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INVESTMENTS IN CONSUMER LOANS, EQUITY METHOD INVESTEES
 12 Months Ended
Dec. 31, 2015
Investments In Consumer Loans Equity Method Investees [Abstract]  
INVESTMENTS IN CONSUMER LOANS, EQUITY METHOD INVESTEES
INVESTMENTS IN CONSUMER LOANS, EQUITY METHOD INVESTEES

In April 2013, New Residential completed, through newly formed limited liability companies (together, the “Consumer Loan Companies”), a co-investment in a portfolio of consumer loans. The portfolio included personal unsecured loans and personal homeowner loans originated through subsidiaries of HSBC Finance Corporation. The Consumer Loan Companies acquired the portfolio from HSBC Finance Corporation and its affiliates. New Residential acquired 30% membership interests in each of the Consumer Loan Companies. Of the remaining 70% of the membership interests, OneMain acquired 47% and an affiliate of Blackstone Tactical Opportunities Advisors L.L.C. acquired 23%. OneMain acts as the managing member of the Consumer Loan Companies. The Consumer Loan Companies initially financed approximately 73% of the purchase price with asset-backed notes. In September 2013, the Consumer Loan Companies issued and sold additional asset-backed notes that were subordinate to the debt issued in April 2013. All of these notes were refinanced in October 2014 as described below. The Consumer Loan Companies were formed on March 19, 2013, for the purpose of making this investment, and commenced operations upon the completion of the investment. After a servicing transition period, OneMain became the servicer of the loans and provides all servicing and advancing functions for the portfolio.

New Residential accounts for its investment in the Consumer Loan Companies pursuant to the equity method of accounting because it can exercise significant influence over the Consumer Loan Companies, but the requirements for consolidation are not met. New Residential’s share of earnings and losses in these equity method investees is included in “Earnings from investments in consumer loans, equity method investees” on the Consolidated Statements of Income. Equity method investments are included in “Investments in consumer loans, equity method investees” on the Consolidated Balance Sheets.

On October 3, 2014, the Consumer Loan Companies refinanced the outstanding asset-backed notes with an asset-backed securitization for approximately $2.6 billion. The proceeds in excess of the refinanced debt were distributed to the co-investors. New Residential received approximately $337.8 million which reduced New Residential’s basis in the consumer loans investment to $0.0 million and resulted in a gain of approximately $80.1 million. Subsequent to this refinancing, New Residential has discontinued recording its share of the underlying earnings of the Consumer Loan Companies until such time as their cumulative earnings exceed their cumulative cash distributions.

The following tables summarize the investment in the Consumer Loan Companies held by New Residential:
 
December 31,
 
2015
 
2014
Consumer Loan Assets (amortized cost basis)
$
1,698,130

 
$
2,088,330

Other Assets
70,469

 
92,051

Debt
(1,912,267
)
 
(2,411,421
)
Other Liabilities
(5,640
)
 
(12,340
)
Equity
$
(149,308
)
 
$
(243,380
)
New Residential’s investment
$
—

 
$
—

New Residential’s ownership
30.0
%
 
30.0
%


 
Year Ended December 31,
 
2015
 
2014
 
2013
Interest income
$
455,479

 
$
534,990

 
$
481,056

Interest expense
(87,000
)
 
(81,706
)
 
(71,639
)
Provision for finance receivable losses
(67,935
)
 
(104,921
)
 
(60,619
)
Other expenses, net
(60,263
)
 
(74,781
)
 
(67,225
)
Change in fair value of debt
—

 
(14,810
)
 
—

Loss on extinguishment of debt
—

 
(21,151
)
 
—

Net income
$
240,281

 
$
237,621

 
$
281,573

New Residential’s equity in net income through October 3, 2014
$
—

 
$
53,840

 
$
82,856

New Residential’s ownership
30.0
%
 
30.0
%
 
30.0
%


The following is a summary of New Residential’s consumer loan investments made through equity method investees:
 
Unpaid Principal Balance(A)
 
Interest in Consumer Loan Companies
 
Carrying Value(B)
 
Weighted Average Coupon(C)
 
Weighted Average Yield
 
Weighted Average Expected Life (Years)(D)
December 31, 2015
$
2,094,904

 
30.0
%
 
$
1,698,130

 
18.2
%
 
18.1
%
 
3.1
December 31, 2014
$
2,589,748

 
30.0
%
 
$
2,088,330

 
18.1
%
 
16.1
%
 
3.6

(A)
Represents the November 30, 2015 and 2014 balances, respectively.
(B)
Represents the carrying value of the consumer loans held by the Consumer Loan Companies.
(C)
Substantially all of the cash flows received on the loans was required to be used to make payments on the notes described above.
(D)
Weighted Average Expected Life represents the weighted average expected timing of the receipt of expected cash flows for this investment.

New Residential’s investments in consumer loans, equity method investees changed as follows:
 
Year Ended December 31,
 
2015
 
2014
Balance at beginning of period
$
—

 
$
215,062

Contributions to equity method investees
—

 
—

Distributions of earnings from equity method investees
—

 
(53,840
)
Distributions of capital from equity method investees
—

 
(215,062
)
Earnings from investments in consumer loan equity method investees
—

 
53,840

Balance at end of period
$
—

 
$
—



 
Year Ended December 31,
 
2015
 
2014
Tax withholding payments on behalf of New Residential, treated as non-cash distributions
$
585

 
$
609

Distributions in excess of basis, treated as gains, excluding tax withholding payments
$
43,369

 
$
91,411