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Business Segment Reporting
 3 Months Ended
Mar. 31, 2015
Segment Reporting [Abstract]  
Business Segment Reporting
Note 16 – 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 revenues and expenses that are not directly related to other reportable segments, business activities that are individually insignificant, interest income on short-term investments of cash, interest expense on corporate debt and certain corporate expenses. Business activities not currently considered to be of continuing significance include residential subprime non-Agency loans held for sale (at lower of cost or fair value), investments in residential mortgage-backed securities, investments in unconsolidated entities and affordable housing investment activities.
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 March 31, 2015
 
 
 
 
 
 
 
 
 
Revenue (1)
$
471,125

 
$
37,746

 
$
1,608

 
$
(35
)
 
$
510,444

 
 
 
 
 
 
 
 
 
 
Expenses (1) (2)
337,911

 
23,785

 
16,697

 
(35
)
 
378,358

 
 
 
 
 
 
 
 
 
 
Other income (expense):
 
 
 
 
 
 
 
 
 
Interest income
1,371

 
3,596

 
608

 
—

 
5,575

Interest expense
(110,629
)
 
(2,639
)
 
(6,128
)
 
—

 
(119,396
)
Other (1)
22,766

 
1,065

 
733

 
—

 
24,564

Other income (expense), net
(86,492
)
 
2,022

 
(4,787
)
 
—

 
(89,257
)
 
 
 
 
 
 
 
 
 
 
Income (loss) before income taxes
$
46,722

 
$
15,983

 
$
(19,876
)
 
$
—

 
$
42,829

 
 
 
 
 
 
 
 
 
 
Three months ended March 31, 2014
 
 
 
 
 
 
 
 
 
Revenue (1)
$
520,823

 
$
28,767

 
$
1,711

 
$
(40
)
 
$
551,261

 
 
 
 
 
 
 
 
 
 
Expenses (1) (2)
307,933

 
31,464

 
9,837

 
(40
)
 
349,194

 


 


 


 


 


Other income (expense):
 
 
 
 
 
 
 
 
 
Interest income
439

 
4,009

 
879

 
—

 
5,327

Interest expense
(136,386
)
 
(3,451
)
 
(36
)
 
—

 
(139,873
)
Other (1)
(320
)
 
2,718

 
1,784

 
—

 
4,182

Other income (expense), net
(136,267
)
 
3,276

 
2,627

 
—

 
(130,364
)
 
 
 
 
 
 
 
 
 
 
Income (loss) before income taxes
$
76,623

 
$
579

 
$
(5,499
)
 
$
—

 
$
71,703

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

 
 

 
 

 
 

 
 

March 31, 2015
$
5,733,630

 
$
2,165,742

 
$
487,402

 
$
—

 
$
8,386,774

 
 
 
 
 
 
 
 
 
 
December 31, 2014
$
5,881,862

 
$
1,963,729

 
$
421,687

 
$
—

 
$
8,267,278

 
 
 
 
 
 
 
 
 
 
March 31, 2014
$
6,333,097

 
$
1,326,114

 
$
527,140

 
$
—

 
$
8,186,351


(1)
Intersegment billings for services rendered to other segments are recorded as revenues, as contra-expense or as other income, depending on the type of service that is rendered.
(2)
Depreciation and amortization expense are as follows:
 
Servicing
 
Lending
 
Corporate Items and Other
 
Business Segments Consolidated
For the three months ended March 31, 2015
 

 
 

 
 

 
 

Depreciation expense
$
529

 
$
104

 
$
3,711

 
$
4,344

Amortization of mortgage servicing rights
38,405

 
89

 
—

 
38,494

Amortization of debt discount
356

 
—

 
—

 
356

Amortization of debt issuance costs
3,423

 
—

 
332

 
3,755

 
 
 
 
 
 
 
 
For the three months ended March 31, 2014
 

 
 

 
 

 
 

Depreciation expense
$
2,820

 
$
105

 
$
2,615

 
$
5,540

Amortization of mortgage servicing rights
61,779

 
115

 
200

 
62,094

Amortization of debt discount
330

 
—

 
—

 
330

Amortization of debt issuance costs
1,087

 
—

 
—

 
1,087