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Mortgage Servicing (Tables)
 12 Months Ended
Dec. 31, 2019
Transfers and Servicing [Abstract]  
Summary of Activity in Carrying Value of Amortization Method Servicing Assets
Mortgage Servicing Rights – Amortization Method
Years Ended December 31,
2018
 
2017
Beginning balance
$
336,882

 
$
363,722

Fair value election - transfer to MSRs carried at fair value (1)
(361,670
)
 
—

Additions recognized in connection with asset acquisitions
—

 
1,658

Additions recognized on the sale of mortgage loans
—

 
20,738

Sales
—

 
(1,066
)
Servicing transfers and adjustments
—

 
252

 
(24,788
)
 
385,304

Decrease in impairment valuation allowance (1) (2)
24,788

 
3,366

Amortization (1)
—

 
(51,788
)
Ending balance
$
—

 
$
336,882

 
 
 
 
Estimated fair value at end of year
$
—

 
$
418,745


(1)
Effective January 1, 2018, we elected fair value accounting for our MSRs previously accounted for using the amortization method, which included Agency MSRs and government-insured MSRs. This irrevocable election applies to all subsequently acquired or originated servicing assets and liabilities that have characteristics consistent with each of these classes. We recorded a cumulative-effect adjustment of $82.0 million to retained earnings as of January 1, 2018 to reflect the excess of the fair value of the Agency MSRs over their carrying amount. We also recognized the tax effect of this adjustment through an increase in retained earnings of $6.8 million and a deferred tax asset for the same amount. However, we established a full valuation allowance on the resulting deferred tax asset through a reduction in retained earnings. The government-insured MSRs were impaired by $24.8 million at December 31, 2017; therefore, these MSRs were already effectively carried at fair value.
(2)
Impairment of MSRs is recognized in MSR valuation adjustments, net in the consolidated statements of operations for 2017. Impairment valuation allowance balance of $24.8 million was reclassified to reduce the carrying value of the related MSRs on January 1, 2018 in connection with our fair value election.
Summary of Activity Related to Fair Value Servicing Assets
Mortgage Servicing Rights – Fair Value Measurement Method
Years Ended December 31,
2019
 
2018
 
2017
 
Agency
 
Non-Agency
 
Total
 
Agency
 
Non-Agency
 
Total
 
Agency
 
Non-Agency
 
Total
Beginning balance
$
865,587

 
$
591,562

 
$
1,457,149

 
$
11,960

 
$
660,002

 
$
671,962

 
$
13,357

 
$
665,899

 
$
679,256

Fair value election - Transfer from MSRs carried at amortized cost
—

 
—

 
—

 
336,882

 
—

 
336,882

 
—

 
—

 
—

Cumulative effect of fair value election
—

 
—

 
—

 
82,043

 
—

 
82,043

 
—

 
—

 
—

Sales
(3,578
)
 
(766
)
 
(4,344
)
 
(4,748
)
 
(1,492
)
 
(6,240
)
 
—

 
(540
)
 
(540
)
Additions:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Recognized on the sale of residential mortgage loans
8,795

 
—

 
8,795

 
8,279

 
—

 
8,279

 
162

 
—

 
162

Recognized in connection with the acquisition of PHH
—

 
—

 
—

 
494,348

 
23,779

 
518,127

 
—

 
—

 
—

Purchase of MSRs
153,505

 
—

 
153,505

 
5,433

 
—

 
5,433

 
—

 
—

 
—

Servicing transfers and adjustments
—

 
(7,309
)
 
(7,309
)
 
(1,047
)
 
(4,833
)
 
(5,880
)
 
—

 
(2,376
)
 
(2,376
)
Changes in fair value (1):
 
 
 
 
 
 
 
 
 
 

 
 
 
 
 

Changes in valuation inputs or other assumptions
(171,050
)
 
265,003

 
93,953

 
11,558

 
(5,705
)
 
5,853

 
243

 
86,721

 
86,964

Realization of expected future cash flows and other changes
(139,253
)
 
(76,101
)
 
(215,354
)
 
(79,121
)
 
(80,189
)
 
(159,310
)
 
(1,802
)
 
(89,702
)
 
(91,504
)
Ending balance
$
714,006

 
$
772,389

 
$
1,486,395

 
$
865,587

 
$
591,562

 
$
1,457,149

 
$
11,960

 
$
660,002

 
$
671,962

(1)
Changes in fair value are recognized in MSR valuation adjustments, net in the consolidated statements of operations.
Schedule of Composition of Primary Servicing and Subservicing Portfolios by Type of Property Serviced as Measured by UPB
The following table presents the composition of our primary servicing and subservicing portfolios as measured by UPB. The UPB amounts in the table below are not included on our consolidated balance sheets.
 
UPB at December 31,
 
2019
 
2018
 
2017
Servicing (1)
$
76,657,932

 
$
72,378,693

 
$
75,469,327

Subservicing (1)
17,120,905

 
53,104,560

 
2,063,669

NRZ (1) (2)
118,587,594

 
130,517,237

 
101,819,557

 
$
212,366,431

 
$
256,000,490

 
$
179,352,553


(1)
UPB at December 31, 2018 includes $6.3 billion, $51.3 billion and $42.3 billion UPB of loans serviced, subserviced or subserviced on behalf of NRZ, respectively, added to the portfolio in connection with the PHH acquisition.
(2)
UPB of loans for which the Rights to MSRs have been sold to NRZ, including $57.7 billion for which third-party consents have been received and the MSRs have been transferred to NRZ (the MSRs remain on balance sheet as the transactions do not achieve sale accounting treatment).
Summary of Geographic Distributions of UPB and Count of Residential Loans and Real Estate Serviced
The geographic concentration of the UPB of residential loans and real estate we serviced at December 31, 2019 was as follows:
 
Amount
 
Count
California
$
47,350,699

 
189,959

New York
19,557,621

 
90,805

Florida
16,366,372

 
121,875

New Jersey
10,921,867

 
57,182

Texas
10,073,637

 
100,868

Other
108,096,235

 
859,254

 
$
212,366,431

 
1,419,943
Schedule of Components of Servicing and Subservicing Fees


Years Ended December 31,
Servicing Revenue
2019
 
2018
 
2017
Loan servicing and subservicing fees
 
 
 
 
 
Servicing
$
227,490

 
$
227,639

 
$
259,640

Subservicing
15,459

 
8,904

 
7,775

NRZ
577,015

 
539,039

 
549,411

 
819,964

 
775,582

 
816,826

Late charges
57,194

 
61,453

 
61,763

Home Affordable Modification Program (HAMP) fees (1)
5,538

 
14,312

 
43,310

Custodial accounts (float earnings)
47,562

 
40,115

 
25,237

Loan collection fees
15,539

 
18,392

 
22,770

Other
29,710

 
27,229

 
21,691

 
$
975,507

 
$
937,083

 
$
991,597


(1)
The HAMP expired on December 31, 2016. Borrowers who had requested assistance or to whom an offer of assistance had been extended as of that date had until September 30, 2017 to finalize their modification. We continue to earn HAMP success fees for HAMP modifications that remain less than 90 days delinquent at the first-, second- and third-year anniversary of the start of the trial modification.