v3.20.4

Investments in Unconsolidated Entities | 12 Months Ended
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Dec. 31, 2020
Equity Method Investments and Joint Ventures [Abstract] |
Investments in Unconsolidated Entities | Investments in Unconsolidated EntitiesThe Company has various equity investments in entities where it has the ability to exert significant influence over such entity, but does not control such entity. In these cases the criteria for consolidation have not been met and the Company is required to account for such investments under ASC 323-10; the Company has elected the FVO for its investments in unconsolidated entities. As of December 31, 2020 and 2019, the Company's investments in unconsolidated entities had an aggregate fair value of $141.6 million and $71.9 million, respectively, which is included on the Consolidated Balance Sheet in Investments in unconsolidated entities, at fair value. For the years ended December 31, 2020 and 2019, the Company recognized $37.9 million and $10.2 million, respectively, in Earnings (losses) from investments in unconsolidated entities, on its Consolidated Statement of Operations, primarily related to its investment in loan originators. As of December 31, 2020 and 2019, the Company had non-controlling equity interests in three loan originators with an aggregate fair value of $79.5 million and $40.6 million, respectively. Certain of the entities that the Company accounts for under ASC 323-10 are deemed to be VIEs, and the maximum amount at risk is generally limited to the Company's investment in the VIE. As of December 31, 2020 and 2019, the fair value of the Company's investments in unconsolidated entities that have been deemed to be VIEs was $13.6 million and $28.5 million. The following table provides details about the Company's investments in unconsolidated entities as of December 31, 2020 and 2019:
|  |  |  | Percentage Ownership of Unconsolidated Entity
Investment in Unconsolidated Entity |  | Form of Investment |  | December 31, 2020 |  | December 31, 2019
Longbridge Financial, LLC(1) |  | Preferred shares |  | 49.7% |  | 49.7%
LendSure Mortgage Corp.(1)(2) |  | Common shares |  | 49.9% |  | 49.9%
Elizon TCG SBC 2017-1(1) |  | Membership Interest |  | 36.0% |  | —%
Jepson Holdings Limited(1) |  | Membership Interest |  | 30.1% |  | 30.1%
Elizon DB 2015-1 LLC(1)(3)(4) |  | Membership Interest |  | 8.9% |  | 3.5%
Elizon AFG 2018-1 LLC(1)(3)(5) |  | Membership Interest |  | —% |  | 13.4%
Other(6)(7) |  | Various |  | 7.4%–56.3% |  | 7.7%–51.0%
(1)See Note 13 for additional details on the Company's related party transactions. (2)Excludes investment in warrants convertible into non-voting common shares; including such warrants the Company's additional non-voting stake in the entity was 15.0% as of December 31, 2020. See Note 13 Related Party Transactions—Transactions Involving Certain Loan Originators for additional information. (3)The Company has evaluated this entity and determined that it meets the definition of a VIE. The Company evaluated its interest in the VIE and determined that the Company does not have the power to direct the activities of the VIE and does not have control of the underlying assets, where applicable. As a result, the Company determined that it is not the primary beneficiary of this VIE and therefore has not consolidated the VIE. (4)As discussed in Note 13 Related Party Transactions—Participation in Multi-Borrower Financing Facilities, the Company and the Affiliated Entities (as defined in Note 13) each consolidate their segregated silos of the Joint Entity (as defined in Note 13). The Company's effective percentage ownership before the effects of consolidation of both its and the Affiliated Entities' respective segregated silos of the Joint Entity, was 58.2% and 70.4% as of December 31, 2020 and 2019, respectively. (5)As discussed in Note 13 Related Party Transactions—Participation in Multi-Borrower Financing Facilities, the Company and the Affiliated Entities each consolidate their segregated silos of the Joint Entity. The Company's effective percentage ownership before the effects of consolidation of both its and the Affiliated Entities' respective segregated silos of the Joint Entity, was 48.7% as of December 31, 2019. (6)Includes interest in Consumer Risk Retention Vehicle, as defined in Note 10—Participation in Multi-Seller Consumer Loan Securitization. The Company has evaluated this entity and determined that it does not meet the definition of a VIE. The Company evaluated its interest in the entity under the voting interest model outlined in ASC 810, and has determined that the Company does not control this entity. As a result, the Company has not consolidated the entity. See Note 10 for additional details on the Company's securitization transactions. (7)Includes interest in warehouse facilities; see Note 13—Participation in CLO Transactions, for additional details. The following table provides a summary of the combined financial position of the unconsolidated entities as of December 31, 2020 and 2019, in which the Company has an investment:
|  | December 31, 2020 |  | December 31, 2019
|  | (In thousands)
Assets |  |  |  |
Investments in securities, loans, MSRs, and REO(1) |  | $ | 424,475 |  |  | $ | 560,949 |
Other assets |  | 117,746 |  |  | 65,580 |
Total assets |  | $ | 542,221 |  |  | $ | 626,529 |
Liabilities |  |  |  |
Borrowings |  | $ | 215,792 |  |  | $ | 387,910 |
Other liabilities |  | 30,801 |  |  | 28,134 |
Total liabilities |  | 246,593 |  |  | 416,044 |
Equity |  | 295,628 |  |  | 210,485 |
Total liabilities and equity |  | $ | 542,221 |  |  | $ | 626,529 |
(1)Includes investments carried as the lower of cost or fair value as well as investments where the unconsolidated entity has elected the FVO. The following table provides a summary of the combined results of operations of the unconsolidated entities as of December 31, 2020 and 2019, in which the Company has an investment:
|  | Year Ended December 31, 2020 |  | Year Ended December 31, 2019
|  |  |  | (In thousands)
Net Interest Income |  |  |  |
Interest income |  | $ | 10,935 |  |  | $ | 30,587 |
Interest expense |  | (9,243) |  |  | (13,316) |
Total net interest income |  | 1,692 |  |  | 17,271 |
Other Income (Loss) |  |  |  |
Realized and unrealized gains (losses) on securities, loans, MSRs, and REO, net |  | 44,362 |  |  | 40,901 |
Other, net |  | 44,031 |  |  | 31,848 |
Total other income (loss) |  | 88,393 |  |  | 72,749 |
Total expenses |  | 65,492 |  |  | 58,018 |
Net income (loss) before income tax expense |  | 24,593 |  |  | 32,002 |
Income tax expense (benefit) |  | 776 |  |  | 979 |
Net Income (Loss) |  | $ | 23,817 |  |  | $ | 31,023 |

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- Definition The entire disclosure for equity method investments and joint ventures. Equity method investments are investments that give the investor the ability to exercise significant influence over the operating and financial policies of an investee. Joint ventures are entities owned and operated by a small group of businesses as a separate and specific business or project for the mutual benefit of the members of the group. + References Reference 1: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 810 -SubTopic 10 -Section S99 -Paragraph 4 -Subparagraph (SX 210.3A-04) -URI http://asc.fasb.org/extlink&oid=116822174&loc=d3e355119-122828 Reference 2: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 323 -URI http://asc.fasb.org/topic&trid=2196965 + Details
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