Note 22 — 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. A brief description of our current business segments is as follows:

Servicing. This segment is primarily comprised of our core residential mortgage servicing business and currently accounts for most of our total revenues. 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 conventional and government-insured residential forward and reverse mortgage loans. 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. We originate loans directly with customers (retail channel) in forward lending as well as through our correspondent lending arrangements, broker relationships (wholesale) and retail channels of reverse mortgage lending. In 2017, we closed our forward correspondent lending channel and exited the forward wholesale lending business due to higher liquidity and capital requirements versus the available liquidity at the time. 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 corporate support services, CR Limited (CRL), our wholly-owned captive reinsurance subsidiary, discontinued operations and inactive entities, 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 and interest expense on corporate debt. 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. In January 2018, we decided to exit the ACS business and have liquidated our portfolio of inventory-secured loans to independent used car dealers.

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, 2018
Revenue (1)	$	951,224		$	93,672		$	18,149		$	—		$	1,063,045

Expenses (1)	772,467			82,906			77,123			—			932,496

Other income (expense):
Interest income	5,383			6,061			2,582			—			14,026
Interest expense	(214,172		)	(6,639		)	(54,230		)	—			(275,041		)
Bargain purchase gain	—						64,036						64,036
Gain on sale of mortgage servicing rights, net	1,325			—			—			—			1,325
Other, net (1)	(3,241		)	966			(4,096		)	—			(6,371		)
Other income (expense), net	(210,705		)	388			8,292			—			(202,025		)

Income (loss) from continuing operations before income taxes	$	(31,948	)	$	11,154		$	(50,682	)	$	—		$	(71,476	)

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, net (1)	4,049			(869		)	(6,348		)	—			(3,168		)
Other income (expense), net	(278,226		)	(3,848		)	(57,830		)	—			(339,904		)

Income (loss) from continuing operations 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	8,492			—			—			—			8,492
Other, net (1)	15,812			1,065			(2,139		)	—			14,738
Other income (expense), net	(333,218		)	1,967			(39,019		)	—			(370,270		)

Income (loss) from continuing operations before income taxes	$	3,364		$	131		$	(209,856	)	$	—		$	(206,361	)



Total Assets	Servicing		Lending		Corporate Items and Other		Corporate Eliminations		Business Segments Consolidated
December 31, 2018	$	3,306,208	$	5,603,481	$	484,527	$	—	$	9,394,216

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


(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, 2018:
Depreciation expense	$	4,601	$	103	$	22,498	$	27,202
Amortization of debt discount	—		—		1,183		1,183
Amortization of debt issuance costs	—		—		2,921		2,921

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