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BUSINESS ACQUISITIONS
 12 Months Ended
Dec. 31, 2021
Business Combinations [Abstract]  
BUSINESS ACQUISITIONS BUSINESS ACQUISITIONS New Residential completed the Guardian and Ditech acquisitions in 2019 and the Caliber and Genesis acquisitions in 2021 as part of its strategy to expand its origination, servicing and asset management capabilities. New Residential accounted for these transactions using the acquisition method which requires, among other things, that the assets acquired and liabilities assumed be recognized at fair value as of the acquisition date.
Purchase Price Allocation

The following table summarizes the allocation of the total consideration paid to acquire the assets and assume the liabilities of companies acquired:
20212019
($ in millions)CaliberGenesisTotalDitechGuardianTotal
Total Consideration $1,318.5 $1,634.6 $2,953.1 $1,218.2 $21.5 $1,239.7 
Assets
Mortgage servicing rights, at fair value$1,507.5 $— $1,507.5 $387.2 $— $387.2 
Residential mortgage loans, held-for-sale, at fair value7,685.7 — 7,685.7 627.4 — 627.4 
Mortgage loans receivable, at fair value— 1,505.6 1,505.6 — — — 
Residential mortgage loans subject to repurchase666.8 — 666.8 — — — 
Cash and cash equivalents472.7 16.4 489.1 — 1.8 1.8 
Restricted cash30.6 — 30.6 — — — 
Servicer advance receivable108.3 — 108.3 238.0 — 238.0 
Intangible assets(A)(B)(C)(D)
41.0 56.8 97.8 10.5 11.7 22.2 
Other assets(E)
609.7 14.5 624.2 64.8 6.6 71.4 
Total Assets Acquired$11,122.3 $1,593.3 $12,715.6 $1,327.9 $20.1 $1,348.0 
Liabilities
Secured financing agreements$7,090.6 $— $7,090.6 $— $— $— 
Secured notes and bonds payable1,121.8 — 1,121.8 — — — 
Residential mortgage loans repurchase liability666.8 — 666.8 — — — 
Accrued expenses and other liabilities918.6 14.4 933.0 60.2 3.7 63.9 
Total Liabilities Assumed$9,797.8 $14.4 $9,812.2 $60.2 $3.7 $63.9 
Net Assets$1,324.5 $1,578.9 $2,903.4 $1,267.7 $16.4 $1,284.1 
Goodwill (bargain purchase gain)$(6.0)$55.7 $49.7 $(49.5)$5.1 $(44.4)
(A)Includes intangible assets acquired as part of the Caliber acquisition in the form of purchased technology and trade name/trademarks. These intangibles are being amortized over a finite life of up to five years.
(B)Includes intangible assets acquired as part of the Genesis acquisition in the form of customer relationships, trade name and a license. Customer relationships and the trade name are being amortized over a finite life of nine years and five years, respectively. New Residential has determined that the license has an indefinite useful life.
(C)Includes intangible assets acquired as part of the Ditech acquisition in the form of correspondent customer relationships and servicing contracts tied to the recovery of defaulted loans. These intangibles are being amortized over a finite life of three years.
(D)Includes intangible assets acquired as part of the Guardian acquisition in the form of customer relationships and a trade name. Customer relationships are being amortized over a finite life of seven years. New Residential has determined that the trade name has an indefinite useful life and will be evaluated for impairment given no legal, regulatory, contractual, competitive or economic factors that would limit the useful life.
(E)Includes post loan charge off deficiency balances acquired through the Ditech Acquisition.
Acquisition of Caliber Home Loans Inc.

On April 14, 2021, New Residential entered into a Stock Purchase Agreement (the “SPA”) with LSF Pickens Holdings, LLC (“LSF”), a Delaware limited liability company and an affiliate of Lone Star Funds, and Caliber, a leading mortgage originator and servicer and then-wholly owned subsidiary of LSF. The SPA provided that, upon the terms and subject to the conditions set forth therein, the Company or one of its subsidiaries will purchase all of the issued and outstanding equity interests of Caliber from LSF. On August 23, 2021, New Residential completed its acquisition of all of the outstanding equity interests of Caliber from LSF for a purchase price of $1.318 billion in cash.

At acquisition, New Residential recognized an initial bargain purchase gain of approximately $3.3 million and the amount is grouped and presented as part of Other Income in the Consolidated Statements of Income. The bargain purchase gain was primarily driven by differences in Caliber’s projected net income versus actuals between the period of Caliber acquisition announcement and its closing. During the fourth quarter of 2021, the Company recognized a $2.7 million measurement period adjustment related to certain return to provision adjustments which increased the total bargain purchase gain to $6.0 million.

The preliminary estimate of fair value of assets and liabilities required the use of significant assumptions and estimates. Critical estimates included, but were not limited to, future expected cash flows, including projected revenues and expenses, and the applicable discount rates. These estimates were based on assumptions that management believes to be reasonable; however, actual results may differ from these estimates. The assessment of fair value is preliminary and is based on information that was available to management at the time the consolidated financial statements were prepared. Those estimates and assumptions are subject to change as management obtains additional information related to those estimates during the applicable measurement period. The most significant open items necessary to complete are related to intangible assets, other assets, deferred income taxes, and other liabilities. The final acquisition accounting adjustments, including those resulting from conforming Caliber’s accounting policies to those of New Residential, could differ materially.

The results of Caliber’s operations have been included in the Company’s Consolidated Statements of Income for the year ended December 31, 2021 from the date of the acquisition and represent $659.8 million of revenue and $25.9 million of net income.

Acquisition-related costs are expensed in the period incurred. New Residential recognized $9.6 million of acquisition-related costs that were expensed for the year ended December 31, 2021. These costs are grouped and presented within General and Administrative Expenses in the Consolidated Statements of Income.

Intangible assets consist of purchased technology and trademarks/trade names. New Residential amortizes intangible assets on a straight-line basis over their respective useful lives. The weighted average life of the total acquired identifiable intangible assets is 4.8 years. The following table presents the details of identifiable intangible assets acquired:
Estimated Useful LifeAmount
Purchased technology5$38,545 
Trademarks/trade names12,483 
Total identifiable intangible assets$41,028 
Measurement Period Adjustments — The following table summarizes the provisional amounts recognized related to the Caliber acquisition as of September 30, 2021, as well as the measurement period adjustments made in the fourth quarter of 2021:
($ in millions)Acquisition Date Amounts Recognized as of September 30, 2021Subsequent Adjustments to Fair ValueAcquisition Date Amounts Recognized as of December 31, 2021
(As Adjusted)
Total Consideration$1,318.5 $— $1,318.5 
Assets
Mortgage servicing rights, at fair value$1,507.5 $— $1,507.5 
Residential mortgage loans, held-for-sale, at fair value7,685.7 — 7,685.7 
Residential mortgage loans subject to repurchase666.8 — 666.8 
Cash and cash equivalents472.7 — 472.7 
Restricted cash30.6 — 30.6 
Servicer advance receivable108.3 — 108.3 
Intangible assets41.0 — 41.0 
Other assets(A)
605.4 4.3 609.7 
Total Assets Acquired$11,118.0 $4.3 $11,122.3 
Liabilities
Secured financing agreements$7,090.6 $— $7,090.6 
Secured notes and bonds payable1,121.8 — 1,121.8 
Residential mortgage loans repurchase liability666.8 — 666.8 
Accrued expenses and other liabilities(A)
917.0 1.6 918.6 
Total Liabilities Assumed$9,796.2 $1.6 $9,797.8 
Net Assets$1,321.8 $2.7 $1,324.5 
Goodwill (bargain purchase gain)$(3.3)$(2.7)$(6.0)
(A)The adjustments to Other assets and Accrued expenses and other liabilities primarily reflect the impact on deferred tax assets and related liabilities attributable to certain return to provision adjustments.

Unaudited Supplemental Pro Forma Financial Information — The following table presents unaudited pro forma combined revenues and income before income taxes for the year ended December 31, 2021 and 2020 prepared as if the Caliber acquisition had been consummated on January 1, 2020:
Year Ended December 31,
Pro Forma (in millions)20212020
Revenues$5,422.7 $4,453.4 
Income (loss) before income taxes1,258.6 (529.9)

The unaudited supplemental pro forma financial information reflects, among others, financing adjustments, amortization of intangibles, and transactions costs. The unaudited supplemental pro forma financial information has not been adjusted to reflect all conforming of accounting policies. The unaudited supplemental pro forma financial information does not include any anticipated synergies or other anticipated benefits of the Caliber acquisition and, accordingly, the unaudited supplemental pro forma financial information is not necessarily indicative of either future results of operations or results that might have been
achieved had the Caliber acquisition occurred on January 1, 2020, the beginning of the earliest period presented.

Acquisition of Genesis Capital LLC

On December 20, 2021, New Residential acquired 100% of the outstanding interest of Genesis, a leading mortgage loan lender, along with a related portfolio of loans, from affiliates of Goldman Sachs. Cash consideration for the Genesis acquisition totaled approximately $1.63 billion.

The Company recognized goodwill of approximately $55.7 million related to the Genesis acquisition and primarily relates to anticipated synergies, the value of the assembled workforce and intangible assets that do not qualify for separate recognition at the time of the acquisition. Goodwill is reflected within the Mortgage Loans Receivable reporting segment and the amount is grouped and presented as part of Other Assets on the Consolidated Balance Sheets. Purchased goodwill is expected to be deductible for income tax purposes over 15 years. New Residential will assess the goodwill annually during the fourth quarter and in interim periods in case of events or circumstances make it more likely than not that an impairment may have occurred.

The preliminary estimate of fair value of assets and liabilities required the use of significant assumptions and estimates. Critical estimates included, but were not limited to, future expected cash flows and the applicable discount rates. These estimates were based on assumptions that management believes to be reasonable; however, actual results may differ from these estimates. The assessment of fair value is preliminary and is based on information that was available to management `at the time the consolidated financial statements were prepared. Those estimates and assumptions are subject to change as management obtains additional information related to those estimates during the applicable measurement period. Due to the limited time since the acquisition date of the transaction, the business combination accounting is still in progress. The most significant open items necessary to complete relate to mortgage loans receivable and intangible assets. The Company is currently in the process of finalizing the accounting and expects to complete by the end of the first quarter of 2022. The additional analysis is expected to result in changes to goodwill and intangible assets. Furthermore, the Company is currently in the process of determining the fair values of its intangible assets with the assistance of a third party specialist. The final acquisition accounting adjustments, including those resulting from conforming Genesis’s accounting policies to those of New Residential could differ materially.

The results of Genesis’s operations have been included in the Company’s Consolidated Statements of Income for the year ended December 31, 2021 from the date of the acquisition and represent $4.2 million of revenue and $1.4 million of net income.

Acquisition-related costs are expensed in the period incurred. New Residential recognized $6.7 million of acquisition-related costs that were expensed for the year ended December 31, 2021. These costs are grouped and presented within General and Administrative expenses in the Consolidated Statements of Income.

Intangible assets consist of customer relationships, trade name, and license. New Residential amortizes finite-lived customer relationships and trade name intangible assets on a straight-line basis over their respective useful lives. New Residential has determined that the license has an indefinite useful life. The weighted average life of the total acquired identifiable intangible assets is 8.5 years. The following table presents the details of identifiable intangible assets acquired:
Estimated Useful LifeAmount
Customer relationships9$44,700 
Trade name55,900 
LicenseIndefinite5,500 
Total identifiable intangible assets$56,100 
Unaudited Supplemental Pro Forma Financial Information — The following table presents unaudited pro forma combined revenues and income before income taxes for the year ended December 31, 2021 and 2020 prepared as if the Genesis acquisition had been consummated on January 1, 2020:
Year Ended December 31,
Pro Forma (in millions)20212020
Revenues$3,643.4 $1,693.0 
Income (loss) before income taxes981.8 (1,316.1)

The unaudited supplemental pro forma financial information reflects, among others, amortization of intangibles and transactions costs. The unaudited supplemental pro forma financial information has not been adjusted to reflect all conforming of accounting policies. The unaudited supplemental pro forma financial information does not include any anticipated synergies or other anticipated benefits of the Genesis acquisition and, accordingly, the unaudited supplemental pro forma financial information is not necessarily indicative of either future results of operations or results that might have been achieved had the Genesis acquisition occurred on January 1, 2020, the beginning of the earliest period presented.

Acquisition of Select Assets and Liabilities from Ditech Holding Corporation

On June 17, 2019, New Residential, entered into a “stalking-horse” Asset Purchase Agreement (the “APA”) with Ditech Holding Corporation, a Maryland corporation (“Holding”), and Ditech Financial LLC, a Delaware limited liability company (“Financial” and together with Holding, the “Sellers” or “Ditech”) to acquire certain assets and assume certain liabilities under the APA based on the value of the acquired assets and assumed liabilities as calculated in accordance with the terms of the APA, subject to certain adjustments. Ditech filed voluntary petitions for relief under Chapter 11 of the Bankruptcy code, in the United States Bankruptcy Court for the Southern District of New York (“Bankruptcy Court”).

The proposed sale was conducted through a Bankruptcy Court-supervised process, subject to Bankruptcy Court-approved bidding procedures, with the potential receipt of higher or better offers from competing bidders at auction, the approval of the sale by the Bankruptcy Court, and the satisfaction of certain conditions. As the stalking horse bidder, the Company’s offer to acquire the assets and assume the liabilities, as set forth in the APA, set the standard by which any other qualifying bids would be evaluated. Upon conclusion of the competitive bidding process, Ditech decided to proceed with New Residential’s stalking horse bid, as amended and sought the Bankruptcy Court’s approval.

On October 1, 2019, New Residential Investment Corp (“Ditech Purchaser”) completed the acquisition (“Ditech Acquisition”) contemplated by the APA dated June 17, 2019, as amended, by and among the Ditech Purchaser and Ditech. Pursuant to the APA, Ditech sold, transferred, and assigned to the Ditech Purchaser (and its certain designated subsidiaries) the acquired assets, as defined in the APA, and the Ditech Purchaser (and its certain designated subsidiaries) assumed the liabilities, as defined in the APA, for cash consideration of $1.2 billion.

The acquisition included certain Fannie Mae, Ginnie Mae and non-agency MSRs, the servicer advance receivables relating to such MSRs and other assets core to certain origination and servicing businesses at Ditech. Additionally, New Residential assumed certain Ditech office spaces and added approximately 1,100 Ditech employees to support the increase in volume to its existing origination and servicing operations.

The acquisition of assets from the bankruptcy estate of Ditech along with the subsequent hiring of Ditech employees was accounted for as a business acquisition rather than an asset acquisition. Upon completing the Ditech Acquisition, the consideration transferred by the Ditech Purchaser for the acquired assets and assumed liabilities was determined to be less than the net assets acquired from Ditech resulting in an economic gain (“Bargain Purchase”). New Residential completed the required reassessment to validate that all assets acquired and liabilities assumed on the acquisition date had been identified and appropriately measured in accordance with ASC 805. Based on the reassessment, the transaction resulted in a Bargain Purchase gain of $49.5 million, which has been included in Other Income (Loss), Net in the Consolidated Statements of Income for the year ended December 31, 2019. The Bargain Purchase gain resulted from certain transition, integration, relocation and training costs that were factored into the purchase price and identified as future liabilities, of which approximately $22.9 million were incurred during the year ended December 31, 2019.
The acquisition date fair value of the consideration transferred includes $1.2 billion in cash consideration and $4.9 million in effective settlement of preexisting relationships. The total consideration is summarized as follows:
Total Consideration (in millions)Amount
Cash consideration$1,213.3 
Effective settlement of preexisting relationships(A)
4.9 
Total consideration $1,218.2 
(A)Represents the effective settlement of preexisting relationships between New Residential and Ditech related to operating accounts receivable and payable existing prior to the acquisition date. The effective settlement of these preexisting relationships had no impact to New Residential’s Consolidated Statements of Income. New Residential recognized the effective settlement of preexisting relationships separately from the acquisition of assets and assumption of liabilities in the business combination.

Unaudited Supplemental Pro Forma Financial Information — The following table presents unaudited pro forma combined Servicing and Origination Revenue, which is comprised of (i) Servicing Revenue, Net and (ii) Gain on Originated Residential Mortgage Loans, Held-for-Sale, Net, and Income Before Income Taxes for the year ended December 31, 2019.
Pro Forma (in millions)Amount
Servicing and origination revenue$1,104.0 
Income before income taxes552.8 

The unaudited supplemental pro forma financial information has not been adjusted for transactions other than the Ditech Acquisition, or for the conforming of accounting policies. The unaudited supplemental pro forma financial information does not include any anticipated synergies or other anticipated benefits of the Ditech Acquisition and, accordingly, the unaudited supplemental pro forma financial information is not necessarily indicative of future.

Acquisition of Guardian Asset Management

On August 19, 2019, NRZ Guardian Purchaser LLC (“Guardian Purchaser”), entered into an agreement to acquire 100% of the shares of DDG RE Investments LLC d/b/a Guardian Asset Management (“Guardian”).

On September 3, 2019, the Guardian Purchaser acquired 100% of the outstanding interests of Guardian for cash consideration of $7.6 million (“Guardian Acquisition”). As additional consideration for the Guardian Acquisition, the Guardian Purchaser may make up to four cash earnout payments, which will be calculated as the amount of cumulative Guardian earnings on specified contracts in excess of certain thresholds up to a maximum of $17.5 million (the “Guardian Earnout Payments”). The Guardian Earnout Payments are classified as contingent consideration recorded at fair value at the acquisition date and included in the total consideration transferred for the Guardian Acquisition. The contingent consideration is subsequently measured at fair value on a quarterly basis with changes in fair value recorded in Other Income (Loss), Net in the Consolidated Statements of Income. On April 10, 2020, New Residential made its first Guardian Earnout Payment of $1.9 million.

Guardian is a field services and asset management business and provides New Residential with in-house property management, inspection and repair service capabilities.

The acquisition date fair value of the consideration transferred includes $7.6 million in cash consideration and $13.9 million in contingent consideration. The total consideration is summarized as follows:
Total Consideration (in millions)Amount
Cash consideration$7.6 
Earnout payment(A)
13.9 
Total consideration $21.5 
(A)The range of outcomes for this contingent consideration is from $0 to $17.5 million dependent on the performance of Guardian.
The goodwill of $5.1 million primarily includes the benefits expected to result from adding in-house property management and repair services has been allocated to the Servicing reporting segment. The full amount of goodwill of $5.1 million is expected to be deductible for tax purposes. New Residential will assess the goodwill annually during the fourth quarter and in interim periods in case of events or circumstances make it more likely than not that an impairment may have occurred.

Unaudited Supplemental Pro Forma Financial Information — The following table presents unaudited pro forma combined Income Before Income Taxes for the year ended December 31, 2019.
Pro Forma (in millions)Amount
Income before income taxes$651.5 
The unaudited supplemental pro forma financial information has not been adjusted for transactions other than the Guardian Acquisition, or for the conforming of accounting policies. The unaudited supplemental pro forma financial information does not include any anticipated synergies or other anticipated benefits of the Guardian Acquisition and, accordingly, the unaudited supplemental pro forma financial information is not necessarily indicative of future results.

Strategic Investment in Covius Holdings Inc.

On May 1, 2019, New Residential made a strategic investment in Covius, a leading provider of technology-enabled services to the mortgage industry. Covius provides settlement and title, document and letter fulfillment, regulatory compliance, quality assurance, commercial and residential loan due diligence and business process automation services. New Residential initially invested $27.3 million in common stock for a noncontrolling interest in Covius, with an option to increase its ownership position through specified future investments and $35.0 million in a four-year subordinated debt facility.

New Residential determined that the investment should be accounted for under the equity method of accounting since it has the ability to exercise significant influence over the investee’s operating and financial policies. As the consideration transferred for the investment was greater than the net equity of the investment (“basis differences”), the Company allocated the basis difference in a manner consistent with business combination accounting resulting in goodwill of $11.8 million, and intangible assets primarily in the form of customer backlog and trade name of $3.6 million. Goodwill and intangibles are included as part of equity investments within Other Assets on the Consolidated Balance Sheets.
The goodwill of $11.8 million primarily includes the benefits expected to result from having a significant investment in the service provider and has been allocated to the MSR Related Investments reporting segment. None of the goodwill is expected to be deductible for tax purposes. New Residential will assess the goodwill annually during the fourth quarter and in interim periods in case of events or circumstances make it more likely than not that an impairment may have occurred.