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(Tables) | 12 Months Ended
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Dec. 31, 2013
Transfers and Servicing [Abstract] |
Schedule of MSRs | MSRs are comprised of the following at December 31:
| 2013 |  | 2012
MSRs - Amortization method | $ | 1,953,352 |  |  | $ | 678,937 |
MSRs - Fair value measurement method | 116,029 |  |  | 85,213 |
| $ | 2,069,381 |  |  | $ | 764,150 |
Schedule of Activity Related to MSRs - Amortization Method | Servicing Assets. The following tables summarize the activity in the carrying value of amortization method servicing assets for the years ended December 31:
|  | 2013 |  | 2012 |  | 2011
Beginning balance |  | $ | 678,937 |  |  | $ | 293,152 |  |  | $ | 193,985 |
Additions recognized in connection with business acquisitions: |  |  |  |  |  |  |  |
ResCap Acquisition (1) |  | 389,944 |  |  | — |  |  | — |
Liberty Acquisition (1) |  | 2,840 |  |  | — |  |  | — |
Homeward Acquisition (1) |  | — |  |  | 278,069 |  |  | — |
Litton Acquisition (1) |  | — |  |  | — |  |  | 144,314 |
Additions recognized in connection with asset acquisitions: |  |  |  |  |  |
Ally MSR Transaction (2) |  | 683,787 |  |  | — |  |  | — |
OneWest MSR Transaction (3) |  | 398,804 |  |  | — |  |  | — |
Greenpoint MSR Transaction (4) |  | 33,647 |  |  | — |  |  | — |
Saxon |  | — |  |  | 77,881 |  |  | — |
JPMorgan |  | — |  |  | 23,445 |  |  | — |
Bank of America |  | — |  |  | 64,569 |  |  | — |
Other |  | 8,764 |  |  | 16,084 |  |  | — |
Additions recognized on the sale of mortgage loans |  | 74,784 |  |  | — |  |  | — |
Sales (5) |  | (28,403 | ) |  | — |  |  | — |
Servicing transfers and adjustments |  | (8,883 | ) |  | (4 | ) |  | — |
Change in valuation allowance |  | 2,375 |  |  | (88 | ) |  | 574 |
Amortization (6) |  | (283,244 | ) |  | (74,171 | ) |  | (45,721 | )
Ending balance |  | $ | 1,953,352 |  |  | $ | 678,937 |  |  | $ | 293,152 |
Estimated fair value at end of year |  | $ | 2,441,719 |  |  | $ | 743,830 |  |  | $ | 340,015 |
(1) | See Note 3 — Business Acquisitions for additional information regarding MSRs recognized in connection with business acquisitions.
(2) | 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. Prior to the closing, we subserviced the related MSRs on behalf of Ally Bank. 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 that we assumed in connection with the ResCap Acquisition. No operations, entities or other assets were acquired in the transaction.
(3) | The acquired MSRs relate to mortgage loans with a UPB of approximately $69.0 billion and related servicing advance receivables of $2.1 billion acquired in the OneWest MSR Transaction. No operations or other assets were purchased in the transaction. As part of the OneWest MSR Transaction, both the seller and OLS have agreed to indemnification provisions for the benefit of the other party. The OneWest MSR Transaction closed in stages, and the majority of loans were boarded onto our primary servicing platform as of December 31, 2013. Each closing is subject to, among other things, receipt of certain investor and third party consents and customary closing conditions.
(4) | The acquired MSRs relate to mortgage loans with a UPB of approximately $6.3 billion and related servicing advance receivables of $422.1 million.
(5) | Cash proceeds from the sale were $34.8 million. These MSRs were sold with subservicing retained. The gain on the sale of $5.1 million has been deferred and will be recognized in earnings over the life of the subservicing contract.
(6) | In the Consolidated Statement of Operations, 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 Expected Amortization Expense | The estimated amortization expense for MSRs, calculated based on assumptions used at December 31, 2013, is projected as follows over the next five years:
2014 | $ | 326,583 |
2015 | 276,893 |
2016 | 234,207 |
2017 | 194,053 |
2018 | 160,804 |
Schedule of Activity Related to MSRs - Fair Value Measurement Method | The following table summarizes the activity related to fair value servicing assets for the years ended December 31:
| 2013 |  | 2012
Beginning balance | $ | 85,213 |  |  | $ | — |
Amount recognized in connection with the Homeward Acquisition (1) | — |  |  | 82,275 |
Additions recognized on the sale of residential mortgage loans | — |  |  | 2,908 |
Changes in fair value (2): |  |  |
Changes in market value assumptions | 44,199 |  |  | 30 |
Realization of cash flows and other changes | (13,383 | ) |  | — |
Ending balance | $ | 116,029 |  |  | $ | 85,213 |
(1) | See Note 3 — Business Acquisitions for additional information.
(2) | Changes in fair value are recognized in Servicing and origination expense in the Consolidated Statements of Operations.
Schedule of Estimated Change in the Fair Value of Our MSRs | The following table summarizes the estimated change in the value of the MSRs that we carry at fair value as of December 31, 2013 given hypothetical instantaneous parallel shifts in the yield curve:
| Adverse change in fair value
| 10% |  | 20%
Weighted average prepayment speeds | $ | (7,995 | ) |  | $ | (15,713 | )
Discount rate (Option-adjusted spread) | $ | (4,497 | ) |  | $ | (8,659 | )
Schedule of Composition of Servicing and Subservicing Portfolios by Type of Property Serviced | The following table presents the composition of our servicing and subservicing portfolios by type of property serviced as measured by UPB. The servicing portfolio represents loans for which we own the MSRs while subservicing represents all other loans. The UPB of assets serviced for others are not included on our Consolidated Balance Sheet.
| Residential |  | Commercial |  | Total
UPB at December 31, 2011 |  |  |  |  |  |  |  |
Servicing | $ | 78,675,160 |  |  | $ | — |  |  | $ | 78,675,160 |
Subservicing | 23,524,062 |  |  | 290,863 |  |  | 23,814,925 |
| $ | 102,199,222 |  |  | $ | 290,863 |  |  | $ | 102,490,085 |
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 |
UPB at December 31, 2013 |  |  |  |  |  |  |  |
Servicing (1) | $ | 397,546,635 |  |  | $ | — |  |  | $ | 397,546,635 |
Subservicing | 67,104,697 |  |  | 400,502 |  |  | 67,505,199 |
| $ | 464,651,332 |  |  | $ | 400,502 |  |  | $ | 465,051,834 |
(1) | Includes UPB of $175.1 billion and $79.4 billion at December 31, 2013 and 2012, respectively, for which the Rights to MSRs have been sold to HLSS.
Mortgage Loans on Real Estate, Geographic Location of Property | At December 31, 2013, the geographic distribution of the UPB and count of residential loans and real estate we serviced was as follows:
| Amount |  | Count
California | $ | 112,200,350 |  |  | 436,374 |
Florida | 37,881,401 |  |  | 245,438 |
New York | 30,548,742 |  |  | 129,364 |
Texas | 20,838,925 |  |  | 203,035 |
New Jersey | 20,336,702 |  |  | 97,207 |
Other | 242,845,212 |  |  | 1,750,500 |
| $ | 464,651,332 |  |  | 2,861,918 |
Schedule of Components of Servicing and Subservicing Fees | The following table presents the components of servicing and subservicing fees for the years ended December 31:
| 2013 |  | 2012 |  | 2011
Loan servicing and subservicing fees: |  |  |  |  |
Servicing | $ | 1,246,882 |  |  | $ | 535,415 |  |  | $ | 313,997 |
Subservicing | 146,605 |  |  | 45,713 |  |  | 27,404 |
| 1,393,487 |  |  | 581,128 |  |  | 341,401 |
Home Affordable Modification Program (HAMP) fees | 152,812 |  |  | 76,764 |  |  | 42,025 |
Late charges | 115,826 |  |  | 69,281 |  |  | 38,557 |
Loan collection fees | 31,022 |  |  | 15,960 |  |  | 11,223 |
Custodial accounts (float earnings) | 5,332 |  |  | 3,749 |  |  | 2,105 |
Other | 125,080 |  |  | 57,525 |  |  | 23,527 |
| $ | 1,823,559 |  |  | $ | 804,407 |  |  | $ | 458,838 |

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