INVESTMENTS IN SERVICER ADVANCES (Tables)

12 Months Ended

Dec. 31, 2015

Investments, All Other Investments [Abstract]

Summary of Information on the Assets and Liabilities related to Consolidated VIE

The following table presents information on the assets and liabilities related to this consolidated VIE.



	As of December 31,
	2015		2014
Assets
Servicer advance investments, at fair value	$	2,344,245	$	3,186,830
Cash and cash equivalents	40,761		58,983
All other assets	25,092		31,092
Total assets^(A)	$	2,410,098	$	3,276,905
Liabilities
Notes payable	$	2,060,347	$	2,811,371
All other liabilities	6,111		7,990
Total liabilities^(A)	$	2,066,458	$	2,819,361


(A)	The creditors of the Buyer do not have recourse to the general credit of New Residential and the assets of the Buyer are not directly available to satisfy New Residential’s obligations.

Summary of Investments in Servicer Advances

The following is a summary of the investments in Servicer Advances, including the right to the basic fee component of the related MSRs, made by New Residential:



	Amortized Cost Basis		Carrying Value^(A)		Weighted Average Discount Rate		Weighted Average Yield		Weighted Average Life (Years)^(B)	Change in Fair Value Recorded in Other Income for Year then Ended
December 31, 2015
Servicer Advances^(C)	$	7,400,068	$	7,426,794	5.6	%	5.5	%	4.4	$	(57,491	)
December 31, 2014
Servicer Advances	$	3,186,622	$	3,270,839	5.4	%	5.8	%	4.0	$	84,217


(A)	Carrying value represents the fair value of the investments in Servicer Advances, including the basic fee component of the related MSRs.


(B)	Weighted Average Life represents the weighted average expected timing of the receipt of expected net cash flows for this investment.


(C)	Excludes asset-backed securities collateralized by Servicer Advances with an aggregate face amount of $431.0 million and an aggregate carrying value of $430.3 million as of December 31, 2015. See Note 7 for details related to these securities.

The following is additional information regarding the Servicer Advances and related financing:



									Loan-to-Value^(A)				Cost of Funds^(C)
	UPB of Underlying Residential Mortgage Loans		Outstanding Servicer Advances		Servicer Advances to UPB of Underlying Residential Mortgage Loans		Face Amount of Notes Payable		Gross		Net^(B)		Gross		Net
December 31, 2015
Servicer Advances^(D)	$	220,256,804	$	7,578,110	3.4	%	$	7,058,094	91.2	%	90.2	%	3.4	%	2.6	%
December 31, 2014
Servicer Advances^(D)	$	96,547,773	$	3,102,492	3.2	%	$	2,890,230	91.4	%	90.4	%	3.0	%	2.3	%

(A)

Based on outstanding Servicer Advances, excluding purchased but unsettled Servicer Advances and certain deferred servicing fees (“DSF”) which New Residential receives financing on. If New Residential were to include these DSF in the servicer advance balance, gross and net LTV as of December 31, 2015 would be 86.9% and 85.9%, respectively. Also excludes retained non-agency bonds with a current face amount of $175.8 million from the outstanding servicer advances debt. If New Residential were to sell these bonds, gross and net LTV as of December 31, 2015 would be 93.4% and 92.4%, respectively.


(B)	Ratio of face amount of borrowings to par amount of Servicer Advance collateral, net of any general reserve.


(C)	Annualized measure of the cost associated with borrowings. Gross Cost of Funds primarily includes interest expense and facility fees. Net Cost of Funds excludes facility fees.


(D)	The following types of advances comprise the investments in Servicer Advances:



	December 31,
	2015		2014
Principal and interest advances	$	2,229,468	$	729,713
Escrow advances (taxes and insurance advances)	3,687,559		1,600,713
Foreclosure advances	1,661,083		772,066
Total	$	7,578,110	$	3,102,492

Schedule of Interest Income Related to Investments in Servicer Advances

Interest income recognized by New Residential related to its investments in Servicer Advances was comprised of the following:



	Year Ended December 31,
	2015			2014			2013
Interest income, gross of amounts attributable to servicer compensation	$	754,717		$	290,309		$	6,708
Amounts attributable to base servicer compensation	(97,351		)	(26,092		)	(2,287		)
Amounts attributable to incentive servicer compensation	(305,050		)	(74,011		)	—
Interest income from investments in Servicer Advances	$	352,316		$	190,206		$	4,421

Others’ interests in the equity of the Buyer is computed as follows:



	December 31,
	2015			2014
Total Advance Purchaser LLC equity	$	343,640		$	457,545
Others’ ownership interest	55.5		%	55.5		%
Others’ interest in equity of consolidated subsidiary	$	190,647		$	253,836

Others’ interests in the Buyer’s net income (loss) is computed as follows:



	Year Ended December 31,
	2015			2014			2013
Net Advance Purchaser LLC income (loss)	$	33,180		$	159,374		$	(517	)
Others’ ownership interest as a percent of total^(A)	55.5		%	56.0		%	63.1		%
Others’ interest in net income (loss) of consolidated subsidiaries^(B)	$	18,407		$	89,222		(326		)


(A)	As a result, New Residential owned 44.5%, 44.0% and 36.9% of the Buyer, on average during the years ended December 31, 2015, 2014 and 2013, respectively.


(B)	Excludes HLSS shareholders’ interests in the net income (loss) of HLSS of $5.2 million during the year ended December 31, 2015.

- Definition

Tabular disclosure of the significant judgments and assumptions made in determining whether a variable interest (as defined) held by the entity requires the variable interest entity (VIE) (as defined) to be consolidated and (or) disclose information about its involvement with the VIE, individually or in aggregate (as applicable); the nature of restrictions, if any, on the consolidated VIE's assets and on the settlement of its liabilities reported by an entity in its statement of financial position, including the carrying amounts of such assets and liabilities; the nature of, and changes in, the risks associated with involvement in the VIE; how involvement with the VIE affects the entity's financial position, financial performance, and cash flows; the lack of recourse if creditors (or beneficial interest holders) of the consolidated VIE have no recourse to the general credit of the primary beneficiary (if applicable); the terms of arrangements, giving consideration to both explicit arrangements and implicit variable interests, if any, that could require the entity to provide financial support to the VIE, including events or circumstances that could expose the entity to a loss; the methodology used by the entity for determining whether or not it is the primary beneficiary of the variable interest entity; the significant factors considered and judgments made in determining that the power to direct the activities of a VIE that most significantly impact the VIE's economic performance are shared (as defined); the carrying amounts and classification of assets and liabilities of the VIE included in the statement of financial position; the entity's maximum exposure to loss, if any, as a result of its involvement with the VIE, including how the maximum exposure is determined and significant sources of the entity's exposure to the VIE; a comparison of the carrying amounts of the assets and liabilities and the entity's maximum exposure to loss; information about any liquidity arrangements, guarantees, and (or) other commitments by third parties that may affect the fair value or risk of the entity's variable interest in the VIE; whether or not the entity has provided financial support or other support (explicitly or implicitly) to the VIE that it was not previously contractually required to provide or whether the entity intends to provide that support, including the type and amount of the support and the primary reasons for providing the support; and supplemental information the entity determines necessary to provide.

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