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Mortgage Servicing (Tables) | 9 Months Ended
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Sep. 30, 2019
Transfers and Servicing [Abstract] |
Schedule of Activity Related to MSRs - Amortization Method |
MSRs – Amortization Method | Nine Months Ended September 30, 2018
Beginning balance | $ | 336,882 |
Fair value election - transfer of MSRs carried at fair value (1) | (361,670 | )
Decrease in impairment valuation allowance (1) (2) | 24,788 |
Ending balance | $ | — |
(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 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.
Schedule of Activity Related to MSRs - Fair Value Measurement Method |
MSRs – Fair Value Measurement Method | Three Months Ended September 30,
2019 |  | 2018
| Agency |  | Non-Agency |  | Total |  | Agency |  | Non-Agency |  | Total
Beginning balance | $ | 745,735 |  |  | $ | 566,898 |  |  | $ | 1,312,633 |  |  | $ | 427,597 |  |  | $ | 616,398 |  |  | $ | 1,043,995 |
Fair value election - transfer from MSRs carried at amortized cost | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |
Cumulative effect of fair value election | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |
Sales and other transfers | — |  |  | (15 | ) |  | (15 | ) |  | (5,950 | ) |  | (20 | ) |  | (5,970 | )
Additions: |  |  |  |  |  |  |  |  |  |  |
Recognized on the sale of residential mortgage loans | 1,235 |  |  | — |  |  | 1,235 |  |  | 1,503 |  |  | — |  |  | 1,503 |
Purchase of MSRs | 9,298 |  |  | 1,268 |  |  | 10,566 |  |  | 1,421 |  |  | — |  |  | 1,421 |
Servicing transfers and adjustments | — |  |  | (3,105 | ) |  | (3,105 | ) |  | — |  |  | (219 | ) |  | (219 | )
Changes in fair value (1): |  |  |  |  |  |  |  |  |  |  |
Changes in valuation inputs or other assumptions | (63,360 | ) |  | 252,293 |  |  | 188,933 |  |  | (1,243 | ) |  | (5,413 | ) |  | (6,656 | )
Realization of expected future cash flows and other changes | (36,898 | ) |  | (17,796 | ) |  | (54,694 | ) |  | (13,912 | ) |  | (20,880 | ) |  | (34,792 | )
Ending balance | $ | 656,010 |  |  | $ | 799,543 |  |  | $ | 1,455,553 |  |  | $ | 409,416 |  |  | $ | 589,866 |  |  | $ | 999,282 |
MSRs – Fair Value Measurement Method | Nine Months Ended September 30,
2019 |  | 2018
| Agency |  | Non-Agency |  | Total |  | Agency |  | Non-Agency |  | Total
Beginning balance | $ | 865,587 |  |  | $ | 591,562 |  |  | $ | 1,457,149 |  |  | $ | 11,960 |  |  | $ | 660,002 |  |  | $ | 671,962 |
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 and other transfers | (29 | ) |  | (556 | ) |  | (585 | ) |  | (5,950 | ) |  | (175 | ) |  | (6,125 | )
Additions: |  |  |  |  |  |  |  |  |  |  |
Recognized on the sale of residential mortgage loans | 3,933 |  |  | — |  |  | 3,933 |  |  | 6,080 |  |  | — |  |  | 6,080 |
Purchase of MSRs | 123,600 |  |  | 1,355 |  |  | 124,955 |  |  | 2,729 |  |  | — |  |  | 2,729 |
Servicing transfers and adjustments | — |  |  | (7,872 | ) |  | (7,872 | ) |  | — |  |  | (2,594 | ) |  | (2,594 | )
Changes in fair value (1): |  |  |  |  |  |  |  |  |  |  |
Changes in valuation inputs or other assumptions | (235,036 | ) |  | 264,876 |  |  | 29,840 |  |  | 19,217 |  |  | (424 | ) |  | 18,793 |
Realization of expected future cash flows and other changes | (102,045 | ) |  | (49,822 | ) |  | (151,867 | ) |  | (43,545 | ) |  | (66,943 | ) |  | (110,488 | )
Ending balance | $ | 656,010 |  |  | $ | 799,543 |  |  | $ | 1,455,553 |  |  | $ | 409,416 |  |  | $ | 589,866 |  |  | $ | 999,282 |
(1) | Changes in fair value are recognized in MSR valuation adjustments, net in the unaudited consolidated statements of operations.
Schedule of Composition of Servicing and Subservicing Portfolios by Type of Property Serviced | 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 UPB amounts in the table below are not included on our unaudited consolidated balance sheets.
UPB at September 30, 2019 |  |
Servicing | $ | 76,523,660 |
Subservicing | 23,175,607 |
NRZ | 117,055,517 |
| $ | 216,754,784 |
UPB at December 31, 2018 |  |
Servicing | $ | 72,378,693 |
Subservicing | 53,104,560 |
NRZ | 130,517,237 |
| $ | 256,000,490 |
UPB at September 30, 2018 |  |
Servicing | $ | 68,076,254 |
Subservicing | 1,387,641 |
NRZ | 91,532,579 |
| $ | 160,996,474 |
Schedule of Components of Servicing and Subservicing Fees |
Servicing Revenue | Three Months Ended September 30, |  | Nine Months Ended September 30,
2019 |  | 2018 |  | 2019 |  | 2018
Loan servicing and subservicing fees |  |  |  |  |  |  |
Servicing | $ | 60,682 |  |  | $ | 52,610 |  |  | $ | 167,720 |  |  | $ | 167,389 |
Subservicing | 1,365 |  |  | 658 |  |  | 11,775 |  |  | 2,443 |
NRZ | 146,567 |  |  | 120,593 |  |  | 443,505 |  |  | 374,322 |
| 208,614 |  |  | 173,861 |  |  | 623,000 |  |  | 544,154 |
Late charges | 14,105 |  |  | 14,839 |  |  | 42,786 |  |  | 44,743 |
Custodial accounts (float earnings) | 13,464 |  |  | 10,241 |  |  | 38,739 |  |  | 25,965 |
Loan collection fees | 3,862 |  |  | 4,916 |  |  | 11,613 |  |  | 14,700 |
Home Affordable Modification Program (HAMP) fees (1) | 1,216 |  |  | 3,365 |  |  | 4,558 |  |  | 11,622 |
Other, net | 6,453 |  |  | 6,508 |  |  | 22,063 |  |  | 16,911 |
| $ | 247,714 |  |  | $ | 213,730 |  |  | $ | 742,759 |  |  | $ | 658,095 |
(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. We continue to earn HAMP success fees for HAMP modifications that remain less than 90 days delinquent at the first-, second- and third-year anniversary of the start of the trial modification.

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- Definition Tabular disclosure of the activity in the balance of servicing assets (including a description of where changes in fair value are reported in the statement of income for each period for which results of operations are presented), including but not limited to, the following: beginning and ending balances, additions (for instance, through purchases of servicing assets), disposals, changes in fair value during the period resulting from changes in inputs or assumptions used in the valuation model, other changes in fair value along with a description of those changes, and other changes that affect the balance along with a description of those changes. + References Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 860 -SubTopic 50 -Section 50 -Paragraph 3 -Subparagraph (a) -URI http://asc.fasb.org/extlink&oid=116651436&loc=d3e122625-111746 + Details
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