New Residential, through limited liability companies (together, the “Consumer Loan Companies”), has a co-investment in a portfolio of consumer loans. The portfolio includes personal unsecured loans and personal homeowner loans. OneMain is the servicer of the loans and provides all servicing and advancing functions for the portfolio. As of June 30, 2020, New Residential owns 53.5% of the limited liability company interests in, and consolidates, the Consumer Loan Companies.

New Residential also purchased certain newly originated consumer loans from a third party (“Consumer Loan Seller”). These loans are not held in the Consumer Loan Companies and have been designated as performing consumer loans, held-for-investment and are grouped and presented as part of residential loans and variable interest entity consumer loans held-for-investment, at fair value on the Condensed Consolidated Balance Sheets. In addition, see “Equity Method Investees” below.


	Unpaid Principal Balance		Interest in Consumer Loans		Carrying Value		Weighted Average Coupon		Weighted Average Expected Life (Years)^(A)	Weighted Average Delinquency^(B)
June 30, 2020
Consumer Loan Companies
Performing Loans	$	564,899	53.5	%	$	617,349	18.4	%	3.8	4.6	%
Purchased Credit Deteriorated Loans^(C)	148,047		53.5	%	144,176		14.7	%	3.6	9.4	%
Other - Performing Loans	5,439		100.0	%	4,937		15.1	%	0.6	2.7	%
Total Consumer Loans, held-for-investment	$	718,385			$	766,462	17.6	%	3.7	5.5	%
December 31, 2019
Consumer Loan Companies
Performing Loans	$	644,676	53.5	%	$	682,310	18.8	%	4.0	4.7	%
Purchased Credit Deteriorated Loans^(C)	170,083		53.5	%	136,633		15.5	%	3.7	10.1	%
Other - Performing Loans	9,158		100.0	%	8,602		15.1	%	0.7	6.1	%
Total Consumer Loans, held-for-investment	$	823,917			$	827,545	18.0	%	3.9	5.9	%

(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.

Upon adoption of ASU 2016-13 on January 1, 2020, New Residential elected to apply the fair value option for all consumer loans. The fair value option provides an election which allows a company to irrevocably elect fair value for certain financial asset and liabilities on an instrument-by-instrument basis. The Company elected the fair value option for these loans to better align reported results with the underlying economic changes in value of the loans on the Company’s Condensed Consolidated Balance Sheet.

The election of the fair value option resulted in the Company recognizing an adjustment of $19.7 million to reduce retained earnings attributable to the change in the fair value of consumer loans, net of noncontrolling interests. Unrealized gains (losses) from the change in fair value of consumer loans are recognized in Change in fair value of investments in the Condensed Consolidated Statements of Income. Realized gains (losses) are recorded in Gain on settlement of investments, net in the Condensed Consolidated Statements of Income. See Note 2.

Consumer loans for which the fair value option has been elected are not evaluated for credit impairment as changes in fair value are recorded in the Condensed Consolidated Statements of Income. Interest income is recognized over the life of the loan using the effective interest method and is recorded on the accrual basis.


Days Past Due	Unpaid Principal Balance	Fair Value	Fair Value Over (Under) Unpaid Principal Balance
Under 90 Days	704,708	752,053	47,345
90 days or more past due	13,677	14,409	732
Total	718,385	766,462	48,077

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:


Balance at December 31, 2019	$	827,545
Fair value adjustment due to fair value option	36,472

Additional fundings^(A)	17,684
Proceeds from repayments	(119,124)
Accretion of loan discount and premium amortization, net	13,108
Fair value adjustment due to:
Changes in instrument-specific credit risk	(4,565)
Other factors	(4,658)
Balance at June 30, 2020	$	766,462

In February 2017, New Residential completed a co-investment, through a newly formed entity, PF LoanCo Funding LLC (“LoanCo”), to purchase up to $5.0 billion worth of newly originated consumer loans from Consumer Loan Seller over a two-year term. New Residential accounted for its investment in LoanCo pursuant to the equity method of accounting because it could exercise significant influence over LoanCo but the requirements for consolidation are not met. As of December 31, 2019, LoanCo had distributed all net assets to New Residential.

Additionally, New Residential and the LoanCo co-investors agreed to purchase warrants to purchase up to 177.7 million shares of Series F convertible preferred stock in the Consumer Loan Seller’s parent company (“ParentCo”). The holder of the warrants has the option to purchase an equivalent number of shares of Series F convertible preferred stock in ParentCo at a price of $0.01 per share. The Series F convertible preferred stock holders have the right to convert such preferred stock to common stock at any time, are entitled to the number of votes equal to the number of shares of common stock into which such shares of convertible preferred stock could be converted, and will have liquidation rights in the event of liquidation. As of June 30, 2020 and December 31, 2019, the warrants are held on New Residential’s balance sheet in Other Assets and carried at $23.0 million and $28.0 million, respectively.


	Three Months Ended June 30, 2019^(A)			Six Months Ended June 30, 2019^(A)
Interest income	$	11,390		$	19,367
Interest expense	(3,665)			(6,487)
Change in fair value of consumer loans and warrants	(15,993)			(1,457)
Gain on sale of consumer loans	(1,222)			(1,668)
Other expenses	(1,462)			(2,918)
Net income	$	(10,952)		$	6,837
New Residential’s equity in net income	$	(2,654)		$	1,657
New Residential’s ownership	24.2		%	24.2		%


	Unpaid Principal Balance		Interest in Consumer Loans		Carrying Value		Weighted Average Coupon		Weighted Average Expected Life (Years)^(A)	Weighted Average Delinquency^(B)
June 30, 2019^(C)	$	414,530	25.0	%	$	409,379	14.6	%	1.3	1.4	%