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Mortgage Servicing (Tables) | 12 Months Ended
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Dec. 31, 2018
Transfers and Servicing [Abstract] |
Summary of Activity in Carrying Value of Amortization Method Servicing Assets |
Mortgage Servicing Rights – Amortization Method | Years Ended December 31,
2018 |  | 2017 |  | 2016
Beginning balance | $ | 336,882 |  |  | $ | 363,722 |  |  | $ | 377,379 |
Fair value election - transfer to MSRs carried at fair value (1) | (361,670 | ) |  | — |  |  | — |
Additions recognized in connection with asset acquisitions | — |  |  | 1,658 |  |  | 17,356 |
Additions recognized on the sale of mortgage loans | — |  |  | 20,738 |  |  | 37,230 |
Sales | — |  |  | (1,066 | ) |  | (24,452 | )
Servicing transfers and adjustments | — |  |  | 252 |  |  | — |
| (24,788 | ) |  | 385,304 |  |  | 407,513 |
Decrease (increase) in impairment valuation allowance (1) (2) | 24,788 |  |  | 3,366 |  |  | (10,813 | )
Amortization (1) | — |  |  | (51,788 | ) |  | (32,978 | )
Ending balance | $ | — |  |  | $ | 336,882 |  |  | $ | 363,722 |
Estimated fair value at end of year | $ | — |  |  | $ | 418,745 |  |  | $ | 467,911 |
(1) | Effective January 1, 2018, we elected fair value accounting for our MSRs previously accounted for using the amortization method, which included Agency MSRs and government-insured MSRs. This irrevocable election applies to all subsequently acquired or originated servicing assets and liabilities that have characteristics consistent with each of these classes. We recorded a cumulative-effect adjustment of $82.0 million to retained earnings as of January 1, 2018 to reflect the excess of the fair value of the Agency MSRs over their carrying amount. We also recognized the tax effect of this adjustment through an increase in retained earnings of $6.8 million and a deferred tax asset for the same amount. However, we established a full valuation allowance on the resulting deferred tax asset through a reduction in retained earnings. The government-insured MSRs were impaired by $24.8 million at December 31, 2017; therefore, these MSRs were already effectively carried at fair value.
(2) | Impairment of MSRs is recognized in MSR valuation adjustments, net in the consolidated statements of operations for 2017 and 2016. Impairment valuation allowance balance of $24.8 million was reclassified to reduce the carrying value of the related MSRs on January 1, 2018 in connection with our fair value election. See Note 4 — Fair Value for additional information regarding impairment and the valuation allowance.
Summary of Activity Related to Fair Value Servicing Assets |
Mortgage Servicing Rights – Fair Value Measurement Method | Years Ended December 31,
2018 |  | 2017 |  | 2016
| Agency |  | Non-Agency |  | Total |  | Agency |  | Non-Agency |  | Total |  | Agency |  | Non-Agency |  | Total
Beginning balance | $ | 11,960 |  |  | $ | 660,002 |  |  | $ | 671,962 |  |  | $ | 13,357 |  |  | $ | 665,899 |  |  | $ | 679,256 |  |  | $ | 15,071 |  |  | $ | 746,119 |  |  | $ | 761,190 |
Fair value election - transfer from MSRs carried at amortized cost | 336,882 |  |  | — |  |  | 336,882 |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |
Cumulative effect of fair value election | 82,043 |  |  | — |  |  | 82,043 |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |
Sales | (4,748 | ) |  | (1,492 | ) |  | (6,240 | ) |  | — |  |  | (540 | ) |  | (540 | ) |  | (3 | ) |  | (145 | ) |  | (148 | )
Additions: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Recognized on the sale of residential mortgage loans | 8,279 |  |  | — |  |  | 8,279 |  |  | 162 |  |  | — |  |  | 162 |  |  | — |  |  | — |  |  | — |
Recognized in connection with the acquisition of PHH | 494,348 |  |  | 23,779 |  |  | 518,127 |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |
Purchase of MSRs | 5,433 |  |  | — |  |  | 5,433 |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |
Servicing transfers and adjustments | (1,047 | ) |  | (4,833 | ) |  | (5,880 | ) |  | — |  |  | (2,376 | ) |  | (2,376 | ) |  | — |  |  | (1,548 | ) |  | (1,548 | )
Changes in fair value (1): |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Changes in valuation inputs or other assumptions | 11,558 |  |  | (5,705 | ) |  | 5,853 |  |  | 243 |  |  | 86,721 |  |  | 86,964 |  |  | 305 |  |  | — |  |  | 305 |
Realization of expected future cash flows and other changes | (79,121 | ) |  | (80,189 | ) |  | (159,310 | ) |  | (1,802 | ) |  | (89,702 | ) |  | (91,504 | ) |  | (2,016 | ) |  | (78,527 | ) |  | (80,543 | )
Ending balance | $ | 865,587 |  |  | $ | 591,562 |  |  | $ | 1,457,149 |  |  | $ | 11,960 |  |  | $ | 660,002 |  |  | $ | 671,962 |  |  | $ | 13,357 |  |  | $ | 665,899 |  |  | $ | 679,256 |
(1) | Changes in fair value are recognized in MSR valuation adjustments, net 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, 2018 given hypothetical shifts in lifetime prepayments and yield assumptions:
| Adverse change in fair value
| 10% |  | 20%
Weighted average prepayment speeds | $ | (122,911 | ) |  | $ | (237,916 | )
Discount rate (option-adjusted spread) | (43,410 | ) |  | (84,631 | )
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 residential primary servicing and subservicing portfolios as measured by UPB, including foreclosed real estate and small-balance commercial loans. 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.
UPB at December 31, 2018 |  |
Servicing (3) | $ | 72,378,693 |
Subservicing (3) | 53,104,560 |
NRZ (1) (3) | 130,517,237 |
| $ | 256,000,490 |
UPB at December 31, 2017 |  |
Servicing | $ | 75,469,327 |
Subservicing | 2,063,669 |
NRZ (1) | 101,819,557 |
| $ | 179,352,553 |
UPB at December 31, 2016 |  |
Servicing | $ | 86,049,298 |
Subservicing (2) | 4,330,084 |
NRZ (1) | 118,712,748 |
| $ | 209,092,130 |
(1) | UPB of loans for which the Rights to MSRs have been sold to NRZ, including those for which third-party consents have been received and the MSRs have been transferred to NRZ.
(2) | Excludes $92.9 million of large-balance commercial foreclosed real estate. During 2017, we sold or transferred servicing on the remaining managed assets.
(3) | Includes $6.3 billion, $51.3 billion and $42.3 billion UPB of loans serviced, subserviced or subserviced on behalf of NRZ, respectively, added to the portfolio in connection with the PHH acquisition.
Summary of Geographic Distributions of UPB and Count of Residential Loans and Real Estate Serviced | The geographic distribution of the UPB and count of residential loans and real estate we serviced at December 31, 2018 was as follows:
| Amount |  | Count
California | $ | 56,455,157 |  |  | 201,058 |
New York | 25,411,051 |  |  | 101,444 |
Florida | 20,345,407 |  |  | 134,335 |
New Jersey | 13,711,894 |  |  | 65,263 |
Texas | 11,858,287 |  |  | 111,512 |
Other | 128,218,694 |  |  | 948,626 |
| $ | 256,000,490 |  |  | 1,562,238 |
Schedule of Components of Servicing and Subservicing Fees |
| Years Ended December 31,
Servicing Revenue | 2018 |  | 2017 |  | 2016
Loan servicing and subservicing fees |  |  |  |  |
Servicing | $ | 224,892 |  |  | $ | 257,419 |  |  | $ | 293,210 |
Subservicing | 8,904 |  |  | 7,775 |  |  | 21,427 |
NRZ | 539,039 |  |  | 549,411 |  |  | 633,545 |
| 772,835 |  |  | 814,605 |  |  | 948,182 |
Late charges | 61,453 |  |  | 61,763 |  |  | 66,709 |
Home Affordable Modification Program (HAMP) fees (1) | 14,312 |  |  | 43,310 |  |  | 110,367 |
Custodial accounts (float earnings) | 40,115 |  |  | 25,237 |  |  | 8,969 |
Loan collection fees | 18,392 |  |  | 22,770 |  |  | 27,213 |
Other | 27,229 |  |  | 21,691 |  |  | 25,180 |
| $ | 934,336 |  |  | $ | 989,376 |  |  | $ | 1,186,620 |
(1) | The HAMP expired on December 31, 2016. Borrowers who had requested assistance or to whom an offer of assistance had been extended as of that date had until September 30, 2017 to finalize their modification.

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- Definition Tabular disclosure of a sensitivity analysis or stress test showing the hypothetical effect on the fair value of the transferor's interests in transferred financial assets (including any servicing assets or servicing liabilities) of two or more unfavorable variations from the expected levels for each key assumption that is reported, independently determined from any change in another key assumption, and a description of the objectives, methodology, and limitations of the sensitivity analysis or stress test. + References Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 860 -SubTopic 20 -Section 50 -Paragraph 4 -Subparagraph (c) -URI http://asc.fasb.org/extlink&oid=109247956&loc=d3e107314-111719 Reference 2: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 860 -SubTopic 20 -Section 50 -Paragraph 4 -Subparagraph (d) -URI http://asc.fasb.org/extlink&oid=109247956&loc=d3e107314-111719 + Details
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