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Mortgage Servicing (Tables) | 12 Months Ended
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Dec. 31, 2016
Transfers and Servicing [Abstract] |
Summary of Activity in Carrying Value of Amortization Method Servicing Assets | The following table summarizes changes in the net carrying value of servicing assets that we account for using the amortization method for the years ended December 31.
| 2016 |  | 2015 |  | 2014
Beginning balance | $ | 377,379 |  |  | $ | 1,820,091 |  |  | $ | 1,953,352 |
Fair value election - transfer to MSRs carried at fair value (1) | — |  |  | (787,142 | ) |  | — |
Additions recognized in connection with business acquisitions (2) (3) | — |  |  | — |  |  | 20,378 |
Additions recognized in connection with asset acquisitions | 17,356 |  |  | 12,356 |  |  | 35,326 |
Additions recognized on the sale of mortgage loans | 37,231 |  |  | 34,961 |  |  | 63,310 |
Sales | (24,452 | ) |  | (586,352 | ) |  | (137 | )
Servicing transfers and adjustments | — |  |  | — |  |  | (1,763 | )
| 407,514 |  |  | 493,914 |  |  | 2,070,466 |
Increase in impairment valuation allowance (4) | (10,813 | ) |  | (17,341 | ) |  | — |
Amortization | (32,979 | ) |  | (99,194 | ) |  | (250,375 | )
Ending balance | $ | 363,722 |  |  | $ | 377,379 |  |  | $ | 1,820,091 |
Estimated fair value at end of year | $ | 467,911 |  |  | $ | 461,555 |  |  | $ | 2,237,703 |
(1) | Effective January 1, 2015, we elected fair value accounting for a newly-created class of non-Agency MSRs, which were previously accounted for using the amortization method, based on a different strategy for managing the risks of the underlying portfolio compared to our other MSR classes. This irrevocable election applies to all subsequently acquired or originated servicing assets and liabilities that have characteristics consistent with this class. We recorded a cumulative-effect adjustment of $52.0 million (before deferred income taxes of $9.2 million) to retained earnings as of January 1, 2015 to reflect the excess of the fair value of these MSRs over their carrying amount. At December 31, 2014, the UPB of the loans related to the non-Agency MSRs for which the fair value election was made was $195.3 billion.
(2) | As of the February 15, 2013 acquisition date, the purchase of certain MSRs from Residential Capital, LLC (ResCap) was not complete pending the receipt of certain consents and court approvals. Subsequent to the acquisition, we obtained the required consents and approvals for a portion of these MSRs and, in 2014, paid an additional purchase price of $54.2 million, which included $11.4 million to acquire the MSRs and $39.2 million to acquire the related advances. We recorded a contingent asset effective as of the ResCap acquisition date.
(3) | On January 31, 2014, we increased our ownership in Ocwen Structured Investments, LLC (OSI) from 26.00% to 87.35%. The acquired net assets were $20.0 million and consisted primarily of MSRs ($9.0 million), mortgage-backed securities ($7.7 million) and cash ($3.2 million).
(4) | Impairment of MSRs is recognized in Servicing and origination expense in the consolidated statements of operations.
Schedule of Estimated Amortization Expense for MSRs | The estimated amortization expense for MSRs, calculated based on assumptions used at December 31, 2016, is projected as follows over the next five years:
2017 | $ | 45,960 |
2018 | 37,158 |
2019 | 35,264 |
2020 | 35,832 |
2021 | 33,134 |
Summary of Activity Related to Fair Value Servicing Assets | The following table summarizes changes in the fair value of servicing assets that we account for at fair value on a recurring basis for the years ended December 31:
| 2016 |  | 2015 |  | 2014
| Agency |  | Non-Agency |  | Total |  | Agency |  | Non-Agency |  | Total |  | Agency
Beginning balance | $ | 15,071 |  |  | $ | 746,119 |  |  | $ | 761,190 |  |  | $ | 93,901 |  |  | $ | — |  |  | $ | 93,901 |  |  | $ | 116,029 |
Fair value election - transfer from MSRs carried at amortized cost | — |  |  | — |  |  | — |  |  | — |  |  | 787,142 |  |  | 787,142 |  |  | — |
Cumulative effect of fair value election | — |  |  | — |  |  | — |  |  | — |  |  | 52,015 |  |  | 52,015 |  |  | — |
Sales | (3 | ) |  | (145 | ) |  | (148 | ) |  | (70,930 | ) |  | (1,344 | ) |  | (72,274 | ) |  | — |
Additions recognized on the sale of residential mortgage loans | — |  |  | — |  |  | — |  |  | — |  |  | 1,007 |  |  | 1,007 |  |  | — |
Servicing transfers and adjustments | — |  |  | (1,548 | ) |  | (1,548 | ) |  | — |  |  | (2,428 | ) |  | (2,428 | ) |  | — |
Changes in fair value (1): |  |  |  |  |  |  |  |  |  |  | — |  |  |
Changes in valuation inputs or other assumptions | 305 |  |  | — |  |  | 305 |  |  | (639 | ) |  | 10,684 |  |  | 10,045 |  |  | (15,028 | )
Realization of expected future cash flows and other changes | (2,016 | ) |  | (78,527 | ) |  | (80,543 | ) |  | (7,261 | ) |  | (100,957 | ) |  | (108,218 | ) |  | (7,100 | )
Ending balance | $ | 13,357 |  |  | $ | 665,899 |  |  | $ | 679,256 |  |  | $ | 15,071 |  |  | $ | 746,119 |  |  | $ | 761,190 |  |  | $ | 93,901 |
(1) | Changes in fair value are recognized in Servicing and origination expense in the consolidated statements of operations.
Summary of Estimated Change in the Value of MSRs Carried at Fair Value | The following table summarizes the estimated change in the value of the MSRs that we carry at fair value as of December 31, 2016 given hypothetical shifts in lifetime prepayments and yield assumptions:
| Adverse change in fair value
| 10% |  | 20%
Weighted average prepayment speeds | $ | (64,604 | ) |  | $ | (131,414 | )
Discount rate (option-adjusted spread) | $ | (19,043 | ) |  | $ | (34,224 | )
Schedule of Composition of Primary Servicing and Subservicing Portfolios by Type of Property Serviced as Measured by UPB | The following table presents the composition of our primary servicing and subservicing portfolios by type of property serviced as measured by UPB. The servicing portfolio represents loans for which we own the servicing rights while subservicing represents all other loans. The UPB of assets serviced for others are not included on our consolidated balance sheets.
| Residential |  | Commercial |  | Total
UPB at December 31, 2016 |  |  |  |  |  |  |  |
Servicing | $ | 86,049,298 |  |  | $ | — |  |  | $ | 86,049,298 |
Subservicing | 4,330,084 |  |  | 92,933 |  |  | 4,423,017 |
NRZ (1) | 118,712,748 |  |  | — |  |  | 118,712,748 |
| $ | 209,092,130 |  |  | $ | 92,933 |  |  | $ | 209,185,063 |
UPB at December 31, 2015 |  |  |  |  |  |  |  |
Servicing | $ | 100,058,745 |  |  | $ | — |  |  | $ | 100,058,745 |
Subservicing | 13,764,558 |  |  | 105,268 |  |  | 13,869,826 |
NRZ (1) | 137,142,809 |  |  | — |  |  | 137,142,809 |
| $ | 250,966,112 |  |  | $ | 105,268 |  |  | $ | 251,071,380 |
UPB at December 31, 2014 |  |  |  |  |  |  |  |
Servicing | $ | 208,135,523 |  |  | $ | — |  |  | $ | 208,135,523 |
Subservicing | 29,806,924 |  |  | 149,737 |  |  | 29,956,661 |
NRZ (1) | 160,785,280 |  |  | — |  |  | 160,785,280 |
| $ | 398,727,727 |  |  | $ | 149,737 |  |  | $ | 398,877,464 |
(1) | UPB of loans serviced for which the Rights to MSRs have been sold to NRZ.
Summary of Geographic Distributions of UPB and Count of Residential Loans and Real Estate Serviced | At December 31, 2016, the geographic distribution of the UPB and count of residential loans and real estate we serviced was as follows:
| Amount |  | Count
California | $ | 48,094,471 |  |  | 191,031 |
New York | 18,741,164 |  |  | 79,197 |
Florida | 17,282,020 |  |  | 126,949 |
New Jersey | 10,254,163 |  |  | 49,857 |
Texas | 9,522,228 |  |  | 109,763 |
Other | 105,198,084 |  |  | 836,969 |
| $ | 209,092,130 |  |  | 1,393,766 |
Schedule of Components of Servicing and Subservicing Fees | The following table presents the components of servicing and subservicing fees for the years ended December 31:
| 2016 |  | 2015 |  | 2014
Loan servicing and subservicing fees: |  |  |  |  |
Servicing | $ | 293,210 |  |  | $ | 453,445 |  |  | $ | 627,678 |
Subservicing | 21,427 |  |  | 58,384 |  |  | 128,797 |
NRZ | 633,545 |  |  | 694,833 |  |  | 736,122 |
| 948,182 |  |  | 1,206,662 |  |  | 1,492,597 |
Home Affordable Modification Program (HAMP) fees | 110,367 |  |  | 135,036 |  |  | 141,121 |
Late charges | 66,709 |  |  | 82,690 |  |  | 121,618 |
Loan collection fees | 27,213 |  |  | 31,763 |  |  | 33,983 |
Custodial accounts (float earnings) | 8,969 |  |  | 15,870 |  |  | 6,693 |
Other | 25,180 |  |  | 59,776 |  |  | 98,163 |
| $ | 1,186,620 |  |  | $ | 1,531,797 |  |  | $ | 1,894,175 |

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