7. Exit Costs

PLS Exit

In November 2016, the Company announced its plan to exit the PLS business which has been previously reported within the Mortgage Production segment. This business channel provided end-to-end origination services to financial institution clients, and represented a significant percentage of the Company's historical total mortgage production volume. The Company made the decision to exit this business due to elevated operating losses, increasing regulatory and client customization costs and a shrinking market for financial institution origination services. Refer to Note 8, 'Discontinued Operations' for additional information.

All of the exit costs related to the PLS exit program relate to discontinued operations and have been presented within Income (loss) from discontinued operations, net of tax in the Condensed Consolidated Statements of Operations and Comprehensive Income (Loss). The following is a summary of expenses incurred to-date, including an estimate of remaining and total program costs:



	Six Months Ended June 30, 2018
	Severance and Termination Benefits		Facility Exit Costs		Contract Termination & Other Costs		Non-Cash Charges & Impairments		Total
	(In millions)
Costs incurred in current year:
First quarter	$	—	$	—	$	2	$	—	$	2
Second quarter	—		—		—		—		—
	—		—		2		—		2
Cumulative costs recognized in prior years	34		6		17		11		68
Estimate of remaining costs ⁽¹⁾	—		16		2		—		18
Total	$	34	$	22	$	21	$	11	$	88

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⁽¹⁾	The Company expects to incur substantially all of the remaining exit costs during the remainder of 2018, a significant portion of which relate to facility costs that are dependent upon the timing of when we vacate certain facilities.

Reorganization

In February 2017, the Company announced its intention to operate as a smaller business that is focused on subservicing and portfolio retention services. Costs estimated for this Reorganization exit program, which are presented separately from the PLS exit program, include severance, acceleration of existing retention and incentive awards and other costs to execute the reorganization and change the focus of the Company's operations.

The following is a summary of expenses incurred to-date, including an estimate of remaining and total program costs:



	Six Months Ended June 30, 2018
	Severance and Termination Benefits		Facility Exit Costs		Contract Termination & Other Costs		Non-Cash Charges & Impairments		Total
	(In millions)
Costs incurred in current year:
First quarter	$	1	$	—	$	—	$	1	$	2
Second quarter	—		—		—		—		—
	1		—		—		1		2
Cumulative costs recognized in prior years	30		2		1		2		35
Estimate of remaining costs	1		—		—		—		1
Total Exit and disposal costs	32		2		1		3		38
Less: Exit and disposal costs related to discontinued operations ⁽¹⁾	19		2		1		3		25
Total Exit and disposal costs related to continuing operations	$	13	$	—	$	—	$	—	$	13

———————


⁽¹⁾	Amounts include the estimate of remaining program costs.

The following is a summary of the Reorganization program costs by segment as of June 30, 2018:



	Continuing Operations
	Mortgage Servicing Segment		Other		Discontinued Operations		Total
	(In millions)
Costs incurred in current year:
First quarter	$	—	$	—	$	2	$	2
Second quarter	—		—		—		—
	—		—		2		2
Cumulative costs recognized in prior years	2		11		22		35
Estimate of remaining costs	—		—		1		1
Total	$	2	$	11	$	25	$	38

Exit Cost Liability

The following tables provide a summary of the aggregate activity of the exit cost liability for both the PLS exit program and the Reorganization exit program, including those balances related to discontinued operations:



	Six Months Ended June 30, 2018
	Severance and Termination Benefits			Facility Exit Costs			Contract Termination & Other Costs			Total
	(In millions)
Balance, beginning of period	$	43		$	2		$	8		$	53
Charges	1			—			3			4
Paid	(30		)	(1		)	(10		)	(41		)
Balance, end of period	$	14		$	1		$	1		$	16



	Six Months Ended June 30, 2017
	Severance and Termination Benefits			Facility Exit Costs			Contract Termination & Other Costs		Total
	(In millions)
Balance, beginning of period	$	22		$	—		$	3	$	25
Charges	29			6			8		43
Paid	(1		)	(6		)	—		(7		)
Adjustments ⁽¹⁾	4			—			—		4
Balance, end of period	$	54		$	—		$	11	$	65

———————


⁽¹⁾	This adjustment represents previously accrued amounts of existing retention and incentive awards for exiting employees that will be paid out upon termination.