Related-Party Transactions

WCO was established to invest in mortgage-related assets. The Company's investment in WCO was $19.4 million and $22.6 million at December 31, 2016 and 2015, respectively. The Company recorded income (loss) relating to its investment in WCO of $(2.2) million, $0.6 million and $0.2 million for the years ended December 31, 2016, 2015 and 2014, respectively. Additionally, the Company received a dividend of $1.0 million from WCO during the year ended December 31, 2016.

The Company’s subsidiary, GTIM, earns fees for providing investment advisory and management services to WCO and administering its business activities and day-to-day operations. The Company earned fees associated with these activities of $1.7 million, $1.0 million and $0.3 million for the years ended December 31, 2016, 2015 and 2014, respectively, which are recorded in other revenues on the consolidated statements of comprehensive loss. The Company had $0.9 million and $1.2 million included in receivables, net on the consolidated balance sheets at December 31, 2016 and 2015, respectively, relating to fees earned for the aforementioned investment advisory and management services provided to WCO, as well as pass-throughs to WCO related to general and administrative and payroll-related expenses.

The Company, in exchange for a servicing fee, services certain assets held by WCO. The Company also has servicing rights related liabilities for the sales to WCO of beneficial interests in certain portions of contractual servicing fees associated with mortgage loans serviced by the Company as well as for the sale of servicing rights. The Company is also engaged by WCO to offer refinancing options to borrowers with mortgage loans underlying the excess servicing spread and servicing rights transactions that occurred with WCO. In addition, the Company has a similar arrangement with WCO with respect to certain other servicing rights held by WCO. These arrangements were made for purposes of reducing portfolio runoff. Further, the Company entered into various other ancillary agreements with WCO pursuant to which, among other things, WCO has the right to make the first offer to purchase servicing rights relating to certain mortgage loans originated by the Company and certain excess servicing spread that the Company may create from time to time.

Subservicing fees from WCO were $4.4 million during the year ended December 31, 2016 and are included in net servicing revenue and fees on the consolidated statement of comprehensive loss. In addition, the Company earned incentive and performance fees and ancillary and other fees related to servicing assets held by WCO of $0.7 million for the year ended December 31, 2016, which are included in net servicing revenue and fees on the consolidated statement of comprehensive loss.

WCO lacks sufficient equity at risk to finance its activities without subordinated financial support and as such is a VIE. WCO’s board of directors have decision making authority as it relates to the activities that most significantly impact the economic performance of WCO, including making decisions related to significant investments, servicing, capital and debt financing. As a result, the Company is not deemed to be the primary beneficiary of WCO as it does not have the power to direct the activities that most significantly impact WCO’s economic performance.

In November 2016, WCO entered into a series of agreements whereby it agreed to sell substantially all of its assets, including the sale of substantially all of its MSR portfolio to NRM. In connection with the December 2016 closing of the transactions relating thereto, WCO commenced liquidation activities and the Company does not expect to sell further assets to WCO.

The following table presents the carrying amounts of the Company’s assets and liabilities that relate to WCO, as well as the size of the unconsolidated VIE (in thousands):



	Carrying Value of Assets and Liabilities Recorded on the Consolidated Balance Sheets
	Servicing Rights, Net ⁽¹⁾		Servicer and Protective Advances, Net		Receivables, Net		Other Assets ⁽²⁾		Payables and Accrued Liabilities			Servicing Rights Related Liabilities			Net Assets (Liabilities) ⁽³⁾			Size of VIE ⁽⁴⁾
December 31, 2016	$	—	$	6,980	$	1,392	$	19,403	$	(1,353	)	$	—		$	26,422		$	194,556
December 31, 2015	16,889		7,015		9,814		23,578		(4,500		)	(117,000		)	(64,204		)	228,361

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(1)	During the second quarter of 2016, the Company sold MSR, which did not qualify for sale accounting, to WCO for $27.9 million. Transactions between WCO and NRM during the fourth quarter of 2016 allowed the Company to derecognize the transferred assets on its consolidated balance sheets. Refer to Note 4 for additional information.


(2)	Other assets at December 31, 2016 and 2015 are primarily comprised of the Company's investment in WCO.


(3)	At December 31, 2015, the Company had no net exposure to loss as it relates to transactions with WCO as a result of its net liabilities due to WCO.


(4)	The size of the VIE is deemed to be WCO's net assets.