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Business Segment Reporting
 6 Months Ended
Jun. 30, 2017
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. While our expense allocation methodology for the current period is consistent with that used in prior periods presented, during the first quarter of 2017, we moved certain functions which had been associated with corporate cost centers to our Lending and Servicing segments because these functions align more closely with those segments. As applicable, the results of operations for the three and six months ended June 30, 2016 have been recast to conform to the current period presentation. As a result of these changes, income before income taxes for the Lending segment for the three and six months ended June 30, 2016 decreased by $2.5 million and $5.1 million, respectively, while loss before income taxes for the Servicing segment decreased by the same amounts for the same periods.
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 broker relationships and directly with mortgage customers. The loans are typically sold shortly after origination into a liquid market on a servicing retained (securitization) or servicing released (sale to a third party) basis.
Corporate Items and Other. Corporate Items and Other includes revenues and expenses of ACS and CR Limited (CRL), our wholly-owned captive reinsurance subsidiary, and our other business activities that are individually insignificant, revenues and expenses that are not directly related to other reportable segments, interest income on short-term investments of cash, interest expense on corporate debt and certain corporate expenses. Our cash balances are included in Corporate Items and Other. ACS provides short-term inventory-secured loans to independent used car dealers to finance their inventory.
We allocate a portion of interest income to each business segment, including interest earned on cash balances and short-term investments. We also allocate expenses incurred 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, 2017
Revenue
$
271,784

 
$
32,776

 
$
6,740

 
$
—

 
$
311,300

 
 
 
 
 
 
 
 
 
 
Expenses
201,928

 
32,886

 
45,666

 
—

 
280,480

 
 
 
 
 
 
 
 
 
 
Other income (expense):
 
 
 
 
 
 
 
 
 
Interest income
174

 
3,007

 
1,058

 
—

 
4,239

Interest expense
(63,903
)
 
(3,383
)
 
(13,842
)
 
—

 
(81,128
)
Gain on sale of mortgage servicing rights, net
1,034

 
—

 
(1
)
 
—

 
1,033

Other
2,057

 
(128
)
 
1,499

 
—

 
3,428

Other expense, net
(60,638
)
 
(504
)
 
(11,286
)
 
—

 
(72,428
)
 
 
 
 
 
 
 
 
 
 
Income (loss) before income taxes
$
9,218

 
$
(614
)
 
$
(50,212
)
 
$
—

 
$
(41,608
)
 
 
 
 
 
 
 
 
 
 
Three months ended June 30, 2016
Revenue
$
325,120

 
$
35,376

 
$
12,558

 
$
—

 
$
373,054

 
 
 
 
 
 
 
 
 
 
Expenses
257,751

 
31,181

 
96,086

 
—

 
385,018

 


 


 


 


 


Other income (expense):
 
 
 
 
 
 
 
 
 
Interest income
(15
)
 
4,204

 
951

 
—

 
5,140

Interest expense
(81,197
)
 
(3,697
)
 
(6,139
)
 
—

 
(91,033
)
Gain on sale of mortgage servicing rights, net
853

 
—

 
—

 
—

 
853

Other
806

 
308

 
(508
)
 
—

 
606

Other income (expense), net
(79,553
)
 
815

 
(5,696
)
 
—

 
(84,434
)
 
 
 
 
 
 
 
 
 
 
Income (loss) before income taxes
$
(12,184
)
 
$
5,010

 
$
(89,224
)
 
$
—

 
$
(96,398
)
 
 
 
 
 
 
 
 
 
 
 
Servicing
 
Lending
 
Corporate Items and Other
 
Corporate Eliminations
 
Business Segments Consolidated
Six months ended June 30, 2017
Revenue
$
555,802

 
$
63,522

 
$
13,840

 
$
—

 
$
633,164

 
 
 
 
 
 
 
 
 
 
Expenses
418,842

 
62,217

 
75,804

 
—

 
556,863

 
 
 
 
 
 
 
 
 
 
Other income (expense):
 
 
 
 
 
 
 
 
 
Interest income
261

 
5,754

 
1,987

 
—

 
8,002

Interest expense
(131,254
)
 
(6,667
)
 
(27,269
)
 
—

 
(165,190
)
Gain on sale of mortgage servicing rights, net
1,320

 
—

 
—

 
—

 
1,320

Other
5,060

 
103

 
2,298

 
—

 
7,461

Other expense, net
(124,613
)
 
(810
)
 
(22,984
)
 
—

 
(148,407
)
 
 
 
 
 
 
 
 
 
 
Income (loss) before income taxes
$
12,347

 
$
495

 
$
(84,948
)
 
$
—

 
$
(72,106
)
 
 
 
 
 
 
 
 
 
 
Six months ended June 30, 2016
Revenue
$
632,547

 
$
58,660

 
$
12,604

 
$
—

 
$
703,811

 
 
 
 
 
 
 
 
 
 
Expenses
532,070

 
55,558

 
126,047

 
—

 
713,675

 
 
 
 
 
 
 
 
 
 
Other income (expense):
 
 
 
 
 
 
 
 
 
Interest income
(161
)
 
7,815

 
1,676

 
—

 
9,330

Interest expense
(177,670
)
 
(7,145
)
 
(12,307
)
 
—

 
(197,122
)
Gain on sale of mortgage servicing rights, net
2,028

 
—

 
—

 
—

 
2,028

Other
(2,537
)
 
659

 
(1,017
)
 
—

 
(2,895
)
Other income (expense), net
(178,340
)
 
1,329

 
(11,648
)
 
—

 
(188,659
)
 
 
 
 
 
 
 
 
 
 
Income (loss) before income taxes
$
(77,863
)
 
$
4,431

 
$
(125,091
)
 
$
—

 
$
(198,523
)
 
 
 
 
 
 
 
 
 
 
 
Servicing
 
Lending
 
Corporate Items and Other
 
Corporate Eliminations
 
Business Segments Consolidated
Total Assets
 

 
 

 
 

 
 

 
 

June 30, 2017
$
2,975,458

 
$
4,483,652

 
$
473,282

 
$
—

 
$
7,932,392

 
 
 
 
 
 
 
 
 
 
December 31, 2016
$
3,312,371

 
$
3,863,862

 
$
479,430

 
$
—

 
$
7,655,663

 
 
 
 
 
 
 
 
 
 
June 30, 2016
$
3,630,933

 
$
3,424,808

 
$
432,511

 
$
—

 
$
7,488,252


 
Servicing
 
Lending
 
Corporate Items and Other
 
Business Segments Consolidated
Depreciation and Amortization Expense
 
 
 
 
 
 
 
Three months ended June 30, 2017
Depreciation expense
$
1,466

 
$
55

 
$
4,835

 
$
6,356

Amortization of mortgage servicing rights
12,627

 
70

 
—

 
12,697

Amortization of debt discount
—

 
—

 
268

 
268

Amortization of debt issuance costs
—

 
—

 
661

 
661

 
 
 
 
 
 
 
 
Three months ended June 30, 2016
Depreciation expense
$
1,206

 
$
65

 
$
5,539

 
$
6,810

Amortization of mortgage servicing rights
8,269

 
78

 
—

 
8,347

Amortization of debt discount
178

 
—

 
—

 
178

Amortization of debt issuance costs
2,889

 
—

 
332

 
3,221

 
 
 
 
 
 
 
 
Six months ended June 30, 2017
Depreciation expense
$
2,869

 
$
105

 
$
10,465

 
$
13,439

Amortization of mortgage servicing rights
25,271

 
141

 
—

 
25,412

Amortization of debt discount
—

 
—

 
539

 
539

Amortization of debt issuance costs
—

 
—

 
1,334

 
1,334

 
 
 
 
 
 
 
 
Six months ended June 30, 2016
Depreciation expense
$
2,340

 
$
136

 
$
9,374

 
$
11,850

Amortization of mortgage servicing rights
20,994

 
159

 
—

 
21,153

Amortization of debt discount
383

 
—

 
—

 
383

Amortization of debt issuance costs
5,822

 
—

 
676

 
6,498