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Business Segment Reporting
 12 Months Ended
Dec. 31, 2017
Segment Reporting [Abstract]  
Business Segment Reporting
Note 21 — 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 years ended December 31, 2016 and 2015 have been recast to conform to the current year presentation. As a result of these changes, income before income taxes for the Lending segment for the years ended December 31, 2016 and 2015 decreased by $9.9 million and $10.7 million, respectively, while income before income taxes for the Servicing segment increased by the same amounts for the same years.
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 originates and purchases conventional and government-insured residential forward and reverse mortgage loans mainly through correspondent lending arrangements, broker relationships (wholesale) and directly with mortgage customers (retail). 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. In 2017, we closed our forward correspondent lending channel and have effectively exited the forward wholesale lending business. We wrote off the capitalized balance of software developed internally for the forward wholesale lending business and recorded a loss of $6.8 million in Other expenses in 2017. We continue to originate loans through our forward retail lending channel as well as through all three channels of reverse mortgage lending.
Corporate Items and Other. Corporate Items and Other includes revenues and expenses of CR Limited (CRL), our wholly-owned captive reinsurance subsidiary, ACS 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. CRL provides re-insurance related to coverage on foreclosed real estate properties owned or serviced by us. ACS provided short-term inventory-secured loans to independent used car dealers to finance their inventory. In January 2018, we entered into an agreement to sell the majority of our portfolio. We expect to have exited the business by the end of the second quarter of 2018, although we will retain, and continue to attempt to collect on, defaulted loans.
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:
Results of Operations
 
Servicing
 
Lending
 
Corporate Items and Other
 
Corporate Eliminations
 
Business Segments Consolidated
Year Ended December 31, 2017
 
 
 
 
 
 
 
 
 
 
Revenue (1)
 
$
1,041,290

 
$
127,475

 
$
25,811

 
$
—

 
$
1,194,576

 
 
 
 
 
 
 
 
 
 
 
Expenses (1)
 
716,384

 
128,058

 
154,203

 
—

 
998,645

 
 
 
 
 
 
 
 
 
 
 
Other income (expense):
 
 
 
 
 
 
 
 
 
 
Interest income
 
783

 
10,914

 
4,268

 
—

 
15,965

Interest expense
 
(293,595
)
 
(13,893
)
 
(55,750
)
 
—

 
(363,238
)
Gain on sale of mortgage servicing rights, net
 
10,537

 
—

 
—

 
—

 
10,537

Other (1)
 
4,049

 
(869
)
 
(6,348
)
 
—

 
(3,168
)
Other expense, net
 
(278,226
)
 
(3,848
)
 
(57,830
)
 
—

 
(339,904
)
 
 
 
 
 
 
 
 
 
 
 
Income (loss) before income taxes
 
$
46,680

 
$
(4,431
)
 
$
(186,222
)
 
$
—

 
$
(143,973
)
 
 
 
 
 
 
 
 
 
 
 
Year Ended December 31, 2016
 
 
 
 
 
 
 
 
 
 
Revenue (1)
 
$
1,247,159

 
$
112,363

 
$
27,646

 
$
(5
)
 
$
1,387,163

 
 
 
 
 
 
 
 
 
 
 
Expenses (1)
 
910,577

 
114,199

 
198,483

 
(5
)
 
1,223,254

 
 
 
 
 
 
 
 
 
 
 
Other income (expense):
 
 
 
 
 
 
 
 
 
 
Interest income
 
(109
)
 
15,300

 
3,892

 
—

 
19,083

Interest expense
 
(357,413
)
 
(14,398
)
 
(40,772
)
 
—

 
(412,583
)
Gain on sale of mortgage servicing rights, net
 
8,492

 
—

 
—

 
—

 
8,492

Other (1)
 
15,812

 
1,065

 
(2,139
)
 
—

 
14,738

Other income (expense), net
 
(333,218
)
 
1,967

 
(39,019
)
 
—

 
(370,270
)
 
 
 
 
 
 
 
 
 
 
 
Income (loss) before income taxes
 
$
3,364

 
$
131

 
$
(209,856
)
 
$
—

 
$
(206,361
)
 
 
 
 
 
 
 
 
 
 
 
Year Ended December 31, 2015
 
 
 
 
 
 
 
 
 
 
Revenue (1)
 
$
1,613,537

 
$
124,724

 
$
2,895

 
$
(58
)
 
$
1,741,098

 
 
 
 
 
 
 
 
 
 
 
Expenses (1)
 
1,211,140

 
108,431

 
158,671

 
(58
)
 
1,478,184

 
 
 
 
 
 
 
 
 
 
 
Other income (expense):
 
 
 
 
 
 
 
 
 
 
Interest income
 
1,044

 
14,669

 
2,607

 
—

 
18,320

Interest expense
 
(446,377
)
 
(9,859
)
 
(26,137
)
 
—

 
(482,373
)
Gain on sale of mortgage servicing rights
 
83,921

 
—

 
—

 
—

 
83,921

Other (1)
 
(14,370
)
 
2,123

 
(396
)
 
—

 
(12,643
)
Other income (expense), net
 
(375,782
)
 
6,933

 
(23,926
)
 
—

 
(392,775
)
 
 
 
 
 
 
 
 
 
 
 
Income (loss) before income taxes
 
$
26,615

 
$
23,226

 
$
(179,702
)
 
$
—

 
$
(129,861
)
Total Assets
 
Servicing
 
Lending
 
Corporate Items and Other
 
Corporate Eliminations
 
Business Segments Consolidated
December 31, 2017
 
$
3,033,243

 
$
4,945,456

 
$
424,465

 
$
—

 
$
8,403,164

 
 
 
 
 
 
 
 
 
 
 
December 31, 2016
 
3,312,371

 
3,863,862

 
479,430

 
—

 
7,655,663

 
 
 
 
 
 
 
 
 
 
 
December 31, 2015
 
4,089,911

 
2,811,165

 
479,232

 
—

 
7,380,308

(1)
Inter-segment 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.
Depreciation and Amortization Expense
 
Servicing
 
Lending
 
Corporate Items and Other
 
Business Segments Consolidated
Year Ended December 31, 2017:
 
 

 
 

 
 

 
 

Depreciation expense
 
$
5,797

 
$
194

 
$
20,895

 
$
26,886

Amortization of mortgage servicing rights
 
51,515

 
273

 
—

 
51,788

Amortization of debt discount
 
—

 
—

 
1,114

 
1,114

Amortization of debt issuance costs
 
—

 
—

 
2,738

 
2,738

 
 
 
 
 
 
 
 
 
Year Ended December 31, 2016:
 
 

 
 

 
 

 
 

Depreciation expense
 
$
6,804

 
$
228

 
$
18,306

 
$
25,338

Amortization of mortgage servicing rights
 
32,669

 
309

 
—

 
32,978

Amortization of debt discount
 
727

 
—

 
3,450

 
4,177

Amortization of debt issuance costs
 
13,455

 
—

 
12,207

 
25,662

 
 
 
 
 
 
 
 
 
Year Ended December 31, 2015:
 
 

 
 

 
 

 
 

Depreciation expense
 
$
2,990

 
$
380

 
$
15,789

 
$
19,159

Amortization of mortgage servicing rights
 
98,849

 
345

 
—

 
99,194

Amortization of debt discount
 
2,680

 
—

 
—

 
2,680

Amortization of debt issuance costs
 
21,269

 
—

 
1,395

 
22,664