(Tables)

12 Months Ended

Dec. 31, 2013

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