DEBT OBLIGATIONS

12 Months Ended

Dec. 31, 2020

The following table presents certain information regarding New Residential’s secured financing agreements and secured notes and bonds payable debt obligations:


	December 31, 2020															December 31, 2019
									Collateral
Debt Obligations/Collateral	Outstanding Face Amount		Carrying Value(A)		Final Stated Maturity(B)	Weighted Average Funding Cost		Weighted Average Life (Years)	Outstanding Face		Amortized Cost Basis		Carrying Value		Weighted Average Life (Years)	Carrying Value(A)
Secured Financing Agreements(C)
Repurchase Agreements:
Warehouse Credit Facilities-Residential Mortgage Loans(F)	$	4,043,156	$	4,039,564	Feb-21 to Dec-22	2.18	%	0.6	$	4,370,264	$	4,496,831	$	4,465,054	19.5	$	5,053,207
Agency RMBS(D)	12,682,427		12,682,427		Jan-21	0.24	%	0.2	12,929,057		13,715,013		13,800,351		0.9	15,481,677
Non-Agency RMBS(E)	818,063		817,209		Jan-21 to Mar-21	3.48	%	0.3	17,183,226		1,534,798		1,548,351		0.7	7,317,519
Real Estate Owned(G) (H)	8,480		8,480		Feb-21 to Dec-22	3.13	%	1.9	N/A		N/A		11,098		N/A	63,822
Total Secured Financing Agreements	17,552,126		17,547,680			0.84	%	0.3								27,916,225
Secured Notes and Bonds Payable
Excess MSRs(I)	275,088		275,088		Aug-24	4.36	%	3.7	101,142,417		317,234		398,969		6.1	217,300
MSRs(J)	2,704,923		2,691,791		Jul-22 to Dec-25	4.52	%	3.5	416,212,194		4,457,541		4,400,657		5.6	2,640,036
Servicer Advance Investments(K)	423,144		423,144		Apr-21 to Dec-22	1.45	%	1.5	449,150		512,958		538,056		6.0	443,248
Servicer Advances(K)	2,593,643		2,585,575		Apr-21 to Sep-23	2.42	%	1.8	2,970,329		3,002,267		3,002,267		0.7	2,738,424
Residential Mortgage Loans(L)	1,045,275		1,039,838		Apr-21 to Aug-60	4.25	%	30.2	1,602,289		1,535,095		1,365,250		4.8	864,451
Consumer Loans(M)	625,166		628,759		Sep -37	2.03	%	3.6	618,055		682,866		682,866		3.6	816,689
Total Secured Notes and Bonds Payable	7,667,239		7,644,195			3.39	%	6.5								7,720,148
Total/Weighted Average	$	25,219,365	$	25,191,875		1.61	%	2.2								$	35,636,373

(A)Net of deferred financing costs.

(B)All debt obligations with a stated maturity through the date of issuance were refinanced, extended or repaid.

(C)These secured financing agreements had approximately $48.5 million of associated accrued interest payable as of December 31, 2020.

(D)All Agency RMBS repurchase agreements have a fixed rate.

(E)All Non-Agency RMBS secured financing agreements have LIBOR-based floating interest rates. This also includes repurchase agreements and related collateral of $25.2 million and $35.1 million, respectively, on retained bonds collateralized by Agency MSRs.

(F)Includes $258.0 million of repurchase agreements which bear interest at a fixed rate of 4.4%. All remaining repurchase agreements have LIBOR-based floating interest rates.

(G)All repurchase agreements have LIBOR-based floating interest rates.

(H)Includes financing collateralized by receivables including claims from FHA on Ginnie Mae EBO loans for which foreclosure has been completed and for which New Residential has made or intends to make a claim on the FHA guarantee.

(I)Includes $275.1 million of corporate loans which bear interest at a fixed rate of 4.4%.

(J)Includes $425.1 million of MSR notes which bear interest equal to the sum of (i) a floating rate index equal to one-month LIBOR and (ii) a margin of 4.5%; $329.9 million of MSR notes which bear interest equal to the sum of (i) a floating rate index equal to one-month LIBOR and (ii) a margin of 4.5%; and $1,950.0 million of capital markets notes with fixed interest rates ranging 3.8% to 5.4%. The outstanding face amount of the collateral represents the UPB of the residential mortgage loans underlying the MSRs and MSR financing receivables that secure these notes.

(K)$2.0 billion face amount of the notes have a fixed rate while the remaining notes bear interest equal to the sum of (i) a floating rate index equal to one-month LIBOR or a cost of funds rate, as applicable, and (ii) a margin ranging from 1.2% to 1.9%. Collateral includes Servicer Advance Investments, as well as servicer advances receivable related to the MSRs and MSR financing receivables owned by NRM.

(L)Represents (i) a $5.7 million note payable to Mr. Cooper which includes a $1.5 million receivable from government agency and bears interest equal to one-month LIBOR plus 2.9%, (ii) $58.3 million of SAFT 2013-1 mortgage-backed securities issued with fixed interest rate of 3.7% (see Note 13 for fair value details), (iii) $150.9 million of MDST

Trusts asset-backed notes held by third parties which bear interest equal to 6.6% (see Note 13 for fair value details), and (iv) $947.5 million of bonds held by third parties which bear interest at a fixed rate ranging from 3.2% to 5.0%.

(M)Includes the SpringCastle debt, which is composed of the following classes of asset-backed notes held by third parties: $572.1 million UPB of Class A notes with a coupon of 2.0% and a stated maturity date in September 2037 and $53.0 million UPB of Class B notes with a coupon of 2.7% and a stated maturity date in May 2036.

As of December 31, 2020, New Residential had no outstanding secured financing agreements where the amount at risk with any individual counterparty or group of related counterparties exceeded 10% of New Residential’s stockholders’ equity. The amount at risk under secured financing agreements is defined as the excess of carrying amount (or market value, if higher than the carrying amount) of the securities or other assets sold under agreement to repurchase, including accrued interest plus any cash or other assets on deposit to secure the repurchase obligation, over the amount of the repurchase liability (adjusted for accrued interest).

General

Certain of the debt obligations included above are obligations of New Residential’s consolidated subsidiaries, which own the related collateral. In some cases, such collateral is not available to other creditors of New Residential.

New Residential has margin exposure on $17.6 billion of secured financing agreements as of December 31, 2020. To the extent that the value of the collateral underlying these secured financing agreements declines, New Residential may be required to post margin, which could significantly impact its liquidity.

Activities related to the carrying value of New Residential’s debt obligations were as follows:


	Excess MSRs		MSRs		Servicer Advances(A)		Real Estate Securities		Residential Mortgage Loans and REO		Consumer Loans		Total
Balance at December 31, 2018	$	297,563	$	2,360,856	$	3,382,455	$	11,780,855	$	3,898,059	$	936,447	$	22,656,235
Secured Financing Agreements:
Borrowings	—		—		—		207,138,969		36,177,659		—		243,316,628
Repayments	—		—		—		(196,120,793)		(34,833,314)		—		(230,954,107)
Capitalized deferred financing costs, net of amortization	—		—		—		165		(429)		—		(264)
Secured Notes and Bonds Payable:
Ditech Acquisition(B)	—		—		—		—		209,459		—		209,459
Borrowings	456,741		2,456,410		4,952,585		—		912,445		928,683		9,706,864
Repayments	(537,200)		(2,178,755)		(5,149,327)		—		(383,635)		(1,054,610)		(9,303,527)
Discount on borrowings, net of amortization	—		—		102		—		—		6,169		6,271
Unrealized (gain) loss on notes, fair value	—		—		—		—		1,236		—		1,236
Capitalized deferred financing costs, net of amortization	196		1,525		(4,143)		—		—		—		(2,422)
Balance at December 31, 2019	$	217,300	$	2,640,036	$	3,181,672	$	22,799,196	$	5,981,480	$	816,689	$	35,636,373
Secured Financing Agreements:
Borrowings	—		—		—		113,228,180		63,453,603		—		176,681,783
Repayments	—		—		—		(122,526,887)		(64,520,481)		—		(187,047,368)
Capitalized deferred financing costs, net of amortization	—		—		—		(853)		(2,107)		—		(2,960)
Secured Notes and Bonds Payable:
Borrowings	193,357		3,575,811		4,072,560		—		875,758		663,047		9,380,533
Repayments	(135,569)		(3,517,429)		(4,245,295)		—		(697,789)		(851,688)		(9,447,770)
Discount on borrowings, net of amortization	—		—		—		—		—		(2,882)		(2,882)
Unrealized (gain) loss on notes, fair value	—		—		—		—		(2,627)		3,593		966
Capitalized deferred financing costs, net of amortization	—		(6,627)		(218)		—		45		—		(6,800)
Balance at December 31, 2020	$	275,088	$	2,691,791	$	3,008,719	$	13,499,636	$	5,087,882	$	628,759	$	25,191,875

(A)New Residential net settles daily borrowings and repayments of the Secured Notes and Bonds Payable on its servicer advances.

(B)As a result of the Ditech Acquisition, New Residential acquired the servicing on certain residual tranches of Non-Agency RMBS it already owned, and now consolidates the respective securities. See Note 9 for the associated loans.

Maturities

New Residential’s debt obligations as of December 31, 2020 had contractual maturities as follows:


Year Ending	Nonrecourse(A)		Recourse(B)		Total
2021	$	882,761	$	17,186,206	$	18,068,967
2022	800,000		1,260,621		2,060,621
2023	1,200,000		302,851		1,502,851
2024	—		583,801		583,801
2025	257,468		1,888,428		2,145,896
2026 and thereafter	1,407,229		—		1,407,229
	$	4,547,458	$	21,221,907	$	25,769,365

(A)Includes secured notes and bonds payable of $4.5 billion.

(B)Includes secured financing agreements and secured notes and bonds payable of $17.7 billion and $3.5 billion, respectively.

Borrowing Capacity

The following table represents New Residential’s borrowing capacity as of December 31, 2020:


Debt Obligations/ Collateral	Borrowing Capacity		Balance Outstanding		Available Financing
Secured Financing Agreements
Residential mortgage loans and REO	$	4,913,746	$	1,254,198	$	3,659,548
New Loan Originations	6,823,000		2,797,437		4,025,563

Secured Notes and Bonds Payable
Excess MSRs	286,380		275,088		11,292
MSRs(B)	3,689,991		2,704,923		985,068
Servicer advances(A)(B)	4,365,000		3,016,787		1,348,213


	$	20,078,117	$	10,048,433	$	10,029,684

(A)New Residential’s unused borrowing capacity is available if New Residential has additional eligible collateral to pledge and meets other borrowing conditions as set forth in the applicable agreements, including any applicable advance rate.

(B)The borrowing capacity for servicing advance and MSR capital notes is equal to the current outstanding principal note balance at December 31,2020.

Certain of the debt obligations are subject to customary loan covenants and event of default provisions, including event of default provisions triggered by certain specified declines in New Residential’s equity or a failure to maintain a specified tangible net worth, liquidity, or indebtedness to tangible net worth ratio. New Residential was in compliance with all of its debt covenants as of December 31, 2020.

2020 Term Loan

On May 19, 2020, the Company, as borrower, entered into a three-year senior secured term loan facility agreement (the “2020 Term Loan”) in the principal amount of $600.0 million at a fixed annual rate of 11.0%.

In conjunction with the 2020 Term Loan, the Company issued common stock purchase warrants (the “2020 Warrants”) to the lenders. The 2020 Warrants expire approximately three years after the issuance date. The Company recorded the value of the

2020 Term Loan and 2020 Warrants on a relative fair value basis. The estimated fair value of the 2020 Warrants at the date of issuance was approximately $53.5 million and the Company recognized it as a discount to the 2020 Term Loan. Refer to Note 15, Equity and Earnings Per Share, for further details.

In August 2020, the Company made a $51.0 million prepayment on the 2020 Term Loan. As a result, The Company recorded a $5.7 million loss on extinguishment of debt, representing a write-off of unamortized debt issuance costs and original issue discount.

In September 2020, the Company used the net proceeds from a senior unsecured note (discussed further below), together with cash on hand, to fully retire all of the outstanding principal balance on the 2020 Term Loan.

The table below summarizes the interest expense on the 2020 Term Loan:


	Year Ended December 31,
	2020		2019
Coupon interest at 11%	$	20,435	$	—
Amortization of debt discounts and issuance costs	5,006		—
Total	$	25,441	$	—

The 2020 Term Loan contained certain customary affirmative and negative covenants and also required the Company to maintain compliance with certain financial covenants. The Company was in compliance with all financial covenants through extinguishment of the 2020 Term Loan.

2025 Senior Unsecured Notes

On September 16, 2020, the Company, as borrower, completed a private offering of $550.0 million aggregate principal amount of 6.250% senior unsecured notes due 2025 (the “2025 Senior Notes”). Interest on the 2025 Senior Notes accrue at the rate of 6.250% per annum with interest payable semi-annually in arrears on each April 15 and October 15, commencing on April 15, 2021.

The 2025 Senior Notes mature on October 15, 2025 and the Company may redeem some or all of the 2025 Senior Notes at the Company’s option, at any time from time to time, on or after October 15, 2022 at a price equal to the following fixed redemption prices (expressed as a percentage of principal amount of the 2025 Senior Notes to be redeemed):


Year						Price
2022						103.125%
2023						101.563%
2024 and thereafter						100.000%

Prior to October 15, 2022, the Company will be entitled at its option on one or more occasions to redeem the 2025 Senior Notes in an aggregate principal amount not to exceed 40% of the aggregate principal amount of the 2025 Senior Notes originally issued prior to the applicable redemption date at a fixed redemption price of 106.250%.

Net proceeds from the offering were approximately $544.5 million, after deducting the initial purchasers’ discounts and commissions and estimated offering expenses payable by the Company. The Company used the net proceeds from the offering, together with cash on hand, to prepay and retire its then-existing 2020 Term Loan and to pay related fees and expenses. The Company recorded a $61.1 million loss on extinguishment of debt, representing a write-off of unamortized debt issuance costs and original issue discount.

The Company incurred fees of approximately $9.0 million in relation to the issuance of the 2025 Senior Notes. These fees were capitalized as debt issuance cost and are grouped and presented as part of Unsecured senior notes, net of issuance costs on the Consolidated Balance Sheets. For the year ended December 31, 2020, the Company recognized $10.0 million of interest expense. As of December 31, 2020, the unamortized debt issuance costs was approximately $8.4 million.

The 2025 Senior Notes are senior unsecured obligations and rank pari passu in right of payment with all of the Company’s existing and future senior unsecured indebtedness and senior unsecured guarantees. At the time of issuance, the 2025 Senior Notes were not guaranteed by any of the Company’s subsidiaries and none of its subsidiaries are required to guarantee the 2025 Senior Notes in the future, except under limited specified circumstances.

The 2025 Senior Notes contain financial covenants and other non-financial covenants, including, among other things, limits on the ability of the Company and its restricted subsidiaries to incur certain indebtedness (subject to various exceptions), requires that the Company maintain total unencumbered assets (as defined in the debt agreement) of not less than 120% of the aggregate principal amount of the outstanding unsecured debt, and imposes certain requirements in order for the Company to merge or consolidate with or transfer all or substantially all of its assets to another person, in each case subject to certain qualifications set forth in the debt agreement. If the Company were to fail to comply with these covenants, after the expiration of the applicable cure periods, the debt maturity could be accelerated or other remedies could be sought by the lenders. As of December 31, 2020, the Company was in compliance with all covenants.

In the event of a change of control, each holder of the 2025 Senior Notes will have the right to require the Company to repurchase all or any part of the outstanding balance at a purchase price of 101% of the principal amount of the 2025 Senior Notes repurchased, plus accrued and unpaid interest, if any, to, but not including, the date of such repurchase.