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Business Segment Reporting
 6 Months Ended
Jun. 30, 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 June 30, 2015
 
 
 
 
 
 
 
 
 
Revenue (1)
$
423,207

 
$
39,312

 
$
755

 
$
(23
)
 
$
463,251

 
 
 
 
 
 
 
 
 
 
Expenses (1) (2)
284,413

 
26,586

 
41,276

 
(23
)
 
352,252

 
 
 
 
 
 
 
 
 
 
Other income (expense):
 
 
 
 
 
 
 
 
 
Interest income
686

 
3,547

 
805

 
—

 
5,038

Interest expense
(116,101
)
 
(2,163
)
 
(6,633
)
 
—

 
(124,897
)
Other (1)
21,200

 
335

 
(175
)
 
—

 
21,360

Other income (expense), net
(94,215
)
 
1,719

 
(6,003
)
 
—

 
(98,499
)
 
 
 
 
 
 
 
 
 
 
Income (loss) before income taxes
$
44,579

 
$
14,445

 
$
(46,524
)
 
$
—

 
$
12,500

 
 
 
 
 
 
 
 
 
 
Three months ended June 30, 2014
 
 
 
 
 
 
 
 
 
Revenue (1)
$
520,480

 
$
31,166

 
$
1,467

 
$
(39
)
 
$
553,074

 
 
 
 
 
 
 
 
 
 
Expenses (1) (2)
298,101

 
27,164

 
20,237

 
(39
)
 
345,463

 


 


 


 


 


Other income (expense):
 
 
 
 
 
 
 
 
 
Interest income
463

 
4,282

 
807

 
—

 
5,552

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

 
(136,207
)
Other (1)
(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

 
 
 
 
 
 
 
 
 
 
 
Servicing
 
Lending
 
Corporate Items and Other
 
Corporate Eliminations
 
Business Segments Consolidated
Six months ended June 30, 2015
 
 
 
 
 
 
 
 
 
Revenue
$
894,332

 
$
77,059

 
$
2,362

 
$
(58
)
 
$
973,695

 
 
 
 
 
 
 
 
 
 
Expenses (1)
622,325

 
50,372

 
57,971

 
(58
)
 
730,610

 
 
 
 
 
 
 
 
 
 
Other income (expense):
 
 
 
 
 
 
 
 
 
Interest income
2,057

 
7,143

 
1,413

 
—

 
10,613

Interest expense
(226,730
)
 
(4,802
)
 
(12,761
)
 
—

 
(244,293
)
Other
43,966

 
1,401

 
557

 
—

 
45,924

Other income (expense), net
(180,707
)
 
3,742

 
(10,791
)
 
—

 
(187,756
)
 
 
 
 
 
 
 
 
 
 
Income (loss) before income taxes
$
91,300

 
$
30,429

 
$
(66,400
)
 
$
—

 
$
55,329

 
 
 
 
 
 
 
 
 
 
Six months ended June 30, 2014
 
 
 
 
 
 
 
 
 
Revenue
$
1,041,302

 
$
59,933

 
$
3,180

 
$
(80
)
 
$
1,104,335

 
 
 
 
 
 
 
 
 
 
Expenses (1)
606,033

 
58,629

 
30,075

 
(80
)
 
694,657

 
 
 
 
 
 
 
 
 
 
Other income (expense):
 
 
 
 
 
 
 
 
 
Interest income
902

 
8,291

 
1,686

 
—

 
10,879

Interest expense (2)
(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

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

 
 

 
 

 
 

 
 

June 30, 2015
$
5,033,690

 
$
2,380,776

 
$
590,173

 
$
—

 
$
8,004,639

 
 
 
 
 
 
 
 
 
 
December 31, 2014
$
5,881,862

 
$
1,963,729

 
$
421,687

 
$
—

 
$
8,267,278

 
 
 
 
 
 
 
 
 
 
June 30, 2014
$
6,260,835

 
$
1,565,389

 
$
538,678

 
$
—

 
$
8,364,902


(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 June 30, 2015
 

 
 

 
 

 
 

Depreciation expense
$
513

 
$
92

 
$
3,470

 
$
4,075

Amortization of mortgage servicing rights
31,499

 
87

 
—

 
31,586

Amortization of debt discount
337

 
—

 
—

 
337

Amortization of debt issuance costs
3,183

 
—

 
373

 
3,556

 
 
 
 
 
 
 
 
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 six months ended June 30, 2015
 
 
 
 
 
 
 
Depreciation expense
$
1,042

 
$
197

 
$
7,181

 
$
8,420

Amortization of mortgage servicing rights
69,903

 
177

 
—

 
70,080

Amortization of debt discount
693

 
—

 
—

 
693

Amortization of debt issuance costs
6,606

 
—

 
705

 
7,311

 
 
 
 
 
 
 
 
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