Mortgage Servicing Rights

12 Months Ended

Dec. 31, 2014

Mortgage Servicing Rights [Abstract]

8. Mortgage Servicing Rights

The Company's MSRs consist of conforming conventional loans sold to Fannie Mae and Freddie Mac or loans securitized in Ginnie Mae securities. Similarly, the government loans serviced by the Company are secured through Ginnie Mae, whereby the Company is insured against loss by the FHA or partially guaranteed against loss by the VA.

The activity of MSRs for the year ended December 31, 2014 is as follows:

Balance at beginning of year	$	—
Acquisition of MSRs in connection with purchase of GMFS		32,300,337
Additions due to loans sold, servicing retained		2,763,014
Fair value adjustment:⁽¹⁾
Changes in assumptions⁽²⁾		(1,420,925	)
Other changes⁽³⁾		(263,448	)
Balance at December 31, 2014	$	33,378,978

(1)	Included in change in fair value of MSRs in the Company's consolidated statements of operations.
(2)	Primarily reflects changes in prepayment assumptions due to changes in interest rates and discount rates.

(3)	Represents decrease in value due to passage of time, including the impact from both regularly scheduled loan principal payments and loans that were paid off during the period.

The Company's MSR portfolio at December 31, 2014 is summarized as follows:

	Unpaid Principal Balance		Fair Value
Fannie Mae	$	1,640,799,719	$	17,078,181
Ginnie Mae		1,146,234,768		13,102,076
Freddie Mac		291,939,855		3,198,721
Total	$	3,078,974,342	$	33,378,978

The Company contracts with licensed sub-servicers to perform all servicing functions for these loans. The following table presents the loan servicing fee income, net of direct costs:

Income	$	1,412,583
Late charges		60
Cost of sub-servicer		(482,925	)
Loan servicing fees, net of direct costs	$	929,718

- Definition

The entire disclosure for a transferor's continuing involvement in financial assets that it has transferred in a securitization or asset-backed financing arrangement, the nature of any restrictions on assets reported by an entity in its statement of financial position that relate to a transferred financial asset (including the carrying amounts of such assets), how servicing assets and servicing liabilities are reported, and (for securitization or asset-backed financing arrangements accounted for as sales) when a transferor has continuing involvement with the transferred financial assets and transfers of financial assets accounted for as secured borrowings, how the transfer of financial assets affects an entity's financial position, financial performance, and cash flows.

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