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Business Segment Reporting | 12 Months Ended
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Dec. 31, 2023
Segment Reporting [Abstract] |
Business Segment Reporting | Note 23 — Business Segment Reporting Our business segments reflect the internal reporting that our Chief Executive Officer uses 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 and subservicing business and accounted for 93% of our total revenues in 2023. 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 and, effective in the fourth quarter of 2023, CR Limited (CRL), our wholly-owned captive reinsurance subsidiary previously included in the Corporate Items and Other segment. CRL provides re-insurance related to coverage on foreclosed real estate properties owned or serviced by us. Segment results for 2022 and 2021 have been recast to conform to the current segment presentation. 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, 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. 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, and other costs related to operating as a public company. Interest expense on direct asset-backed financings is 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, with the exception of the OFC Senior Secured Notes. 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, 2023 |  |  |  |  |  |  |  |  |  |
Servicing and subservicing fees |  | $ | 945.2 |  |  | $ | 2.1 |  |  | $ | — |  |  | $ | — |  |  | $ | 947.3 |
Gain on reverse loans held for investment and HMBS-related borrowings, net |  | 23.5 |  |  | 23.2 |  |  | — |  |  | — |  |  | 46.7 |
Gain (loss) on loans held for sale, net (1) |  | 10.3 |  |  | 30.3 |  |  | — |  |  | — |  |  | 40.6 |
Other revenue, net |  | 15.5 |  |  | 16.4 |  |  | — |  |  | — |  |  | 32.0 |
Revenue |  | 994.6 |  |  | 72.1 |  |  | — |  |  | — |  |  | 1,066.7 |
MSR valuation adjustments, net (1) |  | (243.9) |  |  | 11.7 |  |  | — |  |  | — |  |  | (232.2) |
Operating expenses |  |  |  |  |  |  |  |  |  |
Compensation and benefits |  | 107.2 |  |  | 43.0 |  |  | 79.0 |  |  | — |  |  | 229.2 |
Servicing and origination |  | 53.5 |  |  | 2.7 |  |  | 1.1 |  |  | — |  |  | 57.3 |
Technology and communications |  | 24.6 |  |  | 7.0 |  |  | 20.9 |  |  | — |  |  | 52.5 |
Professional services (2) |  | 35.1 |  |  | 1.9 |  |  | (14.7) |  |  | — |  |  | 22.3 |
Occupancy, equipment and mailing |  | 28.1 |  |  | 2.2 |  |  | 1.6 |  |  | — |  |  | 31.8 |
Corporate overhead allocations |  | 45.5 |  |  | 18.7 |  |  | (64.2) |  |  | — |  |  | — |
Other expenses |  | 7.8 |  |  | 5.3 |  |  | 5.9 |  |  | — |  |  | 19.0 |
Operating expenses |  | 301.7 |  |  | 80.8 |  |  | 29.6 |  |  | — |  |  | 412.1 |
Other income (expense) |  |  |  |  |  |  |  |  |  |
Interest income |  | 21.7 |  |  | 51.8 |  |  | 4.5 |  |  | — |  |  | 78.0 |
Interest expense |  | (173.3) |  |  | (56.6) |  |  | (43.7) |  |  | — |  |  | (273.6) |
Pledged MSR liability expense |  | (296.4) |  |  | — |  |  | 0.1 |  |  | — |  |  | (296.3) |
Gain on extinguishment of debt |  | — |  |  | — |  |  | 1.3 |  |  | — |  |  | 1.3 |
Equity in earnings of unconsolidated entity |  | 7.3 |  |  | — |  |  | — |  |  | — |  |  | 7.3 |
Other, net |  | 1.7 |  |  | (0.2) |  |  | 1.3 |  |  | — |  |  | 2.8 |
Other income (expense), net |  | (439.0) |  |  | (5.0) |  |  | (36.4) |  |  | — |  |  | (480.5) |
Income (loss) before income taxes |  | $ | 9.9 |  |  | $ | (2.0) |  |  | $ | (66.1) |  |  | $ | — |  |  | $ | (58.1) |
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 on loans held for sale, net (1) |  | (15.1) |  |  | 52.9 |  |  | — |  |  | (15.7) |  |  | 22.0 |
Other revenue, net |  | 8.3 |  |  | 24.9 |  |  | — |  |  | — |  |  | 33.2 |
Revenue |  | 828.5 |  |  | 141.1 |  |  | — |  |  | (15.7) |  |  | 953.9 |
MSR valuation adjustments, net (1) | (36.0) |  |  | 9.9 |  |  | — |  |  | 15.7 |  |  | (10.4) |
Operating expenses |  |  |  |  |  |  |  |  |  |
Compensation and benefits |  | 126.2 |  |  | 85.1 |  |  | 78.1 |  |  | — |  |  | 289.4 |
Servicing and origination |  | 53.1 |  |  | 11.1 |  |  | 0.7 |  |  | — |  |  | 64.9 |
Technology and communications |  | 24.7 |  |  | 9.2 |  |  | 23.9 |  |  | — |  |  | 57.9 |
Professional services (2) |  | 26.6 |  |  | 4.8 |  |  | 17.9 |  |  | — |  |  | 49.3 |
Occupancy, equipment and mailing |  | 31.2 |  |  | 4.5 |  |  | 6.0 |  |  | — |  |  | 41.8 |
Corporate overhead allocations |  | 46.2 |  |  | 21.6 |  |  | (67.8) |  |  | — |  |  | — |
Other expenses |  | 7.6 |  |  | 12.2 |  |  | 9.5 |  |  | — |  |  | 29.1 |
Operating expenses |  | 315.6 |  |  | 148.5 |  |  | 68.3 |  |  | — |  |  | 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 |  | (10.8) |  |  | (1.8) |  |  | 2.4 |  |  | — |  |  | (10.2) |
Other expense, net |  | (349.2) |  |  | 0.4 |  |  | (37.4) |  |  | — |  |  | (386.2) |
Income (loss) before income taxes |  | $ | 127.7 |  |  | $ | 2.9 |  |  | $ | (105.7) |  |  | $ | — |  |  | $ | 24.9 |
Results of Operations |  | Servicing |  | Originations |  | Corporate Items and Other |  | Corporate Eliminations (1) |  | Business Segments Consolidated
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 |  | 7.8 |  |  | 34.9 |  |  | — |  |  | — |  |  | 42.7 |
Revenue |  | 825.5 |  |  | 249.9 |  |  | — |  |  | (25.3) |  |  | 1,050.1 |
MSR valuation adjustments, net (1) |  | (143.4) |  |  | 19.6 |  |  | — |  |  | 25.3 |  |  | (98.5) |
Operating expenses |  |  |  |  |  |  |  |  |  |
Compensation and benefits |  | 108.2 |  |  | 101.6 |  |  | 88.1 |  |  | — |  |  | 297.9 |
Servicing and origination |  | 98.8 |  |  | 15.0 |  |  | (0.1) |  |  | — |  |  | 113.6 |
Technology and communications |  | 23.8 |  |  | 9.8 |  |  | 22.5 |  |  | — |  |  | 56.0 |
Professional services |  | 31.9 |  |  | 10.2 |  |  | 39.8 |  |  | — |  |  | 81.9 |
Occupancy, equipment and mailing |  | 26.6 |  |  | 6.9 |  |  | 3.0 |  |  | — |  |  | 36.5 |
Corporate overhead allocations |  | 47.7 |  |  | 20.0 |  |  | (67.7) |  |  | — |  |  | — |
Other expenses |  | 6.7 |  |  | 9.4 |  |  | 7.3 |  |  | — |  |  | 23.3 |
Operating expenses |  | 343.7 |  |  | 172.8 |  |  | 92.8 |  |  | — |  |  | 609.3 |
Other income (expense): |  |  |  |  |  |  |  |  |  |
Interest income |  | 8.2 |  |  | 17.7 |  |  | 0.4 |  |  | — |  |  | 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 |  | 4.1 |  |  | (2.3) |  |  | 2.3 |  |  | — |  |  | 4.1 |
Other expense, net |  | (286.2) |  |  | (6.9) |  |  | (53.6) |  |  | — |  |  | (346.7) |
Income (loss) before income taxes |  | $ | 52.2 |  |  | $ | 89.8 |  |  | $ | (146.3) |  |  | $ | — |  |  | $ | (4.4) |
(1)Corporate Eliminations for 2022 and 2021 includes inter-segment derivatives eliminations of $15.7 million and $25.3 million reported as Gain on loans held for sale, net, respectively, with a corresponding offset in MSR valuation adjustments, net in Servicing. No such derivatives eliminations were recognized during 2023. (2)Professional services expense for 2023 includes the reversal of accruals following the resolution of litigation matters within Corporate Items and Other. 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).
Total Assets |  | Servicing |  | Originations |  | Corporate Items and Other |  |  |  | Business Segments Consolidated
December 31, 2023 |  | $ | 11,687.6 |  |  | $ | 551.9 |  |  | $ | 274.3 |  |  |  |  | $ | 12,513.7 |
December 31, 2022 |  | 11,537.7 |  |  | 570.5 |  |  | 291.1 |  |  |  |  | 12,399.2 |
December 31, 2021 |  | 11,001.5 |  |  | 823.5 |  |  | 322.1 |  |  |  |  | 12,147.1 |

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