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NOTE 13 OTHER ASSETS

9 Months Ended

Sep. 30, 2013

Note 13

Other Assets

Other assets consisted of the following at the dates indicated:

	September 30, 2013		December 31, 2012
Loans – restricted for securitization investors, at fair value (1)	$	290,853	$	—
Loans held for sale, at lower of cost or fair value (2)		86,753		82,866
Prepaid lender fees and debt issuance costs, net (3)		25,197		14,389
Prepaid income taxes		23,112		23,112
Derivatives, at fair value (4)		12,849		10,795
Investment in unconsolidated entities (5)		11,767		25,187
Real estate, net		8,346		6,205
Interest earning collateral deposits (6)		6,533		31,710
Acquisition deposits (7)		—		57,000
Prepaid expenses and other		13,123		22,314
	$	478,533	$	273,578

(1)

Loans sold into Ginnie Mae guaranteed securitizations that we include in our Consolidated Financial Statements because the transfers of reverse mortgage loans to the trusts did not qualify for sale accounting treatment. See Note 2 – Securitizations and Variable Interest Entities for additional information.

(2)

The carrying values at September 30, 2013 and December 31, 2012 are net of valuation allowances of $27.0 million and $14.7 million, respectively. The balances include non-performing subprime single-family residential loans that we do not intend to hold to maturity. The balance at September 30, 2013 includes $67.8 million of loans that we are required to repurchase from Ginnie Mae guaranteed securitizations in connection with loan modifications and loan resolutions. The balance at December 31, 2012 includes non-performing mortgage loans with a carrying value of $65.4 million that we acquired in December 2012 and sold to Altisource Residential, LP in February 2013 for an insignificant gain.

(3)

These balances relate to match funded liabilities and other secured borrowings.

(4)

See Note 19 – Derivative Financial Instruments and Hedging Activities for additional information.

(5)

The balance at December 31, 2012 includes an investment of $13.4 million that represented our 49% equity interest in Correspondent One. As disclosed in Note 4 – Business Acquisitions, we increased our ownership to 100% on March 31, 2013. Effective on that date, we began including the accounts of Correspondent One in our consolidated financial statements and eliminated our current investment in consolidation.

(6)

These balances include $1.5 million and $25.8 million of cash collateral held by the counterparties to certain of our derivative agreements at September 30, 2013 and December 31, 2012, respectively.

(7)

The balance at December 31, 2012 represents an earnest money cash deposit we made in connection with the ResCap Acquisition. This deposit was subsequently applied towards the purchase price upon closing of the transaction on February 15, 2013. See Note 4 – Business Acquisitions for additional information.