Note 14—Borrowings

As of September 30, 2013, the Company maintained four borrowing facilities: three facilities that provide for sales of mortgage loans under agreements to repurchase; and one note payable secured by MSRs and servicing advances made relating to loans in the Company’s loan servicing portfolio.

Mortgage Loans Sold Under Agreement to Repurchase

The borrowing facilities secured by mortgage loans held for sale are in the form of loan sale and repurchase agreements. Eligible loans are sold under advance rates based on the loan type. Interest is charged at a rate based on the buyer’s overnight cost-of funds rate for one agreement and based on LIBOR for the other two agreements. Loans sold under these agreements may be re-pledged by the lenders.

Financial data pertaining to mortgage loans sold under agreements to repurchase are as follows:

	Quarter ended September 30,						Nine months ended September 30,
	2013			2012			2013			2012
	(dollar amounts in thousands)
Period end:
Balance	$	387,883		$	361,478		$	387,883		$	361,478
Unused amount (1)	$	612,117		$	88,522		$	612,117		$	88,522
Weighted-average interest rate	1.82		%	2.38		%	1.82		%	2.38		%
Fair value of loans securing agreements to repurchase	$	522,031		$	408,415		$	522,031		$	408,415
During the period:
Average balance of loans sold under agreements to repurchase	$	373,386		$	219,047		$	354,125		$	146,425
Weighted-average interest rate (2)	1.89		%	2.23		%	2.02		%	2.18		%
Total interest expense	$	2,920		$	1,682		$	8,251		$	3,583
Maximum daily amount outstanding	$	588,494		$	361,588		$	623,523		$	361,588

(1) The amount the Company is able to borrow under loan repurchase agreements is tied to the fair value of unencumbered mortgage loans eligible to secure those agreements and the Company’s ability to fund the agreements’ margin requirements relating to the mortgage loans sold.

(2) Excludes the effect of amortization of commitment fees totaling $1.1 million and $423,000 for the quarters ended September 30, 2013 and September 30, 2012, respectively, and $2.8 million and $1.1 million for the nine months ended September 30, 2013 and September 30, 2012, respectively.

Following is a summary of maturities of outstanding advances under repurchase agreements by maturity date:

Remaining maturity at September 30, 2013	Balance
	(in thousands)
Within 30 days	$	423
Over 30 to 90 days	387,460
Over 90 days to 180 days	—
Over 180 days to 1 year	—
	$	387,883
Weighted-average maturity (in months)	2.6

The amount at risk (the fair value of the assets pledged plus the related margin deposit, less the amount advanced by the counterparty and accrued interest) relating to the Company’s mortgage loans held for sale sold under agreements to repurchase is summarized by counterparty below as of September 30, 2013:

Counterparty	Amount at risk		Weighted-average maturity of advances under repurchase agreement	Facility maturity
	(in thousands)
Bank of America, N.A.	$	45,516	December 16, 2013	January 2, 2014
Credit Suisse First Boston Mortgage Capital LLC	$	89,917	December 18, 2013	(1)

(1) The earlier to occur of October 31, 2014 or the rolling maturity date that is 364 days from any particular date of determination.

The Company is subject to margin calls during the period the agreements are outstanding and therefore may be required to repay a portion of the borrowings before the respective agreements mature if the value (as determined by the applicable lender) of the mortgage loans securing those agreements decreases. As of September 30, 2013, the Company had $1.5 million on deposit with its mortgage loan repurchase agreement counterparties. Such amounts are included in Other assets on the consolidated balance sheets.

Excess Servicing Spread Financing

In August 2013, the Company acquired MSRs on a pool of agency residential mortgage loans. In connection with such acquisition, the Company, in September 2013, sold to PMT the right to receive the excess cash flow generated from the related mortgage loans after receipt of a fixed base servicing fee per loan. The Company retained all ancillary income associated with servicing the loans and the fixed base servicing fee. The Company continues to be the servicer of the loan pool and provides all servicing and advancing functions. PMT has no prior or continuing involvement with the loans. The Company accounts for the transaction as a financing and the total proceeds received was $2.8 million.

The carrying amount of the financing was $2.9 million at September 30, 2013.

Note Payable

The note payable is summarized below:

	September 30, 2013		December 31, 2012
	(in thousands)
Period end:
Note payable secured by:
Servicing advances	$	3,823	$	4,905
MSRs	52,952		48,108
	$	56,775	$	53,013
Assets pledged to secure note:
Servicing advances	$	6,865	$	7,430
MSRs	$	226,588	$	100,957

The note payable matures on the earlier to occur of October 31, 2014 or the rolling maturity date that is 364 days from any particular date of determination. Interest is charged at a rate based on the lender’s overnight cost of funds. The note payable is secured by servicing advances and MSRs relating to certain loans in the Company’s servicing portfolio, and provides for advance rates ranging from 50% to 85% of the amount of the servicing advances or the carrying value of the MSR pledged, up to a maximum of $17 million in the case of servicing advances and $100 million in the case of MSRs.

The borrowing facilities contain various covenants, including financial covenants governing the Company’s net worth, debt-to-equity ratio, profitability and liquidity. Management believes the Company was in compliance with these requirements as of September 30, 2013.