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NOTE 9 MORTGAGE SERVICING (Tables) | 9 Months Ended
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Sep. 30, 2013
Mortgage Servicing [Abstract] |
Schedule of activity related to MSRs - Amortization method |
|  | 2013 |  |  | 2012 |
Balance at December 31 |  | $ | 678,937 |  |  | $ | 293,152 |
Additions recognized in connection with business and asset acquisitions (1) |  |  | 1,208,222 |  |  |  | 181,949 |
Additions recognized on the sale of residential mortgage loans |  |  | 63,154 |  |  |  | — |
Sales (2) |  |  | (17,523 | ) |  |  | — |
Servicing transfers, adjustments and other |  |  | 2,052 |  |  |  | (88 | )
Amortization (3) |  |  | (197,899 | ) |  |  | (54,678 | )
Balance at September 30 |  | $ | 1,736,943 |  |  | $ | 420,335 |
Estimated fair value at September 30 |  | $ | 2,532,239 |  |  | $ | 488,499 |
| (1) | MSR recognized in connection with business and asset acquisitions during the first nine months of 2013 include:
| ● | MSRs of $391.9 million acquired in the ResCap Acquisition. See Note 4 – Business Acquisitions for additional information.
| ● | MSRs of $683.8 million acquired in the Ally MSR Transaction. The acquired MSRs relate to mortgage loans with a UPB of $87.5 billion owned by Freddie Mac and Fannie Mae. We also acquired servicing advances and other receivables of $73.6 million. We assumed the origination representation and warranty obligations of approximately $136.7 million in connection with a majority of the acquired MSRs. We had been subservicing these MSRs on behalf of Ally under a subservicing contract assumed by us in connection with the ResCap Acquisition.
| ● | MSRs of $127.0 million with a UPB of approximately $30.5 billion and related servicing advance receivables of $371.6 million acquired in the OneWest MSR Transaction. We expect the remainder of the transaction to close during the fourth quarter. The total estimated purchase price is approximately $2.4 billion with $432.2 million attributed to MSRs and $2.0 billion attributed to servicing advances. The total UPB to be acquired is estimated at $72.4 billion. No operations or other assets were purchased in the transaction. In October 2013, we closed the purchase of approximately $6.6 million of MSRs with a UPB of approximately $1.1 billion and approximately $37.1 million of servicing advances. On November 1, 2013, we closed the purchase of approximately $235.6 million of MSRs with a UPB of approximately $32.9 billion and approximately $1.3 billion of servicing advances. See Note 26 - Subsequent Events for additional information.
| (2) | Cash proceeds from the sale were $21.5 million. These MSRs were sold with subservicing retained. The gain on the sale of $3.2 million has been deferred and will be recognized in earnings over the life of the subservicing contract.
| (3) | Amortization of mortgage servicing rights is reported net of the amortization of servicing liabilities and includes the amount of charges we recognized to increase servicing liability obligations.
Schedule of activity related to MSRs - Fair value measurement method |
Balance at December 31, 2012 |  | $ | 85,213 |
Changes in fair value: |  |  |  |
Due to changes in market valuation assumptions |  |  | 19,800 |
Realization of cash flows and other changes |  |  | (8,075 | )
Balance at September 30, 2013 |  | $ | 96,938 |
Schedule of estimated change in the fair value of our MSRs |
|  | Adverse change in fair value |
|  | 10% |  |  | 20% |
Weighted average prepayment speeds |  | $ | (3,695 | ) |  | $ | (7,234 | )
Discount rate (Option-adjusted spread) |  | $ | (2,148 | ) |  | $ | (4,128 | )
Schedule of components of servicing and subservicing fees |
|  | Three Months |  |  | Nine Months |
|  | 2013 |  |  | 2012 |  |  | 2013 |  |  | 2012 |
Loan servicing and subservicing fees: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Servicing |  | $ | 335,884 |  |  | $ | 145,861 |  |  | $ | 887,500 |  |  | $ | 394,454 |
Subservicing |  |  | 35,286 |  |  |  | 14,257 |  |  |  | 115,437 |  |  |  | 27,619 |
|  |  | 371,170 |  |  |  | 160,118 |  |  |  | 1,002,937 |  |  |  | 422,073 |
Home Affordable Modification Program (HAMP) fees |  |  | 40,213 |  |  |  | 21,687 |  |  |  | 118,412 |  |  |  | 55,761 |
Late charges |  |  | 30,445 |  |  |  | 16,370 |  |  |  | 85,930 |  |  |  | 52,891 |
Loan collection fees |  |  | 8,387 |  |  |  | 4,102 |  |  |  | 22,524 |  |  |  | 11,271 |
Custodial accounts (float earnings) |  |  | 743 |  |  |  | 942 |  |  |  | 4,533 |  |  |  | 2,393 |
Other |  |  | 32,309 |  |  |  | 19,792 |  |  |  | 99,056 |  |  |  | 34,046 |
|  | $ | 483,267 |  |  | $ | 223,011 |  |  | $ | 1,333,392 |  |  | $ | 578,435 |
Schedule of composition of servicing and subservicing portfolios by type of property serviced |
|  | Residential |  |  | Commercial |  |  | Total |
UPB at September 30, 2013 |  |  |  |  |  |  |  |  |  |  |  |
Servicing (1) |  | $ | 362,792,312 |  |  | $ | — |  |  | $ | 362,792,312 |
Subservicing |  |  | 72,027,114 |  |  |  | 495,312 |  |  |  | 72,522,426 |
|  | $ | 434,819,426 |  |  | $ | 495,312 |  |  | $ | 435,314,738 |
UPB at December 31, 2012 |  |  |  |  |  |  |  |  |  |  |  |
Servicing (1) |  | $ | 175,762,161 |  |  | $ | — |  |  | $ | 175,762,161 |
Subservicing |  |  | 27,903,555 |  |  |  | 401,031 |  |  |  | 28,304,586 |
|  | $ | 203,665,716 |  |  | $ | 401,031 |  |  | $ | 204,066,747 |
| (1) | Includes UPB of $177.1 billion and $79.4 billion at September 30, 2013 and December 31, 2012, respectively, for which the Rights to MSRs have been sold to HLSS.

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