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Business Segment Reporting | 12 Months Ended
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Dec. 31, 2022
Segment Reporting [Abstract] |
Business Segment Reporting | Note 22 — Business Segment Reporting Our business segments reflect the internal reporting that we use to evaluate our operating and financial performance and to assess the allocation of our resources. A brief description of our current reportable business segments is as follows: Servicing. This segment is primarily comprised of our residential mortgage servicing business and accounted for 86% of our total revenues in 2022. We provide residential and commercial forward mortgage loan servicing, reverse mortgage servicing, special servicing and asset management services. We earn fees for providing these services to owners of the mortgage loans and foreclosed real estate. We provide these services either because we purchased the MSRs from the owner of the mortgage, retained the MSRs on the sale or securitization 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 both forward and reverse conventional, government-insured and non-Agency mortgage loans, including the reverse mortgage loans classified as loans held for investment on our balance sheet. Non-Agency loans include subprime loans, which represent residential loans that generally did not qualify under GSE guidelines or have subsequently become delinquent. The Servicing segment also includes the earnings of our equity-method investment in MAV Canopy. Originations. The Originations segment purchases and originates conventional and government-insured residential forward and reverse mortgage loans through multiple channels. The loans are typically sold shortly after origination on a servicing retained basis. We originate forward mortgage loans directly with customers (consumer direct channel) as well as through correspondent lending arrangements. We originate reverse mortgage loans in all three channels through our correspondent lending arrangements, broker relationships (wholesale) and retail channels. In addition to our originated MSRs, we acquire MSRs through multiple channels, including flow purchase agreements, the Agency Cash Window programs and bulk MSR purchases. 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, inactive entities, and our other business activities that are currently individually insignificant, revenues and expenses that are not directly related to other reportable segments, interest income on short-term investments of cash, gain or loss on extinguishment of debt, interest expense on unallocated corporate debt and foreign currency exchange gains or losses. Corporate Items and Other also includes severance, retention, facility-related and other expenses incurred in 2020 related to our cost re-engineering initiatives. 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. Revenues and expenses directly associated with each respective business segments are included in determining its results of operations. We allocate certain expenses incurred by corporate support services to each business segment using various methodologies intended to approximate the utilization of such services, primarily based on time studies, personnel volumes and service consumption levels. Support service costs not allocated to the Servicing and Originations segments are retained in the Corporate Items and Other segment along with certain other costs including certain litigation and settlement related expenses or recoveries, costs related to our re-engineering initiatives, and other costs related to operating as a public company. Interest expense on direct asset-backed financings are recorded in the respective Servicing and Originations segments. We allocate interest expense on corporate debt from Corporate Items and Other to the business segments based on relative financing requirements. Effective in the first quarter of 2022, we no longer allocate interest expense on the OFC Senior Secured Notes to the business segments. Interest expense allocated to the business segments for prior periods has been revised to conform to the current period presentation. The interest expense allocation adjustment for 2021 is $24.4 million ($23.7 million Servicing and $0.7 million Originations). No such interest expense was recorded in 2020 as the OFC Senior Secured Notes were issued in March 2021. As a result of our risk management strategy to hedge the interest rate risk of our net MSR portfolio, the fair value changes of third-party derivative instruments were reported within MSR valuation adjustments, net. For management segment reporting purposes, we established inter-segment derivative instruments to transfer the risks and allocate the associated fair value changes of derivatives between Servicing and Originations, and specifically between MSR valuation adjustments, net and Gain on loans held for sale, net (Gain/loss on economic hedge instruments). In the second quarter of 2021, we began separately hedging our MSR portfolio and pipeline. However, we may, from time to time, continue to establish intersegment derivative instruments between our MSR and pipeline hedging strategies to optimize the use of third-party derivatives. The inter-segment derivative fair value changes are eliminated in the consolidated financial statements in the Corporate Eliminations column in the table below. Financial information for our segments is as follows:
Results of Operations |  | Servicing |  | Originations |  | Corporate Items and Other |  | Corporate Eliminations (1) |  | Business Segments Consolidated
Year Ended December 31, 2022 |  |  |  |  |  |  |  |  |  |
Servicing and subservicing fees |  | $ | 860.5 |  |  | $ | 2.1 |  |  | $ | — |  |  | $ | — |  |  | $ | 862.6 |
Gain on reverse loans held for investment and HMBS-related borrowings, net |  | (25.1) |  |  | 61.2 |  |  | — |  |  | — |  |  | 36.1 |
Gain (loss) on loans held for sale, net (1) |  | (15.1) |  |  | 52.9 |  |  | — |  |  | (15.7) |  |  | 22.0 |
Other revenue, net |  | 1.4 |  |  | 24.9 |  |  | 6.9 |  |  | — |  |  | 33.2 |
Revenue |  | 821.7 |  |  | 141.1 |  |  | 6.9 |  |  | (15.7) |  |  | 953.9 |
MSR valuation adjustments, net (1) |  | (36.0) |  |  | 9.9 |  |  | — |  |  | 15.7 |  |  | (10.4) |
Operating expenses (2) |  | 314.1 |  |  | 148.5 |  |  | 69.8 |  |  | — |  |  | 532.4 |
Other income (expense): |  |  |  |  |  |  |  |  |  |
Interest income |  | 12.9 |  |  | 31.2 |  |  | 1.5 |  |  | — |  |  | 45.6 |
Interest expense |  | (114.8) |  |  | (29.0) |  |  | (42.2) |  |  | — |  |  | (186.0) |
Pledged MSR liability expense |  | (255.0) |  |  | — |  |  | — |  |  | — |  |  | (255.0) |
Gain on extinguishment of debt |  | — |  |  | — |  |  | 0.9 |  |  | — |  |  | 0.9 |
Equity in earnings of unconsolidated entity |  | 18.5 |  |  | — |  |  | — |  |  | — |  |  | 18.5 |
Other, net |  | (7.3) |  |  | (1.8) |  |  | (1.1) |  |  | — |  |  | (10.2) |
Other income (expense), net |  | (345.7) |  |  | 0.4 |  |  | (40.9) |  |  | — |  |  | (386.2) |
Income (loss) before income taxes |  | $ | 125.9 |  |  | $ | 2.9 |  |  | $ | (103.8) |  |  | $ | — |  |  | $ | 24.9 |
Year Ended December 31, 2021 |  |  |  |  |  |  |  |  |  |
Servicing and subservicing fees |  | $ | 773.5 |  |  | $ | 8.5 |  |  | $ | — |  |  | $ | — |  |  | $ | 781.9 |
Gain on reverse loans held for investment and HMBS-related borrowings, net |  | (2.3) |  |  | 82.0 |  |  | — |  |  | — |  |  | 79.7 |
Gain on loans held for sale, net (1) |  | 46.6 |  |  | 124.5 |  |  | — |  |  | (25.3) |  |  | 145.8 |
Other revenue, net |  | 1.7 |  |  | 34.9 |  |  | 6.2 |  |  | — |  |  | 42.7 |
Revenue |  | 819.4 |  |  | 249.9 |  |  | 6.2 |  |  | (25.3) |  |  | 1,050.1 |
MSR valuation adjustments, net (1) (4) | (143.4) |  |  | 19.6 |  |  | — |  |  | 25.3 |  |  | (98.5) |
Operating expenses (2) |  | 342.4 |  |  | 172.8 |  |  | 94.1 |  |  | — |  |  | 609.3 |
Other income (expense): |  |  |  |  |  |  |  |  |  |
Interest income |  | 8.2 |  |  | 17.7 |  |  | 0.5 |  |  | — |  |  | 26.4 |
Interest expense |  | (80.8) |  |  | (22.3) |  |  | (40.9) |  |  | — |  |  | (144.0) |
Pledged MSR liability expense |  | (221.3) |  |  | — |  |  | — |  |  | — |  |  | (221.3) |
Loss on extinguishment of debt |  |  |  |  |  | (15.5) |  |  |  |  | (15.5) |
Equity in earnings of unconsolidated entity |  | 3.6 |  |  |  |  |  |  |  |  | 3.6 |
Other, net |  | 5.2 |  |  | (2.3) |  |  | 1.2 |  |  | — |  |  | 4.1 |
Other expense, net |  | (285.1) |  |  | (6.9) |  |  | (54.7) |  |  | — |  |  | (346.7) |
Income (loss) before income taxes |  | $ | 48.5 |  |  | $ | 89.8 |  |  | $ | (142.6) |  |  | $ | — |  |  | $ | (4.4) |
Results of Operations |  | Servicing |  | Originations |  | Corporate Items and Other |  | Corporate Eliminations (1) |  | Business Segments Consolidated
Year Ended December 31, 2020 |  |  |  |  |  |  |  |  |  |
Servicing and subservicing fees |  | $ | 731.2 |  |  | $ | 6.0 |  |  | $ | 0.1 |  |  | $ | — |  |  | $ | 737.3 |
Gain on reverse loans held for investment and HMBS-related borrowings, net |  | 7.6 |  |  | 53.1 |  |  | — |  |  | — |  |  | 60.7 |
Gain on loans held for sale, net (1) |  | 14.7 |  |  | 105.2 |  |  | — |  |  | 17.4 |  |  | 137.2 |
Other revenue, net |  | 4.2 |  |  | 14.9 |  |  | 6.5 |  |  | — |  |  | 25.6 |
Revenue |  | 757.7 |  |  | 179.3 |  |  | 6.6 |  |  | 17.4 |  |  | 960.9 |
MSR valuation adjustments, net (1) |  | (159.5) |  |  | 41.7 |  |  | — |  |  | (17.4) |  |  | (135.2) |
Operating expenses (2) (3) |  | 331.9 |  |  | 114.4 |  |  | 129.5 |  |  | — |  |  | 575.7 |
Other income (expense): |  |  |  |  |  |  |  |  |  |
Interest income |  | 7.1 |  |  | 7.0 |  |  | 1.9 |  |  | — |  |  | 16.0 |
Interest expense |  | (90.7) |  |  | (9.8) |  |  | (8.9) |  |  | — |  |  | (109.4) |
Pledged MSR liability expense |  | (269.1) |  |  | — |  |  | — |  |  | — |  |  | (269.1) |
Other, net |  | 10.8 |  |  | 0.4 |  |  | (4.4) |  |  | — |  |  | 6.7 |
Other expense, net |  | (342.0) |  |  | (2.5) |  |  | (11.3) |  |  | — |  |  | (355.7) |
Income (loss) before income taxes |  | $ | (75.7) |  |  | $ | 104.2 |  |  | $ | (134.2) |  |  | $ | — |  |  | $ | (105.7) |
(1)Corporate Eliminations for 2022, 2021 and 2020 includes inter-segment derivatives eliminations of $15.7 million, $25.3 million and $17.4 million reported as Gain on loans held for sale, net, respectively, with a corresponding offset in MSR valuation adjustments, net. (2)Included in Professional services expense for 2022 are reimbursements received from mortgage loan investors related to prior years legal expenses and payments received following resolution of legacy litigation matters of $27.6 million ($19.8 million Servicing and $7.8 million Corporate Items and Other). Professional services expense for 2021 (Servicing) includes $2.5 million reimbursements received from mortgage loan investors related to prior years legal expenses, and 2020 (Corporate Items and Other) includes an $8.0 million recovery of prior expenses received from a mortgage insurer. (3)In 2020, we executed certain cost re-engineering initiatives to generate further cost savings, some of which qualify as restructuring charges under GAAP, including the partial abandonment of certain leased properties and additional severance costs. As a result of these initiatives, we accelerated the depreciation of facility lease ROU assets and leasehold improvements by $3.3 million, recorded $6.3 million of facility and other related exit costs, and accrued $3.4 million of employee severance costs. Employee-related costs and facility-related costs are reported in Compensation and benefits expense and Occupancy and equipment expense, respectively, in the consolidated statements of operations. Other costs are primarily reported in Professional services expense and Other expenses. The expenses were all incurred within the Corporate Items and Other segment. (4)Effective in 2022, we recognize revaluation gains or losses on those Fannie Mae MSRs purchased through the Agency Cash Window Program that are sold to MAV within the Servicing segment (historically reported in the Originations segment). $5.6 million MSR valuation adjustments, net have been reclassified in 2021 from the Originations segment to the Servicing segment to conform to the current segment presentation.
Total Assets |  | Servicing |  | Originations |  | Corporate Items and Other |  |  |  | Business Segments Consolidated
December 31, 2022 |  | $ | 11,535.0 |  |  | $ | 570.5 |  |  | $ | 293.7 |  |  |  |  | $ | 12,399.2 |
December 31, 2021 |  | 10,999.2 |  |  | 823.5 |  |  | 324.4 |  |  |  |  | 12,147.1 |
December 31, 2020 |  | 9,847.6 |  |  | 379.2 |  |  | 424.3 |  |  |  |  | 10,651.1 |
Depreciation and Amortization Expense |  | Servicing |  | Originations |  | Corporate Items and Other |  | Business Segments Consolidated
Year Ended December 31, 2022: |  |  |  |  |  |  |  |
Depreciation expense |  | $ | 0.9 |  |  | $ | 0.4 |  |  | $ | 9.2 |  |  | $ | 10.5 |
Amortization of debt discount and issuance costs |  | 0.8 |  |  | — |  |  | 9.3 |  |  | 10.1 |
Amortization of intangible assets |  | 4.3 |  |  | — |  |  | — |  |  | 4.3 |
Year Ended December 31, 2021: |  |  |  |  |  |  |  |
Depreciation expense |  | $ | 0.7 |  |  | $ | 0.2 |  |  | $ | 9.3 |  |  | $ | 10.3 |
Amortization of debt discount and issuance costs |  | 0.7 |  |  | — |  |  | 7.1 |  |  | 7.8 |
Amortization of intangible assets |  | 0.7 |  |  | — |  |  | — |  |  | 0.7 |
Year Ended December 31, 2020: |  |  |  |  |  |  |  |
Depreciation expense |  | $ | 0.9 |  |  | $ | 0.1 |  |  | $ | 18.1 |  |  | $ | 19.1 |
Amortization of debt discount and issuance costs |  | 0.5 |  |  | — |  |  | 6.5 |  |  | 7.0 |

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- Definition The entire disclosure for reporting segments including data and tables. Reportable segments include those that meet any of the following quantitative thresholds a) it's reported revenue, including sales to external customers and intersegment sales or transfers is 10 percent or more of the combined revenue, internal and external, of all operating segments b) the absolute amount of its reported profit or loss is 10 percent or more of the greater, in absolute amount of 1) the combined reported profit of all operating segments that did not report a loss or 2) the combined reported loss of all operating segments that did report a loss c) its assets are 10 percent or more of the combined assets of all operating segments. + References Reference 1: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 31 -URI https://asc.fasb.org/extlink&oid=126901519&loc=d3e8924-108599 Reference 2: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 34 -URI https://asc.fasb.org/extlink&oid=126901519&loc=d3e8981-108599 Reference 3: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 21 -Subparagraph (a) -URI https://asc.fasb.org/extlink&oid=126901519&loc=d3e8721-108599 Reference 4: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 40 -URI https://asc.fasb.org/extlink&oid=126901519&loc=d3e9031-108599 Reference 5: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 32 -Subparagraph (f) -URI https://asc.fasb.org/extlink&oid=126901519&loc=d3e8933-108599 Reference 6: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 32 -Subparagraph (e) -URI https://asc.fasb.org/extlink&oid=126901519&loc=d3e8933-108599 Reference 7: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 26 -URI https://asc.fasb.org/extlink&oid=126901519&loc=d3e8844-108599 Reference 8: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 41 -URI https://asc.fasb.org/extlink&oid=126901519&loc=d3e9038-108599 Reference 9: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 32 -Subparagraph (d) -URI https://asc.fasb.org/extlink&oid=126901519&loc=d3e8933-108599 Reference 10: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 22 -URI https://asc.fasb.org/extlink&oid=126901519&loc=d3e8736-108599 Reference 11: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 42 -URI https://asc.fasb.org/extlink&oid=126901519&loc=d3e9054-108599 Reference 12: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 15 -URI https://asc.fasb.org/extlink&oid=126901519&loc=d3e8657-108599 Reference 13: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 21 -Subparagraph (b) -URI https://asc.fasb.org/extlink&oid=126901519&loc=d3e8721-108599 Reference 14: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -URI https://asc.fasb.org/topic&trid=2134510 + Details
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