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Servicing of Residential Loans (Tables)
 12 Months Ended
Dec. 31, 2016
Transfers and Servicing [Abstract]  
Schedule of Total Servicing Portfolio
Provided below is a summary of the Company’s total servicing portfolio (dollars in thousands):
 
 
December 31, 2016
 
December 31, 2015
 
 
Number
of Accounts
 
Unpaid Principal
Balance
 
Number
of Accounts
 
Unpaid Principal
Balance
Third-party credit owners
 
 
 
 
 
 
 
 
Capitalized servicing rights (1)
 
1,032,676

 
$
112,936,287

 
1,637,541

 
$
197,154,579

Capitalized subservicing (2)
 
130,018

 
7,426,803

 
159,368

 
9,053,755

Subservicing (3) (4)
 
804,461

 
113,392,035

 
346,755

 
47,734,378

Total third-party servicing portfolio
 
1,967,155

 
233,755,125

 
2,143,664

 
253,942,712

On-balance sheet residential loans and real estate owned
 
97,388

 
12,690,018

 
102,044

 
12,705,532

Total servicing portfolio
 
2,064,543

 
$
246,445,143

 
2,245,708

 
$
266,648,244

__________
(1)
Includes $1.7 billion in unpaid principal balance associated with servicing rights sold to WCO at December 31, 2015 that did not meet all of the requirements for sale accounting. Refer to Note 21 for additional information relating to the sale of these servicing rights.
(2)
Consists of subservicing contracts acquired through business combinations whereby the benefits from the contract are greater than adequate compensation for performing the servicing.
(3)
Includes $6.6 billion in unpaid principal balance of subservicing performed for WCO at December 31, 2015.
(4)
Includes $64.6 billion in unpaid principal balance of subservicing that relates to transactions with NRM that closed in the fourth quarter of 2016, whereby the Company sold servicing rights with respect to pools of mortgage loans with subservicing retained. Refer to Note 4 for additional information relating to the sale of these servicing rights.
Schedule Geographic Diversification of Third-Party Servicing Portfolio
The Company’s geographic diversification of its third-party servicing portfolio, based on the outstanding unpaid principal balance, is as follows (dollars in thousands):
 
 
December 31, 2016
 
December 31, 2015
 
 
Number
of Accounts
 
Unpaid Principal
Balance
 
Percentage of Total
 
Number
of Accounts
 
Unpaid Principal
Balance
 
Percentage of Total
California
 
224,408

 
$
42,939,204

 
18.4
%
 
244,708

 
$
46,704,146

 
18.4
%
Florida
 
163,186

 
19,530,088

 
8.4
%
 
180,242

 
21,714,653

 
8.6
%
Texas
 
152,485

 
12,935,308

 
5.5
%
 
169,167

 
14,380,328

 
5.7
%
Other <5%
 
1,427,076

 
158,350,525

 
67.7
%
 
1,549,547

 
171,143,585

 
67.3
%
Total
 
1,967,155

 
$
233,755,125

 
100.0
%
 
2,143,664

 
$
253,942,712

 
100.0
%
Schedule of Net Servicing Revenue and Fees
The following table presents the components of net servicing revenue and fees, which includes revenues earned by the Servicing and Reverse Mortgage segments (in thousands):
 
 
For the Years Ended December 31,
 
 
2016
 
2015
 
2014
Servicing fees (1) (2)
 
$
680,002

 
$
708,491

 
$
675,335

Incentive and performance fees (1) 
 
70,197

 
117,586

 
157,148

Ancillary and other fees (1) (3)
 
98,055

 
104,750

 
88,430

Servicing revenue and fees
 
848,254

 
930,827

 
920,913

Change in fair value of servicing rights
 
(480,476
)
 
(401,992
)
 
(273,502
)
Amortization of servicing rights (4)
 
(21,801
)
 
(26,827
)
 
(43,101
)
Change in fair value of servicing rights related liabilities (2) (5)
 
(4,986
)
 
(7,741
)
 
(2,800
)
Net servicing revenue and fees
 
$
340,991

 
$
494,267

 
$
601,510

__________
(1)
Includes subservicing fees related to servicing assets held by WCO of $4.4 million and $1.3 million for the years ended December 31, 2016 and 2015, respectively. Includes incentive and performance fees, and ancillary and other fees related to servicing assets held by WCO of $0.7 million and $0.2 million for the years ended December 31, 2016 and 2015, respectively.
(2)
Includes a pass-through of $9.8 million and $0.6 million relating to servicing rights sold to WCO for the years ended December 31, 2016 and 2015, respectively.
(3)
Includes late fees of $63.3 million, $62.8 million and $48.4 million for the years ended December 31, 2016, 2015 and 2014, respectively.
(4)
Includes amortization of a servicing liability of $7.1 million and $0.4 million for the years ended December 31, 2016 and 2015, respectively.
(5)
Includes interest expense on servicing rights related liabilities, which represents the accretion of fair value, of $16.3 million, $9.3 million and $4.9 million for the years ended December 31, 2016, 2015 and 2014, respectively.
Schedule of Servicing Rights Carried at Amortized Cost
The following table summarizes the activity in the carrying value of servicing rights carried at amortized cost by class (in thousands):
 
 
Mortgage Loan
 
Reverse Loan
Balance at January 1, 2014
 
$
161,782

 
$
11,994

Amortization of servicing rights
 
(40,418
)
 
(2,683
)
Balance at December 31, 2014
 
121,364

 
9,311

Servicing rights capitalized upon deconsolidation of Residual Trusts
 
3,133

 
—

Amortization of servicing rights
 
(25,195
)
 
(2,053
)
Balance at December 31, 2015
 
99,302

 
7,258

Sales
 
(318
)
 
—

Amortization of servicing rights (1)
 
(24,363
)

(1,753
)
Balance at December 31, 2016
 
$
74,621

 
$
5,505

__________
(1)
Includes impairment of servicing rights related to the mortgage loan class of $4.0 million for the year ended December 31, 2016.
Schedule of Fair Value Assumptions, Servicing Rights Carried at Amortized Cost
The estimation of fair value requires significant judgment and uses key economic inputs and assumptions, which are provided in the table below:
 
 
December 31, 2016
 
December 31, 2015
 
 
Mortgage Loan
 
Reverse Loan
 
Mortgage Loan
 
Reverse Loan
Weighted-average remaining life in years (1)
 
5.1

 
2.6

 
5.6

 
2.8

Weighted-average discount rate
 
13.00
%
 
15.00
%
 
12.06
%
 
15.00
%
Conditional prepayment rate (2)
 
6.51
%
 
N/A

 
6.49
%
 
N/A

Conditional default rate (2)
 
2.33
%
 
N/A

 
2.16
%
 
N/A

Conditional repayment rate (3)
 
N/A

 
32.28
%
 
N/A

 
29.53
%
__________
(1)
Represents the remaining weighted-average life of the related unpaid principal balance of the underlying collateral adjusted for assumptions for conditional repayment rate, conditional prepayment rate and conditional default rate, as applicable.
(2)
Voluntary and involuntary prepayment rates have been presented as conditional prepayment rate and conditional default rate, respectively.
(3)
Conditional repayment rate includes assumptions for both voluntary and involuntary rates as well as assumptions for the assignment of HECMs to HUD, in accordance with obligations as servicer.
Schedule of Servicing Rights Carried at Fair Value
The following table summarizes the activity in servicing rights carried at fair value (in thousands):
 
 
For the Years Ended December 31,
 
 
2016
 
2015
 
2014
Balance at beginning of the year (1)
 
$
1,682,016

 
$
1,599,541

 
$
1,131,124

Acquisition of EverBank net assets
 
—

 
—

 
58,680

Purchases
 
24,380

 
237,820

 
479,820

Servicing rights capitalized upon sales of loans
 
198,865

 
306,741

 
214,285

Sales
 
(458,541
)
 
(60,094
)
 
(10,866
)
Other
 
(16,651
)
 
—

 
—

Change in fair value due to:
 
 
 
 
 
 
Changes in valuation inputs or other assumptions (2)
 
(243,645
)
 
(157,262
)
 
(124,471
)
Other changes in fair value (3)
 
(236,831
)
 
(244,730
)
 
(149,031
)
Total change in fair value
 
(480,476
)
 
(401,992
)
 
(273,502
)
Balance at end of the year
 
$
949,593

 
$
1,682,016

 
$
1,599,541

__________
(1)
Includes servicing rights that were sold to WCO and accounted for as a financing of $16.9 million at December 31, 2015.
(2)
Represents the change in fair value resulting primarily from market-driven changes in interest rates and prepayment speeds.
(3)
Represents the realization of expected cash flows over time.
Schedule of Sensitivity Analysis of Fair Value, Servicing Rights Carried at Fair Value
The following table summarizes the hypothetical effect on the fair value of servicing rights carried at fair value using adverse changes of 10% and 20% to the weighted average of the significant assumptions used in valuing these assets (dollars in thousands):
 
 
December 31, 2016
 
December 31, 2015
 
 
 
 
Decline in fair value due to
 
 
 
Decline in fair value due to
 
 
Assumption
 
10% adverse change
 
20% adverse change
 
Assumption
 
10% adverse change
 
20% adverse change
Weighted-average discount rate
 
11.56
%
 
$
(41,926
)
 
$
(80,512
)
 
10.88
%
 
$
(68,874
)
 
$
(132,645
)
Weighted-average conditional prepayment rate
 
9.09
%
 
(30,513
)
 
(59,083
)
 
9.94
%
 
(63,884
)
 
(123,173
)
Weighted-average conditional default rate
 
0.88
%
 
(28,370
)
 
(57,854
)
 
1.06
%
 
(21,208
)
 
(43,576
)
Schedule of Fair Value Assumptions, Fair Value of Servicing Rights on Date of Sale
For mortgage loans sold with servicing retained, the Company used the following inputs and assumptions to determine the fair value of servicing rights at the dates of sale. These servicing rights are included in servicing rights capitalized upon sales of loans in the table presented above that summarizes the activity in servicing rights accounted for at fair value.
 
 
For the Years Ended December 31,
 
 
2016
 
2015
 
2014
Weighted-average life in years
 
6.2
 
6.5
 
7.1
Weighted-average discount rate
 
12.47%
 
11.90%
 
9.43%
Weighted-average conditional prepayment rate
 
9.15%
 
8.19%
 
7.67%
Weighted-average conditional default rate
 
0.34%
 
0.39%
 
0.73%