Mortgage-Backed Debt

Mortgage-backed debt consists of debt issued by the Residual and Non-Residual Trusts that have been consolidated by the Company. The mortgage-backed debt of the Residual Trusts was carried at amortized cost at December 31, 2017. In connection with the adoption of fresh start accounting effective February 9, 2018, the Company changed its method of accounting for mortgage-backed debt of the Residual Trusts to fair value. In November 2018, the Company sold its residual interests in the four remaining Residual Trusts and these trusts were deconsolidated. The mortgage-backed debt of the Non-Residual Trusts is carried at fair value.

Provided in the table below is information regarding the mortgage-backed debt (dollars in thousands):



	Successor				Predecessor
	December 31, 2018				December 31, 2017
	Carrying Value		Weighted-Average Stated Interest Rate⁽¹⁾		Carrying Value		Weighted-Average Stated Interest Rate⁽¹⁾
Mortgage-backed debt at fair value (unpaid principal balance of $139,064 and $353,262 at December 31, 2018 and 2017, respectively)	$	131,313	6.56	%	$	348,682	6.26	%
Mortgage-backed debt at amortized cost (unpaid principal balance of $391,208 at December 31, 2017) ⁽²⁾	—		—	%	387,200		6.07	%
Total mortgage-backed debt	$	131,313	6.56	%	$	735,882	6.16	%

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(1)	Represents the weighted-average stated interest rate, which may be different from the effective rate, which considers the amortization of discounts and issuance costs.


(2)	During the year ended December 31, 2018, the Company sold its residual interests in the four remaining Residual Trusts that it previously consolidated. Refer to Note 5 for additional information.

In connection with the adoption of fresh start accounting, the Company recorded adjustments resulting in an increase to mortgage-backed debt totaling $6.2 million at February 9, 2018, as further described in Note 2.

Borrower remittances received on the residential loans of the Non-Residual Trusts collateralizing this debt and draws under LOCs issued by a third party and serving as credit enhancements to certain of the Non-Residual Trusts are used to make principal and interest payments due on the mortgage-backed debt. The maturity of the Company's mortgage-backed debt is directly affected by the rate of principal prepayments on the collateral. As a result, the actual maturity of the mortgage-backed debt is likely to occur earlier than the stated maturity. At December 31, 2018, mortgage-backed debt was collateralized by $123.3 million of assets including residential loans, receivables related to the Non-Residual Trusts, real estate owned and restricted cash and cash equivalents. Refer to the Consolidated Variable Interest Entities section of Note 5 for further information.