10. Indebtedness

Notes Payable



						Successor
						September 30, 2019				December 31, 2018
Advance Facilities	Interest Rate	Maturity Date	Collateral	Capacity Amount		Outstanding		Collateral Pledged		Outstanding		Collateral pledged
$325 advance facility	LIBOR + 1.5% to 6.5%	August 2021	Servicing advance receivables	$	325	$	233	$	294	$	209	$	284
$250 advance facility	LIBOR + 1.5% to 2.6%	December 2020	Servicing advance receivables	250		142		173		218		255
$200 advance facility	LIBOR + 2.5%	December 2019	Servicing advance receivables	200		64		125		90		149
$125 advance facility	LIBOR + 1.5% to 7.4%	July 2020	Servicing advance receivables	125		74		84		78		89
Advance facilities principal amount						513		$	676	595		$	777
Unamortized debt issuance costs						—				—
Advance facilities, net						$	513			$	595



						Successor
						September 30, 2019					December 31, 2018
Warehouse Facilities	Interest Rate	Maturity Date	Collateral	Capacity Amount		Outstanding			Collateral pledged		Outstanding			Collateral pledged
$1,500 warehouse facility	LIBOR + 1.0%	June 2020	Mortgage loans or MBS	$	1,500	$	970		$	938	$	—		$	—
$1,200 warehouse facility	LIBOR + 1.7% to 3.5%	November 12, 2019	Mortgage loans or MBS	1,200		734			779		560			622
$1,000 warehouse facility	LIBOR + 1.4% to 2.3%	September 2020	Mortgage loans or MBS	1,000		521			536		137			140
$800 warehouse facility⁽¹⁾	LIBOR + 1.5% to 2.9%	April 2020	Mortgage loans or MBS	800		586			643		464			514
$750 warehouse facility	LIBOR + 1.4% to 2.8%	September 2020	Mortgage loans or MBS	750		511			524		119			122
$600 warehouse facility	LIBOR + 2.3%	February 2020	Mortgage loans or MBS	600		214			251		151			168
$500 warehouse facility	LIBOR + 1.5% to 2.8%	November 14, 2019	Mortgage loans or MBS	500		405			474		220			248
$500 warehouse facility	LIBOR + 1.5% to 3.0%	April 2020	Mortgage loans or MBS	500		391			400		187			200
$200 warehouse facility	LIBOR + 1.5%	December 2019	Mortgage loans or MBS	200		91			92		—			—
$200 warehouse facility	LIBOR + 1.2%	April 2021	Mortgage loans or MBS	200		91			94		18			19
$200 warehouse facility	LIBOR + 2.0%	January 2020	Mortgage loans or MBS	200		67			94		103			132
$200 warehouse facility	LIBOR + 1.5%	October 2020	Mortgage loans or MBS	200		21			21		—			—
$50 warehouse facility	LIBOR + 2.0% to 6.0%	April 2020	Mortgage loans or MBS	50		13			16		—			—
$40 warehouse facility	LIBOR + 3.3%	September 2020	Mortgage loans or MBS	40		27			28		—			—
$40 warehouse facility	LIBOR + 3.0%	November 29, 2019	Mortgage loans or MBS	40		1			2		1			2
$500 warehouse facility⁽²⁾	LIBOR + 2.0% to 2.3%	September 2020	Mortgage loans or MBS	—		—			—		290			299
Warehouse facilities principal amount						4,643			4,892		2,250			2,466
MSR Facility
$400 warehouse facility	LIBOR + 3.5% to 6.1%	June 2021	MSR	400		150			839		100			928
$400 warehouse facility	LIBOR + 2.3%	December 2020	MSR	400		—			193		—			226
$150 warehouse facility⁽¹⁾	LIBOR + 2.8%	April 2020	MSR	150		—			121		—			430
$50 warehouse facility	LIBOR + 2.8%	August 2020	MSR	50		10			84		—			102
						160			1,237		100			1,686
Warehouse and MSR facilities principal amount						4,803			$	6,129	2,350			$	4,152

Unamortized debt issuance costs						(1		)			(1		)
Warehouse facilities, net						$	4,802				$	2,349

Pledged Collateral:
Mortgage loans and mortgage loans held for investment						$	3,980		$	4,119	$	1,528		$	1,628
Reverse mortgage interests						663			773		722			838
MSR						160			1,237		100			1,686


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


⁽²⁾	This facility was terminated during August 2019.

Unsecured Senior Notes

Unsecured senior notes consist of the following:



	Successor
	September 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⁽¹⁾	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, premium and discount	(34		)	(39		)
Unsecured senior notes, net	$	2,464		$	2,459


⁽¹⁾	This note was subsequently paid down by $100 in principal balance in October 2019.

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 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 or redeemed during the three and nine months ended September 30, 2019, and two months ended September 30, 2018. During the two months ended September 30, 2018, the Company redeemed $658 in principal of outstanding notes. Additionally, the Company repaid $364 in principal of outstanding notes which matured during the two months ended September 30, 2018. The Predecessor repurchased $60 in principal of outstanding notes during the seven months ended July 31, 2018 resulting in a loss of $2. No notes were repurchased during the one month ended July 31, 2018.

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 September 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⁽¹⁾	592
2022	206
2023	950
Thereafter	750
Total unsecured senior notes principal amount	$	2,498


⁽¹⁾	This note does not include the subsequent pay down of $100 in principal balance in October 2019.

Other Nonrecourse Debt

Other nonrecourse debt consists of the following:



						Successor
						September 30, 2019		December 31, 2018
	Issue Date	Maturity Date	Class of Note	Securitized Amount		Outstanding		Outstanding
Participating interest financing⁽¹⁾	—	—	—	$	—	$	4,581	$	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	232		201		284
Trust 2018-2	August 2018	August 2028	A, M1, M2, M3, M4, M5	179		161		250
Trust 2018-3	November 2018	November 2028	A, M1, M2, M3, M4, M5	254		239		326
Trust 2019-1	June 2019	June 2029	A, M1, M2, M3, M4, M5	347		339		—
Nonrecourse Debt - Legacy⁽³⁾	November 2009	October 2039	A	—		—		29
Other nonrecourse debt principal amount						5,521		6,727
Unamortized debt issuance costs, premium and discount						12		68
Other nonrecourse debt, net						$	5,533	$	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.


⁽³⁾	As discussed in Note 6, Mortgage Loans Held for Sale and Investment, Trust 2009-A, the Company’s legacy portfolio, was collapsed and the related debt was extinguished during September 2019.

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 2.3% to 5.9%.

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 trust was called and related debt was extinguished during September 2019. See Note 6, Mortgage Loans Held for Sale and Investment for further information. The total outstanding principal balance on the underlying mortgage loans serving as collateral for the debt was approximately $160 at December 31, 2018. The UPB on the outstanding loans was $29 at December 31, 2018 and the carrying value of the nonrecourse debt was $29.

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 September 30, 2019. The most restrictive tangible net worth covenant required the Company to maintain a minimum tangible net worth of at least $682.