10. Indebtedness

Notes Payable



						Successor
						June 30, 2019					December 31, 2018
Advance Facilities	Interest Rate	Maturity Date	Collateral	Capacity Amount		Outstanding			Collateral Pledged		Outstanding		Collateral pledged
Nationstar mortgage advance receivable trust	LIBOR + 1.5% to 6.5%	August 2021	Servicing advance receivables	$	325	$	229		$	290	$	209	$	284
Nationstar agency advance receivable trust	LIBOR + 1.5% to 2.6%	December 2020	Servicing advance receivables	250		162			194		218		255
MBS servicer advance facility (2014)	LIBOR + 2.5%	December 2019	Servicing advance receivables	200		90			131		90		149
Nationstar agency advance financing facility	LIBOR + 1.5% to 7.4%	July 2020	Servicing advance receivables	125		87			99		78		89
Advance facilities principal amount						568			$	714	595		$	777
Unamortized debt issuance costs						(1		)			—
Advance facilities, net						$	567				$	595



						Successor
						June 30, 2019					December 31, 2018
Warehouse Facilities	Interest Rate	Maturity Date	Collateral	Capacity Amount		Outstanding			Collateral pledged		Outstanding			Collateral pledged
$1,200 warehouse facility	LIBOR + 1.7% to 3.5%	November 2019	Mortgage loans or MBS	$	1,200	$	715		$	762	$	560		$	622
$1,000 warehouse facility	LIBOR + 1.6% to 2.5%	September 2019	Mortgage loans or MBS	1,000		629			646		137			140
$750 warehouse facility	LIBOR + 1.4% to 2.8%	August 30, 2019	Mortgage loans or MBS	750		416			424		119			122
$800 warehouse facility⁽¹⁾	LIBOR + 1.5% to 2.9%	April 2020	Mortgage loans or MBS	800		531			576		464			514
$600 warehouse facility	LIBOR + 2.3%	February 2020	Mortgage loans or MBS	600		226			258		151			168
$500 warehouse facility	LIBOR + 1.5% to 3.0%	April 2020	Mortgage loans or MBS	500		382			395		187			200
$500 warehouse facility	LIBOR + 1.5% to 2.8%	November 2019	Mortgage loans or MBS	500		377			410		220			248
$500 warehouse facility	LIBOR + 2.0% to 2.3%	September 2020	Mortgage loans or MBS	500		49			51		290			299
$200 warehouse facility	LIBOR + 1.0%	June 2020	Mortgage loans or MBS	200		194			187		—			—
$200 warehouse facility	LIBOR + 1.5%	December 2019	Mortgage loans or MBS	200		107			103		—			—
$200 warehouse facility	LIBOR + 1.5%	October 2019	Mortgage loans or MBS	200		104			103		—			—
$200 warehouse facility	LIBOR + 2.0%	January 2020	Mortgage loans or MBS	200		88			116		103			132
$200 warehouse facility	LIBOR + 1.2%	April 2021	Mortgage loans or MBS	200		32			33		18			19
$50 warehouse facility	LIBOR + 2.7% to 7.5%	April 2020	Mortgage loans or MBS	50		5			7		—			—
$40 warehouse facility	LIBOR + 3.0%	November 2019	Mortgage loans or MBS	40		1			2		1			2
Warehouse facilities principal amount						3,856			4,073		2,250			2,466
MSR Facility
$400 warehouse facility	LIBOR + 3.5% to 6.1%	June 2021	MSR	400		150			786		100			928
$400 warehouse facility	LIBOR + 2.3%	December 2020	MSR	400		25			215		—			226
$150 warehouse facility⁽¹⁾	LIBOR + 2.8%	April 2020	MSR	150		—			121		—			430
$50 warehouse facility	LIBOR + 2.8%	August 2020	MSR	50		15			92		—			102
						190			1,214		100			1,686
Warehouse facilities principal amount						4,046			$	5,287	2,350			$	4,152

Unamortized debt issuance costs						(1		)			(1		)
Warehouse facilities, net						$	4,045				$	2,349

Pledged Collateral:
Mortgage loans and mortgage loans held for investment						$	3,204		$	3,319	$	1,528		$	1,628
Reverse mortgage interests						652			754		722			838
MSR						190			1,214		100			1,686


⁽¹⁾	Total capacity amount for this facility is $800 of which $150 is a sublimit for MSR financing.

Unsecured Senior Notes

Unsecured senior notes consist of the following:



	Successor
	June 30, 2019			December 31, 2018
$950 face value, 8.125% interest rate payable semi-annually, due July 2023	$	950		$	950
$750 face value, 9.125% interest rate payable semi-annually, due July 2026	750			750
$600 face value, 6.500% interest rate payable semi-annually, due July 2021	592			592
$300 face value, 6.500% interest rate payable semi-annually, due June 2022	206			206
Unsecured senior notes principal amount	2,498			2,498
Unamortized debt issuance costs, net of premium, and discount	(36		)	(39		)
Unsecured senior notes, net	$	2,462		$	2,459

The ratios included in the indentures for the unsecured senior notes are incurrence-based compared to the customary ratio covenants that are often found in credit agreements that require a company to maintain a certain ratio. The incurrence-based covenants limit the issuer(s) and restricted subsidiaries ability to incur additional indebtedness, pay dividends, make certain investments, create liens, consolidate, merge or sell substantially all of their assets or enter into certain transactions with affiliates. The indentures contain certain events of default, including (subject, in some cases, to customary cure periods and materiality thresholds) defaults based on (i) the failure to make payments under the applicable indenture when due, (ii) breach of covenants, (iii) cross-defaults to certain other indebtedness, (iv) certain bankruptcy or insolvency events, (v) material judgments and (vi) invalidity of material guarantees.

The indentures for the unsecured senior notes provide that the Company may redeem all or a portion of the notes prior to certain fixed dates by paying a make-whole premium plus accrued and unpaid interest, to the redemption dates. In addition, the Company may redeem all or a portion of the unsecured senior notes at any time on or after certain fixed dates at the applicable redemption prices set forth in the indentures plus accrued and unpaid interest, to the redemption dates. No notes were repurchased during the three and six months ended June 30, 2019. The Predecessor repurchased $44 and $60 in principal of outstanding notes during the three and six months ended June 30, 2018 resulting in a loss of $1 and $2, respectively.

Additionally, the indentures provide that on or before certain fixed dates, the Company may redeem (x) in the case of the New Notes, up to 40%, or (y) in the case of the other series of unsecured senior notes, up to 35% of the aggregate principal amount of the unsecured senior notes with the net proceeds of certain equity offerings at fixed redemption prices, plus accrued and unpaid interest, to the redemption dates, subject to compliance with certain conditions.

As of June 30, 2019, the expected maturities of the Company’s unsecured senior notes based on contractual maturities are as follows:



Year Ending December 31,	Amount
2019	$	—
2020	—
2021	592
2022	206
2023	950
Thereafter	750
Total	$	2,498

Other Nonrecourse Debt

Other nonrecourse debt consists of the following:



						Successor
						June 30, 2019		December 31, 2018
	Issue Date	Maturity Date	Class of Note	Securitized Amount		Outstanding		Outstanding
Participating interest financing⁽¹⁾	—	—	—	$	—	$	4,861	$	5,607
Securitization of nonperforming HECM loans
Trust 2017-2⁽²⁾	September 2017	September 2027	A, M1, M2	—		—		231
Trust 2018-1	March 2018	March 2028	A, M1, M2, M3, M4, M5	252		224		284
Trust 2018-2	August 2018	August 2028	A, M1, M2, M3, M4, M5	198		182		250
Trust 2018-3	November 2018	November 2028	A, M1, M2, M3, M4, M5	284		272		326
Trust 2019-1	June 2019	June 2029	A, M1, M2, M3, M4, M5	398		398		—
Nonrecourse Debt - Legacy	November 2009	October 2039	A	97		22		29
Other nonrecourse debt principal amount						5,959		6,727
Unamortized debt issuance costs, premium, and issuance discount						26		68
Other nonrecourse debt, net						$	5,985	$	6,795


⁽¹⁾	Amounts represent the Company’s participating interest in GNMA HMBS securitized portfolios.


⁽²⁾	As discussed in Note 5, Reverse Mortgage Interests, Net, Trust 2017-2 was extinguished.

Participating Interest Financing

Participating interest financing represents the obligation of HMBS pools to third-party security holders. The Company issues HMBS in connection with the securitization of borrower draws and accrues interest on HECM loans. Proceeds are received in exchange for securitized advances on the HECM loan amounts transferred to GNMA, and the Company retains a beneficial interest (referred to as a “participating interest”) in the securitization trust in which the HECM loans and HMBS obligations are held and assume both issuer and servicer responsibilities in accordance with GNMA HMBS program guidelines. Monthly cash flows generated from the HECM loans are used to service the HMBS obligations. The interest rate is based on the underlying HMBS rate with a range of 2.7% to 6.0%.

Securitizations of Nonperforming HECM Loans

From time to time, the Company securitizes its interests in non-performing reverse mortgages. The transactions provide investors with the ability to invest in a pool of both non-performing HECM loans secured by one-to-four-family residential properties and a pool of REO properties acquired through foreclosure of a deed in lieu of foreclosure in connection with HECM loans that are covered by FHA insurance. The transactions provide the Company with access to liquidity for the non-performing HECM loan portfolio, ongoing servicing fees, and potential residual returns. The transactions are structured as secured borrowings with the reverse mortgage loans included in the consolidated financial statements as reverse mortgage interests and the related financing included in other nonrecourse debt. Interest is accrued at a rate of 2.7% to 6.0% on the outstanding securitized notes and recorded as interest expense in consolidated statements of operations. The HECM securitizations are callable with expected weighted average lives of one to four years. The Company may re-securitize the previously called loans from earlier HECM securitizations to achieve a lower cost of funds.

Nonrecourse Debt – Legacy Assets

During November 2009, the Predecessor completed the securitization of approximately $222 of Asset-Backed Securities (“ABS”), which was accounted for as a secured borrowing. This structure resulted in the Predecessor and subsequently the Company carrying the securitized mortgage loans in its consolidated balance sheets and recognizing the asset-backed certificates acquired by third parties. The principal and interest on these notes are paid using the cash flows from the underlying mortgage loans, which serve as collateral for the debt. The interest rate paid on the outstanding securities is 7.5%, which is subject to an available funds cap. The total outstanding principal balance on the underlying mortgage loans serving as collateral for the debt was approximately $151 and $160 at June 30, 2019 and December 31, 2018, respectively. The UPB on the outstanding loans was $22 and $29 at June 30, 2019 and December 31, 2018, respectively, and the carrying value of the nonrecourse debt was $22 and $29, respectively.

Financial Covenants

The Company’s credit facilities contain various financial covenants which primarily relate to required tangible net worth amounts, liquidity reserves, leverage requirements, and profitability requirements, which are measured at the Company’s operating subsidiary, Nationstar Mortgage LLC. The Company was in compliance with its required financial covenants as of June 30, 2019. The most restrictive tangible net worth covenant required the Company to maintain a minimum tangible net worth of at least $682.