INVESTMENTS IN CONSUMER LOANS (Tables)

12 Months Ended

Dec. 31, 2017

Investments, Debt and Equity Securities [Abstract]

Summary of Preliminary Allocation of Total Consideration

New Residential has performed an allocation of the purchase price to HLSS’s assets and liabilities, as set forth below.

Total Consideration ($ in millions)	$	1,491.2
Assets
Cash and cash equivalents	$	51.4
Servicer advance investments, at fair value	5,096.7
Excess mortgage servicing rights, at fair value	917.1
Residential mortgage loans, held-for-sale(A)	416.8
Deferred tax asset(B)	195.1
Investment in HLSS Ltd.	44.9
Other assets(C)	402.4
Total Assets Acquired	$	7,124.4
Liabilities
Notes and bonds payable	5,580.3
Accrued expenses and other liabilities(D)(E)	52.9
Total Liabilities Assumed	$	5,633.2
Net Assets	$	1,491.2

(A) Represents $424.3 million unpaid principal balance (“UPB”) of Government National Mortgage Association (“Ginnie Mae”) early buy-out (“EBO”) residential mortgage loans not subject to Accounting Standards Codification (“ASC”) No. 310-30 as the contractual cash flows are guaranteed by the Federal Housing Administration (“FHA”).

(B) Due primarily to the difference between carryover historical tax basis and acquisition date fair value of one of HLSS’s first tier subsidiaries.

(C) Includes restricted cash and receivables not subject to ASC No. 310-30 which New Residential has deemed fully collectible.

(D) Includes liabilities which arose from contingencies regarding HLSS matters.

(E) Contingencies for HLSS class action law suits had not been recognized at the acquisition date as the criteria in ASC No. 450 had not been met (Note 14).

New Residential has performed an allocation of the purchase price to the Consumer Loan Companies’ assets and liabilities, as set forth below.

Total Consideration ($ in millions)	$	237.5
Assets
Consumer loans, held-for-investment	$	1,934.7
Cash and cash equivalents	0.3
Restricted cash	74.6
Other assets	35.9
Total Assets Acquired	2,045.5
Liabilities
Notes and bonds payable	$	1,803.2
Accrued expenses and other liabilities	4.8
Total Liabilities Assumed	1,808.0
Net Assets	$	237.5

Summary of Unaudited Pro Forma Combined Interest Income and Income Before Income Taxes

Unaudited Supplemental Pro Forma Financial Information - The following table presents unaudited pro forma combined Interest Income and Income Before Income Taxes for the year ended December 31, 2015 prepared as if the HLSS Acquisition had been consummated on January 1, 2014.

	Year Ended December 31, 2015
	(unaudited)
Pro Forma
Interest Income	$	731,660
Income Before Income Taxes	322,365

The following table presents unaudited pro forma combined Interest Income and Income Before Income Taxes for the years ended December 31, 2016 and 2015 prepared as if the SpringCastle Transaction had been consummated on January 1, 2015.

	Year Ended December 31,
	2016		2015
	(unaudited)		(unaudited)
Pro Forma
Interest Income	$	1,163,648	$	1,030,522
Income Before Income Taxes	581,925		466,915
Noncontrolling Interests in Income of Consolidated Subsidiaries	96,852		92,413

Schedule of Investments in Consumer Loan Equity Method Investees

The following table summarizes the investment in consumer loans, held-for-investment held by New Residential:

	Unpaid Principal Balance		Interest in Consumer Loans		Carrying Value		Weighted Average Coupon		Weighted Average Expected Life (Years)(A)	Weighted Average Delinquency(B)
December 31, 2017
Consumer Loan Companies
Performing Loans	$	1,005,570	53.5	%	$	1,052,561	18.7	%	3.7	6.0	%
Purchased Credit Deteriorated Loans(C)	282,540		53.5	%	236,449		16.2	%	3.3	12.5	%
Other - Performing Loans	89,682		100.0	%	85,253		14.1	%	1.0	4.5	%
Total Consumer Loans, held-for-investment	$	1,377,792			$	1,374,263	17.9	%	3.5	7.3	%
December 31, 2016
Consumer Loan Companies
Performing Loans	$	1,275,121	53.5	%	$	1,321,825	18.7	%	4.2	6.3	%
Purchased Credit Deteriorated Loans(C)	371,261		53.5	%	316,532		16.6	%	3.6	14.0	%
Other - Performing Loans	163,570		100.0	%	161,129		14.2	%	1.5	0.3	%
Total Consumer Loans, held-for-investment	$	1,809,952			$	1,799,486	17.9	%	3.8	7.3	%

(A) Represents the weighted average expected timing of the receipt of expected cash flows for this investment.

(B) Represents the percentage of the total unpaid principal balance that is 30+ days delinquent. Delinquency status is the primary credit quality indicator as it provides early warning of borrowers who may be experiencing financial difficulties.

(C) Includes loans with evidence of credit deterioration since origination where it is probable that New Residential will not collect all contractually required principal and interest payments, which are accounted for as PCD loans.

Past Due Financing Receivables

The following table provides past due information regarding New Residential’s Performing Loans, which is an important indicator of credit quality and the establishment of the allowance for loan losses:

December 31, 2017
Days Past Due	Delinquency Status(A)
Current	84.2	%
30-59	6.6	%
60-89	2.6	%
90-119(B)	1.5	%
120+(C)	5.1	%
	100.0	%

(A) Represents the percentage of the total principal balance that corresponds to loans that are in each delinquency status.

(B) Includes loans 90-119 days past due and still accruing interest because they are generally placed on nonaccrual status at 120 days or more past due.

(C) Represents nonaccrual loans.

The following table provides past due information regarding New Residential’s performing consumer loans, held-for-investment, which is an important indicator of credit quality and the establishment of the allowance for loan losses:

December 31, 2017
Days Past Due	Delinquency Status(A)
Current	94.0	%
30-59	2.5	%
60-89	1.4	%
90-119(B)	0.8	%
120+(B) (C)	1.3	%
	100.0	%

(A) Represents the percentage of the total unpaid principal balance that corresponds to loans that are in each delinquency status.

(B) Includes loans more than 90 days past due and still accruing interest.

(C) Interest is accrued up to the date of charge-off at 180 days past due.

Schedule of Carrying Value of Performing Consumer Loans

Activities related to the carrying value of performing consumer loans, held-for-investment were as follows:

	Performing Loans
Balance at December 31, 2015	$	—
SpringCastle Transaction	1,539,569
Purchases	176,107
Additional fundings(A)	49,289
Proceeds from repayments	(239,236		)
Accretion of loan discount and premium amortization, net	7,728
Net charge-offs	(47,065		)
Allowance for loan losses	(3,438		)
Balance at December 31, 2016	$	1,482,954
Purchases
Additional fundings(A)	56,321
Proceeds from repayments	(329,843		)
Accretion of loan discount and premium amortization, net	4,891
Gross charge-offs	(73,842		)
Additions to the allowance for loan losses, net	(2,667		)
Balance at December 31, 2017	$	1,137,814

(A) Represents draws on consumer loans with revolving privileges.

Allowance for Credit Losses on Financing Receivables

Activities related to the valuation and loss provision on reverse mortgage loans and allowance for loan losses on performing loans held-for-investment were as follows:

	Reverse Mortgage Loans			Performing Loans
Balance at December 31, 2015	$	1,553		$	119
Provision for loan losses(A)	73			4
Charge-offs(B)	—			—
Sales	(171		)	—
Transfer of loans to held-for-sale(C)	(1,455		)	(123		)
Balance at December 31, 2016	$	—		$	—
Provision for loan losses(A)	—			646
Charge-offs(B)	—			(450		)
Balance at December 31, 2017	$	—		$	196

(A) Based on an analysis of collective borrower performance, credit ratings of borrowers, loan-to-value ratios, estimated value of the underlying collateral, key terms of the loans and historical and anticipated trends in defaults and loss severities at a pool level.

(B) Loans, other than PCD loans, are generally charged off or charged down to the net realizable value of the collateral (i.e., fair value less costs to sell), with an offset to the allowance for loan losses, when available information confirms that loans are uncollectible.

(C) Represents loans not initially acquired with the intent to sell for which New Residential determined that it no longer has the intent to hold for the foreseeable future, or until maturity or payoff.

Activities related to the allowance for loan losses on performing consumer loans, held-for-investment were as follows:

	Collectively Evaluated(A)			Individually Impaired(B)		Total
Balance at March 31, 2016 (date of SpringCastle Transaction)	$	—		$	—	$	—
Provision for loan losses	49,506			997		50,503
Net charge-offs(C)	(47,065		)	—		(47,065		)
Balance at December 31, 2016	$	2,441		$	997	$	3,438
Provision (reversal) for loan losses	65,059			679		65,738
Net charge-offs(C)	(63,071		)	—		(63,071		)
Balance at December 31, 2017	$	4,429		$	1,676	$	6,105

(A) Represents smaller-balance homogeneous loans that are not individually considered impaired and are evaluated based on an analysis of collective borrower performance, key terms of the loans and historical and anticipated trends in defaults and loss severities, and consideration of the unamortized acquisition discount.

(B) Represents consumer loan modifications considered to be troubled debt restructurings (“TDRs”) as they provide concessions to borrowers, primarily in the form of interest rate reductions, who are experiencing financial difficulty. As of December 31, 2017, there are $10.9 million in UPB and $9.4 million in carrying value of consumer loans classified as TDRs.

(C) Consumer loans, other than PCD loans, are charged off when available information confirms that loans are uncollectible, which is generally when they become 180 days past due. Charge-offs are presented net of $10.8 million and $8.1 million in recoveries of previously charged-off UPB in 2017 and 2016, respectively.

Schedule of Carrying Value of Purchased Credit Deteriorated Loans

A portion of the consumer loans are considered PCD loans. Activities related to the carrying value of PCD consumer loans, held-for-investment were as follows:

Balance at December 31, 2015	$	—
SpringCastle Transaction	395,129
Allowance for Loan Losses(A)	(3,013		)
Proceeds from repayments	(112,222		)
Accretion of loan discount and other amortization	36,638
Balance at December 31, 2016	$	316,532
(Allowance) reversal for loan losses(A)	3,013
Proceeds from repayments	(123,932		)
Accretion of loan discount and other amortization	40,836
Balance at December 31, 2017	$	236,449

(A) An allowance represents the present value of cash flows expected at acquisition that are no longer expected to be collected. A reversal results from an increase to expected cash flows that reverses a prior allowance.

Impaired Financing Receivables

The following is the unpaid principal balance and carrying value for consumer loans, for which, as of the acquisition date, it was probable that New Residential would be unable to collect all contractually required payments:

	Unpaid Principal Balance		Carrying Value
December 31, 2017	$	282,540	$	236,449
December 31, 2016	371,261		316,532

Schedule of Changes in Accretable Yield

The following is a summary of the changes in accretable yield for these loans:

Balance at December 31, 2015	$	—
SpringCastle Transaction	176,387
Accretion	(36,638		)
Reclassifications from (to) non-accretable difference(A)	28,179
Balance at December 31, 2016	$	167,928
Accretion	(40,836		)
Reclassifications from (to) non-accretable difference(A)	5,199
Balance at December 31, 2017	$	132,291

(A) Represents a probable and significant increase (decrease) in cash flows previously expected to be uncollectible.

Consolidation, Less than Wholly Owned Subsidiary, Parent Ownership Interest, Effects of Changes, Net

Others’ interests in the equity of the Consumer Loan Companies is computed as follows:

	December 31,
	2017			2016
Total Consumer Loan Companies equity	$	74,071		$	75,311
Others’ ownership interest	46.5		%	46.5		%
Others’ interests in equity of consolidated subsidiary	$	34,466		$	35,020

Others’ interests in the Consumer Loan Companies’ net income (loss) is computed as follows:

	Year Ended December 31,
	2017			2016
Net Consumer Loan Companies income (loss)	$	98,692		$	81,992
Others’ ownership interest as a percent of total	46.5		%	46.5		%
Others’ interest in net income (loss) of consolidated subsidiaries	$	45,892		$	38,127

Schedule of Variable Interest Entities

The following table presents information on the combined assets and liabilities related to these consolidated VIEs.

	As of
	December 31, 2017
Assets
Residential mortgage loans	$	188,957
Other assets	—
Total assets(A)	$	188,957
Liabilities
Notes and bonds payable(B)	$	184,490
Accounts payable and accrued expenses	16
Total liabilities(A)	$	184,506

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

(B) Includes $78.2 million of bonds retained by New Residential issued by these VIEs.

As described in “Call Rights” above, New Residential has issued securitizations which were treated as sales under GAAP. New Residential has no obligation to repurchase any loans from these securitizations and its exposure to loss is limited to the carrying amount of its retained interests in the securitization entities. These securitizations are conducted through variable interest entities, of which New Residential is not the primary beneficiary. The following table summarizes certain characteristics of the underlying residential mortgage loans, and related financing, in these securitizations as of December 31, 2017:

Residential mortgage loan UPB	$	5,031,191
Weighted average delinquency(A)	2.38		%
Net credit losses for the year ended December 31, 2017	$	6,163
Face amount of debt held by third parties(B)	$	5,025,028
Carrying value of bonds retained by New Residential(C)	$	467,072
Cash flows received by New Residential on these bonds for the year ended December 31, 2017	$	93,698

(A) Represents the percentage of the UPB that is 60+ days delinquent.

(B) Excludes bonds retained by New Residential.

(C) Retained pursuant to required risk retention regulations.

The following table presents information on the combined assets and liabilities related to these consolidated VIEs.

	As of December 31,
	2017		2016
Assets
Consumer loans, held-for-investment	$	1,289,010	$	1,638,357
Restricted cash	11,563		13,393
Accrued interest receivable	19,360		24,528
Total assets(A)	$	1,319,933	$	1,676,278
Liabilities
Notes and bonds payable(B)	$	1,284,436	$	1,648,488
Accounts payable and accrued expenses	4,007		951
Total liabilities(A)	$	1,288,443	$	1,649,439

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

(B) Includes $121.0 million face amount of bonds retained by New Residential issued by these VIEs.

Summary of the Investment in the Consumer Loan Companies

The following tables summarize the investment in LoanCo and WarrantCo held by New Residential:

	December 31, 2017(A)
Consumer loans, at fair value	$	178,422
Warrants, at fair value	80,746
Other assets	46,342
Warehouse financing	(117,944		)
Other liabilities	(13,059		)
Equity	$	174,507
Undistributed retained earnings	$	—
New Residential’s investment	$	42,473
New Residential’s ownership	24.3		%

	Year Ended
	December 31, 2017(A)
Interest income	$	35,912
Interest expense	(8,144		)
Change in fair value of consumer loans and warrants	56,324
Gain on sale of consumer loans(B)	26,400
Other expenses	(4,623		)
Net income	$	105,869
New Residential’s equity in net income	$	25,617
New Residential’s ownership	24.2		%

(A) Data as of, and for the periods ended, November 30, 2017, as a result of the one month reporting lag.

(B) During the year ended December 31, 2017, LoanCo sold, through securitizations which were treated as sales for accounting purposes, $1.7 billion in UPB of consumer loans. LoanCo retained $178.4 million of residual interests in the securitizations and distributed them to the LoanCo co-investors, including New Residential.

The following is a summary of LoanCo’s consumer loan investments:

	Unpaid Principal Balance		Interest in Consumer Loans		Carrying Value		Weighted Average Coupon		Weighted Average Expected Life (Years)(A)	Weighted Average Delinquency(B)
December 31, 2017(C)	$	178,422	25.0	%	$	178,422	15.1	%	1.4	0.4	%

(A) Represents the weighted average expected timing of the receipt of expected cash flows for this investment.

(B) Represents the percentage of the total unpaid principal balance that is 30+ days delinquent. Delinquency status is the primary credit quality indicator as it provides early warning of borrowers who may be experiencing financial difficulties.

(C) Data as of November 30, 2017 as a result of the one month reporting lag.

New Residential’s investment in LoanCo and WarrantCo changed as follows:

Balance at December 31, 2016	$	—
Contributions to equity method investees	470,344
Distributions of earnings from equity method investees	(6,240		)
Distributions of capital from equity method investees	(438,309		)
Earnings from investments in consumer loans, equity method investees	25,617
Balance at December 31, 2017	$	51,412