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Reverse Mortgage Interests, Net | 12 Months Ended
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Dec. 31, 2018
Reverse Mortgage Interest [Abstract] |
Reverse Mortgage Interests, Net | 6. Reverse Mortgage Interests, Net Reverse mortgage interests, net consists of the following:
| Successor |  |  | Predecessor
| December 31, 2018 |  |  | December 31, 2017
Participating interests in HECM mortgage-backed securities, net of $58 and $0 premium, respectively | $ | 5,664 |  |  |  | $ | 7,107 |
Other interests securitized, net of $100 and $0 discount, respectively | 1,064 |  |  |  | 912 |
Unsecuritized interests, net of $122 and $89 discount, respectively | 1,219 |  |  |  | 2,080 |
Reserves | (13 | ) |  |  | (115 | )
Total reverse mortgage interests, net | $ | 7,934 |  |  |  | $ | 9,984 |
Participating Interests in HMBS Participating interests in HMBS consist of the Company’s reverse mortgage interests in HECM loans which have been transferred to GNMA and subsequently securitized through the issuance of HMBS. During the five months ended December 31, 2018, a total of $107 UPB was transferred to GNMA and securitized by the Company. During the seven months ended July 31, 2018 and year ended December 31, 2017, a total of $198 and $547 in UPB were transferred to GNMA and securitized by the Predecessor, respectively. Other Interests Securitized Other interests securitized consist of reverse mortgage interests that no longer meet HMBS program eligibility criteria and have been repurchased out of HMBS. These reverse mortgage interests have subsequently been transferred to private securitization trusts and are accounted for as a secured borrowing. During the five months ended December 31, 2018, the Company securitized a total of $364 UPB through Trust 2018-3 and a total of $188 UPB from Trust 2017-1 was called and the related debt was extinguished. During the seven months ended July 31, 2018, the Predecessor securitized a total of $760 UPB through Trust 2018-1 and Trust 2018-2 and a total of $284 UPB from Trust 2016-2 and Trust 2016-3 were called and the related debt was extinguished. Refer to Other Nonrecourse Debt in Note 11, Indebtedness for additional information. Unsecuritized Interests Unsecuritized interests in reverse mortgages consists of the following:
| Successor |  |  | Predecessor
| December 31, 2018 |  |  | December 31, 2017
Repurchased HECM loans (exceed 98% MCA) | $ | 949 |  |  |  | $ | 1,751 |
HECM related receivables | 300 |  |  |  | 311 |
Funded borrower draws not yet securitized | 76 |  |  |  | 82 |
REO-related receivables | 16 |  |  |  | 25 |
Purchase discount | (122 | ) |  |  | (89 | )
Total unsecuritized interests | $ | 1,219 |  |  |  | $ | 2,080 |
Unsecuritized interests include repurchased HECM loans for which the Company is required to repurchase from the HMBS pool when the outstanding principal balance of the HECM loan is equal to or greater than 98% of the maximum claim amount (“MCA”) established at origination in accordance with HMBS program guidelines. The Company repurchased a total of $1,429 of HECM loans out of GNMA HMBS securitizations during the five months ended December 31, 2018, of which $328 were subsequently assigned to a third party in accordance with applicable servicing agreements. The Predecessor repurchased a total of $2,439 and $4,268 of HECM loans out of GNMA HMBS securitizations during the seven months ended July 31, 2018 and year ended December 31, 2017, respectively, of which, $512 and $1,018 were subsequently assigned to a third party in accordance with applicable servicing agreements, respectively. To the extent a loan is not subject to applicable servicing agreements and assigned to a third party, the loan is either subject to assignment to U.S. Department of Housing and Urban Development (“HUD”), per contractual obligations with GNMA, liquidated via a payoff from the borrower or liquidated via a foreclosure according to the terms of the underlying mortgage. The Company and the Predecessor also estimate and record an asset for probable recoveries from prior servicers for their respective portion of the losses associated with the underlying loans that were not serviced in accordance with established guidelines. Receivables from prior servicers totaled $18 and $22 for the Company and Predecessor’s reverse loan portfolio at December 31, 2018 and 2017, respectively. Purchase of Reverse Mortgage Servicing Rights and Interests On December 1, 2016, the Predecessor executed an asset purchase agreement with a large financial institution and acquired servicing rights and reverse mortgage interests. As part of the asset purchase agreement, the Predecessor agreed to acquire remaining components of the reverse portfolio, primarily including servicing of whole HECM loans and REO advances upon receiving regulatory approval. In September 2017, the Predecessor executed a mortgage servicing rights purchase agreement and a subservicing agreement to acquire servicing rights and subservicing contracts on the remaining reverse portfolio. In March 2018, the Predecessor executed an asset purchase agreement to acquire reverse mortgage interests on the subservicing contracts acquired in September 2017 referenced above, acquiring $467 UPB of participating interests in HECM loans and $460 UPB of related HMBS obligations. Reserves for Reverse Mortgage Interests The Company records reserves related to reverse mortgage interests based on potential unrecoverable costs and loss exposures expected to be realized. Recoverability is determined based on the Company’s ability to meet HUD servicing guidelines and is viewed as two different categories of expenses: financial and operational. Financial exposures are defined as the cost of doing business related to servicing the HECM product and include potential unrecoverable costs primarily based on HUD claim guidelines related to recoverable expenses and unfavorable changes in the appraised value of the loan collateral. Operational exposures are defined as unrecoverable debenture interest curtailments imposed for missed HUD-specified servicing timelines. Reserves for reverse mortgage interests are related to both financial and operational exposures. The activity of the reserves for reverse mortgage interests is set forth below.
| Successor |  |  | Predecessor
Reserves for reverse mortgage interests | For the Period August 1 - December 31, 2018 |  |  | For the Period January 1 - July 31, 2018 |  | Year ended December 31, 2017
Balance - beginning of period | $ | — |  |  |  | $ | 115 |  |  | $ | 131 |
Provisions | 13 |  |  |  | 32 |  |  | 76 |
Write-offs | — |  |  |  | (18 | ) |  | (92 | )
Balance - end of period | $ | 13 |  |  |  | $ | 129 |  |  | $ | 115 |
Purchase Discount for Reverse Mortgage Interests In connection with the Merger, the Company recorded the acquired reverse mortgage interests at estimated fair value as of the acquisition date, which resulted in a preliminary purchase premium of $58 for participating interests in HMBS, and a preliminary purchase discount of $290 for other interest securitized and unsecuritized interests as this population of reverse mortgage interests represents a portion of the portfolio that has more risk of loss attributable to financial and operational exposures related to being serviced through foreclosure and collateral liquidation. The following table sets forth the activities of the purchase premiums and discounts for reverse mortgage interests.
| Successor
| For the Period August 1 - December 31, 2018
Purchase premiums and discounts for reverse mortgage interests | Premium for Participating Interests in HMBS |  | Discount for Other Interest Securitized |  | Discount for Unsecuritized Interests
Balance - beginning of period | $ | 58 |  |  | $ | (117 | ) |  | $ | (173 | )
Additions | — |  |  | — |  |  | — |
Utilization of purchase discounts | — |  |  | — |  |  | 43 |
Accretion/(Amortization) | — |  |  | 17 |  |  | 8 |
Balance - end of period | $ | 58 |  |  | $ | (100 | ) |  | $ | (122 | )
In connection with previous reverse mortgage portfolio acquisitions, the Predecessor recorded a purchase discount within unsecuritized interests. The following table sets forth the activities of the purchase discounts for reverse mortgage interests.
| Predecessor
Purchase discounts for reverse mortgage interests | For the Period January 1 - July 31, 2018 |  | Year ended December 31, 2017
Balance - beginning of period | $ | (89 | ) |  | $ | (43 | )
Additions | (7 | ) |  | (75 | )
Accretion | 14 |  |  | 29 |
Balance - end of period | $ | (82 | ) |  | $ | (89 | )
Reverse Mortgage Interest Income The Company accrues interest income for its participating interest in reverse mortgages based on the stated rates underlying HECM loans and FHA guidelines. Total interest earned on the Company’s reverse mortgage interests was $206 for the five months ended December 31, 2018. Total interest earned on the Predecessor’s reverse mortgage interests was $274 for the seven months ended July 31, 2018, and $490 and $344 for the years ended December 31, 2017 and 2016, respectively.

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