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Business Segment Reporting | 12 Months Ended
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Dec. 31, 2024
Segment Reporting [Abstract] |
Business Segment Reporting | Note 24 — Business Segment Reporting Our business segments reflect the internal reporting that our Chief Executive Officer, whom we have determined to be our Chief Operating Decision Maker (CODM), uses to evaluate our operating and financial performance and to assess the allocation of our resources. The CODM uses pre-tax income calculated both on a GAAP basis and on a managed or adjusted basis, as internally defined, to assess the segment performance and allocate resources. The segment information presented below is prepared under GAAP, consistent with the amounts included in our consolidated financial statements. A brief description of our current reportable business segments is as follows: Servicing. This segment is primarily comprised of our mortgage servicing and subservicing business and accounts for 89% of our total revenues in 2024. We earn servicing and subservicing fees, including ancillary income, and incur cost to service the loans which varies depending on delinquency status. We are exposed to MSR valuation adjustments and advancing obligations when we own the MSR. Our 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. The CODM uses pre-tax income to assess the segment performance and allocate resources, including employees, and financial and capital resources, predominantly in the annual budget and forecasting process. On a monthly basis, the CODM considers budget-to-actual variances, actual variances and trends. The CODM also uses segment pre-tax income for evaluating MSR investments and subservicing pricing and comparing the results and return on assets and the compensation of certain employees. 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 (securitized through the GSEs and Ginnie Mae programs) 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. The CODM uses pre-tax income to assess the segment performance and allocate resources, including employees, and financial and capital resources, predominantly in the annual budget and forecasting process. On a monthly basis, the CODM considers budget-to-actual variances, actual variances and trends. The CODM also uses segment pre-tax income for evaluating loan and MSR originations and acquisitions, monitoring margin and pricing, and comparing the results and return on assets and the compensation of certain employees. Corporate. Corporate 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. To align with our internal reporting, we renamed the Corporate Items and Other segment as “Corporate” effective in the fourth quarter 2024, without any other changes to our operating and reporting segments. 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 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 to the business segments based on relative financing requirements, with the exception of the Onity Senior Secured Notes through their redemption in November 2024. With intercompany financing agreements, the financing cost of the Servicing and Originations segments reflects, and is consistent with the financing needs of the licensed entity PHH that carries out these businesses. Financial information for our segments prepared under GAAP is as follows:
Results of Operations |  | Servicing |  | Originations |  | Corporate |  | Eliminations (1) |  | Business Segments Consolidated
Year Ended December 31, 2024 |  |  |  |  |  |  |  |  |  |
Servicing and subservicing fees |  | $ | 830.5 |  |  | $ | 2.0 |  |  | $ | — |  |  | $ | — |  |  | $ | 832.5 |
Gain on reverse loans held for investment and HMBS-related borrowings, net |  | 16.5 |  |  | 25.9 |  |  | — |  |  | — |  |  | 42.5 |
Gain on loans held for sale, net |  | 1.4 |  |  | 57.7 |  |  | — |  |  | — |  |  | 59.0 |
Other revenue, net |  | 18.2 |  |  | 23.7 |  |  | — |  |  | — |  |  | 42.0 |
Revenue |  | 866.7 |  |  | 109.3 |  |  | — |  |  | — |  |  | 976.0 |
MSR valuation adjustments, net |  | (109.7) |  |  | 13.6 |  |  | — |  |  | — |  |  | (96.2) |
Operating expenses |  |  |  |  |  |  |  |  |  |
Compensation and benefits |  | 100.6 |  |  | 46.4 |  |  | 85.4 |  |  | — |  |  | 232.5 |
Servicing and origination |  | 42.8 |  |  | 7.8 |  |  | 1.6 |  |  | — |  |  | 52.3 |
Technology and communications |  | 24.7 |  |  | 7.3 |  |  | 21.0 |  |  | — |  |  | 52.9 |
Professional services |  | 28.0 |  |  | 2.2 |  |  | 22.5 |  |  | — |  |  | 52.6 |
Occupancy, equipment and mailing |  | 27.3 |  |  | 2.4 |  |  | 1.7 |  |  | — |  |  | 31.4 |
Corporate overhead allocations |  | 45.8 |  |  | 16.8 |  |  | (62.6) |  |  | — |  |  | — |
Other expenses |  | 3.7 |  |  | 5.4 |  |  | 5.6 |  |  | — |  |  | 14.7 |
Operating expenses |  | 273.0 |  |  | 88.3 |  |  | 75.2 |  |  | — |  |  | 436.5 |
Other income (expense) |  |  |  |  |  |  |  |  |  |
Interest income |  | 32.9 |  |  | 54.4 |  |  | 6.0 |  |  | — |  |  | 93.3 |
Interest expense |  | (184.4) |  |  | (58.1) |  |  | (46.3) |  |  | — |  |  | (288.9) |
Pledged MSR liability expense |  | (175.6) |  |  | — |  |  | 0.1 |  |  | — |  |  | (175.4) |
Loss on extinguishment of debt |  | (0.1) |  |  | — |  |  | (49.3) |  |  | — |  |  | (49.4) |
Equity in earnings of unconsolidated entity |  | 22.9 |  |  | — |  |  | — |  |  | — |  |  | 22.9 |
Other, net |  | (6.8) |  |  | (0.4) |  |  | 0.7 |  |  | — |  |  | (6.6) |
Other expense, net |  | (311.2) |  |  | (4.2) |  |  | (88.7) |  |  | — |  |  | (404.1) |
Income (loss) before income taxes |  | $ | 172.8 |  |  | $ | 30.4 |  |  | $ | (163.9) |  |  | $ | — |  |  | $ | 39.3 |
Results of Operations |  | Servicing |  | Originations |  | 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 on loans held for sale, net |  | 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 | (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 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 |  | Eliminations (1) |  | Business Segments Consolidated
Year Ended December 31, 2022 |  |  |  |  |  |  |  |  |  |
Servicing and subservicing fees |  | $ | 860.5 |  |  | $ | 2.1 |  |  | $ | — |  |  | $ | — |  |  | $ | 862.6 |
Gain (loss) 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 |  | (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 |  | (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) |
Loss 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 income (expense), net |  | (349.2) |  |  | 0.4 |  |  | (37.4) |  |  | — |  |  | (386.2) |
Income (loss) before income taxes |  | $ | 127.7 |  |  | $ | 2.9 |  |  | $ | (105.7) |  |  | $ | — |  |  | $ | 24.9 |
(1)Eliminations for 2022 includes inter-segment derivatives eliminations of $15.7 million reported as Gain on loans held for sale, net with a corresponding offset in MSR valuation adjustments, net in Servicing. No such derivatives eliminations were recognized during 2024 and 2023. (2)Professional services expense for 2023 includes the reversal of accruals following the resolution of litigation matters within Corporate. 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).
Total Assets |  | Servicing |  | Originations |  | Corporate |  |  |  | Business Segments Consolidated
December 31, 2024 |  | $ | 15,242.5 |  |  | $ | 945.0 |  |  | $ | 247.9 |  |  |  |  | $ | 16,435.4 |
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 |

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