Note 12 — Other Assets

Other assets consisted of the following at December 31:



	2016		2015
Contingent loan repurchase asset (1)	$	246,081	$	346,984
Prepaid expenses (2)	57,188		69,805
Debt service accounts (3)	42,822		87,328
Automotive dealer financing notes, net (4)	33,224		2,538
Derivatives, at fair value	9,279		6,367
Prepaid lender fees, net (5)	9,023		19,496
Prepaid income taxes (6)	8,392		11,749
Mortgage-backed securities, at fair value	8,342		7,985
Real estate	5,249		20,489
Other	15,772		13,754
	$	435,372	$	586,495

(1)

In connection with the Ginnie Mae EBO program, our agreements provide either that: (a) we have the right, but not the obligation, to repurchase previously transferred mortgage loans under certain conditions, including the mortgage loans becoming eligible for pooling under a program sponsored by Ginnie Mae; or (b) we have the obligation to repurchase previously transferred mortgage loans that have been subject to a successful trial modification before any permanent modification is made. Once these conditions are met, we have effectively regained control over the mortgage loan(s), and under GAAP, must re-recognize the loans on our consolidated balance sheets and establish a corresponding repurchase liability. With respect to those loans that we have the right, but not the obligation, to repurchase under the applicable agreement, this requirement applies regardless of whether we have any intention to repurchase the loan. We re-recognize the loans in Other assets and a corresponding liability in Other liabilities.


(2)	In connection with the sale of Agency MSRs in 2015, we placed $52.9 million in escrow for the payment of representation, warranty and indemnification claims associated with the underlying loans. Prepaid expenses at December 31, 2016 and 2015 includes the remaining balance of $34.9 million and $41.3 million, respectively.

(3)

Under our advance financing facilities, we are contractually required to remit collections on pledged advances to the trustee within two days of receipt. The collected funds are not applied to reduce the related match funded debt until the payment dates specified in the indenture. The balances also include amounts that have been set aside from the proceeds of our match funded advance facilities to provide for possible shortfalls in the funds available to pay certain expenses and interest, as well as amounts set aside as required by our warehouse facilities as security for our obligations under the related agreements. The funds are held in interest earning accounts and those amounts related to match funded facilities are held in the name of the SPE created in connection with the facility.


(4)	These notes represent short-term inventory-secured floor plan loans provided to independent used car dealerships through our ACS venture. Automotive dealer financing notes are net of an allowance of $4.4 million and $0.03 million at December 31, 2016 and 2015, respectively. We recognized a provision for losses on these notes of $4.3 million in 2016.


(5)	We amortize these costs to the earlier of the scheduled amortization date, contractual maturity date or prepayment date of the debt.


(6)	The deferred tax effects of intra-entity transfers of MSRs have been recognized as prepaid income taxes and are presently being amortized to Income tax expense over 7-year periods through 2021.