Note 5 – Loans Held for Sale

Loans Held for Sale - Fair Value

The following table summarizes the activity in the balance:



	For the Three Months Ended March 31,
	2017			2016
Beginning balance	$	284,632		$	309,054
Originations and purchases	840,999			789,180
Proceeds from sales	(817,033		)	(783,187		)
Principal collections	(744		)	(3,280		)
Gain (loss) on sale of loans	(396		)	7,646
Increase in fair value of loans	5,628			1,785
Other	472			541
Ending balance (1)	$	313,558		$	321,739


(1)	At March 31, 2017 and 2016, the balances include $10.5 million and $13.7 million, respectively, of fair value adjustments.

At March 31, 2017, loans held for sale, at fair value with a UPB of $231.9 million were pledged as collateral to warehouse lines of credit in our Lending segment.

Loans Held for Sale - Lower of Cost or Fair Value

The following table summarizes the activity in the net balance:



	For the Three Months Ended March 31,
	2017			2016
Beginning balance	$	29,374		$	104,992
Purchases	396,536			421,896
Proceeds from sales	(354,285		)	(372,583		)
Principal collections	(1,850		)	(6,453		)
Transfers to accounts receivable	(48,752		)	(61,212		)
Transfers to real estate owned	(55		)	(1,224		)
Gain (loss) on sale of loans	(998		)	5,010
Decrease (increase) in valuation allowance	4,429			(3,335		)
Other	1,196			(21		)
Ending balance (1)	$	25,595		$	87,070


(1)	At March 31, 2017 and 2016, the balances include $20.0 million and $55.5 million, respectively, of loans that we were required to repurchase from Ginnie Mae guaranteed securitizations as part of our servicing obligations. Repurchased loans are modified or otherwise remediated through loss mitigation activities or are reclassified to receivables.

The changes in the valuation allowance are as follows:



	For the Three Months Ended March 31,
	2017			2016
Beginning balance	$	10,064		$	14,658
Provision	364			2,597
Transfer from liability for indemnification obligations	255			1,030
Sales of loans	(5,045		)	—
Other	(3		)	(292		)
Ending balance	$	5,635		$	17,993

At March 31, 2017, Loans held for sale, at lower of cost or fair value, with a UPB of $13.4 million were pledged as collateral to a warehouse line of credit in our Servicing segment.

Gain on Loans Held for Sale, Net

The following table summarizes the activity in Gain on loans held for sale, net:



	For the Three Months Ended March 31,
	2017			2016
MSRs retained on transfers of forward loans	$	8,126		$	6,484
Fair value gains related to transfers of reverse mortgage loans, net	7,638			356
Gain (loss) on sale of repurchased Ginnie Mae loans	(998		)	5,010
Other gains related to loans held for sale, net	2,146			6,089
Gain on sales of loans, net	16,912			17,939
Change in fair value of IRLCs	1,060			7,465
Change in fair value of loans held for sale	7,666			3,521
Loss on economic hedge instruments	(2,514		)	(13,202		)
Other	(180		)	(151		)
	$	22,944		$	15,572