balance at September 30, 2021 $ 248,061  $ 3,617,850  $ 2,722,755  $ 9,679,550  $ 14,242,515  $ 497,346  $ 31,008,077 
(A)New Residential net settles daily borrowings and repayments of the Secured Notes and Bonds Payable on its servicer advances.
Maturities
 
Contractual maturities of debt obligations as of September 30, 2021 are as follows:
Year Ending
Nonrecourse(A)
Recourse(B)
Total
October 1 through December 31, 2021 $ —  $ 13,742,872  $ 13,742,872 
2022 1,432,049  6,338,673  7,770,722 
2023 1,365,913  3,245,451  4,611,364 
2024 750,000  952,951  1,702,951 
2025 232,200  2,141,348  2,373,548 
2026 and thereafter 569,976  812,466  1,382,442 
$ 4,350,138  $ 27,233,761  $ 31,583,899 
(A)Reflects secured notes and bonds payable of $4.4 billion.
(B)Reflects secured financing agreements and secured notes and bonds payable of $22.8 billion and $4.4 billion, respectively.

Borrowing Capacity

The following table represents borrowing capacity as of September 30, 2021:
Debt Obligations / Collateral Borrowing Capacity Balance Outstanding
Available Financing(A)
Secured Financing Agreements
Residential mortgage loans and REO $ 4,379,092  $ 1,999,295  $ 2,379,797 
New loan originations 21,103,010  11,834,240  9,268,770 
Secured Notes and Bonds Payable
Excess MSRs 286,380  248,061  38,319 
MSRs 4,685,450  3,629,810  1,055,640 
Servicer advances 4,554,990  2,729,105  1,825,885 
Residential mortgage loans 200,000  105,825  94,175 
$ 35,208,922  $ 20,546,336  $ 14,662,586 
(A)Although available financing is uncommitted, New Residential’s unused borrowing capacity is available if it has additional eligible collateral to pledge and meets other borrowing conditions as set forth in the applicable agreements, including any applicable advance rate.

Certain of the debt obligations are subject to customary loan covenants and event of default provisions, including event of default provisions triggered by certain specified declines in New Residential’s equity or a failure to maintain a specified tangible net worth, liquidity, or indebtedness to tangible net worth ratio. New Residential was in compliance with all of its debt covenants as of September 30, 2021.

2025 Senior Unsecured Notes

On September 16, 2020, the Company, as borrower, completed a private offering of $550.0 million aggregate principal amount of 6.250% senior unsecured notes due 2025 (the “2025 Senior Notes”). Interest on the 2025 Senior Notes accrue at the rate of 6.250% per annum with interest payable semi-annually in arrears on each April 15 and October 15.

The 2025 Senior Notes mature on October 15, 2025 and the Company may redeem some or all of the 2025 Senior Notes at the Company’s option, at any time from time to time, on or after October 15, 2022 at a price equal to the following fixed redemption prices (expressed as a percentage of principal amount of the 2025 Senior Notes to be redeemed):
Year Price
2022 103.125%
2023 101.563%
2024 and thereafter 100.000%

Prior to October 15, 2022, the Company will be entitled at its option on one or more occasions to redeem the 2025 Senior Notes in an aggregate principal amount not to exceed 40% of the aggregate principal amount of the 2025 Senior Notes originally issued prior to the applicable redemption date at a fixed redemption price of 106.250%.

Net proceeds from the offering were approximately $544.5 million, after deducting the initial purchasers’ discounts and commissions and estimated offering expenses payable by the Company. The Company incurred fees of approximately $8.3 million in relation to the issuance of the 2025 Senior Notes. These fees were capitalized as debt issuance cost and are grouped and presented as part of Unsecured Senior Notes, Net of Issuance Costs on the Consolidated Balance Sheets. For the three and nine months ended September 30, 2021, the Company recognized interest expense of $8.6 million and $25.7 million, respectively. At September 30, 2021, the unamortized debt issuance costs was approximately $7.1 million.

The 2025 Senior Notes are senior unsecured obligations and rank pari passu in right of payment with all of the Company’s existing and future senior unsecured indebtedness and senior unsecured guarantees. At the time of issuance, the 2025 Senior Notes were not guaranteed by any of the Company’s subsidiaries and none of its subsidiaries are required to guarantee the 2025 Senior Notes in the future, except under limited specified circumstances.

The 2025 Senior Notes contain financial covenants and other non-financial covenants, including, among other things, limits on the ability of the Company and its restricted subsidiaries to incur certain indebtedness (subject to various exceptions), requires that the Company maintain total unencumbered assets (as defined in the debt agreement) of not less than 120% of the aggregate principal amount of the outstanding unsecured debt, and imposes certain requirements in order for the Company to merge or consolidate with or transfer all or substantially all of its assets to another person, in each case subject to certain qualifications set forth in the debt agreement. If the Company were to fail to comply with these covenants, after the expiration of the applicable cure periods, the debt maturity could be accelerated or other remedies could be sought by the lenders. As of September 30, 2021, the Company was in compliance with all covenants.

In the event of a change of control, each holder of the 2025 Senior Notes will have the right to require the Company to repurchase all or any part of the outstanding balance at a purchase price of 101% of the principal amount of the 2025 Senior Notes repurchased, plus accrued and unpaid interest, if any, to, but not including, the date of such repurchase.