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NOTE 21 BUSINESS SEGMENT REPORTING
 6 Months Ended
Jun. 30, 2013
Segment Reporting [Abstract]  
BUSINESS SEGMENT REPORTING
Note 21 Business Segment Reporting

Our business segments reflect the internal reporting that we use to evaluate operating performance of services and to assess the allocation of our resources. A brief description of our current business segments is as follows:

Servicing. This segment is primarily comprised of our core residential servicing business. We provide residential and commercial mortgage loan servicing, special servicing and asset management services. We earn fees for providing these services to owners of the mortgage loans and foreclosed real estate. In most cases, we provide these services either because we purchased the MSRs from the owner of the mortgage, retained the MSRs on the sale of residential mortgage loans or because we entered into a subservicing or special servicing agreement with the entity that owns the MSR. Our residential servicing portfolio includes both agency and non-agency loans. Non-agency loans include prime and subprime loans which represent residential loans that generally did not qualify under GSE guidelines or have subsequently become delinquent.

Lending. The Lending segment is focused on originating and purchasing agency-conforming residential forward and reverse mortgage loans mainly through correspondent lending arrangements. We also commenced a direct lending business to pursue refinancing opportunities from our existing portfolio, where permitted. The loans are typically sold shortly after origination into a liquid market on a servicing retained basis.

Corporate Items and Other. Corporate Items and Other includes items of revenue and expense that are not directly related to a business, business activities that are individually insignificant, interest income on short-term investments of cash, corporate debt and certain corporate expenses. Business activities that are not considered to be of continuing significance include subprime loans held for sale (at lower of cost or fair value), investments in unconsolidated entities and affordable housing investment activities. Corporate Items and Other also included the diversified fee-based businesses that we acquired as part of the Homeward and ResCap Acquisitions and subsequently sold to Altisource.

We allocate interest income and expense to each business segment for funds raised or for funding of investments made, including interest earned on cash balances and short-term investments and interest incurred on corporate debt. We also allocate expenses generated by corporate support services to each business segment.

Financial information for our segments is as follows:

    Servicing     Lending     Corporate Items and Other     Corporate Eliminations     Business Segments Consolidated  
Results of Operations                                        
                                         
Three Months Ended June 30, 2013:                                        
Revenue   $ 495,033     $ 33,735     $ 1,241     $ (44 )   $ 529,965  
Operating expenses (1)     282,651       28,941       63,248       (44 )     374,796  
Income (loss) from operations     212,382       4,794       (62,007 )     —       155,169  
Other income (expense), net:                                        
Interest income     3,485       4,587       1,042       —       9,114  
Interest expense (1)     (96,073 )     (4,001 )     206       —       (99,868 )
Other     17,923       4,741       431       —       23,095  
Other income (expense), net     (74,665 )     5,327       1,679       —       (67,659 )
Income (loss) before income taxes   $ 137,717     $ 10,121     $ (60,328 )   $ —     $ 87,510  
                                         
Three Months Ended June 30, 2012:                                        
Revenue   $ 210,407     $ —     $ 1,204     $ (230 )   $ 211,381  
Operating expenses (1)     80,936       —       5,099       (131 )     85,904  
Income (loss) from operations     129,471       —       (3,895 )     (99 )     125,477  
Other income (expense), net:                                        
Interest income     —       —       2,038       —       2,038  
Interest expense (1)     (58,139 )     —       (180 )     —       (58,319 )
Other     1,070       —       (201 )     99       968  
Other income (expense), net     (57,069 )     —       1,657       99       (55,313 )
Income (loss) before income taxes   $ 72,402     $       $ (2,238 )   $ —     $ 70,164  

 

 
 
   Servicing     Lending     Corporate Items and Other     Corporate Eliminations     Business Segments Consolidated  
Six Months Ended June 30, 2013:                                        
Revenue   $ 869,300     $ 47,643     $ 17,954     $ (89 )   $ 934,808  
Operating expenses (1)     494,262       40,041       84,216       (89 )     618,430  
Income (loss) from operations     375,038       7,602       (66,262 )     —       316,378  
Other income (expense), net:                                        
Interest income     4,795       9,366       2,062       —       16,223  
Interest expense (1)     (186,533 )     (6,829 )     78       —       (193,284 )
Other     (8,162 )     5,008       2,682       —       (472 )
Other income (expense), net     (189,900 )     7,545       4,822       —       (177,533 )
Income (loss) before income taxes   $ 185,138     $ 15,147     $ (61,440 )   $ —     $ 138,845  
                                         
Six Months Ended June 30, 2012:                                        
Revenue   $ 374,586     $ —     $ 1,862     $ (535 )   $ 375,913  
Operating expenses (1)     163,801       —       8,495       (279 )     172,017  
Income (loss) from operations     210,785       —       (6,633 )     (256 )     203,896  
Other income (expense), net:                                        
Interest income     —       —       4,350       —       4,350  
Interest expense (1)     (104,665 )     —       (578 )     —       (105,243 )
Other     759       —       (3,735 )     256       (2,720 )
Other income (expense), net     (103,906 )     —       37       256       (103,613 )
Income (loss) before income taxes   $ 106,879     $       $ (6,596 )   $ —     $ 100,283  
                                         
Total Assets                                        
June 30, 2013   $ 5,791,710     $ 599,870     $ 690,700     $ —     $ 7,082,280  
December 31, 2012   $ 4,474,457     $ 551,733     $ 659,294     $ —     $ 5,685,484  
June 30, 2012   $ 4,978,986     $ —     $ 395,876     $ —     $ 5,374,862  
(1) Depreciation and amortization expense are as follows:

 

    Servicing     Lending     Corporate Items and Other     Business Segments Consolidated  
Three Months Ended June 30, 2013:                                
Depreciation expense   $ 3,680     $ (160 )   $ 2,422     $ 5,942  
Amortization of MSRs     70,369       —       —       70,369  
Amortization of debt discount     328       —       —       328  
Amortization of debt issuance costs – SSTL     1,192       —       —       1,192  
                                 
Three Months Ended June 30, 2012:                                
Depreciation expense   $ 419     $ —     $ 686     $ 1,105  
Amortization of MSRs     19,097       —       —       19,097  
Amortization of debt discount     735       —       —       735  
Amortization of debt issuance costs – SSTL     923       —       —       923  
                                 
Six Months Ended June 30, 2013:                                
Depreciation expense   $ 6,378     $ 74     $ 4,003     $ 10,455  
Amortization of MSRs     118,252       —       —       118,252  
Amortization of debt discount     752       —       —       752  
Amortization of debt issuance costs – SSTL     2,086       —       —       2,086  
                                 
Six Months Ended June 30, 2012:                                
Depreciation expense   $ 674     $ —     $ 1,263     $ 1,937  
Amortization of MSRs     33,411       —       —       33,411  
Amortization of debt discount     1,480       —       —       1,480  
Amortization of debt issuance costs – SSTL     1,843       —       —       1,843