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NOTE 22 BUSINESS SEGMENT REPORTING
 9 Months Ended
Sep. 30, 2013
Segment Reporting [Abstract]  
BUSINESS SEGMENT REPORTING
Note 22 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 September 30, 2013:                                        
                                         
Revenue   $ 496,302     $ 33,539     $ 1,801     $ (402 )   $ 531,240  
Operating expenses (1)     305,654       29,504       11,143       (41 )     346,260  
Income (loss) from operations     190,648       4,035       (9,342 )     (361 )     184,980  
Other income (expense), net:                                        
Interest income     859       3,066       1,454       —       5,379  
Interest expense (1)     (106,848 )     (3,279 )     72       —       (110,055 )
Other     (6,631 )     1,843       398       361       (4,029 )
Other income (expense), net     (112,620 )     1,630       1,924       361       (108,705 )
Income (loss) before income taxes   $ 78,028     $ 5,665     $ (7,418 )   $ —     $ 76,275  
                                         
Three Months Ended September 30, 2012:                                        
                                         
Revenue   $ 232,104     $ —     $ 873     $ (277 )   $ 232,700  
Operating expenses (1)     88,743       —       4,162       (112 )     92,793  
Income (loss) from operations     143,361       —       (3,289 )     (165 )     139,907  
Other income (expense), net:                                        
Interest income     —       —       2,084       —       2,084  
Interest expense (1)     (58,144 )     —       (273 )     —       (58,417 )
Other     (963 )     —       (2,030 )     165       (2,828 )
Other income (expense), net     (59,107 )     —       (219 )     165       (59,161 )
Income (loss) before income taxes   $ 84,254     $ —     $ (3,508 )   $ —     $ 80,746  
 
    Servicing     Lending     Corporate
Items and
Other		     Corporate
Eliminations		     Business
Segments
Consolidated		  
Nine Months Ended September 30, 2013:                                        
                                         
Revenue   $ 1,381,872     $ 81,180     $ 19,758     $ (492 )   $ 1,482,318  
Operating expenses (1)     795,645       69,543       95,361       (131 )     960,418  
Income (loss) from operations     586,227       11,637       (75,603 )     (361 )     521,900  
Other income (expense), net:                                        
Interest income     1,382       12,432       3,516       —       17,330  
Interest expense (1)     (293,381 )     (10,108 )     150       —       (303,339 )
Other     (30,961 )     6,852       2,977       361       (20,771 )
Other income (expense), net     (322,960 )     9,176       6,643       361       (306,780 )
Income (loss) before income taxes   $ 263,267     $ 20,813     $ (68,960 )   $ —     $ 215,120  
                                         
Nine Months Ended September 30, 2012:                                        
                                         
Revenue   $ 606,689     $ —     $ 2,736     $ (812 )   $ 608,613  
Operating expenses (1)     252,542       —       12,659       (391 )     264,810  
Income (loss) from operations     354,147       —       (9,923 )     (421 )     343,803  
Other income (expense), net:                                        
Interest income     —       —       6,434       —       6,434  
Interest expense (1)     (162,810 )     —       (850 )     —       (163,660 )
Other     (204 )     —       (5,765 )     421       (5,548 )
Other income (expense), net     (163,014 )     —       (181 )     421       (162,774 )
Income (loss) before income taxes   $ 191,133     $       $ (10,104 )   $ —     $ 181,029  
                                         
Total Assets                                        
September 30, 2013   $ 3,925,510     $ 778,777     $ 607,393     $ —     $ 5,311,680  
                                         
December 31, 2012   $ 4,498,043     $ 550,569     $ 634,143     $ —     $ 5,682,755  
                                         
September 30, 2012   $ 3,611,768     $ —     $ 544,248     $ —     $ 4,156,016  

(1) Depreciation and amortization expense are as follows:

 

    Servicing     Lending     Corporate
Items and
Other		     Business
Segments
Consolidated		  
Three Months Ended September 30, 2013:                                
Depreciation expense   $ 3,589     $ 135     $ 2,973     $ 6,697  
Amortization of MSRs     79,035       148       —       79,183  
Amortization of debt discount     330       —       —       330  
Amortization of debt issuance costs – SSTL     1,178       —       —       1,178  
                                 
Three Months Ended September 30, 2012:                                
Depreciation expense   $ 395     $ —     $ 1,564     $ 1,959  
Amortization of MSRs     20,150       —       —       20,150  
Amortization of debt discount     1,199       —       —       1,199  
Amortization of debt issuance costs – SSTL     1,207       —       —       1,207  
                                 

Nine Months Ended September 30, 2013:

                                
Depreciation expense   $ 9,968     $ 209     $ 6,976     $ 17,153  
Amortization of MSRs     197,287       148       —       197,435  
Amortization of debt discount     1,082       —       —       1,082  
Amortization of debt issuance costs – SSTL     3,264       —       —       3,264  
                                 
Nine Months Ended September 30, 2012:                                
Depreciation expense   $ 1,069     $ —     $ 2,827     $ 3,896  
Amortization of MSRs     53,561       —       —       53,561  
Amortization of debt discount     2,679       —       —       2,679  
Amortization of debt issuance costs – SSTL     3,050       —       —       3,050