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Business Segment Reporting
 6 Months Ended
Jun. 30, 2014
Segment Reporting [Abstract]  
Business Segment Reporting
Note 17 – 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 conventional, government insured and non-Agency loans. Non-Agency loans include 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 conventional and government insured residential forward and reverse mortgage loans mainly through our correspondent lending arrangements, broker relationships and directly with mortgage customers. 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 acquisitions of Homeward and ResCap and subsequently sold to Altisource on March 29, 2013 and April 12, 2013, respectively.
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
 
 
 
 
 
 
 
 
 
For the three months ended June 30, 2014
 
 
 
 
 
 
 
 
 
Revenue
$
520,480

 
$
31,166

 
$
1,467

 
$
(39
)
 
$
553,074

Operating expenses (1)
298,101

 
27,164

 
20,237

 
(39
)
 
345,463

Income (loss) from operations
222,379

 
4,002

 
(18,770
)
 
—

 
207,611

Other income (expense):
 
 
 
 
 
 
 
 
 
Interest income
463

 
4,282

 
807

 
—

 
5,552

Interest expense
(130,630
)
 
(2,219
)
 
(3,358
)
 
—

 
(136,207
)
Other
(684
)
 
988

 
(83
)
 
—

 
221

Other income (expense), net
(130,851
)
 
3,051

 
(2,634
)
 
—

 
(130,434
)
Income (loss) before income taxes
$
91,528

 
$
7,053

 
$
(21,404
)
 
$
—

 
$
77,177

 
 
 
 
 
 
 
 
 
 
For the three months ended June 30, 2013
 
 
 
 
 
 
 
 
 
Revenue
$
509,880

 
$
33,735

 
$
1,241

 
$
(44
)
 
$
544,812

Operating expenses (1)
282,651

 
28,941

 
63,248

 
(44
)
 
374,796

Income (loss) from operations
227,229

 
4,794

 
(62,007
)
 
—

 
170,016

Other income (expense):
 
 
 
 
 
 
 
 
 
Interest income
3,485

 
4,587

 
1,042

 
—

 
9,114

Interest expense (2)
(109,425
)
 
(4,001
)
 
206

 
—

 
(113,220
)
Other
3,079

 
4,741

 
428

 
—

 
8,248

Other income (expense), net
(102,861
)
 
5,327

 
1,676

 
—

 
(95,858
)
Income (loss) before income taxes
$
124,368

 
$
10,121

 
$
(60,331
)
 
$
—

 
$
74,158

 
 
 
 
 
 
 
 
 
 
For the six months ended June 30, 2014
 
 
 
 
 
 
 
 
 
Revenue
$
1,041,302

 
$
59,933

 
$
3,180

 
$
(80
)
 
$
1,104,335

Operating expenses (1)
606,033

 
58,629

 
30,075

 
(80
)
 
694,657

Income (loss) from operations
435,269

 
1,304

 
(26,895
)
 
—

 
409,678

Other income (expense):
 
 
 
 
 
 
 
 
 
Interest income
902

 
8,291

 
1,686

 
—

 
10,879

Interest expense
(267,016
)
 
(5,670
)
 
(3,394
)
 
—

 
(276,080
)
Other
(1,004
)
 
3,707

 
1,700

 
—

 
4,403

Other income (expense), net
(267,118
)
 
6,328

 
(8
)
 
—

 
(260,798
)
Income (loss) before income taxes
$
168,151

 
$
7,632

 
$
(26,903
)
 
$
—

 
$
148,880

 
 
 
 
 
 
 
 
 
 
For the six months ended June 30, 2013
 
 
 
 
 
 
 
 
 
Revenue
$
885,570

 
$
47,643

 
$
17,954

 
$
(89
)
 
$
951,078

Operating expenses (1)
494,262

 
40,041

 
84,216

 
(89
)
 
618,430

Income (loss) from operations
391,308

 
7,602

 
(66,262
)
 
—

 
332,648

Other income (expense):
 
 
 
 
 
 
 
 
 
Interest income
4,795

 
9,366

 
2,062

 
—

 
16,223

Interest expense (2)
(195,928
)
 
(6,829
)
 
78

 
—

 
(202,679
)
Other
(24,331
)
 
5,008

 
2,581

 
—

 
(16,742
)
Other income (expense), net
(215,464
)
 
7,545

 
4,721

 
—

 
(203,198
)
Income (loss) before income taxes
$
175,844

 
$
15,147

 
$
(61,541
)
 
$
—

 
$
129,450

 
 
 
 
 
 
 
 
 
 
 
Servicing
 
Lending
 
Corporate Items and Other
 
Corporate Eliminations
 
Business Segments Consolidated
Total Assets
 

 
 

 
 

 
 

 
 

June 30, 2014
$
6,260,835

 
$
1,565,389

 
$
538,678

 
$
—

 
$
8,364,902

 
 
 
 
 
 
 
 
 
 
December 31, 2013
$
6,295,976

 
$
1,195,812

 
$
435,215

 
$
—

 
$
7,927,003

 
 
 
 
 
 
 
 
 
 
June 30, 2013
$
6,061,783

 
$
525,624

 
$
673,304

 
$
—

 
$
7,260,711


(1)
Depreciation and amortization expense are as follows:
 
Servicing
 
Lending
 
Corporate Items and Other
 
Business Segments Consolidated
For the three months ended June 30, 2014:
 

 
 

 
 

 
 

Depreciation expense
$
2,643

 
$
32

 
$
2,631

 
$
5,306

Amortization of mortgage servicing rights
62,794

 
404

 
—

 
63,198

Amortization of debt discount
330

 
—

 
—

 
330

Amortization of debt issuance costs
1,040

 
—

 
170

 
1,210

 
 
 
 
 
 
 
 
For the three months ended June 30, 2013:
 

 
 

 
 

 
 

Depreciation expense
$
3,680

 
$
(160
)
 
$
2,422

 
$
5,942

Amortization of mortgage servicing rights
70,369

 
—

 
—

 
70,369

Amortization of debt discount
328

 
—

 
—

 
328

Amortization of debt issuance costs
1,192

 
—

 
—

 
1,192

 
 
 
 
 
 
 
 
For the six months ended June 30, 2014
 
 
 
 
 
 
 
Depreciation expense
$
5,463

 
$
138

 
$
5,245

 
$
10,846

Amortization of mortgage servicing rights
124,574

 
519

 
199

 
125,292

Amortization of debt discount
661

 
—

 
—

 
661

Amortization of debt issuance costs
2,127

 
—

 
170

 
2,297

 
 
 
 
 
 
 
 
For the six months ended June 30, 2013
 
 
 
 
 
 
 
Depreciation expense
$
6,378

 
$
74

 
$
4,003

 
$
10,455

Amortization of mortgage servicing rights
118,252

 
—

 
—

 
118,252

Amortization of debt discount
752

 
—

 
—

 
752

Amortization of debt issuance costs
2,086

 
—

 
—

 
2,086


(2)
Includes interest expense related to financing liabilities recorded in connection with the HLSS Transactions. As discussed in Note 1A — Restatement of Previously Issued Consolidated Financial Statements , we are restating our previously issued audited Consolidated Balance Sheet as of December 31, 2013 as restated on the Form 10-K/A and our previously reported consolidated operating results for the three and six months ended June 30, 2013 to correct an error in applying the interest method to financing liabilities in connection with Rights to MSRs sold to HLSS.