OTHER ASSETS

The following is a detail of items that comprise other assets at June 30, 2014 and December 31, 2013:



	June 30, 2014		December 31, 2013
	(in thousands)
Income tax receivables	$	421,887	$	419,832
Derivative assets at fair value	251,741		222,491
Other repossessed assets	142,730		3,073
Prepaid expenses	128,580		141,593
MSRs, at fair value	124,118		141,787
OREO	85,458		88,603
Miscellaneous assets and receivables	313,466		157,115
Total other assets	$	1,467,980	$	1,174,494

Residential real estate

The Company maintains an MSR asset for sold residential real estate loans serviced for others. At June 30, 2014 and December 31, 2013, the balance of these loans serviced for others was $14.0 billion and $14.5 billion, respectively. The Company accounts for residential MSRs using the fair value option. Changes in fair value are recorded through the Condensed Consolidated Statements of Operations. The fair value of the MSRs at June 30, 2014 and December 31, 2013 was $124.1 million and $141.8 million, respectively. See further discussion on the valuation of the MSRs in Note 16. As deemed appropriate, the Company economically hedges MSRs using interest rate swaps and forward contracts to purchase mortgage-backed securities. See further discussion on these derivative activities in Note 10 to these Condensed Consolidated Financial Statements.

For the three-month and six-month periods ended June 30, 2014, the Company recorded net changes in the fair value of MSRs totaling $(6.9) million and $(11.4) million, respectively, compared to $23.3 million and $33.4 million for the corresponding periods of 2013. The MSR asset fair value decrease during 2014 was primarily the result of decreased interest rates.

NOTE 8. OTHER ASSETS (continued)

The following table presents a summary of activity for the Company’s residential MSRs.



	Six-Month Period Ended June 30,
	2014			2013
	(in thousands)
Carrying value at beginning of period	$	141,787		$	92,512
Mortgage servicing assets recognized	4,003			24,046
Principal reductions	(10,320		)	(11,783		)
Change in fair value due to valuation assumptions	(11,352		)	33,366
Carrying value at end of period	$	124,118		$	138,141

Multifamily

Historically, the Company originated and sold multi-family loans in the secondary market to FNMA while retaining servicing. The Company has not sold multi-family loans to FNMA since 2009. At June 30, 2014 and December 31, 2013, the Company serviced $3.0 billion and $4.3 billion, respectively, of loans for FNMA. The servicing asset related to these portfolios was previously fully amortized. During the six months ended June 30, 2014, the Company repurchased from FNMA $816.5 million of performing multifamily loans that had been previously sold with servicing retained. See further discussion on the recourse reserve in Note 14.

Fee income and gain/loss on sale of mortgage loans

Included in Mortgage banking revenue on the Condensed Consolidated Statement of Operations was mortgage servicing fee income of $10.4 million and $21.3 million for the three-month and six-month periods ended June 30, 2014, respectively, compared to $11.2 million and $22.2 million for the corresponding periods ended June 30, 2013. The Company had gains on the sale of mortgage loans of $10.7 million and $13.9 million for the three-month and six-month periods ended June 30, 2014, respectively, compared to gains of $8.7 million and $42.1 million for the corresponding periods ended June 30, 2013.