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Business Segment Reporting
 9 Months Ended 12 Months Ended
Sep. 30, 2015
Dec. 31, 2014
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 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 September 30, 2015
Revenue (1)
$
374,936

 
$
29,662

 
$
348

 
$
—

 
$
404,946

 
 
 
 
 
 
 
 
 
 
Expenses (1) (2)
318,439

 
23,126

 
46,161

 
—

 
387,726

 
 
 
 
 
 
 
 
 
 
Other income (expense):
 
 
 
 
 
 
 
 
 
Interest income
1,175

 
3,883

 
635

 
—

 
5,693

Interest expense
(109,357
)
 
(2,256
)
 
(6,700
)
 
—

 
(118,313
)
Other (1)
38,943

 
425

 
114

 
—

 
39,482

Other income (expense), net
(69,239
)
 
2,052

 
(5,951
)
 
—

 
(73,138
)
 
 
 
 
 
 
 
 
 
 
Income (loss) before income taxes
$
(12,742
)
 
$
8,588

 
$
(51,764
)
 
$
—

 
$
(55,918
)
 
 
 
 
 
 
 
 
 
 
Three months ended September 30, 2014
Revenue (1)
$
485,303

 
$
26,877

 
$
1,557

 
$
(39
)
 
$
513,698

 
 
 
 
 
 
 
 
 
 
Expenses (1) (2)
313,964

 
22,632

 
118,482

 
(39
)
 
455,039

 


 


 


 


 


Other income (expense):
 
 
 
 
 
 
 
 
 
Interest income
903

 
4,825

 
865

 
—

 
6,593

Interest expense
(124,106
)
 
(2,601
)
 
(6,342
)
 
—

 
(133,049
)
Other (1)
(3,618
)
 
139

 
(990
)
 
—

 
(4,469
)
Other income (expense), net
(126,821
)
 
2,363

 
(6,467
)
 
—

 
(130,925
)
 
 
 
 
 
 
 
 
 
 
Income (loss) before income taxes
$
44,518

 
$
6,608

 
$
(123,392
)
 
$
—

 
$
(72,266
)
 
 
 
 
 
 
 
 
 
 
 
Servicing
 
Lending
 
Corporate Items and Other
 
Corporate Eliminations
 
Business Segments Consolidated
Nine months ended September 30, 2015
Revenue (1)
$
1,269,269

 
$
106,721

 
$
2,709

 
$
(58
)
 
$
1,378,641

 
 
 
 
 
 
 
 
 
 
Expenses (1) (2)
940,764

 
73,497

 
104,133

 
(58
)
 
1,118,336

 
 
 
 
 
 
 
 
 
 
Other income (expense):
 
 
 
 
 
 
 
 
 
Interest income
3,232

 
11,025

 
2,049

 
—

 
16,306

Interest expense
(336,088
)
 
(7,058
)
 
(19,460
)
 
—

 
(362,606
)
Other (1)
82,909

 
1,826

 
671

 
—

 
85,406

Other income (expense), net
(249,947
)
 
5,793

 
(16,740
)
 
—

 
(260,894
)
 
 
 
 
 
 
 
 
 
 
Income (loss) before income taxes
$
78,558

 
$
39,017

 
$
(118,164
)
 
$
—

 
$
(589
)
 
 
 
 
 
 
 
 
 
 
Nine months ended September 30, 2014
Revenue (1)
$
1,526,606

 
$
86,811

 
$
4,734

 
$
(118
)
 
$
1,618,033

 
 
 
 
 
 
 
 
 
 
Expenses (1) (2)
919,998

 
81,261

 
148,555

 
(118
)
 
1,149,696

 
 
 
 
 
 
 
 
 
 
Other income (expense):
 
 
 
 
 
 
 
 
 
Interest income
1,805

 
13,117

 
2,550

 
—

 
17,472

Interest expense
(391,122
)
 
(8,271
)
 
(9,736
)
 
—

 
(409,129
)
Other (1)
(4,622
)
 
3,846

 
710

 
—

 
(66
)
Other income (expense), net
(393,939
)
 
8,692

 
(6,476
)
 
—

 
(391,723
)
 
 
 
 
 
 
 
 
 
 
Income (loss) before income taxes
$
212,669

 
$
14,242

 
$
(150,297
)
 
$
—

 
$
76,614

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

 
 

 
 

 
 

 
 

September 30, 2015
$
4,681,176

 
$
2,571,893

 
$
757,985

 
$
—

 
$
8,011,054

 
 
 
 
 
 
 
 
 
 
December 31, 2014
$
5,881,862

 
$
1,963,729

 
$
421,687

 
$
—

 
$
8,267,278

 
 
 
 
 
 
 
 
 
 
September 30, 2014
$
6,059,359

 
$
1,706,964

 
$
589,317

 
$
—

 
$
8,355,640


(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 September 30, 2015
Depreciation expense
$
694

 
$
96

 
$
4,256

 
$
5,046

Amortization of mortgage servicing rights
18,023

 
85

 
—

 
18,108

Amortization of debt discount
329

 
—

 
—

 
329

Amortization of debt issuance costs
2,981

 
—

 
344

 
3,325

 
 
 
 
 
 
 
 
For the three months ended September 30, 2014
Depreciation expense
$
2,636

 
$
98

 
$
3,022

 
$
5,756

Amortization of mortgage servicing rights
60,689

 
94

 
—

 
60,783

Amortization of debt discount
331

 
—

 
—

 
331

Amortization of debt issuance costs
1,114

 
—

 
344

 
1,458

 
 
 
 
 
 
 
 
For the nine months ended September 30, 2015
Depreciation expense
$
1,736

 
$
292

 
$
11,439

 
$
13,467

Amortization of mortgage servicing rights
87,926

 
262

 
—

 
88,188

Amortization of debt discount
1,022

 
—

 
—

 
1,022

Amortization of debt issuance costs
9,336

 
—

 
1,049

 
10,385

 
 
 
 
 
 
 
 
For the nine months ended September 30, 2014
Depreciation expense
$
8,099

 
$
235

 
$
8,267

 
$
16,601

Amortization of mortgage servicing rights
185,263

 
613

 
199

 
186,075

Amortization of debt discount
991

 
—

 
—

 
991

Amortization of debt issuance costs
3,241

 
—

 
513

 
3,754
Note 24 — 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 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. Conventional loans include prime loans, which represent residential loans that exceeded the GSE limits at origination.
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 subprime non-Agency loans held for sale (at lower of cost or fair value) investments in mortgage-backed securities, affordable housing investment activities and investments in unconsolidated entities. Corporate Items and Other also included the diversified fee-based businesses that we acquired as part of the Homeward and ResCap Acquisitions 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 year ended December 31, 2014
 
 
 
 
 
 
 
 
 
Revenue (1)
$
1,985,436

 
$
119,220

 
$
6,825

 
$
(156
)
 
$
2,111,325

Operating expenses (1) (2)
1,643,323

 
156,272

 
235,769

 
(156
)
 
2,035,208

Income (loss) from operations
342,113

 
(37,052
)
 
(228,944
)
 
—

 
76,117

Other income (expense):
 
 
 
 
 
 
 
 
 
Interest income
2,981

 
16,459

 
3,551

 
—

 
22,991

Interest expense
(515,141
)
 
(10,725
)
 
(15,891
)
 
—

 
(541,757
)
Other (1)
(4,043
)
 
4,476

 
(943
)
 
—

 
(510
)
Other income (expense), net
(516,203
)
 
10,210

 
(13,283
)
 
—

 
(519,276
)
Loss before income taxes
$
(174,090
)
 
$
(26,842
)
 
$
(242,227
)
 
$
—

 
$
(443,159
)
 
 
 
 
 
 
 
 
 
 
For the year ended December 31, 2013
 
 
 
 
 
 
 
 
 
Revenue (1)
$
1,895,921

 
$
120,899

 
$
22,092

 
$
(639
)
 
$
2,038,273

Operating expenses (1) (2)
1,096,084

 
98,194

 
107,188

 
(172
)
 
1,301,294

Income (loss) from operations
799,837

 
22,705

 
(85,096
)
 
(467
)
 
736,979

Other income (expense):
 
 
 
 
 
 
 
 
 
Interest income
1,599

 
16,295

 
4,461

 
—

 
22,355

Interest expense
(381,477
)
 
(13,508
)
 
(601
)
 
—

 
(395,586
)
Other (1)
(28,292
)
 
10,132

 
6,424

 
467

 
(11,269
)
Other income (expense), net
(408,170
)
 
12,919

 
10,284

 
467

 
(384,500
)
Income (loss) before income taxes
$
391,667

 
$
35,624

 
$
(74,812
)
 
$
—

 
$
352,479

 
 
 
 
 
 
 
 
 
 
For the year ended December 31, 2012
 
 
 
 
 
 
 
 
 
Revenue (1)
$
840,630

 
$
356

 
$
5,122

 
$
(905
)
 
$
845,203

Operating expenses (1) (2)
344,315

 
409

 
19,667

 
(484
)
 
363,907

Income (loss) from operations
496,315

 
(53
)
 
(14,545
)
 
(421
)
 
481,296

Other income (expense):
 

 
 

 
 

 
 

 
 

Interest income
9

 
309

 
8,011

 
—

 
8,329

Interest expense
(221,948
)
 
(514
)
 
(993
)
 
—

 
(223,455
)
Other (1)
(13
)
 
—

 
(9,070
)
 
421

 
(8,662
)
Other income (expense), net
(221,952
)
 
(205
)
 
(2,052
)
 
421

 
(223,788
)
Income (loss) before income taxes
$
274,363

 
$
(258
)
 
$
(16,597
)
 
$
—

 
$
257,508

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

 
 

 
 

 
 

 
 

December 31, 2014
$
5,881,862

 
$
1,963,729

 
$
421,687

 
$
—

 
$
8,267,278

 
 
 
 
 
 
 
 
 
 
December 31, 2013
$
6,295,976

 
$
1,195,812

 
$
435,215

 
$
—

 
$
7,927,003

 
 
 
 
 
 
 
 
 
 
December 31, 2012
$
4,575,489

 
$
476,434

 
$
634,039

 
$
—

 
$
5,685,962

(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 year ended December 31, 2014:
 

 
 

 
 

 
 

Depreciation expense
$
9,955

 
$
332

 
$
11,623

 
$
21,910

Amortization of MSRs
249,471

 
705

 
199

 
250,375

Amortization of debt discount
1,318

 
—

 
—

 
1,318

Amortization of debt issuance costs
4,294

 
—

 
845

 
5,139

 
 
 
 
 
 
 
 
For the year ended December 31, 2013:
 

 
 

 
 

 
 

Depreciation expense
$
13,525

 
$
320

 
$
10,400

 
$
24,245

Amortization of MSRs
282,526

 
255

 
—

 
282,781

Amortization of debt discount
1,412

 
—

 
—

 
1,412

Amortization of debt issuance costs
4,395

 
—

 
—

 
4,395

 
 
 
 
 
 
 
 
For the year ended December 31, 2012:
 

 
 

 
 

 
 

Depreciation expense
$
1,469

 
$
8

 
$
4,243

 
$
5,720

Amortization of MSRs
72,897

 
—

 
—

 
72,897

Amortization of debt discount
3,259

 
—

 
—

 
3,259

Amortization of debt issuance costs
3,718

 
—

 
—

 
3,718