10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

________________________________________________________________________________________________________

 FORM 10-Q

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2021

or

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from _______ to _______                    

Commission file number: 001-14667

________________________________________________________________________________________________________

Mr. Cooper Group Inc.

(Exact name of registrant as specified in its charter)

Delaware	91-1653725
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)
8950 Cypress Waters Blvd, Coppell, TX	75019
(Address of principal executive offices)	(Zip Code)
(469) 549-2000
Registrant’s telephone number, including area code

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common stock, $0.01 par value per share	COOP	The Nasdaq Stock Market

____________________________________________________________________________________________________

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes  x    No  ¨

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).    Yes  x    No  ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12(b)-2 of the Exchange Act.

Large Accelerated Filer	x	Accelerated Filer	☐
Non-Accelerated Filer	¨	Smaller reporting company	☐
		Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes  ☐    No  x

Number of shares of common stock, $0.01 par value, outstanding as of July 22, 2021 was 86,148,567.

MR. COOPER GROUP INC.

QUARTERLY REPORT ON FORM 10-Q

TABLE OF CONTENTS

		Page
PART I	FINANCIAL INFORMATION
Item 1.	Financial Statements	3
	Condensed Consolidated Balance Sheets as of June 30, 2021 (unaudited) and December 31, 2020	3
	Condensed Consolidated Statements of Operations (unaudited) for the Three and Six Months Ended June 30, 2021 and 2020	4
	Condensed Consolidated Statements of Stockholders’ Equity (unaudited) for the Three and Six Months Ended June 30, 2021 and 2020	5
	Condensed Consolidated Statements of Cash Flows (unaudited) for the Six Months Ended June 30, 2021 and 2020	7
	Notes to Condensed Consolidated Financial Statements (unaudited)	9
	1. Nature of Business and Basis of Presentation	9
	2. Discontinued Operations	10
	3. Mortgage Servicing Rights and Related Liabilities	11
	4. Advances and Other Receivables	14
	5. Mortgage Loans Held for Sale	15
	6. Loans Subject to Repurchase from Ginnie Mae	16
	7. Goodwill and Intangible Assets	16
	8. Derivative Financial Instruments	17
	9. Indebtedness	19
	10. Securitizations and Financings	20
	11. Earnings Per Share	21
	12. Income Taxes	23
	13. Fair Value Measurements	23
	14. Capital Requirements	27
	15. Commitments and Contingencies	27
	16. Segment Information	29
Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	33
Item 3.	Quantitative and Qualitative Disclosures about Market Risk	62
Item 4.	Controls and Procedures	63
PART II	OTHER INFORMATION
Item 1.	Legal Proceedings	64
Item 1A.	Risk Factors	64
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	64
Item 3.	Defaults Upon Senior Securities	64
Item 4.	Mine Safety Disclosures	64
Item 5.	Other Information	64
Item 6.	Exhibits	65

2

PART I. Financial Information

Item 1. Financial Statements

MR. COOPER GROUP INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(millions of dollars, except share data)

	June 30, 2021		December 31, 2020
	(unaudited)
Assets
Cash and cash equivalents	$	716	$	695
Restricted cash	113		135
Mortgage servicing rights at fair value	3,307		2,703
Advances and other receivables, net of reserves of $191 and $208, respectively	837		940
Mortgage loans held for sale at fair value	6,961		5,720
Property and equipment, net of accumulated depreciation of $108 and $96, respectively	110		113
Deferred tax assets, net	1,118		1,339
Other assets	5,211		7,173
Assets of discontinued operations	4,935		5,347
Total assets	$	23,308	$	24,165
Liabilities and Stockholders’ Equity
Unsecured senior notes, net	$	2,075	$	2,074
Advance and warehouse facilities, net	7,310		6,258
Payables and other liabilities	4,895		7,159
MSR related liabilities - nonrecourse at fair value	888		967
Liabilities of discontinued operations	4,790		5,203
Total liabilities	19,958		21,661
Commitments and contingencies (Note 15)
Preferred stock at $0.00001 - 10 million shares authorized, 1.0 million shares issued and outstanding, respectively; aggregate liquidation preference of ten dollars, respectively	—		—
Common stock at $0.01 par value - 300 million shares authorized, 93.2 million and 92.0 million shares issued, respectively	1		1
Additional paid-in-capital	1,120		1,126
Retained earnings	2,434		1,434
Treasury shares at cost - 7.1 million and 2.6 million shares, respectively	(206)		(58)
Total Mr. Cooper stockholders’ equity	3,349		2,503
Non-controlling interests	1		1
Total stockholders’ equity	3,350		2,504
Total liabilities and stockholders’ equity	$	23,308	$	24,165

See accompanying Notes to the Condensed Consolidated Financial Statements (unaudited).

3

MR. COOPER GROUP INC.

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(millions of dollars, except for earnings per share data)

	Three Months Ended June 30,				Six Months Ended June 30,
	2021		2020		2021		2020
Revenues:
Service related, net	$	(8)	$	—	$	572	$	(67)
Net gain on mortgage loans held for sale	582		618		1,261		949
Total revenues	574		618		1,833		882
Expenses:
Salaries, wages and benefits	277		238		554		472
General and administrative	148		160		325		350
Total expenses	425		398		879		822
Interest income	51		22		97		97
Interest expense	(119)		(127)		(245)		(266)
Other income, net	486		—		486		1
Total other income (expenses), net	418		(105)		338		(168)
Income (loss) from continuing operations before income tax expense (benefit)	567		115		1,292		(108)
Less: Income tax expense (benefit)	140		38		306		(26)
Net income (loss) from continuing operations	427		77		986		(82)
Net income (loss) from discontinued operations	12		(4)		14		(16)
Net income (loss)	439		73		1,000		(98)
Less: Net loss attributable to non-controlling interests	—		—		—		(3)
Net income (loss) attributable to Mr. Cooper	439		73		1,000		(95)
Less: Undistributed earnings attributable to participating stockholders	4		1		9		—
Net income (loss) attributable to common stockholders	$	435	$	72	$	991	$	(95)
Earnings from continuing operations per common share attributable to Mr. Cooper:
Basic	$	4.91	$	0.82	$	11.13	$	(0.86)
Diluted	$	4.72	$	0.81	$	10.65	$	(0.86)
Earnings from discontinued operations per common share attributable to Mr. Cooper:
Basic	$	0.14	$	(0.04)	$	0.16	$	(0.18)
Diluted	$	0.13	$	(0.04)	$	0.15	$	(0.18)
Earnings per common share attributable to Mr. Cooper:
Basic	$	5.05	$	0.78	$	11.29	$	(1.04)
Diluted	$	4.85	$	0.77	$	10.80	$	(1.04)

    

See accompanying Notes to the Condensed Consolidated Financial Statements (unaudited).

4

MR. COOPER GROUP INC.

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

(millions of dollars, except share data)

	Preferred Stock			Common Stock
	Shares (in thousands)	Amount		Shares (in thousands)	Amount		Additional Paid-in Capital		Retained Earnings		Treasury Share Amount		Total Mr. Cooper Stockholders’ Equity		Non-controlling Interests		Total Stockholders’ Equity
Balance at March 31, 2020	1,000	$	—	91,970	$	1	$	1,108	$	961	$	—	$	2,070	$	(4)	$	2,066
Shares issued / (surrendered) under incentive compensation plan	—	—		52	—		—		—		—		—		—		—
Share-based compensation	—	—		—	—		6		—		—		6		—		6
Net income	—	—		—	—		—		73		—		73		—		73
Balance at June 30, 2020	1,000	$	—	92,022	$	1	$	1,114	$	1,034	$	—	$	2,149	$	(4)	$	2,145
Balance at March 31, 2021	1,000	$	—	86,135	$	1	$	1,113	$	1,995	$	(206)	$	2,903	$	1	$	2,904
Shares issued / (surrendered) under incentive compensation plan	—	—		14	—		(1)		—		—		(1)		—		(1)
Share-based compensation	—	—		—	—		8		—		—		8		—		8
Net income	—	—		—	—		—		439		—		439		—		439
Balance at June 30, 2021	1,000	$	—	86,149	$	1	$	1,120	$	2,434	$	(206)	$	3,349	$	1	$	3,350

See accompanying Notes to the Condensed Consolidated Financial Statements (unaudited).

5

MR. COOPER GROUP INC.

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

(millions of dollars, except share data)

	Preferred Stock			Common Stock
	Shares (in thousands)	Amount		Shares (in thousands)	Amount		Additional Paid-in Capital		Retained Earnings		Treasury Share Amount		Total Mr. Cooper Stockholders’ Equity		Non-controlling Interests		Total Stockholders’ Equity
Balance at January 1, 2020	1,000	$	—	91,118	$	1	$	1,109	$	1,122	$	—	$	2,232	$	(1)	$	2,231
Shares issued / (surrendered) under incentive compensation plan	—	—		904	—		(5)		—		—		(5)		—		(5)
Share-based compensation	—	—		—	—		10		—		—		10		—		10
Cumulative effect adjustments pursuant to the adoption of CECL-related accounting guidance	—	—		—	—		—		7		—		7		—		7
Net loss	—	—		—	—		—		(95)		—		(95)		(3)		(98)
Balance at June 30, 2020	1,000	$	—	92,022	$	1	$	1,114	$	1,034	$	—	$	2,149	$	(4)	$	2,145
Balance at January 1, 2021	1,000	$	—	89,457	$	1	$	1,126	$	1,434	$	(58)	$	2,503	$	1	$	2,504
Shares issued / (surrendered) under incentive compensation plan	—	—		1,197	—		(20)		—		—		(20)		—		(20)
Share-based compensation	—	—		—	—		14		—		—		14		—		14
Repurchase of common stock	—	—		(4,505)	—		—		—		(148)		(148)		—		(148)
Net income	—	—		—	—		—		1,000		—		1,000		—		1,000
Balance at June 30, 2021	1,000	$	—	86,149	$	1	$	1,120	$	2,434	$	(206)	$	3,349	$	1	$	3,350

See accompanying Notes to the Condensed Consolidated Financial Statements (unaudited).

6

MR. COOPER GROUP INC.

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(millions of dollars)

	Six Months Ended June 30,
	2021		2020
Operating Activities
Net income (loss)	$	1,000	$	(98)
Less: Net income (loss) from discontinued operations	14		(16)
Net income (loss) from continuing operations	986		(82)
Adjustments to reconcile net income (loss) from continuing operations to net cash attributable to operating activities:
Deferred tax expense (benefit)	220		(49)
Net gain on mortgage loans held for sale	(1,261)		(949)
Provision for servicing and non-servicing reserves	21		11
Fair value changes and amortization of mortgage servicing rights	190		1,055
Fair value changes in MSR related liabilities	2		(89)
Depreciation and amortization for property and equipment and intangible assets	31		36
Gain on sale of business	(487)		—
Other operating activities	24		26
Repurchases of forward loan assets out of Ginnie Mae securitizations	(5,812)		(2,092)
Mortgage loans originated and purchased for sale, net of fees	(47,560)		(23,110)
Sales proceeds and loan payment proceeds for mortgage loans held for sale	52,923		26,606
Changes in assets and liabilities:
Advances and other receivables	48		270
Other assets	101		(5)
Payables and other liabilities	13		(119)
Net cash attributable to operating activities - continuing operations	(561)		1,509
Net cash attributable to operating activities - discontinued operations	447		557
Net cash attributable to operating activities	(114)		2,066
Investing Activities
Property and equipment additions, net of disposals	(26)		(26)
Purchase of forward mortgage servicing rights	(217)		(31)
Proceeds on sale of forward mortgage servicing rights	13		43
Other investing activities	(17)		—
Net cash attributable to investing activities - continuing operations	(247)		(14)
Net cash attributable to investing activities - discontinued operations	—		—
Net cash attributable to investing activities	(247)		(14)
Financing Activities
Increase in advance and warehouse facilities	1,047		(520)
Settlements and repayments of excess spread financing	(81)		(110)
Issuance of unsecured senior notes	—		600
Redemption and repayment of unsecured senior notes	—		(698)
Repurchase of common stock	(148)		—
Other financing activities	(24)		(2)
Net cash attributable to financing activities - continuing operations	794		(730)
Net cash attributable to financing activities - discontinued operations	(440)		(633)
Net cash attributable to financing activities	354		(1,363)
Net (decrease) increase in cash, cash equivalents, and restricted cash	(7)		689
Cash, cash equivalents, and restricted cash - beginning of period	913		612
Cash, cash equivalents, and restricted cash - end of period(1)	$	906	$	1,301
Supplemental Disclosures of Non-cash Investing Activities
Consideration from sale of business	$	499	$	—
Purchase of forward mortgage servicing rights	$	7	$	—

7

(1)The following table provides a reconciliation of cash, cash equivalents and restricted cash to amounts reported within the condensed consolidated balance sheets.

	June 30, 2021		June 30, 2020
Cash and cash equivalents	$	716	$	1,041
Restricted cash	113		178
Restricted cash within assets of discontinued operations	77		82
Total cash, cash equivalents, and restricted cash	$	906	$	1,301

See accompanying Notes to the Condensed Consolidated Financial Statements (unaudited). 

8

MR COOPER GROUP INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

(millions of dollars, unless otherwise stated)

1. Nature of Business and Basis of Presentation

Nature of Business

Mr. Cooper Group Inc., collectively with its consolidated subsidiaries, (“Mr. Cooper,” the “Company,” “we,” “us” or “our”) provides servicing, origination and transaction-based services related to single family residences throughout the United States with operations under its primary brands: Mr. Cooper® and Xome®. Mr. Cooper is one of the largest home loan originators and servicers in the country focused on delivering a variety of servicing and lending products, services and technologies. Xome provides technology and data enhanced solutions to homebuyers, home sellers, real estate agents and mortgage companies. The Company’s corporate website is located at www.mrcoopergroup.com. The Company has provided a glossary of terms, which defines certain industry-specific and other terms that are used herein, in Item 2, Management’s Discussion and Analysis of Financial Condition and Results of Operations, of this Form 10-Q.

On March 12, 2021, the Company entered into a Stock Purchase Agreement with Blend Labs, Inc. (“Blend Labs”), a Delaware corporation, pursuant to which Blend Labs will acquire the title business of the Company for a purchase price of approximately $500, consisting of approximately $450 in cash, subject to certain adjustments specified therein, and a retained interest of 9.9% for the Company (the “Title Transaction”). The Title Transaction was completed on June 30, 2021, with consideration received on July 1, 2021. A receivable for consideration was recorded in other assets in the Company’s condensed consolidated balance sheets as of June 30, 2021. Pursuant to the Stock Purchase Agreement, all cash generated, subject to certain adjustments, between March 13, 2021 and the closing date of the Title Transaction, were held for the benefit of Blend Labs. A $487 gain on the Title Transaction was recorded in the second quarter of 2021 upon closing of the Title Transaction, which was included in other income, net within the condensed consolidated statements of operations. In addition, the Company recorded total transaction costs of $2 and $5 for the three and six months ended June 30, 2021, respectively. The results of the title business were previously reported under the Xome segment. The carrying amounts of assets and liabilities associated with the title business were not material to the condensed consolidated balance sheets as of December 31, 2020.

On July 1, 2021, the Company entered into a definitive agreement for the sale of its reverse servicing portfolio, operating under the Champion Mortgage brand (“Champion”), to Mortgage Assets Management, LLC and its affiliates (“MAM”). The reverse servicing operation was previously reported in the Company’s Servicing segment. The Company determined the sale of the reverse servicing portfolio qualified for reporting as discontinued operations as of June 30, 2021. As a result, the reverse servicing operation is presented as discontinued operations in the Company’s condensed consolidated statements of operations and the assets and liabilities of the reverse servicing operation are presented as discontinued operations in the Company’s condensed consolidated balance sheets for all periods presented. Unless otherwise indicated, information in this report relates to the Company’s continuing operations. Refer to Note 2, Discontinued Operations for further details.

Basis of Presentation

The interim condensed consolidated financial statements of the Company have been prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) for interim financial information and in accordance with the instructions to Form 10-Q and Article 10 of Regulation S-X as promulgated by the Securities and Exchange Commission. Accordingly, the financial statements do not include all of the information and footnotes required by GAAP for complete financial statements and should be read in conjunction with the audited consolidated financial statements and notes thereto included in the Company’s Annual Reports on Form 10-K for the year ended December 31, 2020.

The interim condensed consolidated financial statements are unaudited; however, in the opinion of management, all adjustments, consisting of normal recurring items, considered necessary for a fair presentation of the results of the interim periods have been included. Dollar amounts are reported in millions, except per share data and other key metrics, unless otherwise noted.

9

Basis of Consolidation

The condensed consolidated financial statements include the accounts of the Company, its wholly-owned subsidiaries, other entities in which the Company has a controlling financial interest and those variable interest entities (“VIE”) where the Company’s wholly-owned subsidiaries are the primary beneficiaries. Assets and liabilities of VIEs and their respective results of operations are consolidated from the date that the Company became the primary beneficiary through the date the Company ceases to be the primary beneficiary. The Company applies the equity method of accounting to investments where it is able to exercise significant influence, but not control, over the policies and procedures of the entity and owns less than 50% of the voting interests. Investments in certain companies over which the Company does not exert significant influence are accounted for as cost method investments. Intercompany balances and transactions on consolidated entities have been eliminated.

Use of Estimates

The preparation of the condensed consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts reported in the condensed consolidated financial statements and accompanying notes. Actual results could differ from these estimates due to factors such as adverse changes in the economy, changes in interest rates, secondary market pricing for loans held for sale and derivatives, strength of underwriting and servicing practices, changes in prepayment assumptions, declines in home prices or discrete events adversely affecting specific borrowers, uncertainties in the economy from the COVID-19 pandemic, and such differences could be material.

In the second quarter of 2021, the Company refined its estimation process for determining the fair value of forward MSRs by incorporating an estimate of future cash flows from existing loans that are expected to be recaptured, which is consistent with recent pricing observed from market participants. This refinement did not result in a significant change to the overall valuation of the Company’s mortgage servicing rights (“MSRs”) portfolio. See Note 3, Mortgage Servicing Rights and Related Liabilities and Note 13, Fair Value Measurements for further discussion. There were no other changes to the Company’s use of estimates for the period ended June 30, 2021.

Recent Accounting Guidance Adopted

Accounting Standards Update 2019-12, Income Taxes (Topic 740) - Simplifying the Accounting for Income Taxes (“ASU 2019-12”) simplifies accounting for income taxes by removing certain exceptions from the general principles in Topic 740 including elimination of the exception to the incremental approach for intraperiod tax allocation when there is a loss from continuing operations and income or a gain from other items such as other comprehensive income. ASU 2019-12 also clarifies and amends certain guidance in Topic 740. ASU 2019-12 is effective for the Company on January 1, 2021. The adoption of the standard did not have a material impact to the Company’s condensed consolidated financial statements.

2. Discontinued Operations

On July 1, 2021, the Company entered into a definitive agreement for the sale of its reverse servicing portfolio, operating under Champion, to MAM. Upon close of the transaction, which is subject to regulatory approvals and other closing conditions, MAM will assume Champion’s reverse portfolio and related operations. The sale is expected to close prior to the end of 2021. The carrying amounts of assets and liabilities associated with the reverse servicing operation are reported under the Servicing segment. The Company determined reverse servicing operations met the criteria for classification as held for sale as of June 30, 2021 and represents a strategic shift in the Company’s operations. Therefore, the sale of the reverse servicing portfolio qualifies for reporting as discontinued operations, and the assets and liabilities of the reverse servicing portfolio are reported as discontinued operations in the condensed consolidated balance sheets and related results of operations are reported as discontinued operations in the condensed consolidated statements of operations for all periods presented.

As part of the transaction, the Company entered into a servicing agreement with MAM, under which the Company will be compensated for continuing to service these reverse loans through the date that the loans are transferred out of Company’s servicing system, which will be the date of close. In addition, the Company will retain certain loans related to the reverse servicing portfolio, primarily related to previously liquidated loans, with total assets of $112 and total liabilities of $88 as of June 30, 2021.

10

The following table sets forth the assets and liabilities included in discontinued operations:

	June 30, 2021		December 31, 2020
Carrying amounts of assets of discontinued operations
Restricted cash	$	77	$	83
Reverse mortgage interests, net	4,910		5,253
Other	9		11
Loss recognized on classification as discontinued operations	(61)		—
Total assets of discontinues operations	$	4,935	$	5,347
Carrying amounts of liabilities of discontinued operations
Advances and warehouse facilities, net	$	525	$	505
Payables and other liabilities	224		233
Mortgage servicing liabilities	42		41
Other nonrecourse debt, net	3,999		4,424
Total liabilities of discontinued operations	$	4,790	$	5,203

The following table sets forth the condensed consolidated statements of operations data for discontinued operations:

	Three Months Ended June 30,				Six Months Ended June 30,
	2021		2020		2021		2020
Revenue - service related, net	$	1	$	12	$	9	$	26
Salaries, wages and benefits expense	(8)		(10)		(16)		(22)
General and administrative expense	71		(10)		64		(18)
Interest income	43		53		87		96
Interest expense	(30)		(50)		(64)		(103)
Loss on classification as discontinued operations	(61)		—		(61)		—
Income (loss) from discontinued operations before income tax expense (benefit)	16		(5)		19		(21)
Less: Income tax expense (benefit)	4		(1)		5		(5)
Net income (loss) from discontinued operations	$	12	$	(4)	$	14	$	(16)

3. Mortgage Servicing Rights and Related Liabilities

The following table sets forth the carrying value of the Company’s mortgage servicing rights (“MSRs”) and the related liabilities. In estimating the fair value of all mortgage servicing rights and related liabilities, the impact of the current environment was considered in the determination of key assumptions.

MSRs and Related Liabilities	June 30, 2021		December 31, 2020
Forward MSRs - fair value	$	3,307	$	2,703
Excess spread financing - fair value	$	867	$	934
Mortgage servicing rights financing - fair value	21		33
MSR related liabilities - nonrecourse at fair value	$	888	$	967

11

Forward Mortgage Servicing Rights

The following table sets forth the activities of forward MSRs:

	Six Months Ended June 30,
Forward MSRs - Fair Value	2021		2020
Fair value - beginning of period	$	2,703	$	3,496
Additions:
Servicing retained from mortgage loans sold	554		249
Purchases of servicing rights	218		24
Dispositions:
Sales of servicing assets	(12)		—
Changes in fair value:
Changes in valuation inputs or assumptions used in the valuation model	270		(717)
Changes in valuation due to amortization	(460)		(338)
Other changes	34		43
Fair value - end of period	$	3,307	$	2,757

During the six months ended June 30, 2021 and 2020, the Company sold $1,076 and $71 in unpaid principal balance (“UPB”) of forward MSRs, of which $1,008 and none were retained by the Company as subservicer, respectively.

MSRs measured at fair value are segregated between investor type into agency and non-agency pools (referred to herein as “investor pools”) based upon contractual servicing agreements with investors at the respective balance sheet date to evaluate the MSR portfolio and fair value of the portfolio. Agency investors primarily consist of government sponsored enterprises (“GSE”), such as the Federal National Mortgage Association (“Fannie Mae” or “FNMA”) and the Federal Home Loan Mortgage Corp (“Freddie Mac” or “FHLMC”), and the Government National Mortgage Association (“Ginnie Mae” or “GNMA”). Non-agency investors consist of investors in private-label securitizations.

The following table provides a breakdown of UPB and fair value for the Company’s forward MSRs:

	June 30, 2021				December 31, 2020
Forward MSRs - UPB and Fair Value Breakdown	UPB		Fair Value		UPB		Fair Value
Investor Pools
Agency	$	248,799	$	2,955	$	227,136	$	2,305
Non-agency	38,656		352		44,053		398
Total	$	287,455	$	3,307	$	271,189	$	2,703

In the second quarter of 2021, the Company refined its estimate of the fair value of forward MSRs by incorporating an estimate of future cash flows from existing loans that are expected to be recaptured. The estimate of future cash flows related to recapture is consistent with recent pricing observed from various market participants, including the Company’s independent, third-party valuation firms. As a result of considering the recapture rate, the Company adjusted its discount rate assumption in order to ensure that the fair value of forward MSRs remains consistent with current market participant pricing and was also corroborated with valuations provided by independent, third parties. The net impact on the overall forward MSRs fair value was not significant during the three and six months ended June 30, 2021. Refer to Note 13, Fair Value Measurements, for further discussion on key weighted-average inputs and assumptions used in estimating the fair value of forward MSRs.

12

The following table shows the hypothetical effect on the fair value of the Company’s forward MSRs when applying certain unfavorable variations of key assumptions to these assets for the dates indicated:

	Discount Rate				Total Prepayment Speeds				Cost to Service per Loan
Forward MSRs - Hypothetical Sensitivities	100 bps Adverse Change		200 bps Adverse Change		10% Adverse Change		20% Adverse Change		10% Adverse Change		20% Adverse Change
June 30, 2021
Mortgage servicing rights	$	(112)	$	(216)	$	(139)	$	(268)	$	(43)	$	(87)
December 31, 2020
Mortgage servicing rights	$	(100)	$	(192)	$	(181)	$	(347)	$	(45)	$	(89)

These hypothetical sensitivities should be evaluated with care. The effect on fair value of an adverse change in assumptions generally cannot be determined because the relationship of the change in assumptions to the fair value may not be linear. Additionally, the impact of a variation in a particular assumption on the fair value is calculated while holding other assumptions constant. In reality, changes in one factor may lead to changes in other factors, which could impact the above hypothetical effects.

Excess Spread Financing - Fair Value

The Company had excess spread financing liability of $867 and $934 as of June 30, 2021 and December 31, 2020, respectively. Refer to Note 13, Fair Value Measurements, for key weighted-average inputs and assumptions used in the valuation of excess spread financing.

The following table shows the hypothetical effect on the Company’s excess spread financing fair value when applying certain unfavorable variations of key assumptions to these liabilities for the dates indicated:

	Discount Rate				Prepayment Speeds
Excess Spread Financing - Hypothetical Sensitivities	100 bps Adverse Change		200 bps Adverse Change		10% Adverse Change		20% Adverse Change
June 30, 2021
Excess spread financing	$	30	$	61	$	34	$	70
December 31, 2020
Excess spread financing	$	30	$	62	$	41	$	84

These hypothetical sensitivities should be evaluated with care. The effect on fair value of an adverse change in assumptions generally cannot be determined because the relationship of the change in assumptions to the fair value may not be linear. Additionally, the impact of a variation in a particular assumption on the fair value is calculated while holding other assumptions constant. In reality, changes in one factor may lead to changes in other factors, which could impact the above hypothetical effects. Also, a positive change in the above assumptions would not necessarily correlate with the corresponding decrease in the net carrying amount of the excess spread financing. Excess spread financing’s cash flow assumptions that are utilized in determining fair value are based on the related cash flow assumptions used in the financed MSRs. Any fair value change recognized in the financed MSRs attributable to related cash flows assumptions would inherently have an inverse impact on the carrying amount of the related excess spread financing.

Mortgage Servicing Rights Financing - Fair Value

The Company had MSR financing liability of $21 and $33 as of June 30, 2021 and December 31, 2020, respectively. Refer to Note 13, Fair Value Measurements, for key weighted-average inputs and assumptions used in the valuation of the MSR financing liability.

13

Servicing Segment Revenues

The following table sets forth the items comprising total revenues for the Servicing segment:

	Three Months Ended June 30,				Six Months Ended June 30,
Total Revenues - Servicing	2021		2020		2021		2020
Contractually specified servicing fees(1)	$	275	$	285	$	551	$	582
Other service-related income(1)	214		62		359		111
Incentive and modification income(1)	14		8		28		18
Late fees(1)	16		20		34		47
Mark-to-market adjustments(2)	(180)		(261)		174		(644)
Counterparty revenue share(3)	(76)		(88)		(159)		(164)
Amortization, net of accretion(4)	(158)		(107)		(314)		(191)
Total revenues - Servicing	$	105	$	(81)	$	673	$	(241)

(1)The Company recognizes revenue on an earned basis for services performed. Amounts include subservicing related revenues.

(2)Mark-to-market (“MTM”) adjustments include fair value adjustments on MSR, excess spread financing and MSR financing liabilities. The amount of MSR MTM includes the impact of negative modeled cash flows which have been transferred to reserves on advances and other receivables. The negative modeled cash flows relate to advances and other receivables associated with inactive and liquidated loans that are no longer part of the MSR portfolio. The impact of negative modeled cash flows was $8 and $3 for the three months ended June 30, 2021 and 2020 and $20 and $13 for the six months ended June 30, 2021 and 2020, respectively.

(3)Counterparty revenue share represents the excess servicing fee that the Company pays to the counterparties under the excess spread financing arrangements and the payments made associated with MSR financing arrangements.

(4)Amortization is net of excess spread accretion of $70 and $79 during the three months ended June 30, 2021 and 2020, respectively. For the six months ended June 30, 2021 and 2020, amortization is net of excess spread accretion of $146 and $147, respectively.

4. Advances and Other Receivables

Advances and other receivables, net, consists of the following:

Advances and Other Receivables, Net	June 30, 2021		December 31, 2020
Servicing advances, net of $26 and $72 purchase discount, respectively	$	856	$	975
Receivables from agencies, investors and prior servicers, net of $20 and $21 purchase discount, respectively	172		173
Reserves	(191)		(208)
Total advances and other receivables, net	$	837	$	940

The following table sets forth the activities of the servicing reserves for advances and other receivables:

	Three Months Ended June 30,				Six Months Ended June 30,
Reserves for Advances and Other Receivables	2021		2020		2021		2020
Balance - beginning of period	$	206	$	193	$	208	$	168
Provision and other additions(1)	26		29		41		59
Write-offs	(41)		(6)		(58)		(11)
Balance - end of period	$	191	$	216	$	191	$	216

(1)The Company recorded a provision of $8 and $3 through the MTM adjustments in revenues - service related, net, in the unaudited condensed consolidated statements of operations during the three months ended June 30, 2021 and 2020, respectively, and $20 and $13 during the six months ended June 30, 2021 and 2020, respectively, for inactive and liquidated loans that are no longer part of the MSR portfolio. Other additions represent reclassifications of required reserves provisioned within other balance sheet accounts as associated serviced loans become inactive or liquidate.

14

Purchase Discount for Advances and Other Receivables

The following tables set forth the activities of the purchase discounts for advances and other receivables:

	Three Months Ended June 30,
	2021				2020
Purchase Discount for Advances and Other Receivables	Servicing Advances		Receivables from Agencies, Investors and Prior Servicers		Servicing Advances		Receivables from Agencies, Investors and Prior Servicers
Balance - beginning of period	$	63	$	20	$	125	$	21
Utilization of purchase discounts	(37)		—		(8)		—
Balance - end of period	$	26	$	20	$	117	$	21

	Six Months Ended June 30,
	2021				2020
Purchase Discount for Advances and Other Receivables	Servicing Advances		Receivables from Agencies, Investors and Prior Servicers		Servicing Advances		Receivables from Agencies, Investors and Prior Servicers
Balance - beginning of period	$	72	$	21	$	131	$	21
Utilization of purchase discounts	(46)		(1)		(14)		—
Balance - end of period	$	26	$	20	$	117	$	21

Credit Loss for Advances and Other Receivables

During the three and six months ended June 30, 2021, the Company increased the current expected credit loss (“CECL”) reserve by $3 and $4, respectively. During the three and six months ended June 30, 2020, the Company increased the CECL reserve by $8 and $14, respectively. As of June 30, 2021, the total CECL reserve was $42, of which $25 and $17 were recorded in reserves and purchase discount for advances and other receivables, respectively. As of June 30, 2020, the total CECL reserve was $31, of which $14 and $17 were recorded in reserves and purchase discount for advances and other receivables, respectively.

The Company determined that the credit-related risk associated with applicable financial instruments typically increase with the passage of time. The CECL reserve methodology considers these financial instruments collectible to a point in time of 39 months. Any projected remaining balance at the end of the collection period is considered a loss and factors into the overall CECL loss rate required.

5. Mortgage Loans Held for Sale

Mortgage loans held for sale are recorded at fair value as set forth below:

Mortgage Loans Held for Sale	June 30, 2021		December 31, 2020
Mortgage loans held for sale – UPB	$	6,706	$	5,438
Mark-to-market adjustment(1)	255		282
Total mortgage loans held for sale	$	6,961	$	5,720

(1)The mark-to-market adjustment includes net change in unrealized gain/loss, premium on correspondent loans and fees on direct-to-consumer loans. The mark-to-market adjustment is recorded in net gain on mortgage loans held for sale in the unaudited condensed consolidated statements of operations.

15

The following table sets forth the activities of mortgage loans held for sale:

	Six Months Ended June 30,
Mortgage Loans Held for Sale	2021		2020
Balance - beginning of period	$	5,720	$	4,077
Loans sold	(52,128)		(26,149)
Mortgage loans originated and purchased, net of fees	47,560		23,110
Repurchase of loans out of Ginnie Mae securitizations	5,812		2,092
Net change in unrealized (loss) gain on retained loans held for sale	(5)		42
Net transfers of mortgage loans held for sale(1)	2		7
Balance - end of period	$	6,961	$	3,179

(1)Amount reflects transfers to other assets for loans transitioning into REO status and transfers to advances and other receivables, net, for claims made on certain government insurance mortgage loans. Transfers out are net of transfers in upon receipt of proceeds from an REO sale or claim filing.

During the six months ended June 30, 2021 and 2020, the Company received proceeds of $52,923 and $26,606, respectively, on the sale of mortgage loans held for sale, resulting in gains of $795 and $457, respectively.

The total UPB and fair value of mortgage loans held for sale on non-accrual status was as follows:

	June 30, 2021				December 31, 2020
Mortgage Loans Held for Sale	UPB		Fair Value		UPB		Fair Value
Non-accrual(1)	$	1,178	$	1,216	$	64	$	54

(1)Non-accrual UPB includes $1,149 and $48 of UPB related to Ginnie Mae repurchased loans as of June 30, 2021 and December 31, 2020, respectively.

The total UPB of mortgage loans held for sale for which the Company has begun formal foreclosure proceedings was $19 and $20 as of June 30, 2021 and December 31, 2020, respectively.

6. Loans Subject to Repurchase from Ginnie Mae

Forward loans are sold to Ginnie Mae in conjunction with the issuance of mortgage backed securities. The Company, as the issuer of the mortgage backed securities, has the unilateral right to repurchase any individual loan in a Ginnie Mae securitization pool if that loan meets certain criteria, including payments not being received from borrowers for greater than 90 days. Once the Company has the unilateral right to repurchase a delinquent loan, it has effectively regained control over the loan and recognizes these rights to the loan on its condensed consolidated balance sheets and establishes a corresponding repurchase liability regardless of the Company’s intention to repurchase the loan. The Company had loans subject to repurchase from Ginnie Mae of $4,057 and $6,159 as of June 30, 2021 and December 31, 2020, respectively, which are included in both other assets and payables and other liabilities in the condensed consolidated balance sheets. Loans subject to repurchase from Ginnie Mae as of June 30, 2021 and December 31, 2020 include $3,825 and $5,879 loans in forbearance related to the Coronavirus Aid, Relief, and Economic Security Act (“CARES Act”), respectively, whereby no payments have been received from borrowers for greater than 90 days.

7. Goodwill and Intangible Assets

The Company had goodwill of $120 as of June 30, 2021 and December 31, 2020. The Company had intangible assets of $22 and $31 as of June 30, 2021 and December 31, 2020, respectively. Goodwill and intangible assets are included in other assets within the condensed consolidated balance sheets.

16

8. Derivative Financial Instruments

Derivative instruments are used as part of the overall strategy to manage exposure to market risks primarily associated with fluctuations in interest rates related to originations. Derivative instruments utilized by the Company primarily include interest rate lock commitments (“IRLCs”), loan purchase commitments (“LPCs”), forward Mortgage Backed Securities (“MBS”) purchase commitments, Eurodollar and Treasury futures and interest rate swap agreements. The changes in value on the derivative instruments are recorded in earnings as a component of net gain on mortgage loans held for sale on the condensed consolidated statements of operations and condensed consolidated statement of cash flows, except for a portion of forward MBS trades to hedge MSR pipelines and related fair value changes, which is recorded in service related, net on the condensed consolidated statements of operations and in changes in other assets or other liabilities on the condensed consolidated statements of cash flows.

The following tables provide the outstanding notional balances, fair values of outstanding positions and recorded gains/(losses) for the derivative financial instruments:

		June 30, 2021				Six Months Ended June 30, 2021
Derivative Financial Instruments	Expiration Dates	Outstanding Notional		Fair Value		Gains/(Losses)
Assets
Mortgage loans held for sale
Loan sale commitments	2021	$	1,514	$	39	$	(63)
Derivative financial instruments
IRLCs	2021	6,730		204		(210)
LPCs	2021	1,984		10		(28)
Forward MBS trades	2021	9,749		27		(10)
Swap futures	2021	60		—		—
Total derivative financial instruments - assets		$	18,523	$	241	$	(248)
Liabilities
Derivative financial instruments
IRLCs	2021	$	9	$	—	$	—
LPCs	2021	708		1		—
Forward MBS trades	2021	11,747		25		(131)
Total derivative financial instruments - liabilities		$	12,464	$	26	$	(131)

17

		June 30, 2020				Six Months Ended June 30, 2020
Derivative Financial Instruments	Expiration Dates	Outstanding Notional		Fair Value		Gains/(Losses)
Assets
Mortgage loans held for sale
Loan sale commitments	2020	$	1,673	$	81	$	48
Derivative financial instruments
IRLCs	2020	9,227		370		235
LPCs	2020	1,823		18		6
Forward MBS trades	2020	1,239		3		(3)
Eurodollar futures	2020-2021	6		—		—
Total derivative financial instruments - assets		$	12,295	$	391	$	238
Liabilities
Derivative financial instruments
LPCs	2020	$	55	$	—	$	(2)
Forward MBS trades	2020	10,119		50		37
Eurodollar futures	2020-2021	5		—		—
Total derivative financial instruments - liabilities		$	10,179	$	50	$	35

The Company held $2 and $61 in collateral deposits on derivative instruments as of June 30, 2021 and December 31, 2020, respectively, which are recorded in other assets in the Company’s condensed consolidated balance sheets. The Company does not offset fair value amounts recognized for derivative instruments with amounts collected or deposited on derivative instruments in the condensed consolidated balance sheets.

18

9. Indebtedness

Advance and Warehouse Facilities

						June 30, 2021				December 31, 2020
	Interest Rate	Maturity Date	Collateral	Capacity Amount		Outstanding		Collateral Pledged		Outstanding		Collateral Pledged
Advance Facilities
$875 advance facility	CP+2.0% to 6.5%	January 2022	Servicing advance receivables	$	875	$	143	$	168	$	168	$	195
$640 advance facility(1)	LIBOR+3.9%	August 2022	Servicing advance receivables	640		201		264		235		305
$425 advance facility	LIBOR+1.7% to 6.5%	October 2021	Servicing advance receivables	425		167		219		192		246
$100 advance facility	LIBOR+2.5%	January 2022	Servicing advance receivables	100		66		69		74		98
Advance facilities principal amount						577		720		669		844
Warehouse Facilities
$2,500 warehouse facility(2)	LIBOR+1.6% to 1.9%	October 2021	Mortgage loans or MBS	2,500		1,374		1,424		1,003		1,037
$2,000 warehouse facility(3)	LIBOR+1.5% to 1.8%	February 2023	Mortgage loans or MBS	2,000		1,968		2,124		339		392
$1,500 warehouse facility	LIBOR+1.5%	June 2022	Mortgage loans or MBS	1,500		607		584		1,081		1,028
$1,350 warehouse facility(4)(5)	LIBOR+1.8% to 3.9%	September 2022	Mortgage loans or MBS	1,350		1,018		1,065		951		977
$1,200 warehouse facility(5)	LIBOR+1.8% to 3.0%	November 2021	Mortgage loans or MBS	1,200		293		303		586		607
$750 warehouse facility	LIBOR+1.8% to 2.3%	August 2021	Mortgage loans or MBS	750		400		412		477		492
$750 warehouse facility	LIBOR+1.7% to 2.8%	October 2021	Mortgage loans or MBS	750		303		313		562		574
$600 warehouse facility(5)	LIBOR+2.5%	February 2022	Mortgage loans or MBS	600		77		78		—		—
$500 warehouse facility	LIBOR+1.5% to 3.0%	June 2023	Mortgage loans or MBS	500		—		—		—		—
$500 warehouse facility(5)	LIBOR+1.5% to 4.0%	June 2022	Mortgage loans or MBS	500		146		145		—		—
$300 warehouse facility	LIBOR+1.4%	January 2022	Mortgage loans or MBS	300		93		94		163		164
$200 warehouse facility	LIBOR+1.8%	August 2021	Mortgage loans or MBS	200		180		184		131		134
$50 warehouse facility	LIBOR+1.8% to 4.8%	April 2022	Mortgage loans or MBS	50		11		15		37		42
$30 warehouse facility(5)(6)	LIBOR+3.3%	January 2022	Mortgage loans or MBS	30		—		—		—		—
Warehouse facilities principal amount						6,470		6,741		5,330		5,447
MSR Facilities
$260 warehouse facility(1)	LIBOR+3.9%	August 2022	MSR	260		260		865		260		668
$200 warehouse facility	LIBOR+3.5%	August 2021	MSR	200		—		517		—		247
$150 warehouse facility(4)	LIBOR+3.8%	September 2022	MSR	150		—		453		—		228
$50 warehouse facility	LIBOR+3.3%	November 2022	MSR	50		10		72		10		74
MSR facilities principal amount						270		1,907		270		1,217
Advance, warehouse and MSR facilities principal amount						7,317		$	9,368	6,269		$	7,508
Unamortized debt issuance costs						(7)				(11)
Advance and warehouse facilities, net						$	7,310			$	6,258
Pledged Collateral for warehouse and MSR facilities:
Mortgage loans held for sale						$	6,470	$	6,741	$	5,330	$	5,447
MSR						270		1,907		270		1,217

19

(1)Total capacity for this facility is $900, of which $640 is internally allocated for advance financing and $260 is internally allocated for MSR financing; capacity is fully fungible and is not restricted by these allocations.

(2)The capacity amount for this warehouse facility increased from $1,500 to $2,500 in 2021.

(3)The capacity amount for this warehouse facility subsequently increased from $2,000 to $4,000 in July 2021.

(4)Total capacity amount for this facility is $1,500, of which $150 is a sublimit for MSR financing.

(5)The outstanding and collateral pledged amounts excluded balances related to reverse mortgage interests, which are included in liabilities of discontinued operations. Refer to Note 2, Discontinued Operations for further details on liabilities of discontinued operations.

(6)The capacity amount for this warehouse facility decreased from $40 to $30 in 2021.

Unsecured Senior Notes

Unsecured senior notes consist of the following:

Unsecured Senior Notes	June 30, 2021		December 31, 2020
$850 face value, 5.500% interest rate payable semi-annually, due August 2028	$	850	$	850
$650 face value, 5.125% interest rate payable semi-annually, due December 2030	650		650
$600 face value, 6.000% interest rate payable semi-annually, due January 2027	600		600
Unsecured senior notes principal amount	2,100		2,100
Unamortized debt issuance costs	(25)		(26)
Unsecured senior notes, net	$	2,075	$	2,074

The indentures provide that on or before certain fixed dates, the Company may redeem up to 40% 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. 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 six months ended June 30, 2021 and three months ended June 30, 2020. During the six months ended June 30, 2020, the Company repaid $100 in principal of outstanding notes, and redeemed $598 in principal of outstanding notes, resulting in a gain of $1.

As of June 30, 2021, the expected maturities of the Company’s unsecured senior notes based on contractual maturities are as follows:

Year Ending December 31,	Amount
2021 through 2025	$	—
Thereafter	2,100
Total unsecured senior notes principal amount	$	2,100

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, 2021.

10. Securitizations and Financings

Variable Interest Entities

In the normal course of business, the Company enters into various types of on- and off-balance sheet transactions with special purpose entities (“SPEs”) determined to be VIEs, which primarily consist of securitization trusts established for a limited purpose. Generally, these SPEs are formed for the purpose of securitization transactions in which the Company transfers assets to an SPE, which then issues to investors various forms of debt obligations supported by those assets.

The Company has determined that the SPEs created in connection with certain advance facilities trusts should be consolidated as the Company is the primary beneficiary of each of these entities.

20

A summary of the assets and liabilities of the Company’s transactions with VIEs included in the Company’s condensed consolidated balance sheets is presented below:

	June 30, 2021		December 31, 2020
Consolidated Transactions with VIEs	Transfers Accounted for as Secured Borrowings		Transfers Accounted for as Secured Borrowings
Assets
Restricted cash	$	44	$	47
Advances and other receivables, net	387		441
Total assets	$	431	$	488
Liabilities
Advance facilities(1)	$	310	$	358
Payables and other liabilities	—		1
Total liabilities	$	310	$	359

(1)Refer to advance facilities in Note 9, Indebtedness, for additional information.

The following table shows a summary of the outstanding collateral and certificate balances for securitization trusts for which the Company was the transferor, including any retained beneficial interests and MSRs, that were not consolidated by the Company:

Unconsolidated Securitization Trusts	June 30, 2021		December 31, 2020
Total collateral balances - UPB	$	1,230	$	1,326
Total certificate balances	$	1,229	$	1,329

The Company has not retained any variable interests in the unconsolidated securitization trusts that were outstanding as of June 30, 2021 and December 31, 2020. Therefore, it does not have a significant maximum exposure to loss related to these unconsolidated VIEs.

A summary of mortgage loans transferred by the Company to unconsolidated securitization trusts that are 60 days or more past due are presented below:

Principal Amount of Transferred Loans 60 Days or More Past Due	June 30, 2021		December 31, 2020
Unconsolidated securitization trusts	$	141	$	154

11. Earnings Per Share

The Company computes earnings per share using the two-class method, which is an earnings allocation formula that determines earnings per share for common stock and any participating securities according to dividends declared (whether paid or unpaid) and participation rights in undistributed earnings. The Series A Preferred Stock is considered participating securities because it has dividend rights determined on an as-converted basis in the event of Company’s declaration of a dividend or distribution for common shares. On March 26, 2021, the Company repurchased 3,700 thousand shares of its common stock from affiliates of Kohlberg Kravis Roberts & Co. L.P., a related party of the Company, for a total cost of $119 or $32.25 per share.

21

The following table sets forth the computation of basic and diluted net income (loss) per common share (amounts in millions, except per share amounts):

	Three Months Ended June 30,				Six Months Ended June 30,
Computation of Earnings Per Share	2021		2020		2021		2020
Net income (loss) from continuing operations	$	427	$	77	$	986	$	(82)
Less: Net loss attributable to non-controlling interests	—		—		—		(3)
Less: Undistributed earnings from continuing operations attributable to participating stockholders	4		1		9		—
Net income (loss) from continuing operations attributable to Mr. Cooper common stockholders	$	423	$	76	$	977	$	(79)
Net income (loss) from discontinued operations	$	12	$	(4)	$	14	$	(16)
Less: Undistributed earnings from discontinued operations attributable to participating stockholders	—		—		—		—
Net income (loss) from discontinued operations attributable to Mr. Cooper common stockholders	$	12	$	(4)	$	14	$	(16)
Net income (loss)	$	439	$	73	$	1,000	$	(98)
Less: Net loss attributable to non-controlling interests	—		—		—		(3)
Net income (loss) attributable to Mr. Cooper	439		73		1,000		(95)
Less: Undistributed earnings attributable to participating stockholders	4		1		9		—
Net income (loss) attributable to common stockholders	$	435	$	72	$	991	$	(95)
Earnings from continuing operations per common share attributable to Mr. Cooper:
Basic	$	4.91	$	0.82	$	11.13	$	(0.86)
Diluted	$	4.72	$	0.81	$	10.65	$	(0.86)
Earnings from discontinued operations per common share attributable to Mr. Cooper:
Basic	$	0.14	$	(0.04)	$	0.16	$	(0.18)
Diluted	$	0.13	$	(0.04)	$	0.15	$	(0.18)
Earnings per common share attributable to Mr. Cooper:
Basic	$	5.05	$	0.78	$	11.29	$	(1.04)
Diluted	$	4.85	$	0.77	$	10.80	$	(1.04)
Weighted average shares of common stock outstanding (in thousands):
Basic	86,142		91,997		87,791		91,691
Dilutive effect of stock awards(1)	2,664		176		3,123		—
Dilutive effect of participating securities(1)	839		839		839		—
Diluted	89,645		93,012		91,753		91,691

(1)For periods with net loss, the Company excluded potential common shares from the computation of diluted EPS because inclusion would be antidilutive.

22

12. Income Taxes

For the three and six months ended June 30, 2021, the effective tax rate was 24.8% and 23.7%, respectively, which differed from the statutory federal rate of 21% primarily due to state income taxes and nondeductible executive compensation. The effective tax rate decreased during the six months ended June 30, 2021 compared to the same period in 2020, primarily due to quarterly discrete tax items related to the completion of the Title Transaction and excess tax benefit from stock-based compensation.

For the three and six months ended June 30, 2020, the effective tax rate was 33.0% and 24.2%, respectively, which differed from the statutory federal rate of 21% primarily due to state income taxes and nondeductible executive compensation.

13. Fair Value Measurements

Fair value is a market-based measurement, not an entity-specific measurement, and should be determined based on the assumptions that market participants would use in pricing the asset or liability. As a basis for considering market participant assumptions in fair value measurements, a three-tiered fair value hierarchy has been established based on the level of observable inputs used in the measurement of fair value (e.g., Level 1 representing quoted prices for identical assets or liabilities in an active market; Level 2 representing values using observable inputs other than quoted prices included within Level 1; and Level 3 representing estimated values based on significant unobservable inputs).

There have been no significant changes to the valuation techniques and inputs used by the Company in estimating fair values of Level 2 and Level 3 assets and liabilities as disclosed in the Company’s Annual Reports on Form 10-K for the year ended December 31, 2020, with the exception of the following:

Mortgage Servicing Rights – Fair Value (Level 3) – The Company estimates the fair value of its forward MSRs on a recurring basis using a process that combines the use of a discounted cash flow model and analysis of current market data to arrive at an estimate of fair value. The cash flow assumptions and prepayment assumptions used in the model are based on a discounted cash flow model which incorporates prepayment speeds, delinquencies, discount rate, ancillary revenues, float earnings and other assumptions (including costs to service, recapture rates and forbearance rates), with the key assumptions being mortgage prepayment speeds, discount rates, and cost to service. In the second quarter of 2021, the Company refined its estimate of the fair value of forward MSRs by incorporating an estimate of future cash flows from loans that are expected to be recaptured. The estimate of future cash flows related to recapture is consistent with recent pricing observed from various market participants, including the Company’s independent third-party valuation firms As a result of considering the recapture rate, the Company adjusted its discount rate assumption in order to ensure that the fair value of forward MSRs remains consistent with current market participant pricing and is reflective of an exit price. The estimated fair value was also corroborated with valuations provided by independent third parties. The net impact on the overall forward MSRs fair value was not significant during the three and six months ended June 30, 2021. These assumptions are generated and applied based on collateral stratifications including product type, remittance type, geography, delinquency and coupon dispersion. These assumptions require the use of judgment by the Company and can have a significant impact on the fair value of the MSRs. Quarterly, management obtains third-party valuations to assess the reasonableness of the fair value calculations provided by the internal cash flow model. Because of the nature of the valuation inputs, the Company classifies these valuations as Level 3 in the fair value disclosures. See Note 3, Mortgage Servicing Rights and Related Liabilities, for more information.

23

The following tables present the estimated carrying amount and fair value of the Company’s financial instruments and other assets and liabilities measured at fair value on a recurring basis:

	June 30, 2021
			Recurring Fair Value Measurements
Fair Value - Recurring Basis	Total Fair Value		Level 1		Level 2		Level 3
Assets
Mortgage loans held for sale	$	6,961	$	—	$	6,961	$	—
Forward mortgage servicing rights	3,307		—		—		3,307
Derivative financial instruments
IRLCs	204		—		—		204
LPCs	10		—		—		10
Forward MBS trades	27		—		27		—
Liabilities
Derivative financial instruments
LPCs	1		—		—		1
Forward MBS trades	25		—		25		—
Mortgage servicing rights financing	21		—		—		21
Excess spread financing	867		—		—		867

	December 31, 2020
			Recurring Fair Value Measurements
Fair Value - Recurring Basis	Total Fair Value		Level 1		Level 2		Level 3
Assets
Mortgage loans held for sale	$	5,720	$	—	$	5,720	$	—
Forward mortgage servicing rights	2,703		—		—		2,703
Derivative financial instruments
IRLCs	414		—		—		414
LPCs	38		—		—		38
Forward MBS trades	37		—		37		—
Liabilities
Derivative financial instruments
LPCs	1		—		—		1
Forward MBS trades	156		—		156		—
Mortgage servicing rights financing	33		—		—		33
Excess spread financing	934		—		—		934

24

The tables below present a reconciliation for all of the Company’s Level 3 assets and liabilities measured at fair value on a recurring basis:

	Six Months Ended June 30, 2021
	Assets						Liabilities
Fair Value - Level 3 Assets and Liabilities	Forward mortgage servicing rights		IRLCs		LPCs		Excess spread financing		Mortgage servicing rights financing
Balance - beginning of period	$	2,703	$	414	$	38	$	934	$	33
Changes in fair value included in earnings	(190)		(210)		(28)		14		(12)
Other changes	34		—		—		—		—
Purchases, issuances, sales, repayments and settlements
Purchases	218		—		—		—		—
Issuances	554		—		—		—		—
Sales	(12)		—		—		—		—
Settlements and repayments	—		—		—		(81)		—
Balance - end of period	$	3,307	$	204	$	10	$	867	$	21

	Six Months Ended June 30, 2020
	Assets				Liabilities
Fair Value - Level 3 Assets and Liabilities	Forward mortgage servicing rights		IRLCs		Excess spread financing		Mortgage servicing rights financing
Balance - beginning of period	$	3,496	$	135	$	1,311	$	37
Changes in fair value included in earnings	(1,055)		235		(101)		12
Other changes	43		—		—		—
Purchases, issuances, sales, repayments and settlements
Purchases	24		—		—		—
Issuances	249		—		24		—
Settlements and repayments	—		—		(110)		—
Balance - end of period	$	2,757	$	370	$	1,124	$	49

No transfers were made in or out of Level 3 fair value assets and liabilities for the Company during the six months ended June 30, 2021 and 2020.

25

The tables below present the quantitative information for significant unobservable inputs used in the fair value measurement of Level 3 assets and liabilities:

	June 30, 2021									December 31, 2020
	Range						Weighted Average			Range						Weighted Average
Level 3 Inputs	Min			Max						Min			Max
Forward MSR
Discount rate	9.5		%	13.8		%	11.0		%	8.2		%	12.0		%	9.4		%
Prepayment speed	12.4		%	18.8		%	13.6		%	14.2		%	21.3		%	15.4		%
Cost to service per loan(1)	$	63		$	223		$	86		$	66		$	257		$	98
Average life(2)							5.5 years									5.0 years
IRLCs
Value of servicing (basis points per loan)	(0.7)			2.3			1.4			(1.0)			2.2			1.2
Excess spread financing
Discount rate	9.5		%	13.8		%	11.2		%	9.9		%	15.7		%	12.2		%
Prepayment speed	12.6		%	15.3		%	13.5		%	13.9		%	15.0		%	14.4		%
Recapture rate	13.7		%	29.5		%	21.3		%	17.7		%	24.2		%	19.5		%
Average life(2)							5.4 years									5.1 years
Mortgage servicing rights financing
Advance financing and counterparty fee rates	5.3		%	8.2		%	6.9		%	4.6		%	8.5		%	7.5		%
Annual advance recovery rates	18.9		%	22.7		%	20.8		%	18.3		%	22.0		%	19.9		%

(1)Presented in whole dollar amounts.

(2)Average life is included for informational purposes.

The tables below present a summary of the estimated carrying amount and fair value of the Company’s financial instruments not carried at fair value:

	June 30, 2021
	Carrying Amount		Fair Value
Financial Instruments			Level 1		Level 2		Level 3
Financial assets
Cash and cash equivalents	$	716	$	716	$	—	$	—
Restricted cash	113		113		—		—
Advances and other receivables, net	837		—		—		837
Loans subject to repurchase from Ginnie Mae	4,057		—		4,057		—
Financial liabilities
Unsecured senior notes, net	2,075		2,117		—		—
Advance and warehouse facilities, net	7,310		—		7,317		—
Liability for loans subject to repurchase from Ginnie Mae	4,057		—		4,057		—

26

	December 31, 2020
	Carrying Amount		Fair Value
Financial Instruments			Level 1		Level 2		Level 3
Financial assets
Cash and cash equivalents	$	695	$	695	$	—	$	—
Restricted cash	135		135		—		—
Advances and other receivables, net	940		—		—		940
Loans subject to repurchase from Ginnie Mae	6,159		—		6,159		—
Financial liabilities
Unsecured senior notes, net	2,074		2,208		—		—
Advance and warehouse facilities, net	6,258		—		6,269		—
Liability for loans subject to repurchase from Ginnie Mae	6,159		—		6,159		—

14. Capital Requirements

Certain of the Company’s secondary market investors require minimum net worth (“capital”) requirements, as specified in the respective selling and servicing agreements. In addition, these investors may require capital ratios in excess of the stated requirements to approve large servicing transfers. To the extent that these requirements are not met, the Company’s secondary market investors may utilize a range of remedies ranging from sanctions, suspension or ultimately termination of the Company’s selling and servicing agreements, which would prohibit the Company from further originating or securitizing these specific types of mortgage loans or being an approved servicer. The Company’s various capital requirements related to its outstanding selling and servicing agreements are measured based on the Company’s operating subsidiary, Nationstar Mortgage LLC. As of June 30, 2021, the Company was in compliance with its selling and servicing capital requirements.

15. Commitments and Contingencies

Litigation and Regulatory

The Company and its subsidiaries are routinely and currently involved in a significant number of legal proceedings, including, but not limited to, judicial, arbitration, regulatory and governmental proceedings related to matters that arise in connection with the conduct of the Company’s business. The legal proceedings are at varying stages of adjudication, arbitration or investigation and are generally based on alleged violations of consumer protection, securities, employment, contract, tort, common law fraud and other numerous laws, including, without limitation, the Equal Credit Opportunity Act, Fair Debt Collection Practices Act, Fair Credit Reporting Act, Real Estate Settlement Procedures Act, National Housing Act, Homeowners Protection Act, Service Member’s Civil Relief Act, Telephone Consumer Protection Act, Truth in Lending Act, Financial Institutions Reform, Recovery, and Enforcement Act of 1989, unfair, deceptive or abusive acts or practices in violation of the Dodd-Frank Act, the Securities Act of 1933, the Securities Exchange Act of 1934, the Home Mortgage Disclosure Act, Title 11 of the United States Code (aka the “Bankruptcy Code”), False Claims Act and Making Home Affordable loan modification programs.

In addition, along with others in its industry, the Company is subject to repurchase and indemnification claims and may continue to receive claims in the future, regarding alleged breaches of representations and warranties relating to the sale of mortgage loans, the placement of mortgage loans into securitization trusts or the servicing of mortgage loans securitizations. The Company is also subject to legal actions or proceedings related to loss sharing and indemnification provisions of its various acquisitions. Certain of the pending or threatened legal proceedings include claims for substantial compensatory, punitive and/ or statutory damages or claims for an indeterminate amount of damages.

27

The Company operates within highly regulated industries on a federal, state and local level. In the normal and ordinary course of its business, the Company is routinely subject to extensive examinations, investigations, subpoenas, inquiries and reviews by various federal, state and local governmental, regulatory and enforcement agencies, including the Consumer Financial Protection Bureau, the Securities and Exchange Commission, the Department of Justice, the Office of the Special Inspector General for the Troubled Asset Relief Program, the U.S. Department of Housing and Urban Development, various State mortgage banking regulators and various State Attorneys General, related to the Company’s residential loan servicing and origination practices, its financial reporting and other aspects of its businesses. Any pending or potential future investigations, subpoenas, examinations or inquiries may lead to administrative, civil or criminal proceedings or settlements, and possibly result in remedies including fines, penalties, restitution, or alterations in the Company’s business practices, and additional expenses and collateral costs. The Company is cooperating fully in these matters. Responding to these matters requires the Company to devote substantial resources, resulting in higher costs and lower net cash flows. Adverse results in any of these matters could further increase the Company’s operating expenses and reduce its revenues, require it to change business practices and limit its ability to grow and otherwise materially and adversely affect its business, reputation, financial condition and results of operation.

The Company seeks to resolve all legal proceedings and other matters in the manner management believes is in the best interest of the Company and contests liability, allegations of wrongdoing and, where applicable, the amount of damages or scope of any penalties or other relief sought as appropriate in each pending matter. The Company has entered into agreements with a number of entities and regulatory agencies that toll applicable limitations periods with respect to their claims.

On at least a quarterly basis, the Company assesses its liabilities and contingencies in connection with outstanding legal and regulatory and governmental proceedings utilizing the latest information available. Where available information indicates that it is probable, a liability has been incurred, and the Company can reasonably estimate the amount of the loss, an accrued liability is established. The actual costs of resolving these proceedings may be substantially higher or lower than the amounts accrued.

As a legal matter develops, the Company, in conjunction with any outside counsel handling the matter, evaluates on an ongoing basis whether such matter presents a loss contingency that is both probable and estimable. If, at the time of evaluation, the loss contingency is not both probable and reasonably estimable, the matter will continue to be monitored for further developments that would make such loss contingency both probable and reasonably estimable. Once the matter is deemed to be both probable and reasonably estimable, the Company will establish an accrued liability and record a corresponding amount to legal-related expense. The Company will continue to monitor the matter for further developments that could affect the amount of the accrued liability that has been previously established. Legal-related expense for the Company, which includes legal settlements and the fees paid to external legal service providers, of $8 and $21 for three and six months ended June 30, 2021, respectively, and $12 and $27 for three and six months ended June 30, 2020, respectively, was included in general and administrative expenses on the unaudited condensed consolidated statements of operations.

For matters for which a loss is probable or reasonably possible in future periods, whether in excess of a related accrued liability or where there is no accrued liability, the Company may be able to estimate a range of possible loss. In determining whether it is possible to provide an estimate of loss or range of possible loss, the Company reviews and evaluates its material legal matters on an ongoing basis, in conjunction with any outside counsel handling the matter. Management currently believes the aggregate range of reasonably possible loss is $2 to $17 in excess of the accrued liability (if any) related to those matters as of June 30, 2021. This estimated range of possible loss is based upon currently available information and is subject to significant judgment, numerous assumptions and known and unknown uncertainties. The matters underlying the estimated range will change from time to time, and actual results may vary substantially from the current estimate. Those matters for which an estimate is not possible are not included within the estimated range. Therefore, this estimated range of possible loss represents what management believes to be an estimate of possible loss only for certain matters meeting these criteria. It does not represent the Company’s maximum loss exposure and the Company cannot provide assurance that its litigations reserves will not need to be adjusted in the future. Thus, the Company’s exposure and ultimate losses may be higher, possibly significantly so, than the amounts accrued or this aggregate amount.    

28

In the Company’s experience, legal proceedings are inherently unpredictable. One or more of the following factors frequently contribute to this inherent unpredictability: the proceeding is in its early stages; the damages sought are unspecified, unsupported or uncertain; it is unclear whether a case brought as a class action will be allowed to proceed on that basis or, if permitted to proceed as a class action, how the class will be defined; the other party is seeking relief other than or in addition to compensatory damages (including, in the case of regulatory and governmental investigations and inquiries, the possibility of fines and penalties); the matter presents meaningful legal uncertainties, including novel issues of law; the Company has not engaged in meaningful settlement discussions; discovery has not started or is not complete; there are significant facts in dispute; predicting possible outcomes depends on making assumptions about future decisions of courts or governmental or regulatory bodies or the behavior of other parties; and there are a large number of parties named as defendants (including where it is uncertain how damages or liability, if any, will be shared among multiple defendants). Generally, the less progress that has been made in the proceedings or the broader the range of potential results, the harder it is for the Company to estimate losses or ranges of losses that is reasonably possible the Company could incur.

Based on current knowledge, and after consultation with counsel, management believes that the current legal accrued liability within payables and accrued liabilities, is appropriate, and the amount of any incremental liability arising from these matters is not expected to have a material adverse effect on the consolidated financial condition of the Company, although the outcome of such proceedings could be material to the Company’s operating results and cash flows for a particular period depending, on among other things, the level of the Company’s revenues or income for such period. However, in the event of significant developments on existing cases, it is possible that the ultimate resolution, if unfavorable, may be material to the Company’s condensed consolidated financial statements.

Other Loss Contingencies

As part of the Company’s ongoing operations, it acquires servicing rights of forward mortgage loan portfolios that are subject to indemnification based on the representations and warranties of the seller. From time to time, the Company will seek recovery under these representations and warranties for incurred costs. The Company believes all balances sought from sellers recorded in advances and other receivables represent valid claims. However, the Company acknowledges that the claims process can be prolonged due to the required time to perfect claims at the loan level. Because of the required time to perfect or remediate these claims, management relies on the sufficiency of documentation supporting the claim, current negotiations with the counterparty and other evidence to evaluate whether a reserve is required for non-recoverable balances. In the absence of successful negotiations with the seller, all amounts claimed may not be recovered. Balances may be written-off and charged against earnings when management identifies amounts where recoverability from the seller is not likely. As of June 30, 2021, the Company believes all recorded balances for which recovery is sought from the seller are valid claims, and no evidence suggests additional reserves are warranted.

Loan and Other Commitments

The Company enters into IRLCs with prospective borrowers whereby the Company commits to lend a certain loan amount under specific terms and interest rates to the borrower. The Company also enters into LPCs with prospective sellers. These loan commitments are treated as derivatives and are carried at fair value. See Note 8, Derivative Financial Instruments, for more information.

In the second quarter of 2021, the Company entered into an agreement, under which the Company committed a total of $83 over a period of 5 years in exchange for cloud platform service.

16. Segment Information

The Company’s segments are based upon the Company’s organizational structure, which focuses primarily on the services offered. Corporate functional expenses are allocated to individual segments based on the actual cost of services performed, direct resource utilization, estimate of percentage use for shared services or headcount percentage for certain functions. Facility costs are allocated to individual segments based on cost per headcount for specific facilities utilized. Group insurance costs are allocated to individual segments based on global cost per headcount. Non-allocated corporate expenses include the administrative costs of executive management and other corporate functions that are not directly attributable to Company’s operating segments. Revenues generated on inter-segment services performed are valued based on similar services provided to external parties.

29

On June 30, 2021, the Company closed the previously announced sale of title business to Blend Labs. Pursuant to the Stock Purchase Agreement, all cash generated, subject to certain adjustments, between March 13, 2021 and the closing date of the Title Transaction, were held for the benefit of Blend Labs. The title business was reported in the Company’s Xome segment. See Note 1, Nature of Business and Basis of Presentation for further details. The Company recorded a $487 gain in the second quarter of 2021 upon closing of the transaction. The gain was included in other income, net in the condensed statements of operations and reported under the Xome segment.

On July 1, 2021, the Company entered into a definitive agreement for the sale of its reverse servicing portfolio, operating under the Champion Mortgage brand, to Mortgage Assets Management, LLC and its affiliates. The reverse servicing operation was previously reported in the Company’s Servicing segment. The reverse servicing operation is presented as discontinued operations in Company’s condensed consolidated financial statements for all periods presented and as such is not included in the continuing operations of the Servicing segment. Refer to Note 2, Discontinued Operations for further details. As of June 30, 2021 and December 31, 2020, total assets of discontinued operations was $4,935 and $5,347, respectively.

The following tables present financial information by segment:

	Three Months Ended June 30, 2021
Financial Information by Segment	Servicing		Originations		Xome		Corporate/Other		Consolidated
Revenues
Service related, net	$	(92)	$	45	$	39	$	—	$	(8)
Net gain on mortgage loans held for sale	197		385		—		—		582
Total revenues	105		430		39		—		574
Total expenses	121		226		45		33		425
Interest income	25		26		—		—		51
Interest expense	(65)		(23)		—		(31)		(119)
Other income, net	—		—		486		—		486
Total other (expenses) income, net	(40)		3		486		(31)		418
(Loss) Income from continuing operations before income tax (benefit) expense	$	(56)	$	207	$	480	$	(64)	$	567
Depreciation and amortization for property and equipment and intangible assets from continuing operations	$	7	$	6	$	3	$	—	$	16
Total assets	$	15,973	$	4,582	$	573	$	2,180	$	23,308

	Three Months Ended June 30, 2020
Financial Information by Segment	Servicing		Originations		Xome		Corporate/Other		Consolidated
Revenues
Service related, net	$	(126)	$	21	$	106	$	(1)	$	—
Net gain on mortgage loans held for sale	45		573		—		—		618
Total revenues	(81)		594		106		(1)		618
Total expenses	102		167		95		34		398
Interest income	3		19		—		—		22
Interest expense	(67)		(13)		—		(47)		(127)
Other income (expense), net	—		—		1		(1)		—
Total other (expenses) income, net	(64)		6		1		(48)		(105)
(Loss) income from continuing operations before income tax (benefit) expense	$	(247)	$	433	$	12	$	(83)	$	115
Depreciation and amortization for property and equipment and intangible assets from continuing operations	$	4	$	4	$	3	$	6	$	17
Total assets	$	10,736	$	3,592	$	135	$	2,837	$	17,300

30

	Six Months Ended June 30, 2021
Financial information by segment	Servicing		Originations		Xome		Corporate/Other		Consolidated
Revenues
Service related, net	$	349	$	88	$	135	$	—	$	572
Net gain on mortgage loans held for sale	324		937		—		—		1,261
Total revenues	673		1,025		135		—		1,833
Total expenses	231		457		132		59		879
Interest income	48		49		—		—		97
Interest expense	(136)		(48)		—		(61)		(245)
Other income, net	—		—		486		—		486
Total other (expenses) income, net	(88)		1		486		(61)		338
Income (loss) from continuing operations before income tax (benefit) expense	$	354	$	569	$	489	$	(120)	$	1,292
Depreciation and amortization for property and equipment and intangible assets from continuing operations	$	12	$	10	$	6	$	3	$	31
Total assets	$	15,973	$	4,582	$	573	$	2,180	$	23,308

	Six Months Ended June 30, 2020
Financial information by segment	Servicing		Originations		Xome		Corporate/Other		Consolidated
Revenues
Service related, net	$	(320)	$	41	$	212	$	—	$	(67)
Net gain on mortgage loans held for sale	79		870		—		—		949
Total revenues	(241)		911		212		—		882
Total expenses	231		333		191		67		822
Interest income	43		53		—		1		97
Interest expense	(127)		(40)		—		(99)		(266)
Other income (expense), net	—		—		2		(1)		1
Total other (expenses) income, net	(84)		13		2		(99)		(168)
(Loss) income from continuing operations before income tax expense (benefit)	$	(556)	$	591	$	23	$	(166)	$	(108)
Depreciation and amortization for property and equipment and intangible assets from continuing operations	$	8	$	7	$	6	$	15	$	36
Total assets	$	10,736	$	3,592	$	135	$	2,837	$	17,300

31

CAUTIONS REGARDING FORWARD-LOOKING STATEMENTS

This report contains forward-looking statements within the meaning of the U.S. federal securities laws. These forward-looking statements include, without limitation, statements concerning plans, objectives, goals, projections, strategies, core initiatives, future events or performance, and underlying assumptions and other statements, which are not statements of historical facts, including the projected impact of COVID-19 on our business, financial performance and operating results. When used in this discussion, the words “anticipate,” “appears,” “believe,” “foresee,” “intend,” “should,” “expect,” “estimate,” “project,” “plan,” “may,” “could,” “will,” “are likely” and similar expressions are intended to identify forward-looking statements. These statements involve predictions of our future financial condition, performance, plans and strategies and are thus dependent on a number of factors including, without limitation, assumptions and data that may be imprecise or incorrect. Specific factors that may impact performance or other predictions of future actions have, in many but not all cases, been identified in connection with specific forward-looking statements. As with any projection or forecast, forward-looking statements are inherently susceptible to uncertainty and changes in circumstances, and we are under no obligation to, and express disclaim any obligation, to update or alter our forward-looking statements, whether as a result of new information, future events or otherwise.

A number of important factors exist that could cause future results to differ materially from historical performance and these forward-looking statements. Factors that might cause such a difference include, but are not limited to:

•economic, financial and public health disruptions caused by the COVID-19 pandemic and federal, state and local governmental responses to the pandemic;

•our ability to maintain or grow the size of our servicing portfolio;

•our ability to maintain or grow our originations volume and profitability;

•our ability to recapture voluntary prepayments related to our existing servicing portfolio;

•our shift in the mix of our servicing portfolio to subservicing, which is highly concentrated;

•delays in our ability to collect or be reimbursed for servicing advances;

•our ability to obtain sufficient liquidity and capital to operate our business;

•changes in prevailing interest rates;

•our ability to successfully implement our strategic initiatives;

•our ability to realize anticipated benefits of our previous acquisitions;

•our ability to use net operating loss carryforwards and other tax attributes;

•changes in our business relationships or changes in servicing guidelines with Fannie Mae, Freddie Mac and Ginnie Mae;

•Xome’s ability to compete in highly competitive markets;

•our ability to pay down debt;

•our ability to manage legal and regulatory examinations and enforcement investigations and proceedings, compliance requirements and related costs;

•our ability to prevent cyber intrusions and mitigate cyber risks; and

•our ability to maintain our licenses and other regulatory approvals.

All of these factors are difficult to predict, contain uncertainties that may materially affect actual results and may be beyond our control. New factors emerge from time to time, and it is not possible for our management to predict all such factors or to assess the effect of each such new factor on our business. Although we believe that the assumptions underlying the forward-looking statements contained herein are reasonable, any of the assumptions could be inaccurate, and any of these statements included herein may prove to be inaccurate. Given the significant uncertainties inherent in the forward-looking statements included herein, the inclusion of such information should not be regarded as a representation by us or any other person that the results or conditions described in such statements or our objectives and plans will be achieved. Please refer to Risk Factors and Management’s Discussion and Analysis of Financial Condition and Results of Operations, included in this report and in our Annual Report on Form 10-K for the year ended December 31, 2020 for further information on these and other risk factors affecting us.

32

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

Management’s discussion and analysis of financial condition and results of operations (“MD&A”) should be read in conjunction with the accompanying unaudited condensed consolidated financial statements and in conjunction with our Annual Report on Form 10-K for the year ended December 31, 2020. The following discussion contains, in addition to the historical information, forward-looking statements that include risks, assumptions and uncertainties that could cause actual results to differ materially from those anticipated by such statements.

Dollar amounts are reported in millions, except per share data and other key metrics, unless otherwise noted.

We have provided a glossary of terms, which defines certain industry-specific and other terms that are used herein, at the end of the MD&A section.

Overview

We are a leading servicer and originator of residential mortgage loans, and a provider of real estate services through our Xome subsidiary. Our purpose is to keep the dream of homeownership alive, and we do this as a servicer by helping mortgage borrowers manage what is typically their largest financial asset, and by helping our investors maximize the returns from their portfolios of residential mortgages. We have a track record of significant growth, having expanded our servicing portfolio from $10 billion in 2009 to $654 billion as of June 30, 2021. We believe this track record reflects our strong operating capabilities, which include a proprietary low-cost servicing platform, strong loss mitigation skills, a commitment to compliance, a customer-centric culture, a demonstrated ability to retain customers, growing origination capabilities, and significant investment in technology.

Our strategy is to position the Company for sustainable long-term growth, drive improved efficiency and profitability, and generate a return on tangible equity of 12% or higher. Key strategic priorities include the following:

•Strengthen our balance sheet by building capital and liquidity, and managing interest rate and other forms of risk;

•Improve efficiency by driving continuous improvement in unit costs for Servicing and Originations segments, as well as by taking corporate actions to eliminate costs throughout the organization;

•Grow our servicing portfolio to $1 trillion in UPB and grow our customer base by acquiring new customers and retaining existing customers;

•Reinvent the customer experience by acting as the customer’s advocate and by harnessing technology to deliver user-friendly digital solutions;

•Sustain the talent of our people and the culture of our organization; and

•Maintain strong relationships with agencies, investors, regulators, and other counterparties and a strong reputation for compliance and customer service.

Impact of the COVID-19 Pandemic

The COVID-19 pandemic introduces unprecedented uncertainty in the economy, including the risk of a significant employment shock and recessionary conditions, with implications for the health and safety of our employees, borrower delinquency rates, servicing advances, origination volumes, the availability of financing, and our overall profitability and liquidity. We have implemented the provisions of the Coronavirus Aid, Relief, and Economic Security Act (CARES Act), which makes available forbearance plans for up to eighteen months for borrowers under government and government agency mortgage programs, which we have extended to borrowers in our private label mortgage servicing portfolio. As of July 18, 2021, approximately 3.6% of our customers were on a forbearance plan, down from a peak of 7.2% in July 2020. More customers are now exiting forbearance than are entering. We include loans in forbearance related to the CARES Act, whereby no payments have been received from borrowers for greater than 90 days, in loans subject to repurchase rights from Ginnie Mae in other assets and payables and other liabilities on a gross basis. The balance was $3,825 as of June 30, 2021. See liquidity discussion related to the COVID-19 pandemic in Liquidity and Capital Resources section in MD&A.

33

Anticipated Trends

In the second quarter of 2021, our forward MSR and subservicing portfolio continued to grow due to strong execution across all channels - correspondent, direct-to-consumer, subservicing and acquisitions. We expect to see continued portfolio growth in the remainder of 2021. We benefited from early-buyout gains in the first half of 2021 as we helped customers exit forbearance and expect another quarter of strong early-buyout revenues in third quarter of 2021, although down about 30% sequentially, after which revenues will begin to taper off, since we will be nearing the end of the inventory, as loans in forbearance continue to decrease. Based on the current interest rate environment, we expect prepayment speeds and amortization to be roughly flat in the third quarter of 2021. On July 1, 2021, we entered into a definitive agreement for the sale of our reverse servicing portfolio, operating under the Champion Mortgage brand. The sale is expected to close prior to the end of 2021. Refer to Note 2, Discontinued Operations, for further details. The sale of the reverse servicing portfolio allows us to focus on our core business.

Our Originations segment continued to generate strong funded volumes from both the correspondent and direct-to-consumer channels in the second quarter of 2021 despite competitive pricing pressure. We expect the originations profits to be relatively flat quarter-over-quarter in the third quarter of 2021.

Our Xome segment completed the previously announced sale of its title business in the second quarter of 2021 for total consideration of approximately $500 and recognized a one-time gain of $487. In connection with the sale agreement, earnings from the title business subsequent to March 12, 2021 were held for the benefit of the buyer, therefore, the title business did not contribute to the Xome segment’s earnings in the second quarter of 2021. Xome’s revenue from the Exchange division has been, negatively impacted due to the foreclosure moratoriums. The current foreclosure moratoriums are set to expire on July 31, 2021.

Results of Operations

Table 1. Consolidated Operations

	Three Months Ended June 30,
	2021		2020		Change
Revenues - operational(1)	$	754	$	879	$	(125)
Revenues - mark-to-market	(180)		(261)		81
Total revenues	574		618		(44)
Total expenses	425		398		27
Total other income (expenses), net	418		(105)		523
Income from continuing operations before income tax expense	567		115		452
Less: Income tax expense	140		38		102
Net income from continuing operations	427		77		350
Less: Net income attributable to non-controlling interests	—		—		—
Net income from continuing operations attributable to Mr. Cooper	$	427	$	77	$	350

(1)Revenues - operational consists of total revenues, excluding mark-to-market.

During the three months ended June 30, 2021, income from continuing operations before income tax expense increased to $567 from $115 in 2020. The increase was primarily driven by the completion of our previously announced sale of the title business to Blend Labs Inc. on June 30, 2021, which resulted in a $487 gain recorded in total other income (expenses), net. See further discussions in the Segment Results section of the MD&A.

During the three months ended June 30, 2021 and 2020, we had income tax expense from continuing operations. The effective tax rate during the three months ended June 30, 2021 was 24.8% as compared to the effective tax rate of 33.0% in 2020. The change in effective tax rate is primarily attributable to state income taxes and discrete tax items during the three months ended June 30, 2021 as compared to 2020.

34

Table 1.1 Consolidated Operations

	Six Months Ended June 30,
	2021		2020		Change
Revenues - operational(1)	$	1,659	$	1,526	$	133
Revenues - Mark-to-market	174		(644)		818
Total revenues	1,833		882		951
Total expenses	879		822		57
Total other income (expenses), net	338		(168)		506
Income (loss) from continuing operations before income tax expense (benefit)	1,292		(108)		1,400
Less: Income tax expense (benefit)	306		(26)		332
Net income (loss) from continuing operations	986		(82)		1,068
Less: Net income (loss) attributable to non-controlling interests	—		(3)		3
Net income (loss) from continuing operations attributable to Mr. Cooper	$	986	$	(79)	$	1,065

(1)Revenues - operational consists of total revenues, excluding mark-to-market.

During the six months ended June 30, 2021, we recorded income from continuing operations before income tax expense of $1,292 compared to a loss from continuing operations before income tax benefit of $108 for 2020. The change was primarily driven by the completion of our previously announced sale of the title business to Blend Labs Inc. on June 30, 2021, which resulted in a $487 gain recorded in total other income (expenses), net. The change was also attributable to a favorable MTM adjustments in 2021 compared to negative MTM adjustments in 2020. See further discussions in Segment Results section of the MD&A.

During the six months ended June 30, 2021 and 2020, we had an income tax expense and benefit, respectively. The effective tax rate during the six months ended June 30, 2021 was 23.7% as compared to the effective tax rate of 24.2% in 2020. The change in effective tax rate is primarily attributable to state income taxes and nondeductible executive compensation expenses during the six months ended June 30, 2021 as compared to 2020.

Segment Results

Our operations are conducted through three segments: Servicing, Originations, and Xome.

•The Servicing segment performs operational activities on behalf of investors or owners of the underlying mortgages, including collecting and disbursing borrower payments, investor reporting, customer service, modifying loans where appropriate to help borrowers stay current, and when necessary performing collections, foreclosures, and the sale of REO.

•The Originations segment originates residential mortgage loans through our direct-to-consumer channel, which provides refinance options for our existing customers, and through our correspondent channel, which purchases or originates loans from mortgage bankers.

•The Xome segment provides a variety of real estate services to mortgage originators, mortgage and real estate investors, and mortgage servicers, including valuation, title, and field services, and operates an exchange which facilitates the sale of foreclosed properties. On March 12, 2021, we entered into an agreement to sell the title business. The sale was completed on June 30, 2021. For more information, see Note 1, Nature of Business and Basis of Presentation in the Notes to the Condensed Consolidated Financial Statements (unaudited).

Refer to Note 16, Segment Information, in the Notes to the Condensed Consolidated Financial Statements (unaudited) for a summary of segment results.

35

Servicing Segment

The Servicing segment’s strategy is to generate income by growing the portfolio and maximizing the servicing margin. We believe several competitive strengths have been critical to our long-term growth as a servicer, including our low-cost platform, our skill in mitigating losses for investors, our commitment to strong customer service and regulatory compliance, our history of successfully boarding new loans, and the ability to retain existing customers by offering attractive refinance options. We believe that our operational capabilities are reflected in our strong servicer ratings.

Table 2. Servicer Ratings

	Fitch(1)	Moody’s(2)	S&P(3)
Rating date	May 2021	February 2021	December 2020
Residential	RPS2	SQ2-	Above Average
Master Servicer	RMS2+	SQ2	Above Average
Special Servicer	RSS2	SQ2-	Above Average
Subprime Servicer	RPS2	SQ2-	Above Average

(1)Fitch Rating Scale of 1 (Highest Performance) to 5 (Low/No Proficiency)

(2)Moody’s Rating Scale of SQ1 (Strong Ability/Stability) to SQ5 (Weak Ability/Stability)

(3)S&P Rating Scale of Strong to Weak

36

The following tables set forth the results of operations for the Servicing segment:

Table 3. Servicing Segment Results of Operations

	Three Months Ended June 30,
	2021				2020				Change
	Amt			bps(1)	Amt			bps(1)	Amt			bps
Revenues
Operational	$	443		27	$	287		19	$	156		8
Amortization, net of accretion	(158)			(10)	(107)			(7)	(51)			(3)
Mark-to-market	(180)			(11)	(261)			(17)	81			6
Total revenues	105			6	(81)			(5)	186			11
Expenses
Salaries, wages and benefits	70			4	65			4	5			—
General and administrative
Servicing support fees	22			1	24			2	(2)			(1)
Corporate and other general and administrative expenses	30			2	30			2	—			—
Foreclosure and other liquidation related (recoveries) expenses, net	(8)			—	(21)			(1)	13			1
Depreciation and amortization	7			—	4			—	3			—
Total general and administrative expenses	51			3	37			3	14			—
Total expenses	121			7	102			7	19			—
Other income (expense)
Other interest income	25			2	3			—	22			2
Interest income	25			2	3			—	22			2
Advance interest expense	(4)			—	(8)			—	4			—
Other interest expense	(61)			(4)	(59)			(4)	(2)			—
Interest expense	(65)			(4)	(67)			(4)	2			—
Total other expenses, net	(40)			(2)	(64)			(4)	24			2
(Loss) from continuing operations before income tax expense (benefit)	$	(56)		(3)	$	(247)		(16)	$	191		13
Weighted average cost - advance facilities	3.4		%		2.9		%		0.5		%
Weighted average cost - excess spread financing	9.0		%		9.0		%		—		%

(1)Calculated basis points (“bps”) are as follows: Annualized dollar amount/Total average UPB X 10000.

37

Table 3.1 Servicing - Revenues

	Three Months Ended June 30,
	2021			2020			Change
	Amt		bps(1)	Amt		bps(1)	Amt		bps
Forward MSR Operational Revenue
Base servicing fees	$	221	14	$	239	16	$	(18)	(2)
Modification fees(2)	7		—	2		—	5		—
Incentive fees(2)	—		—	5		1	(5)		(1)
Late payment fees(2)	14		1	16		1	(2)		—
Other ancillary revenues(2)	208		13	44		3	164		10
Total forward MSR operational revenue	450		28	306		21	144		7
Base subservicing fees and other subservicing revenue(2)	69		4	69		4	—		—
Total servicing fee revenue	519		32	375		25	144		7
MSR financing liability costs	(6)		(1)	(9)		(1)	3		—
Excess spread costs - principal	(70)		(4)	(79)		(5)	9		1
Total operational revenue	443		27	287		19	156		8
Amortization, Net of Accretion
Forward MSR amortization	(228)		(14)	(186)		(12)	(42)		(2)
Excess spread accretion	70		4	79		5	(9)		(1)
Total amortization, net of accretion	(158)		(10)	(107)		(7)	(51)		(3)
Mark-to-Market Adjustments
MSR fair value MTM	(240)		(15)	(316)		(21)	76		6
Other MTM(3)	31		2	(5)		—	36		2
Excess spread / financing MTM	29		2	60		4	(31)		(2)
Total MTM adjustments	(180)		(11)	(261)		(17)	81		6
Total revenues - Servicing	$	105	6	$	(81)	(5)	$	186	11

(1)Calculated basis points (“bps”) are as follows: Annualized dollar amount/Total average UPB X 10000.

(2)Certain ancillary and other non-base fees related to subservicing operations are separately presented as other subservicing revenues.

(3)The amount of MSR MTM includes the impact of negative modeled cash flows which have been transferred to reserves on advances and other receivables. The negative modeled cash flows relate to advances and other receivables associated with inactive and liquidated loans that are no longer part of the MSR portfolio. The impact of negative modeled cash flows was $8 and $3 during the three months ended June 30, 2021 and 2020, respectively.

Servicing Segment Revenues

The following provides the changes in revenues for the Servicing segment:

Forward - Other ancillary revenue increased during the three months ended June 30, 2021 as compared to 2020 primarily due to the $181 gain on sale associated with loans bought out of GNMA securitization, modified and redelivered following GNMA guidelines.

Forward MSR amortization increased during the three months ended June 30, 2021 as compared to 2020, primarily due to higher prepayments driven by the low interest rate environment.

Negative MTM adjustments decreased during the three months ended June 30, 2021 compared to 2020, primarily due to favorable impact from changes in interest rates.

Subservicing - There were no material changes for Subservicing fees during the three months ended June 30, 2021 as compared to 2020.

Servicing Segment Expenses

Total expenses increased during the three months ended June 30, 2021 as compared to 2020, primarily driven by the change in foreclosure and other liquidation related recoveries, net. Foreclosure and other liquidation related recoveries, net decreased in 2021 compared to 2020, primarily due to a decrease in the release of loss reserves on servicing advances.

38

Servicing Segment Other Income (Expenses), net

Total other expenses, net decreased during the three months ended June 30, 2021 as compared to 2020, primarily due to an increase in other interest income due to higher pandemic related buyouts.

Table 4. Servicing Segment Results of Operations

	Six Months Ended June 30,
	2021				2020				Change
	Amt			bps(1)	Amt			bps(1)	Amt			bps
Revenues
Operational	$	813		26	$	594		20	$	219		6
Amortization, net of accretion	(314)			(10)	(191)			(7)	(123)			(3)
Mark-to-market	174			5	(644)			(21)	818			26
Total revenues	673			21	(241)			(8)	914			29
Expenses
Salaries, wages and benefits	136			4	139			5	(3)			(1)
General and administrative
Servicing support fees	43			1	45			1	(2)			—
Corporate and other general and administrative expenses	60			2	62			2	(2)			—
Foreclosure and other liquidation related (recoveries) expenses, net	(20)			—	(23)			—	3			—
Depreciation and amortization	12			—	8			—	4			—
Total general and administrative expenses	95			3	92			3	3			—
Total expenses	231			7	231			8	—			(1)
Other income (expense)
Other interest income	48			1	43			1	5			—
Interest income	48			1	43			1	5			—
Advance interest expense	(10)			—	(13)			—	3			—
Other interest expense	(126)			(4)	(114)			(4)	(12)			—
Interest expense	(136)			(4)	(127)			(4)	(9)			—
Total other expenses, net	(88)			(3)	(84)			(3)	(4)			—
Income (loss) from continuing operations before income tax expense (benefit)	$	354		11	$	(556)		(19)	$	910		30
Weighted average cost - advance facilities	3.2		%		3.0		%		0.2		%
Weighted average cost - excess spread financing	9.0		%		9.0		%		—		%

(1)Calculated basis points (“bps”) are as follows: Annualized dollar amount/Total average UPB X 10000.

39

Table 4.1 Servicing - Revenues

	Six Months Ended June 30,
	2021			2020			Change
	Amt		bps(1)	Amt		bps(1)	Amt		bps
Forward MSR Operational Revenue
Base servicing fees	$	444	14	$	489	16	$	(45)	(2)
Modification fees(2)	14		—	5		—	9		—
Incentive fees(2)	1		—	9		1	(8)		(1)
Late payment fees(2)	28		1	39		1	(11)		—
Other ancillary revenues(2)	349		11	82		3	267		8
Total forward MSR operational revenue	836		26	624		21	212		5
Base subservicing fees and other subservicing revenue(2)	136		5	134		4	2		1
Total servicing fee revenue	972		31	758		25	214		6
MSR financing liability costs	(13)		—	(17)		—	4		—
Excess spread costs - principal	(146)		(5)	(147)		(5)	1		—
Total operational revenue	813		26	594		20	219		6
Amortization, Net of Accretion
Forward MSR amortization	(460)		(15)	(338)		(12)	(122)		(3)
Excess spread accretion	146		5	147		5	(1)		—
Total amortization, net of accretion	(314)		(10)	(191)		(7)	(123)		(3)
Mark-to-Market Adjustments
MSR fair value MTM	270		8	(717)		(24)	987		32
Other MTM(3)	(94)		(3)	(16)		—	(78)		(3)
Excess spread / financing MTM	(2)		—	89		3	(91)		(3)
Total MTM adjustments	174		5	(644)		(21)	818		26
Total revenues - Servicing	$	673	21	$	(241)	(8)	$	914	29

(1)Calculated basis points (“bps”) are as follows: Annualized dollar amount/Total average UPB X 10000.

(2)Certain ancillary and other non-base fees related to subservicing operations are separately presented as other subservicing revenues.

(3)The amount of MSR MTM includes the impact of negative modeled cash flows which have been transferred to reserves on advances and other receivables. The negative modeled cash flows relate to advances and other receivables associated with inactive and liquidated loans that are no longer part of the MSR portfolio. The impact of negative modeled cash flows was $20 and $13 during the six months ended June 30, 2021 and 2020, respectively.

Servicing Segment Revenues

The following provides the changes in revenues for the Servicing segment:

Forward - Base servicing fee revenue decreased during the six months ended June 30, 2021 as compared to 2020 primarily due a decrease in average outstanding forward UPB and increase in delinquencies. Other ancillary revenues increased primarily due to the $290 gain on sale associated with loans bought out of GNMA securitization, modified and redelivered following GNMA guidelines. Late payment fees decreased due to loan forbearance related to the CARES Act.

Forward MSR amortization increased during the six months ended June 30, 2021 as compared to 2020, primarily due to higher prepayments driven by the low interest rate environment.

MTM adjustments increased during the six months ended June 30, 2021 compared to 2020, primarily due to favorable impact from changes in interest rates. Other MTM decreased during the six months ended June 30, 2021 compared to 2020 primarily due to losses related to loan-related derivatives.

Subservicing - There were no material changes for Subservicing fees during the six months ended June 30, 2021 as compared to 2020.

Servicing Segment Expenses

There were no material changes for total expenses during the six months ended June 30, 2021 as compared to 2020.

40

Servicing Segment Other Income (Expenses), net

There were no material changes for Total other expenses, net during the six months ended June 30, 2021 as compared to 2020.

Table 5. Servicing Portfolio - Unpaid Principal Balances

					Three Months Ended June 30,				Six Months Ended June 30,
					2021		2020		2021		2020
Average UPB
Forward MSRs					$	290,946	$	289,707	$	286,233	$	296,446
Subservicing and other(1)					356,354		301,680		345,792		306,121
Total average UPB					$	647,300	$	591,387	$	632,025	$	602,567
	June 30, 2021						June 30, 2020
	UPB		Carrying Amount		bps		UPB		Carrying Amount		bps
Forward MSRs
Agency	$	248,799	$	2,955	119		$	228,680	$	2,308	101
Non-agency	38,656		352		91		49,295		449		91
Total forward MSRs	287,455		3,307		115		277,975		2,757		99
Subservicing and other(1)
Agency	352,643		N/A				286,710		N/A
Non-agency	14,219		N/A				10,082		N/A
Total subservicing and other	366,862		N/A				296,792		N/A
Total ending balance	$	654,317	$	3,307			$	574,767	$	2,757
Forward MSRs UPB Encumbrance									June 30, 2021		June 30, 2020
Forward MSRs - unencumbered									$	143,420	$	83,683
Forward MSRs - encumbered(2)									144,035		194,292
Total Forward MSRs UPB									$	287,455	$	277,975

(1)Subservicing and other includes (i) loans we service for others, (ii) residential mortgage loans originated but have yet to be sold, and (iii) agency REO balances for which we own the mortgage servicing rights.

(2)The encumbered forward MSRs consist of residential mortgage loans included within our excess spread financing transactions and MSR financing liability.

41

The following tables provide a rollforward of our forward MSR and subservicing and other portfolio UPB:

Table 6. Forward Servicing and Subservicing and Other Portfolio UPB Rollforward

	Three Months Ended June 30, 2021						Three Months Ended June 30, 2020
	Forward MSR		Subservicing and Other		Total		Forward MSR		Subservicing and Other		Total
Balance - beginning of period	$	276,028	$	352,481	$	628,509	$	290,634	$	316,933	$	607,567
Additions:
Originations	20,907		1,374		22,281		9,478		1,024		10,502
Acquisitions / Increase in subservicing(1)	12,414		49,642		62,056		(1,634)		16,908		15,274
Deductions:
Dispositions	(18)		(4,815)		(4,833)		(31)		(9,751)		(9,782)
Principal reductions and other	(2,688)		(3,627)		(6,315)		(2,678)		(2,168)		(4,846)
Voluntary reductions(2)	(18,989)		(28,162)		(47,151)		(17,435)		(26,113)		(43,548)
Involuntary reductions(3)	(123)		(31)		(154)		(251)		(41)		(292)
Net changes in loans serviced by others	(76)		—		(76)		(108)		—		(108)
Balance - end of period	$	287,455	$	366,862	$	654,317	$	277,975	$	296,792	$	574,767

(1)Includes transfers to/from Subservicing and Other.

(2)Voluntary reductions are related to loan payoffs by customers.

(3)Involuntary reductions refer to loan chargeoffs.

During the three months ended June 30, 2021, our forward MSR UPB increased primarily due to increased originations volumes and acquisition, partially offset by increased voluntary reductions in the low interest rate environment. During the three months ended June 30, 2021, our subservicing and other portfolio UPB increased primarily due to portfolio growth from our subservicing clients, partially offset by increased voluntary reductions in the low interest rate environment.

Table 6.1 Forward Servicing and Subservicing and Other Portfolio UPB Rollforward

	Six Months Ended June 30, 2021						Six Months Ended June 30, 2020
	Forward MSR		Subservicing and Other		Total		Forward MSR		Subservicing and Other		Total
Balance - beginning of period	$	271,189	$	336,513	$	607,702	$	296,782	$	323,983	$	620,765
Additions:
Originations	44,530		2,878		47,408		21,113		1,686		22,799
Acquisitions / Increase in subservicing(1)	17,061		102,960		120,021		(2,307)		40,260		37,953
Deductions:
Dispositions	(68)		(5,945)		(6,013)		(71)		(20,110)		(20,181)
Principal reductions and other	(5,390)		(6,858)		(12,248)		(5,426)		(5,133)		(10,559)
Voluntary reductions(2)	(39,463)		(62,617)		(102,080)		(31,299)		(43,785)		(75,084)
Involuntary reductions(3)	(256)		(69)		(325)		(638)		(109)		(747)
Net changes in loans serviced by others	(148)		—		(148)		(179)		—		(179)
Balance - end of period	$	287,455	$	366,862	$	654,317	$	277,975	$	296,792	$	574,767

(1)Includes transfers to/from Subservicing and Other.

(2)Voluntary reductions are related to loan payoffs by customers.

(3)Involuntary reductions refer to loan chargeoffs.

42

During the six months ended June 30, 2021, our forward MSR UPB increased primarily due to increased originations volumes and acquisitions, partially offset by increased voluntary reductions in the low interest rate environment. During the six months ended June 30, 2021, our subservicing and other portfolio UPB increased primarily driven by increased acquisitions, partially offset by increased voluntary reductions in the low interest rate environment.

The table below summarizes the overall performance of the forward servicing and subservicing portfolio:

Table 7. Key Performance Metrics - Forward Servicing and Subservicing Portfolio(1)

					June 30, 2021			June 30, 2020
Loan count(2)					3,461,557			3,360,826
Average loan amount(3)					$	189,026		$	171,022
Average coupon - agency(4)					3.8		%	4.4		%
Average coupon - non-agency(4)					4.4		%	4.7		%
60+ delinquent (% of loans)(5)					4.5		%	4.7		%
90+ delinquent (% of loans)(5)					4.2		%	2.2		%
120+ delinquent (% of loans)(5)					4.0		%	1.6		%
	Three Months Ended June 30,				Six Months Ended June 30,
	2021		2020		2021			2020
Total prepayment speed (12-month constant prepayment rate)	26.0	%	26.0	%	28.4		%	22.6		%

(1)Characteristics and key performance metrics of our servicing portfolio exclude UPB and loan counts acquired but not yet boarded and currently serviced by others.

(2)As of June 30, 2021 and 2020, loan count includes 123,194 and 195,423 loans in forbearance related to the CARES Act, respectively.

(3)Average loan amount is presented in whole dollar amounts.

(4)The weighted average coupon amounts presented in the table above are only reflective of our owned forward MSR portfolio that is reported at fair value.

(5)Loan delinquency is based on the current contractual due date of the loan. In the case of a completed loan modification, delinquency is based on the modified due date of the loan. Loan delinquency includes loans in forbearance.

Delinquency is an assumption in determining the mark-to-market adjustment and is a key indicator of MSR portfolio performance. Delinquent loans contribute to lower MSR values due to higher costs to service and increased carrying costs of advances. Due to the COVID-19 pandemic and the implementation of the CARES Act, loans greater than 90 days and 120 days delinquent have increased as of June 30, 2021 compared to 2020.

Table 8. Forward Loan Modifications and Workout Units

	Three Months Ended June 30,			Six Months Ended June 30,
	2021	2020	Change	2021	2020	Change
Modifications(1)	17,545	4,329	13,216	33,180	9,044	24,136
Workouts(2)	18,036	2,253	15,783	36,377	5,366	31,011
Total modifications and workout units	35,581	6,582	28,999	69,557	14,410	55,147

(1)Modifications adjust the terms of the loan.

(2)Workouts are other loss mitigation options which do not adjust the terms of the loan. Workouts exclude loans which did not miss a contractual payment during forbearance related to the CARES Act.

Total modifications and workouts during the three and six months ended June 30, 2021 increased compared to 2020 primarily due to an increase in modifications and workouts related to loans impacted by the COVID-19 pandemic which successfully exited their forbearance plans.

43

Servicing Portfolio and Related Liabilities

The following table sets forth the activities of forward MSRs:

Table 9. Forward MSRs - Fair Value Rollforward

	Three Months Ended June 30,				Six Months Ended June 30,
	2021		2020		2021		2020
Fair value - beginning of period	$	3,354	$	3,109	$	2,703	$	3,496
Additions:
Servicing retained from mortgage loans sold	266		126		554		249
Purchases of servicing rights	151		—		218		24
Dispositions:
Sales and cancellation of servicing assets	(10)		—		(12)		—
Changes in fair value:
Due to changes in valuation inputs or assumptions used in the valuation model:
Agency	(215)		(284)		146		(635)
Non-agency	(25)		(32)		124		(82)
Changes in valuation due to amortization:
Scheduled principal payments	(25)		(23)		(49)		(46)
Prepayments
Voluntary prepayments
Agency	(192)		(152)		(389)		(268)
Non-agency	(10)		(9)		(20)		(18)
Involuntary prepayments
Agency	(1)		(2)		(2)		(6)
Non-agency	—		—		—		—
Other changes:
Disposition of negative MSRs and other(1)	14		24		34		43
Fair value - end of period	$	3,307	$	2,757	$	3,307	$	2,757

(1)Amounts primarily represent negative fair values reclassified from the MSR asset to reserves as underlying loans are removed from the MSR and other reclassification adjustments.

See Note 3, Mortgage Servicing Rights and Related Liabilities and Note 13, Fair Value Measurements, in the Notes to the Condensed Consolidated Financial Statements (unaudited), for additional information regarding the range of assumptions and sensitivities related to the fair value measurement of forward MSRs as of June 30, 2021 and December 31, 2020.

Excess Spread Financing

As further disclosed in Note 3, Mortgage Servicing Rights and Related Liabilities, in the Notes to the Condensed Consolidated Financial Statements (unaudited), we have entered into sale and assignment agreements treated as financing arrangements whereby the acquirer has the right to receive a specified percentage of the excess cash flow generated from an MSR.

The servicing fees associated with an MSR can be segregated into (i) a base servicing fee and (ii) an excess servicing fee. The base servicing fee, along with ancillary income and other revenues, is designed to cover costs incurred to service the specified pool plus a reasonable margin. The remaining servicing fee is considered excess. We sell a percentage of the excess fee as a method for efficiently financing acquired MSRs and the purchase of loans. We do not currently utilize these transactions as a primary source of financing due to the availability of lower cost sources of funding.

44

Excess spread financings are recorded at fair value, and the impact of fair value adjustments varies primarily due to (i) prepayment speeds (ii) recapture rates and (iii) discount rates. See Note 3, Mortgage Servicing Rights and Related Liabilities and Note 13, Fair Value Measurements, in the Notes to the Condensed Consolidated Financial Statements (unaudited), for additional information regarding the range of assumptions and sensitivities related to the measurement of the excess spread financing liability as of June 30, 2021 and December 31, 2020.

The following table sets forth the change in the excess spread financing:

Table 10. Excess Spread Financing - Rollforward

	Three Months Ended June 30,				Six Months Ended June 30,
	2021		2020		2021		2020
Fair value - beginning of period	$	934	$	1,242	$	934	$	1,311
Additions:
New financings	—		—		—		24
Deductions:
Settlements and repayments	(40)		(52)		(81)		(110)
Changes in fair value:
Agency	(29)		(60)		9		(103)
Non-agency	2		(6)		5		2
Fair value - end of period	$	867	$	1,124	$	867	$	1,124

Originations Segment

The strategy of our Originations segment is to originate or acquire new loans for the servicing portfolio at a more attractive cost than purchasing MSRs in bulk transactions and to retain our existing customers by providing them with attractive refinance options. The Originations segment plays a strategically important role because its profitability is typically counter cyclical to that of the Servicing segment. Furthermore, by originating or acquiring loans at a more attractive cost than would be the case in bulk MSR acquisitions, the Originations segment improves our overall profitability and cash flow. Growing the Originations segment has been a strategic focus for us for several years.

The Originations segment includes two channels:

•Our direct-to-consumer (“DTC”) lending channel relies on our call centers, website and mobile apps, specially trained teams of licensed mortgage originators, predictive analytics and modeling utilizing proprietary data from our servicing portfolio to reach our existing customers who may benefit from a new mortgage. Depending on borrower eligibility, we will refinance existing loans into conventional, government or non-agency products. Through lead campaigns and direct marketing, the direct-to-consumer channel seeks to convert leads into loans in a cost-efficient manner.

•Our correspondent lending channel acquires newly originated residential mortgage loans that have been underwritten to investor guidelines. This includes both conventional and government-insured loans that qualify for inclusion in securitizations that are guaranteed by the GSEs. Our correspondent lending channel enables us to replenish servicing portfolio run-off typically at a better rate of return than traditional bulk or flow acquisitions.

45

The following tables set forth the results of operations for the Originations segment:

Table 11. Originations Segment Results of Operations

	Three Months Ended June 30,
	2021			2020			Change
Revenues
Service related, net	$	45		$	21		$	24
Net gain on mortgage loans held for sale
Net gain on loans originated and sold	143			453			(310)
Capitalized servicing rights	246			123			123
Provision for repurchase reserves, net of release	(4)			(3)			(1)
Total net gain on mortgage loans held for sale	385			573			(188)
Total revenues	430			594			(164)
Expenses
Salaries, wages and benefits	164			120			44
General and administrative
Loan origination expenses	26			16			10
Corporate and other general administrative expenses	17			16			1
Marketing and professional service fees	13			11			2
Depreciation and amortization	6			4			2
Total general and administrative	62			47			15
Total expenses	226			167			59
Other income (expenses)
Interest income	26			19			7
Interest expense	(23)			(13)			(10)
Total other income, net	3			6			(3)
Income from continuing operations before income tax expense	$	207		$	433		$	(226)
Weighted average note rate - mortgage loans held for sale	3.1		%	3.3		%	(0.2)		%
Weighted average cost of funds (excluding facility fees)	2.1		%	2.6		%	(0.5)		%

46

Table 11.1 Originations - Key Metrics

	Three Months Ended June 30,
	2021			2020			Change
Key Metrics
Consumer direct lock pull through adjusted volume(1)	$	8,634		$	9,595		$	(961)
Other locked pull through adjusted volume(1)	9,724			2,799			6,925
Total pull through adjusted lock volume	$	18,358		$	12,394		$	5,964
Funded volume	$	22,227		$	10,729		$	11,498
Volume of loans sold	$	24,950		$	11,172		$	13,778
Recapture percentage(2)	31.9		%	26.1		%	5.8		%
Refinance recapture percentage(3)	41.5		%	30.9		%	10.6		%
Purchase as a percentage of funded volume	23.9		%	10.3		%	13.6		%
Value of capitalized servicing on retained settlements	128		bps	133		bps	(5)		bps
Originations Margin
Revenue	$	430		$	594		$	(164)
Pull through adjusted lock volume	$	18,358		$	12,394		$	5,964
Revenue as a percentage of pull through adjusted lock volume(4)	2.34		%	4.79		%	(2.45)		%
Expenses(5)	$	223		$	161		$	62
Funded volume	$	22,227		$	10,729		$	11,498
Expenses as a percentage of funded volume(6)	1.00		%	1.50		%	(0.50)		%
Originations Margin	1.34		%	3.29		%	(1.95)		%

(1)Pull through adjusted volume represents the expected funding from locks taken during the period.

(2)Recapture percentage includes new loan originations for both purchase and refinance transactions where borrower retention and/or property retention occurs as a result of a loan payoff from our servicing portfolio. Excludes loans we are contractually unable to solicit.

(3)Refinance recapture percentage includes new loan originations for refinance transactions where borrower retention and property retention occurs as a result of a loan payoff from our servicing portfolio. Excludes loans we are contractually unable to solicit.

(4)Calculated on pull-through adjusted lock volume as revenue is recognized at the time of loan lock.

(5)Expenses include total expenses and total other income (expenses), net.

(6)Calculated on funded volume as expenses are incurred based on closing of the loan.

Income from continuing operations before income tax expense decreased for the three months ended June 30, 2021 as compared to 2020 primarily due to a decrease in total revenues driven by a decrease in net gain on loans originated and sold in connection with unfavorable mark-to-market loans-related derivatives/hedges revenues. The Originations Margin for the three months ended June 30, 2021 decreased as compared to 2020 primarily due to a lower revenue ratio as a percentage of pull through adjusted lock volume driven by lower margins from a shift in channel mix from DTC to higher correspondent channel mix. Correspondent channel mix for the three months ended June 30, 2021 was 53% compared to 23% in 2020.

47

Originations Segment Revenues

Total revenues decreased during the three months ended June 30, 2021 compared to 2020 primarily driven by a decrease in net gain on loans originated and sold as a result of unfavorable mark-to-market loans-related derivatives/hedges revenue, partially offset by higher origination volumes in a lower interest rate environment, primarily from the correspondent channel. Total revenue decreased $164 or 28% period over period despite a total pull through adjusted lock volume increase of 48% during the same period. There were no material changes for repurchase reserves.

Originations Segment Expenses

Total expenses during the three months ended June 30, 2021 increased when compared to 2020 primarily due to growth in origination volumes. The origination volume growth contributed to the increase in salaries, wages and benefits, due to increased compensation and headcount related costs. Despite the increase in expenses, our expenses as a percentage of funded volume decreased during the three months ended June 30, 2021 when compared to 2020, demonstrating an improvement in cost efficiencies and scale.

Originations Segment Other Income (Expenses), Net

Interest income relates primarily to mortgage loans held for sale. Interest expense is associated with the warehouse facilities utilized to finance newly originated loans.

Interest income during the three months ended June 30, 2021 increased when compared to 2020 primarily driven by higher originations volume offset by an increase in interest expense driven by originations volume growth.

Table 12. Originations Segment Results of Operations

	Six Months Ended June 30,
	2021			2020			Change
Revenues
Service related, net	$	88		$	41		$	47
Net gain on mortgage loans held for sale
Net gain on loans originated and sold	429			636			(207)
Capitalized servicing rights	520			242			278
Provision for repurchase reserves, net of release	(12)			(8)			(4)
Total net gain on mortgage loans held for sale	937			870			67
Total revenues	1,025			911			114
Expenses
Salaries, wages and benefits	331			237			94
General and administrative
Loan origination expenses	53			32			21
Corporate and other general administrative expenses	37			34			3
Marketing and professional service fees	26			23			3
Depreciation and amortization	10			7			3
Total general and administrative	126			96			30
Total expenses	457			333			124
Other income (expenses)
Interest income	49			53			(4)
Interest expense	(48)			(40)			(8)
Total other income, net	1			13			(12)
Income from continuing operations before income tax expense	$	569		$	591		$	(22)
Weighted average note rate - mortgage loans held for sale	3.0		%	3.5		%	(0.5)		%
Weighted average cost of funds (excluding facility fees)	2.2		%	2.9		%	(0.7)		%

48

Table 12.1 Originations - Key Metrics

	Six Months Ended June 30,
	2021			2020			Change
Key Metrics
Consumer direct lock pull through adjusted volume(1)	$	18,956		$	17,018		$	1,938
Other locked pull through adjusted volume(1)	22,669			8,053			14,616
Total pull through adjusted lock volume	$	41,625		$	25,071		$	16,554
Funded volume	$	47,360		$	23,088		$	24,272
Volume of loans sold	$	51,261		$	24,427		$	26,834
Recapture percentage(2)	31.5		%	27.5		%	4.0		%
Refinance recapture percentage(3)	38.6		%	33.4		%	5.2		%
Purchase as a percentage of funded volume	17.7		%	18.7		%	(1.0)		%
Value of capitalized servicing on retained settlements	128		bps	135		bps	(7)		bps
Originations Margin
Revenue	$	1,025		$	911		$	114
Pull through adjusted lock volume	$	41,625		$	25,071		$	16,554
Revenue as a percentage of pull through adjusted lock volume(4)	2.46		%	3.63		%	(1.17)		%
Expenses(5)	$	456		$	320		$	136
Funded volume	$	47,360		$	23,088		$	24,272
Expenses as a percentage of funded volume(6)	0.96		%	1.39		%	(0.43)		%
Originations Margin	1.50		%	2.24		%	(0.74)		%

(1)Pull through adjusted volume represents the expected funding from locks taken during the period.

(2)Recapture percentage includes new loan originations for both purchase and refinance transactions where borrower retention and/or property retention occurs as a result of a loan payoff from our servicing portfolio. Excludes loans we are contractually unable to solicit.

(3)Refinance recapture percentage includes new loan originations for refinance transactions where borrower retention and property retention occurs as a result of a loan payoff from our servicing portfolio. Excludes loans we are contractually unable to solicit.

(4)Calculated on pull-through adjusted lock volume as revenue is recognized at the time of loan lock.

(5)Expenses include total expenses and total other income (expenses), net.

(6)Calculated on funded volume as expenses are incurred based on closing of the loan.

Income from continuing operations before income tax expense decreased for the six months ended June 30, 2021 as compared to 2020 primarily due to an increase in total expenses driven by higher salaries, wages and benefits and loan originations expenses as a result of higher origination volume due to the low interest rate environment and funding out the pipeline. The Originations Margin for 2021 decreased as compared to 2020 primarily due to a lower revenue ratio as a percentage of pull through adjusted lock volume driven by lower margins from a shift in channel mix from DTC to higher correspondent channel mix.

49

Originations Segment Revenues

Total revenues increased during the six months ended June 30, 2021 compared to 2020 primarily driven by higher origination volumes in a lower interest rate environment, primarily from the correspondent channel, partially offset by a decrease in net gain on loans originated and sold in connection with unfavorable mark-to-market loans-related derivatives revenue. Total revenue increased $114 or 13% period over period as total pull through adjusted lock volume increased 66% during the same period. There were no material changes for repurchase reserves.

Originations Segment Expenses

Total expenses during the six months ended June 30, 2021 increased when compared to 2020 primarily due to growth in origination volumes. The origination volume growth contributed to the increase in salaries, wages and benefits, due to increased compensation and headcount related costs. Despite the increase in expenses, our expenses as a percentage of funded volume decreased during the six months ended June 30, 2021 when compared to 2020, demonstrating an improvement in cost efficiencies and scale.

Originations Segment Other Income (Expenses), Net

Interest income during the six months ended June 30, 2021 decreased when compared to 2020 primarily driven by a lower average note rate on mortgage loans held for sale partially offset by growth in originations volume. Interest expense increased primarily due to the growth of originations volume.

Xome Segment

Xome is a real estate services company that provides services for mortgage originators and servicers, including Mr. Cooper, as well as mortgage and real estate investors. Xome generates fee income that complements our servicing and origination businesses without requiring a significant amount of capital or exposing us to the same level of interest rate or credit risk.

Xome historically has been organized into three divisions: Exchange, Solutions, and Title. On March 12, 2021, we entered into a Stock Purchase Agreement with Blend Labs, in which Blend Labs will acquire our title business. Pursuant to the Stock Purchase Agreement, all cash generated, subject to certain adjustments, between March 13, 2021 and the closing date of the transaction, were held for the benefit of Blend Labs. The transaction was completed on June 30, 2021. Consequently, we have removed any discussion of the Title division from our results of operations from March 12, 2021 forward. Our other Xome divisions are:

•The Exchange division consists of the Xome.com auction platform which utilizes proprietary technology designed to provide efficient execution for sales of foreclosed properties.

•The Solutions division consists of field services, collateral valuation, recapture and data analytic solutions to improve purchase, refinance and default transactions.

50

The following tables set forth the results of operations for the Xome segment:

Table 13. Xome Segment Results of Operations

	Three Months Ended June 30,
	2021			2020			Change
Xome - Operations
Revenues:
Exchange	$	5		$	9		$	(4)
Title	—			52			(52)
Solutions	34			45			(11)
Total revenues	39			106			(67)
Expenses:
Salaries, wages and benefits	17			33			(16)
General and administrative
Operational expenses	25			59			(34)
Depreciation and amortization	3			3			—
Total general and administrative	28			62			(34)
Total expenses	45			95			(50)
Total other income, net	486			1			485
Income from continuing operations before income tax expense	$	480		$	12		$	468
Pre-tax margin	1230.8		%	11.3		%	1219.5		%
Key Metrics
Exchange properties sold	659			1,191			(532)
Average Exchange properties under management	14,196			17,438			(3,242)
Title completed orders	—			245,252			(245,252)
Solutions completed orders	475,507			521,169			(45,662)
Percentage of revenue earned from third-party customers	35.8		%	53.4		%	(17.6)		%

Income from continuing operations before income tax expense increased during the three months ended June 30, 2021 as compared to 2020 primarily due to an increase in total other income, net, partially offset by a decrease in total revenues. The increase in total other income, net, is a result of the gain of $487 associated with the sale of the title business to Blend Labs, Inc. We initially entered into a Stock Purchase Agreement with Blend Labs on March 12, 2021 to sell our title business, which was subsequently completed on June 30, 2021. Under the Stock Purchase Agreement, all cash generated, subject to certain adjustments, between March 13, 2021 and the closing date of the Title Transaction would be held to the benefit of Blend Labs. As result, the title business did not contribute to the Xome segment’s revenues in the second quarter of 2021. For more information, see Note 1, Nature of Business and Basis of Presentation, in the Notes to the Condensed Consolidated Financial Statements (unaudited).

51

Table 13.1 Xome Segment Results of Operations

	Six Months Ended June 30,
	2021			2020			Change
Xome - Operations
Revenues:
Exchange	$	10		$	25		$	(15)
Title	56			95			(39)
Solutions	69			92			(23)
Total revenues	135			212			(77)
Expenses:
Salaries, wages and benefits	46			68			(22)
General and administrative
Operational expenses	80			117			(37)
Depreciation and amortization	6			6			—
Total general and administrative	86			123			(37)
Total expenses	132			191			(59)
Total other income, net	486			2			484
Income from continuing operations before income tax expense	$	489		$	23		$	466
Pre-tax margin	362.2		%	10.8		%	351.4		%
Key Metrics
Exchange properties sold	1,369			3,305			(1,936)
Average Exchange properties under management	14,203			17,608			(3,405)
Title completed orders	188,356			475,900			(287,544)
Solutions completed orders	1,022,059			951,895			70,164
Percentage of revenue earned from third-party customers	44.6		%	54.0		%	(9.4)		%

Income from continuing operations before income tax expense increased during the six months ended June 30, 2021 as compared to 2020 primarily due to an increase in total other income, net, partially offset by a decrease in total revenues. The increase in total other income, net, is a result of the gain associated with the sale of the title business to Blend Labs, Inc. The decrease in total revenues was driven by the Stock Purchase Agreement which stipulated that all cash generated, subject to certain adjustments, between March 13, 2021 and the closing date of the Title Transaction would be held to the benefit of Blend Labs.

Corporate/Other

Corporate/Other represents unallocated overhead expenses, including the costs of executive management and other corporate functions that are not directly attributable to our operating segments, and interest expense on our unsecured senior notes.

The following table set forth the selected financial results for Corporate/Other:

Table 14. Corporate/Other Selected Financial Results

	Three Months Ended June 30,						Six Months Ended June 30,
	2021		2020		Change		2021		2020		Change
Corporate/Other - Operations
Total expenses	$	33	$	34	$	(1)	$	59	$	67	$	(8)
Interest expense	31		47		(16)		61		99		(38)

52

There were no material changes for total expenses during the three months ended June 30, 2021 as compared to 2020. Total expenses decreased in the six months ended June 30, 2021 as compared to 2020 primarily due to a decrease in general and administrative expense. General and administrative expense was higher in 2020 due to an $8 loss on impairment of assets in connection with an ancillary business and higher legal reserves.

Interest expense decreased in the three and six months ended June 30, 2021 as compared to 2020 primarily due to a decrease in interest expense on unsecured senior notes as a result of repayment and redemption in 2020 of the unsecured senior notes due 2021, 2022, 2023 and 2026 and the issuance in 2020 of the unsecured senior notes due 2027, 2028 and 2030 at lower interest rates.

53

Liquidity and Capital Resources

We measure liquidity by unrestricted cash and availability of borrowings on our MSR facilities and other facilities. We held cash and cash equivalents on hand of $716 as of June 30, 2021 compared to $695 as of December 31, 2020. We have sufficient borrowing capacity to support our operations. As of June 30, 2021, total available borrowing capacity was $14,930, of which $7,088 was unused.

The economic impact of the COVID-19 pandemic could continue to result in an increase in servicing advances and liquidity demands related to the utilization of forbearance programs offered by the CARES Act. Forbearance rates have declined since the peak during the second of quarter of 2020. As of June 30, 2021, our total advance facility capacity was $2,040, of which $1,463 remained unused. For more information on our advance facilities, see Note 9, Indebtedness in the Notes to the Condensed Consolidated Financial Statements (unaudited).

Sources and Uses of Cash

Our primary sources of funds for liquidity include: (i) servicing fees and ancillary revenues; (ii) advance and warehouse facilities, other secured borrowings and the unsecured senior notes; and (iii) payments received in connection with the sale of excess spread.

Our primary uses of funds for liquidity include: (i) funding of servicing advances (ii) originations of loans; (iii) payment of interest expenses; (iv) payment of operating expenses; (v) repayment of borrowings and repurchases or redemptions of outstanding indebtedness; (vi) payments for acquisitions of MSRs; and (vii) payment of our technology expenses.

We believe that our cash flows from operating activities, as well as capacity through existing facilities, provide adequate resources to fund our anticipated ongoing cash requirements. We rely on these facilities to fund operating activities. As the facilities mature, we anticipate renewal of these facilities will be achieved. Future debt maturities will be funded with cash and cash equivalents, cash flow from operating activities and, if necessary, future access to capital markets. We continue to optimize the use of balance sheet cash to avoid unnecessary interest carrying costs.

In addition, derivative instruments are used as part of the overall strategy to manage exposure to market risks primarily associated with fluctuations in interest rates related to originations. See Note 8, Derivative Financial Instruments, in the Notes to the Condensed Consolidated Financial Statements (unaudited) in Item 1, Financial Statements and Supplementary Data, which is incorporated herein for a summary of our derivative transactions.

In the normal course of business, we enter into various types of on- and off-balance sheet transactions with special purpose entities (“SPEs”) determined to be variable interest entities (“VIEs”), which primarily consist of securitization trusts established for a limited purpose. Generally, these SPEs are formed for the purpose of securitization transactions in which we transfer assets to an SPE, which then issues to investors various forms of debt obligations supported by those assets. In these securitization transactions, we typically receive cash and/or other interests in the SPE as proceeds for the transferred assets. See Note 10, Securitizations and Financings, in the Notes to the Condensed Consolidated Financial Statements (unaudited) in Item 1, Financial Statements and Supplementary Data, which is incorporated herein for a summary of our transactions with VIEs and unconsolidated balances, and details of their impact on our condensed consolidated financial statements.

Cash Flows

The table below presents cash flows information:

Table 15. Cash Flows

	Six Months Ended June 30,
	2021		2020		Change
Net cash attributable to:
Operating activities	$	(114)	$	2,066	$	(2,180)
Investing activities	(247)		(14)		(233)
Financing activities	354		(1,363)		1,717
Net (decrease) increase in cash, cash equivalents, and restricted cash	$	(7)	$	689	$	(696)

54

Operating activities

Our operating activities used cash of $114 during the six months ended June 30, 2021 compared to cash generated of $2,066 in 2020. The change in cash attributable to operating activities was primarily related to continuing operations, driven by an increase of $1,853 in the cash used from originations net sale activities, as a result of an increase in repurchases of forward loan assets out of Ginnie Mae securitizations, and a decrease of $774 driven by fair values changes in MSRs. In addition, we recorded a $487 gain from the sale of the title business in 2021.

Investing activities

Our investing activities used cash of $247 during the six months ended June 30, 2021 compared to cash used of $14 in 2020. The increase in used cash for investing activities was primarily related to continuing operations, driven by an increase of $186 in cash used for the purchase of forward mortgage servicing rights and a decrease in cash generated of $30 from proceeds on sale of forward mortgage servicing rights.

Financing activities

Our financing activities generated cash of $354 during the six months ended June 30, 2021 compared to cash used of $1,363 in 2020. The change in cash attributable to financing activities was primarily related to continuing operations, driven by an increase of $1,567 in cash generated from advance and warehouse facilities due to net increased borrowing of $1,047 from advance and warehouse facilities compared to net repayment of $520 in 2020. Additionally, in 2020, $698 of cash was used in the redemption and repayment of the 2021 and 2022 unsecured senior notes, partially offset by $600 related to the issuance of the 2027 unsecured senior notes. There were no such activities in 2021.

Capital Resources

Capital Structure and Debt

We require access to external financing resources from time to time depending on our cash requirements, assessments of current and anticipated market conditions and after-tax cost of capital. If needed, we believe additional capital could be raised through a combination of issuances of equity, corporate indebtedness, asset-backed acquisition financing and/or cash from operations. Our access to capital markets can be impacted by factors outside our control, including economic conditions.

Financial Covenants

Our credit facilities contain various financial covenants, which primarily relate to required tangible net worth amounts, liquidity reserves, leverage requirements, and profitability requirements. These covenants are measured at our operating subsidiary, Nationstar Mortgage LLC. As of June 30, 2021, we were in compliance with our required financial covenants.

Seller/Servicer Financial Requirements

We are also subject to net worth, liquidity and capital ratio requirements established by the Federal Housing Finance Agency (“FHFA”) for Fannie Mae and Freddie Mac Seller/Servicers, and Ginnie Mae for single family issuers, as summarized below. These requirements apply to our operating subsidiary, Nationstar Mortgage, LLC.

Minimum Net Worth

▪FHFA - a net worth base of $2.5 plus 25 basis points of outstanding UPB for total loans serviced.

▪Ginnie Mae - a net worth equal to the sum of (i) base of $2.5 plus 35 basis points of the issuer’s total single-family effective outstanding obligations, and (ii) base of $5 plus 1% of the total effective outstanding HMBS obligations.

Minimum Liquidity

•FHFA - 3.5 basis points of total Agency Mortgage Servicing UPB plus incremental 200 basis points of total nonperforming Agency, measured at 90+ delinquencies, servicing in excess of 6% total Agency servicing UPB.

•Ginnie Mae - the greater of $1 or 10 basis points of our outstanding single-family MBS and at least 20% of our net worth requirement for Home Equity Conversion Mortgage (“HECM”) mortgage-backed securities (“HMBS”).

Minimum Capital Ratio

▪FHFA and Ginnie Mae - a ratio of Tangible Net Worth to Total Assets (excluding HMBS securitizations) greater than 6%.

Secured Debt to Gross Tangible Asset Ratio

•Ginnie Mae - a secured debt to gross tangible asset ratios no greater than 60%.

55

As of June 30, 2021, we were in compliance with our seller/servicer financial requirements for FHFA and Ginnie Mae.

Since we have a Ginnie Mae single-family servicing portfolio that exceeds $75 billion in UPB, we are also required to obtain an external primary servicer rating and issuer credit ratings from two different rating agencies and receive a minimum rating of a B or its equivalent. We are permitted to satisfy minimum liquidity requirements using a combination of AAA rated government securities that are marked to market in addition to cash and certain cash equivalents.

In addition, Fannie Mae or Freddie Mac may require capital ratios in excess of stated requirements. Refer to Note 14, Capital Requirements, in the Notes to the Condensed Consolidated Financial Statements (unaudited) for additional information.

Table 16. Debt

	June 30, 2021		December 31, 2020
Advance facilities principal amount	$	577	$	669
Warehouse facilities principal amount	6,470		5,330
MSR facilities principal amount	270		270
Unsecured senior notes principal amount	2,100		2,100

Advance Facilities

As part of our normal course of business, we borrow money to fund servicing advances. Our servicing agreements require that we advance our own funds to meet contractual principal and interest payments for certain investors, and to pay taxes, insurance, foreclosure costs and various other items that are required to preserve the assets being serviced. Delinquency rates and prepayment speeds affect the size of servicing advance balances, and we exercise our ability to stop advancing principal and interest where the pooling and servicing agreements permit, where the advance is deemed to be non-recoverable from future proceeds. These servicing requirements affect our liquidity. We rely upon several counterparties to provide us with financing facilities to fund a portion of our servicing advances. As of June 30, 2021, we had a total borrowing capacity of $2,040, of which we could borrow an additional $1,463.

Warehouse and MSR Facilities

Loan origination activities generally require short-term liquidity in excess of amounts generated by our operations. The loans we originate are financed through several warehouse lines on a short-term basis. We typically hold the loans for approximately 30 days and then sell or place the loans in government securitizations in order to repay the borrowings under the warehouse lines. Our ability to fund current operations depends upon our ability to secure these types of short-term financings on acceptable terms and to renew or replace the financings as they expire. As of June 30, 2021, we had a total borrowing capacity of $12,890 for warehouse and MSR facilities, of which we could borrow an additional $5,625.

Unsecured Senior Notes

In 2020, we completed offerings of unsecured senior notes with maturity dates ranging from 2027 to 2030. We pay interest semi-annually to the holders of these notes at interest rates ranging from 5.125% to 6.000%. For more information regarding our indebtedness, see Note 9, Indebtedness, in the Notes to the Condensed Consolidated Financial Statements (unaudited).

Contractual Obligations

As of June 30, 2021, no material changes to our outstanding contractual obligations were made from the amounts previously disclosed in our Annual Report on Form 10-K for the year ended December 31, 2020 except for the following:

In the second quarter of 2021, we entered into an agreement, under which we committed a total of $83 over a period of 5 years in exchange for cloud platform service.

56

Critical Accounting Policies and Estimates

Various elements of our accounting policies, by their nature, are inherently subject to estimation techniques, valuation assumptions and other subjective assessments. In particular, we have identified the following policies that, due to the judgment, estimates and assumptions inherent in those policies, are critical to an understanding of our condensed consolidated financial statements. These policies relate to fair value measurements, particularly those determined to be Level 3 as discussed in Note 13, Fair Value Measurements, in the Notes to the Condensed Consolidated Financial Statements (unaudited), goodwill, and valuation and realization of deferred tax assets. We believe that the judgment, estimates and assumptions used in the preparation of our condensed consolidated financial statements are appropriate given the factual circumstances at the time. However, given the sensitivity of these critical accounting policies on our condensed consolidated financial statements, the use of other judgments, estimates and assumptions could result in material differences in our results of operations or financial condition. Fair value measurements considered to be Level 3 representing estimated values based on significant unobservable inputs include (i) the valuation of MSRs, (ii) the valuation of excess spread financing, and (iii) the valuation of IRLCs. For further information on our critical accounting policies and estimates, please refer to the Company’s Annual Reports on Form 10-K for the year ended December 31, 2020. There have been no material changes to our critical accounting policies and estimates since December 31, 2020.

Other Matters

Recent Accounting Developments

Below lists recently issued accounting pronouncements applicable to us but not yet adopted.

Accounting Standards Update 2020-04 and 2021-01, collectively implemented as Accounting Standards Codification Topic 848 (“ASC 848”), Reference Rate Reform provide temporary optional expedients and exceptions for applying generally accepted accounting principles to contract modifications, hedge accounting and other transactions affected by the transitioning away from reference rates that are expected to be discontinued, such as interbank offered rates and LIBOR. If LIBOR ceases to exist or if the methods of calculating LIBOR change from current methods for any reasons, interest rates on our floating rate loans, obligation derivatives, and other financial instruments tied to LIBOR rates, may be affected and need renegotiation with its lenders. In January 2021, ASU 2021-01 was issued to clarify that all derivatives instruments affected by changes to the interests rates used for discounting, margining alignment due to reference rate reform are in scope of ASC 848. ASU 2020-04 and ASU 2021-01 are effective March 2020 and January 2021, respectively, through December 31, 2022. The guidance in ASU 2020-04 and ASU 2021-01 is optional and may be elected over time as reference rate reform activities occur. We are currently assessing the impact of ASU 2020-04 and ASU 2021-01 on our consolidated financial statements.

57

GLOSSARY OF TERMS

This Glossary of Terms defines some of the terms that are used throughout this report and does not represent a complete list of all defined terms used.

Advance Facility. A secured financing facility to fund advance receivables which is backed by a pool of mortgage servicing advance receivables made by a servicer to a certain pool of mortgage loans.

Agency. Government entities guaranteeing the mortgage investors that the principal amount of the loan will be repaid; the Federal Housing Administration, the Department of Veterans Affairs, the US Department of Agriculture and Ginnie Mae (and collectively, the “Agencies”)

Agency Conforming Loan.  A mortgage loan that meets all requirements (loan type, maximum amount, LTV ratio and credit quality) for purchase by Fannie Mae, Freddie Mac, or insured by the FHA, USDA or guaranteed by the VA or sold into Ginnie Mae.

Asset-Backed Securities (“ABS”). A financial security whose income payments and value is derived from and collateralized (or “backed”) by a specified pool of underlying receivables or other financial assets.

Bulk acquisitions or purchases. MSR portfolio acquired on non-retained basis through an open market bidding process.

Base Servicing Fee.  The servicing fee retained by the servicer, expressed in basis points, in an excess MSR arrangement in exchange for the provision of servicing functions on a portfolio of mortgage loans, after which the servicer and the co-investment partner share the excess fees on a pro rata basis.

Conventional Mortgage Loans.  A mortgage loan that is not guaranteed or insured by the FHA, the VA or any other government agency. Although a conventional loan is not insured or guaranteed by the government, it can still follow the guidelines of GSEs and be sold to the GSEs.

Correspondent lender, lending channel or relationship.  A correspondent lender is a lender that funds loans in their own name and then sells them off to larger mortgage lenders. A correspondent lender underwrites the loans to the standards of an investor and provides the funds at close.

Delinquent Loan. A mortgage loan that is 30 or more days past due from its contractual due date.

Department of Veterans Affairs (“VA”).  The VA is a cabinet-level department of the U.S. federal government, which guarantees certain home loans for qualified borrowers eligible for securitization with GNMA.

Direct-to-consumer originations (“DTC”).  A type of mortgage loan origination pursuant to which a lender markets refinancing and purchase money mortgage loans directly to selected consumers through telephone call centers, the Internet or other means.

Excess Servicing Fees.  In an excess MSR arrangement, the servicing fee cash flows on a portfolio of mortgage loans after payment of the base servicing fee.

Excess Spread.  MSRs with a co-investment partner where the servicer receives a base servicing fee and the servicer and co-investment partner share the excess servicing fees. This co-investment strategy reduces the required upfront capital from the servicer when purchasing or investing in MSRs.

Federal National Mortgage Association (“Fannie Mae” or “FNMA”). FNMA was federally chartered by the U.S. Congress in 1938 to support liquidity, stability, and affordability in the secondary mortgage market, where existing mortgage-related assets are purchased and sold. Fannie Mae buys mortgage loans from lenders and resells them as mortgage-backed securities in the secondary mortgage market.

Federal Housing Administration (“FHA”).  The FHA is a U.S. federal government agency within the Department of Housing and Urban Development (HUD). It provides mortgage insurance on loans made by FHA-approved lenders in compliance with FHA guidelines throughout the United States.

58

Federal Housing Finance Agency (“FHFA”).  A U.S. federal government agency that is the regulator and conservator of Fannie Mae and Freddie Mac and the regulator of the 12 Federal Home Loan Banks.

Federal Home Loan Mortgage Corporation (“Freddie Mac” or “FHLMC”).  Freddie Mac was chartered by Congress in 1970 to stabilize the nation’s residential mortgage markets and expand opportunities for homeownership and affordable rental housing. Freddie Mac participates in the secondary mortgage market by purchasing mortgage loans and mortgage-related securities for investment and by issuing guaranteed mortgage-related securities.

Forbearance. An agreement between the mortgage servicer or lender and borrower for a temporary postponement of mortgage payments. It is a form of repayment relief granted by the lender or creditor in lieu of forcing a property into foreclosure.

Government National Mortgage Association (“Ginnie Mae” or “GNMA”). GNMA is a self-financing, wholly owned U.S. Government corporation within HUD. Ginnie Mae guarantees the timely payment of principal and interest on MBS backed by federally insured or guaranteed loans - mainly loans insured by the FHA or guaranteed by the VA. Ginnie Mae securities are the only MBS to carry the full faith and credit guarantee of the U.S. federal government.

Government-Sponsored Enterprise (“GSE”).  Certain entities established by the U.S. Congress to provide liquidity, stability and affordability in residential housing. These agencies are Fannie Mae, Freddie Mac and the 12 Federal Home Loan Banks.

Home Equity Conversion Mortgage (“HECM”).  Reverse mortgage loans issued by FHA. HECMs provide seniors aged 62 and older with a loan secured by their home which can be taken as a lump sum, line of credit, or scheduled payments. HECM loan balances grow over the loan term through borrower draws of scheduled payments or line of credit draws as well as through the accrual of interest and FHA mortgage insurance premiums. In accordance with FHA guidelines, HECMs are designed to repay through foreclosure and subsequent liquidation of loan collateral after the loan becomes due and payable. Shortfalls experienced by the servicer of the HECM through the foreclosure and liquidation process can be claimed to FHA in accordance with applicable guidelines.

HECM mortgage-backed securities (“HMBS”). A type of asset-backed security that is secured by a group of HECM loans.

Interest Rate Lock Commitments (“IRLC”). Agreements under which the interest rate and the maximum amount of the mortgage loan are set prior to funding the mortgage loan.

Loan Modification.  Temporary or permanent modifications to loan terms with the borrower, including the interest rate, amortization period and term of the borrower’s original mortgage loan. Loan modifications are usually made to loans that are in default, or in imminent danger of defaulting.

Loan-to-Value Ratio (“LTV”). The unpaid principal balance of a mortgage loan as a percentage of the total appraised or market value of the property that secures the loan. An LTV over 100% indicates that the UPB of the mortgage loan exceeds the value of the property.

Lock period. A set of periods of time that a lender will guarantee a specific rate is set prior to funding the mortgage loan.

Loss Mitigation.  The range of servicing activities provided by a servicer in an attempt to minimize the losses suffered by the owner of a defaulted mortgage loan. Loss mitigation techniques include short-sales, deed-in-lieu of foreclosures and loan modifications, among other options.

Mortgage-Backed Securities (“MBS”). A type of asset-backed security that is secured by a group of mortgage loans.

Mortgage Servicing Right (“MSRs”).  The right and obligation to service a loan or pool of loans and to receive a servicing fee as well as certain ancillary income. MSRs may be bought and sold, resulting in the transfer of loan servicing obligations. MSRs are designated as such when the benefits of servicing the loans are expected to adequately compensate the servicer for performing the servicing.

MSR Facility.  A line of credit backed by mortgage servicing rights that is used for financing purposes. In certain cases, these lines may be a sub-limit of another warehouse facility or alternatively exist on a stand-alone basis. These facilities allow for same or next day draws at the request of the borrower.

59

Mortgage Servicing Liability (“MSL”).  The right and obligation to service a loan or pool of loans and to receive a servicing fee as well as certain ancillary income. MSLs may be bought and sold, resulting in the transfer of loan servicing obligations. MSLs are designated as such when the benefits of servicing the loans are not expected to adequately compensate the servicer for performing the servicing.

Non-Conforming Loan.  A mortgage loan that does not meet the standards of eligibility for purchase or securitization by Fannie Mae, Freddie Mac or Ginnie Mae.

Originations.  The process through which a lender provides a mortgage loan to a borrower.

Pull through adjusted lock volume. Represents the expected funding from locks taken during the period.

Prepayment Speed. The rate at which voluntary mortgage prepayments occur or are projected to occur. The statistic is calculated on an annualized basis and expressed as a percentage of the outstanding principal balance.

Primary Servicer.  The servicer that owns the right to service a mortgage loan or pool of mortgage loans. This differs from a subservicer, which has a contractual agreement with the primary servicer to service a mortgage loan or pool of mortgage loans in exchange for a subservicing fee based upon portfolio volume and characteristics.

Prime Mortgage Loan.  Generally, a high-quality mortgage loan that meets the underwriting standards set by Fannie Mae or Freddie Mac and is eligible for purchase or securitization in the secondary mortgage market. Prime Mortgage loans generally have lower default risk and are made to borrowers with excellent credit records and a monthly income at least three to four times greater than their monthly housing expenses (mortgage payments plus taxes and other debt payments) as well as significant other assets. Mortgages not classified as prime mortgage loans are generally called either sub-prime or Alt-A.

Private Label Securitizations. Securitizations that do not meet the criteria set by Fannie Mae, Freddie Mac or Ginnie Mae.

Real Estate Owned (”REO”). Property acquired by the servicer on behalf of the owner of a mortgage loan or pool of mortgage loans, usually through foreclosure or a deed-in-lieu of foreclosure on a defaulted loan. The servicer or a third-party real estate management firm is responsible for selling the REO. Net proceeds of the sale are returned to the owner of the related loan or loans. In most cases, the sale of REO does not generate enough to pay off the balance of the loan underlying the REO, causing a loss to the owner of the related mortgage loan.

Recapture. Voluntarily prepaid loans that are expected to be refinanced by the related servicer.

Refinancing.  The process of working with existing borrowers to refinance their mortgage loans. By refinancing loans for borrowers we currently service, we retain the servicing rights, thereby extending the longevity of the servicing cash flows.

Reverse Mortgage Loan. A reverse mortgage loan, most commonly a Home Equity Conversion Mortgage, enables seniors to borrow against the value of their home, and no payment of principal or interest is required until the death of the borrower or the sale of the home. These loans are designed to go through the foreclosure and claim process to recover loan balance.

Servicing. The performance of contractually specified administrative functions with respect to a mortgage loan or pool of mortgage loans. Duties of a servicer typically include, among other things, collecting monthly payments, maintaining escrow accounts, providing periodic monthly statements to the borrower and monthly reports to the loan owners or their agents, managing insurance, monitoring delinquencies, executing foreclosures (as necessary), and remitting fees to guarantors, trustees and service providers. A servicer is generally compensated with a specific fee outlined in the contract established prior to the commencement of the servicing activities.

60

Servicing Advances.  In the course of servicing loans, servicers are required to make advances that are reimbursable from collections on the related mortgage loan or pool of loans. There are typically three types of servicing advances: P&I Advances, T&I Advances and Corporate Advances.

(i) P&I Advances cover scheduled payments of principal and interest that have not been timely paid by borrowers. P&I Advances serve to facilitate the cash flows paid to holders of securities issued by the residential MBS trust. The servicer is not the insurer or guarantor of the MBS and thus has the right to cease the advancing of P&I, when the servicer deems the next advance nonrecoverable. 

(ii) T&I Advances pay specified expenses associated with the preservation of a mortgaged property or the liquidation of defaulted mortgage loans, including but not limited to property taxes, insurance premiums or other property-related expenses that have not been timely paid by borrowers in order for the lien holder to maintain its interest in the property. 

(iii) Corporate Advances pay costs, fees and expenses incurred in foreclosing upon, preserving defaulted loans and selling REO, including attorneys’ and other professional fees and expenses incurred in connection with foreclosure and liquidation or other legal proceedings arising in the course of servicing the defaulted mortgage loans. 

Servicing Advances are reimbursed to the servicer if and when the borrower makes a payment on the underlying mortgage loan at the time the loan is modified or upon liquidation of the underlying mortgage loan but are primarily the responsibility of the investor/owner of the loan. The types of servicing advances that a servicer must make are set forth in its servicing agreement with the owner of the mortgage loan or pool of mortgage loans. In some instances, a servicer is allowed to cease Servicing Advances, if those advances will not be recoverable from the property securing the loan.

Subservicing.  Subservicing is the process of outsourcing the duties of the primary servicer to a third-party servicer. The third-party servicer performs the servicing responsibilities for a fee and is typically not responsible for making servicing advances, which are subsequently reimbursed by the primary servicer. The primary servicer is contractually liable to the owner of the loans for the activities of the subservicer.

Unpaid Principal Balance (“UPB”).  The amount of principal outstanding on a mortgage loan or a pool of mortgage loans. UPB is used together with the servicing fees and ancillary incomes as a means of estimating the future revenue stream for a servicer.

U.S. Department of Agriculture (“USDA”). The USDA is a cabinet-level department of the U.S. federal government, which guarantees certain home loans for qualified borrowers.

Warehouse Facility.  A type of line of credit facility used to temporarily finance mortgage loan originations to be sold in the secondary market. Pursuant to a warehouse facility, a loan originator typically agrees to transfer to a counterparty certain mortgage loans against the transfer of funds by the counterpart, with a simultaneous agreement by the counterpart to transfer the loans back to the originator at a date certain, or on demand, against the transfer of funds from the originator.

61

Item 3. Quantitative and Qualitative Disclosures about Market Risk

Refer to the discussion included in Part II, Item 7A of our Annual Report on Form 10-K for the year ended December 31, 2020. There have been no material changes in the types of market risks faced by us since December 31, 2020. Our market risks include the broad effects of the COVID-19 pandemic. While the pandemic’s effect on the macroeconomic environment has yet to be fully determined and could continue for months or years, the pandemic and governmental programs created as a response to the pandemic, has affected and will continue to affect our business, financial conditions and results of operations.

Sensitivity Analysis

We assess our market risk based on changes in interest rates utilizing a sensitivity analysis. The sensitivity analysis measures the potential impact on fair values based on hypothetical changes (increases and decreases) in interest rates.

We use a duration-based model in determining the impact of interest rate shifts on our loan portfolio, certain other interest-bearing liabilities measured at fair value and interest rate derivatives portfolios. The primary assumption used in these models is that an increase or decrease in the benchmark interest rate produces a parallel shift in the yield curve across all maturities.

We utilize a discounted cash flow analysis to determine the fair value of MSRs and the impact of parallel interest rate shifts on MSRs. The discounted cash flow model incorporates prepayment speeds, discount rate, costs to service, and other assumptions (including delinquencies, ancillary revenues, float earnings and forbearance rates) that management believes are consistent with the assumptions that other similar market participants use in valuing the MSRs. The key assumptions to determine fair value include prepayment speed, discount rate and cost to service. However, this analysis ignores the impact of interest rate changes on certain material variables, such as the benefit or detriment on the value of future loan originations, non-parallel shifts in the spread relationships between MBS, swaps and U.S. Treasury rates and changes in primary and secondary mortgage market spreads. For mortgage loans, IRLCs and forward delivery commitments on MBS, we rely on a model in determining the impact of interest rate shifts. In addition, the primary assumption used for IRLCs, is the borrower’s propensity to close their mortgage loans under the commitment.

Our total market risk is influenced by a wide variety of factors including market volatility and the liquidity of the markets. There are certain limitations inherent in the sensitivity analysis presented, including the necessity to conduct the analysis based on a single point in time and the inability to include the complex market reactions that normally would arise from the market shifts modeled.

We used June 30, 2021 market rates on our instruments to perform the sensitivity analysis. The estimates are based on the market risk sensitive portfolios described in the preceding paragraphs and assume instantaneous, parallel shifts in interest rate yield curves. These sensitivities are hypothetical and presented for illustrative purposes only. Changes in fair value based on variations in assumptions generally cannot be extrapolated because the relationship of the change in fair value may not be linear.

62

The following table summarizes the estimated change in the fair value of our assets and liabilities sensitive to interest rates as of June 30, 2021 given hypothetical instantaneous parallel shifts in the yield curve. Actual results could differ materially.

Table 17. Change in Fair Value

	June 30, 2021
	Down 25 bps		Up 25 bps
Increase (decrease) in assets
Mortgage servicing rights at fair value	$	(183)	$	187
Mortgage loans held for sale at fair value	36		(43)
Derivative financial instruments:
Interest rate lock commitments	64		(76)
Forward MBS trades	(32)		38
Total change in assets	(115)		106
Increase (decrease) in liabilities
Mortgage servicing rights financing at fair value	(3)		3
Excess spread financing at fair value	(17)		19
Derivative financial instruments:
Interest rate lock commitments	(7)		8
Forward MBS trades	76		(90)
Total change in liabilities	49		(60)
Total, net change	$	(164)	$	166

Item 4. Controls and Procedures

Evaluation of Disclosure Controls and Procedures

Our management, with the participation of our Chief Executive Officer and Chief Financial Officer, evaluated the effectiveness of our disclosure controls and procedures pursuant to Rule 13a-15(b) under the Securities Exchange Act of 1934, as amended (“Exchange Act”), as of June 30, 2021.

Based on this evaluation, our Chief Executive Officer and Chief Financial Officer concluded that, as of June 30, 2021, our disclosure controls and procedures are effective. Disclosure controls and procedures are designed at a reasonable assurance level and are effective to provide reasonable assurance that information we are required to disclose in reports that we file or submit under the Exchange Act is recorded, processed, summarized, and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure.

Changes in Internal Control over Financial Reporting

During the three months ended June 30, 2021, no changes in our internal control over financial reporting occurred that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

Limitations on Effectiveness of Controls and Procedures

In designing and evaluating the disclosure controls and procedures, management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives.

63

PART II – OTHER INFORMATION

Item 1. Legal Proceedings

For a description of our material legal proceedings, see Note 15, Commitments and Contingencies, of the Notes to the Condensed Consolidated Financial Statements within Part I, Item 1. Financial Statements, of this Form 10-Q.

Item 1A. Risk Factors

There have been no material changes or additions to the risk factors previously disclosed under “Risk Factors” included in our Annual Report on Form 10-K filed for the year ended December 31, 2020.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

We did not make any repurchases of our shares during the three months ended June 30, 2021.

On July 29, 2021, we announced that our Board of Directors authorized the repurchase of up to $500 of our outstanding common stock. The new stock repurchase plan will go into effect upon the completion of our current program which has a remaining capacity of approximately $4.

Item 3. Defaults Upon Senior Securities

None.

Item 4. Mine Safety Disclosures

Not applicable.

Item 5. Other Information

We entered into a Transition and Separation Agreement (the “Separation Agreement”) with Anthony Ebers on July 27, 2021, in connection with his previously-announced resignation from the position of Chief Operating Officer. Pursuant to the Separation Agreement, among other things, the parties have agreed to the following: (i) Mr. Ebers will receive a cash payment in the amount of $1.125 paid out over thirty-nine roughly equal installments, (ii) Mr. Ebers will receive a cash payment in the amount of $4.875 in two installments, with the first payment of $1.5 being made on or before March 1, 2022, and the second payment of $3.375 being made on February 1, 2023, and (iii) Mr. Ebers’s medical coverage will continue under our group health plan until August 31, 2021, and if Mr. Ebers properly exercises COBRA rights, we will provide continuation coverage until the earlier of (A) the period of time Mr. Ebers takes to become eligible for group health benefits from another employer or (B) September 1, 2022. The Separation Agreement contains certain non-compete, non-solicitation and non-disparagement provisions. The foregoing summary of the Separation Agreement is qualified in its entirety by reference to the text of the Separation Agreement, which is being filed as Exhibit 10.1 to this report and is incorporated in this report by reference.

64

Item 6. Exhibits

		Incorporated by Reference
Exhibit  Number	Description	Form	File No.	Exhibit	Filing Date	Filed or Furnished Herewith
10.1**	Transition and Separation Agreement, dated July 27, 2021, by and between Anthony Ebers and the Company					X
31.1	Certification by Chief Executive Officer Pursuant to Rules 13a-14(a) and 15d-14(a) as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002					X
31.2	Certification by Chief Financial Officer Pursuant to Rules 13a-14(a) and 15d-14(a) as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002					X
32.1	Certification by Chief Executive Officer Pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002					X
32.2	Certification by Chief Financial Officer Pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002					X
101.INS	Inline XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.					X
101.SCH	Inline XBRL Taxonomy Extension Schema Document					X
101.CAL	Inline XBRL Taxonomy Extension Calculation Linkbase Document					X
101.DEF	Inline XBRL Taxonomy Extension Definition Linkbase Document					X
101.LAB	Inline XBRL Taxonomy Extension Label Linkbase Document					X
101.PRE	Inline XBRL Taxonomy Extension Presentation Linkbase Document					X
104	Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibits 101.)					X

**    Management, contract, compensatory plan or arrangement.

65

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

	MR. COOPER GROUP INC.
July 29, 2021	/s/ Jay Bray
Date	Jay Bray Chief Executive Officer (Principal Executive Officer)
July 29, 2021	/s/ Christopher G. Marshall
Date	Christopher G. Marshall Vice Chairman, President & Chief Financial Officer (Principal Financial and Accounting Officer)

66

EX-10.1

Exhibit 10.1

TRANSITION AND SEPARATION AGREEMENT

This is a Transition and Separation Agreement (“Agreement”) effective July 27, 2021 (“Effective Date”) by and between Anthony Ebers (“Employee”) and Mr. Cooper Group Inc. (“Company”). Employee and Company collectively are referred to herein as the “Parties” or singularly as a “Party.” This Agreement sets forth the complete understanding between them regarding the cessation of Employee’s service as Chief Operating Officer for Company, Employee’s provision of transition services until August 1, 2021 (“Separation Date”), and the commitments and obligations arising out of the termination of the employment relationship between Employee and Company. In consideration of the mutual promises contained herein, and for other good and valuable consideration, the sufficiency and receipt of which are acknowledged, Employee and Company agree as follows:

1.         Company agrees to continue to employ Employee, and Employee agrees to remain in employment with Company, from the Effective Date until the Separation Date (or such earlier time contemplated below) (the “Term”). During the Term, Employee’s title will be Senior Advisor and Employee will perform such duties as reasonably determined by Company. Through the Separation Date, Employee agrees to devote his reasonable best efforts and remain available to devote his full business time to the performance of duties for Company, and to support an orderly transition of Employee’s duties to other Company employees, subject to compliance with applicable law and Employee’s fiduciary duties.

2.     During the Term, Employee will continue to receive his current base salary before all customary deductions, and Employee will be entitled to continue to participate, subject to and in accordance with applicable eligibility requirements, in employee benefit plans of Company applicable to Company’s employees generally or its executive officers, subject to and on a basis consistent with the terms, conditions, and overall administration of such plans, programs, and arrangements. Employee will not be eligible for any additional compensation, bonuses, grants, awards, or shares, except as specifically set forth herein. On the Separation Date, Employee’s service to Company will terminate and Employee will be deemed to have resigned from employment with Company. Employee’s resignation will be effective with respect to all positions Employee holds with Company and all its affiliated entities.

3.     Following the Separation Date, unless otherwise provided in this Agreement, upon Employee’s execution of the General Release of Claims attached hereto as Exhibit A and the expiration of the revocation period in Exhibit A with no revocation taking place, Employee will receive the payments, rights, and benefits set forth therein.

4.         During the Term, Employee’s employment may be terminated by Company for Cause, which is defined as Employee’s material refusal to comply with any lawful directive or policy of Company or any affiliate; commission of any act of fraud, embezzlement, or theft; material breach of any non-disclosure, non-competition, or non-solicitation obligation to Company; or repeated misuse of, or habitual or repeated performance of Employee’s duties under the influence of, alcohol, illegally obtained prescription controlled substances, or non-prescription controlled substances.

a.    In the event of a termination of Employee’s employment for Cause, Employee’s sole entitlement will be the payment of Employee’s base salary and any valid claims under Company’s group health plan through Employee’s date of termination.

b. Similarly, if Employee resigns from employment with Company for any reason prior to the Separation Date (which, for the avoidance of doubt, will not include a cessation of Employee’s employment by reason of death), Employee’s sole entitlement will be the payment of Employee’s base salary and any valid claims under Company’s group health plan through Employee’s date of termination.

c. If Employee should predecease the Separation Date and has complied with all the terms of this Agreement through the date of Employee’s death, Employee’s estate shall be entitled to the payments, rights, and benefits set forth in Exhibit A (in lieu of any other payment or

benefits) upon Employee’s representative’s execution of a release similar in scope to that set forth in Exhibit A.

5.         Nothing in this Agreement shall be construed to limit Employee’s ability to file a charge or complaint with the Equal Employment Opportunity Commission, the National Labor Relations Board, the Department of Labor (including the Occupational Safety and Health Administration), the Securities and Exchange Commission, and any other federal, state, or local government agency or commission (“Government Agencies”). Further, this Agreement does not limit Employee’s ability to communicate with any Government Agency or otherwise participate in any investigation or proceeding that may be conducted by any Government Agency, including providing documents or other information, without notice to Company.

6.         This Agreement supersedes any and all prior agreements, arrangements, or understandings between the Parties regarding the subject matter hereof, other than any prior non-disclosure, non-competition, or non-solicitation provision, and any forfeiture provision related thereto, which are re-affirmed by Employee as consideration for this Agreement and incorporated by reference herein. There have been no representations, promises, understandings, or agreements made by either Party as an inducement for the other Party to enter into this Agreement other than what are expressly set forth and contained herein. Evidence of prior promises, commitments, agreements, arrangements, or understandings cannot be used to attempt to alter, amend, modify, or in any way change the written terms of this Agreement. Furthermore, the Parties cannot orally agree to alter, amend, modify, or in any way change the terms of this Agreement, and can make such alterations, amendments, modifications, or changes only in a written document that specifically references this Agreement and is signed by an authorized representative of each Party.

7.         No waiver of any of the terms of this Agreement shall be valid unless in writing and signed by all parties to this Agreement. The waiver by any party hereto of any provision of this Agreement shall not operate or be construed as a waiver of any subsequent breach by any party, nor shall any waiver operate or be construed as a rescission of this Agreement. This Agreement, the offer of this Agreement, and compliance with this Agreement shall not constitute or be construed as an admission by any party of any wrongdoing or liability, and any wrongdoing or liability is expressly denied. This Agreement shall be governed by and construed in accordance with the laws of the State of Texas, without giving effect to the conflict of law principles thereof. The normal rule of construction that ambiguities shall be construed against the drafter shall not be employed in the interpretation of this Agreement. This Agreement is assignable by Company to its successors in interest.

8.         All executed copies of this Agreement and photocopies thereof shall have the same force and effect and shall be as legally binding and enforceable as the original. This Agreement may be signed in one or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument. An electronic signature through DocuSign or similar format, or transmitted by email with an attached PDF, shall be deemed an original for all purposes.

By my signature below, I acknowledge that I have carefully read and fully understand all of the provisions set forth above, and I knowingly and voluntarily agree to abide by all of the terms, provisions, and conditions set forth in this Transition and Separation Agreement and to be legally bound by the same.

SIGNATURE: /s/ Anthony Ebers

PRINT NAME: Anthony Ebers
DATE: July 27, 2021

Mr. Cooper Group, Inc.

/s/ Jay Bray                

NAME: Jay Bray

TITLE: Chief Executive Officer                            DATE: July 27, 2021

EXHIBIT A - RELEASE OF CLAIMS

This is a General Release of Claims (“Agreement”) by and between Anthony Ebers (“Employee”) and Mr. Cooper Group Inc. (“Company”). Employee and Company collectively are referred to herein as the “Parties” or singularly as a “Party.” Employee’s employment with Company terminated effective August 1, 2021, whereupon all benefits and privileges related thereto ceased except as set forth herein, and the Parties hereby agree as follows:

Consideration. In exchange for execution of this Agreement, Employee’s release of claims below, the other promises and covenants contained herein, and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Parties agree as follows:

1.Company shall pay Employee the gross amount of ONE MILLION ONE HUNDRED AND TWENTY-FIVE THOUSAND DOLLARS AND NO CENTS ($1,125,000.00), less applicable deductions and withholdings from wages (the “Severance Payment”). The Severance Payment shall be made in thirty-nine (39) roughly equal installments paid bi-weekly after the end of the Revocation Period defined below (assuming Company receives the executed Agreement from Employee before the Revocation Period expires and Employee does not revoke his signature). Company will have no obligation to make the Severance Payment, or any installment thereof, if Employee does not comply with this Agreement.

2.Additionally, Company shall pay employee the gross amount of FOUR MILLION EIGHT HUNDRED AND SEVENTY-FIVE THOUSAND DOLLARS AND NO CENTS ($4,875,000.00), less applicable deductions and withholdings from wages, in two installments (the “Deferred Payments”). Assuming Company receives the executed Agreement from Employee before the Revocation Period expires and Employee does not revoke his signature, the first Deferred Payment in the gross amount of ONE MILLION FIVE HUNDRED THOUSAND DOLLARS AND NO CENTS ($1,500,000.00) shall be made in 2022 on or before March 1, 2022, and the second Deferred Payment in the gross amount of THREE MILLION AND THREE HUNDRED AND SEVENTY-FIVE THOUSAND DOLLARS AND NO CENTS ($3,375,000) shall be made on February 1, 2023. Company will have no obligation to make the Deferred Payments if Employee does not comply with this Agreement through the applicable payment date.

3.Employee’s current health benefits insurance coverage will be maintained through Company’s group health plan through August 31, 2021. After that date, Employee shall have no right to continued coverage unless Employee properly exercises COBRA rights in accordance with notice to be provided separate and apart from this Agreement. If Employee timely elects COBRA, Company shall provide continuation coverage under its group health plan to Employee and his eligible dependents at its sole expense until the earlier of (a) the date when Employee becomes eligible for group health coverage offered by another employer, or (b) September 1, 2022. Employee shall notify Company in writing within ten (10) business days after becoming eligible for other group health coverage, and Employee’s failure to do so may result in retroactive cancellation of his COBRA coverage. Following the end of the foregoing COBRA premium subsidy, Employee may continue his continuation coverage at his own expense at the then-prevailing monthly premium for the remainder of his period of statutory entitlement.

4.Company shall reimburse Employee for all reasonable and approved business expenses incurred, but not yet paid, through the end of Employee’s employment with Company.

To the maximum extent possible, the Severance Payment, Deferred Payments, and other benefits under this Agreement are intended to be excluded from the definition of a deferred compensation plan as separation pay due upon an involuntary separation of service as described in Treas. Reg. Section 1.409A-1(b)(9), as a non-taxable medical benefit described in Treas. Reg. Section

1.409A-1(b)(9)(v)(B), and/or as a short-term deferral as described in Treas. Reg. Section 1.409A-1(b)(4). The Agreement shall be operated to comply with this intent. No Severance Payment, Deferred Payment, or other benefits will be made under this Agreement unless the Employee’s termination of employment also constitutes a “separation from service” within the meaning of Section 409A. To the extent either Deferred Payment and/or any portion of the Severance Payment is considered to constitute a “deferral of compensation” within the meaning of Section 409A, it is the intent of the parties that the payment schedules for such benefits be administered in accordance with Treas. Reg. Section 1.409A-3(i)(1) and that payment of such benefits shall in no event be delayed or accelerated except as permitted by Section 409A.

Notwithstanding anything in this Agreement to the contrary, if Employee is a “specified employee” for purposes of Section 409A as of his termination date, any portion of the Severance Payment that is subject to Section 409A shall not be paid or provided to Employee prior to the earlier of (i) the expiration of the six-month period measured from the date of Employee’s termination, or (ii) the date of Employee’s death. Upon the first business day following the expiration of the applicable Section 409A delay period, all payments deferred pursuant to the preceding sentence shall be paid in a lump sum to Employee (or Employee’s estate or beneficiaries), and any remaining payments due to Employee under this Agreement shall be paid as otherwise provided herein. Any installment payments due hereunder shall be treated as a right to receive a series of separate payments, and accordingly, each such installment payment shall at all times be considered a separate and distinct payment as permitted under Section 409A.

As provided by the terms of Company’s equity plans and the applicable award agreements, any outstanding unvested equity awards held by Employee (including without limitation 107,239 units pursuant to the grant dated December 1, 2018, 12,142 units pursuant to the grant dated March 1, 2019, 56,241 units pursuant to the grant dated March 13, 2020, and 66,578 units pursuant to the grant dated March 8, 2021) shall expire and be forfeited upon his termination with Company, and Employee shall have no entitlement to any payments in connection with any such awards.

General Release of Claims. In consideration of the Severance Payment, Deferred Payments, and other benefits described above, together with other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, Employee, together with Employee’s agents, representatives, attorneys, assigns, and designees, hereby knowingly, voluntarily, fully, finally, and completely SETTLES, RELEASES, AND FOREVER DISCHARGES, to the maximum extent permitted by law, the Company Releasees (as defined below) from all claims, disputes, grievances, demands, causes of action, liabilities, injuries, and damages, of whatever kind, character, or nature, known or unknown, arising from, relating to, or connected with acts or omissions occurring at any time prior to and including the date Employee executes this Agreement. This general release includes without limitation all claims or damages that in any way arise from, relate to, or are in any way connected with Employee’s employment with and/or separation from Company, regardless of whether or not same (i) are presently known or unknown, (ii) have been specifically referenced, claimed, asserted, or made by either of the Parties, or (iii) are statutory, contractual, or common law in nature or basis. As used in this Agreement, the term “Company Releasees” means Company and its employees, attorneys, partners, agents, assigns, representatives, designees, insurers, plan administrators, parent companies, subsidiaries, affiliates, joint ventures, alleged joint employers, and other related persons or entities, including their predecessors, successors, and equity and asset purchasers, together with their respective officers, directors, members, managers, shareholders, partners (general and limited), agents, owners, legal representatives, servants, and employees (current and former), and the assigns, heirs, privies, predecessors, successors, and insurers of each of the foregoing persons and entities in their individual, corporate, and official capacities.

Without limiting the generality or comprehensiveness of the above paragraph, Employee knowingly, voluntarily, fully, finally, and completely WAIVES, RELEASES, AND FOREVER DISCHARGES, to the maximum extent permitted by law, the Company Releasees from all claims, actions, causes of action, or demands existing as of the date of this Agreement, including without

limitation any and all claims for injunctive relief; attorneys’ fees; expenses; costs; actual, compensatory, exemplary, or punitive damages; physical injuries; personal injuries; emotional injuries; mental anguish; physical pain and suffering; wrongful discharge; any claims Employee may have under, without limitation, Title VII of the Civil Rights Act of 1964, the Americans with Disabilities Act of 1990, the Age Discrimination in Employment Act of 1967, the Texas Labor Code, the Family and Medical Leave Act of 1993, the Fair Labor Standards Act, the Employee Retirement Income Security Act of 1974, the Sarbanes-Oxley Act of 2002, the Dodd-Frank Wall Street Reform and Consumer Protection Act, the Worker Adjustment and Retraining Notification Act, the Uniformed Services Employment and Reemployment Rights Act, and any other civil rights statutes; harassment and/or discrimination because of sex, race, color, national origin, religion, age, disability, sexual orientation, veteran’s status, the filing of a workers’ compensation claim, or other protected classification; retaliation; incapacity; failure to pay proper wage, minimum wage, and/or overtime wages; unpaid wages; loss of wages; loss of earning capacity; loss of job security; humiliation; physical impairment and/or disfigurement; loss of consortium; harm to reputation; libel, slander, or defamation; medical expenses; personal property damage, loss or diminution in value; negligence; gross negligence; strict liability; malice; invasion of privacy; intentional infliction of emotional distress; negligent infliction of emotional distress; loss or diminution of career advancement; loss of dignity; any and all claims arising under any other federal, state, or local statute, law, ordinance, rule, regulation, or order prohibiting employment discrimination or retaliation; any claim under tort, wrongful discharge, breach of contract, or breach of agreement; and any other theory, claim, or cause of action whatsoever, whether known or unknown.

Employee represents and warrants that Employee has been fully and appropriately paid for all hours worked and services rendered during Employee’s employment with Company, and that Employee has no outstanding claims against any of the Company Releasees (as defined above) for wages, commissions, bonuses, vacation pay, sick pay, paid time off or leave, restricted stock, or other shares, units, awards, or compensation of any kind. Employee is not eligible for and shall forfeit any other shares, units, awards, bonuses, or other compensation.

By signing this Agreement, it is Employee’s intent to waive and release all claims and potential claims against the Company Releasees that can be waived and released under law. Employee releases and discharges the Company Releasees not only from any and all claims that Employee could make on Employee’s own behalf, but Employee also specifically waives any right to become, and promises not to become, a member of any class in any proceeding or case in which a claim or claims against the Company Releasees may arise, in whole or in part, from any event that occurred prior to Employee’s execution of this Agreement, subject to the “No Interference with Rights” section below. If Employee is not permitted to opt-out of a future class, then Employee agrees to waive any recovery for which Employee would be eligible as a member of such class, subject to the “No Interference with Rights” section below. The release of claims contained in this Agreement does not release rights to benefits that Employee may have under the laws governing COBRA, unemployment benefits, disability insurance, and workers’ compensation benefits.

Notwithstanding anything in this Agreement to the contrary, this Agreement shall not release, waive, relinquish, diminish, or in any way affect any rights or claims (i) to payment of salary to the extent earned prior to Employee’s date of termination; (ii) to reimbursement of any medical expenses that Employee or Employee’s eligible dependents may have incurred, for which Employee has submitted or will submit a claim, and which are reimbursable under the terms of any applicable medical plan sponsored by the Company; (iii) to reimbursement of business expenses in accordance with applicable Company policy; (iv) to vested equity compensation awards or shares of stock of the Company; (v) to any benefits provided under the Company’s and its affiliates’ by-laws and to D&O policy, as applicable; (vi) to the benefits to be provided to Employee by the Company under this Agreement; viii) to which Employee may be entitled pursuant to any employee benefit plan of the Company; and (ix) that may not lawfully be waived.

No Interference with Rights. Nothing in this Agreement shall be construed to limit Employee’s ability to file a charge or complaint with the Equal Employment Opportunity Commission, the National Labor Relations Board, the Department of Labor (including the Occupational Safety and Health Administration), the Securities and Exchange Commission, and any other federal, state, or local government agency or commission (“Government Agencies”). Further, this Agreement does not limit Employee’s ability to communicate with any Government Agency or otherwise participate in any investigation or proceeding that may be conducted by any Government Agency, including providing documents or other information, without notice to Company. However, by signing this Agreement, Employee is waiving Employee’s right to receive monetary relief based on claims asserted in any such agency proceeding, such as Employee’s right to receive an award for information provided to any Government Agencies,except where such a waiver is prohibited.

ADEA Release and Revocation Period. Pursuant to the Older Workers Benefit Protection Act (“OWBPA”), Employee hereby knowingly and voluntarily agrees to waive and release any right or claim under the Age Discrimination in Employment Act of 1967 (“ADEA”) against the Company Releasees. Employee has carefully read and fully understands the provisions of this Agreement, and Employee is receiving consideration from Company over and above anything of value to which Employee is otherwise entitled. Employee is not waiving or releasing any right or claim that may arise under the ADEA after Employee signs this Agreement. Employee is advised to consult with an attorney before signing this Agreement. Employee has twenty-one (21) days from the date Employee received this Agreement to consider and sign it. If Employee chooses to sign this document, Employee has seven (7) days after signing to revoke the Agreement (the “Revocation Period”). If Employee chooses to revoke the Agreement, Employee must deliver a written notice of revocation to Kelly Ann Doherty, Chief People Officer, 8950 Cypress Waters Blvd., Coppell, TX 75019, kellyann.doherty@mrcooper.com. Any such revocation must be actually received by Company within the Revocation Period or it will be null and void. This Agreement shall not become effective or enforceable until the Revocation Period has expired with no revocation taking place.

Cooperation. Subject to the “No Interference with Rights” section above, Employee agrees to reasonably cooperate with Company: (a) regarding the transition of any business matters Employee handled or had involvement with on behalf of Company; and (b) in the defense or prosecution of any claims or actions now in existence or which may be brought in the future against or on behalf of any of the Company Releasees that relate in any way to events or occurrences that transpired while Employee was employed by Company. Employee’s cooperation in connection with such claims or actions will include, but not be limited to, being available to meet with Company’s counsel to prepare for discovery or any legal proceeding, and to act as a witness on behalf of Company at mutually convenient times. Company will reimburse Employee for all reasonable, pre-approved out-of-pocket costs and expenses (but, subject at all times to Employee’s right to any benefits under the Company’s and its affiliates’ by-laws and to the Company’s D&O policy, as applicable, compensation for time) that Employee incurs in connection with Employee’s obligations under this section of the Agreement, to the extent permitted by law.

Non-Disparagement. Subject to the “No Interference with Rights” section above, Employee shall not make any disparaging remarks about any of the Company Releasees, verbally or in writing, including without limitation posting on Glassdoor, Indeed, Facebook, Instagram, Snapchat, Twitter, YouTube, blogs, or other public forums, or otherwise take any action that could reasonably be anticipated to cause damage to the reputation, goodwill, or business of any of the Company Releasees, or otherwise make remarks that may reflect negatively upon any of the Company Releasees. Notwithstanding the foregoing provision, Employee may testify truthfully pursuant to compulsory process or to enforce Employee’s rights hereunder.

Return of Company Property. Employee agrees to return all Company documents and other property in Employee’s possession, custody, or control, in whatever form maintained, within three (3) business days of Employee’s execution of this Agreement.

Non-Disclosure of Confidential Information. Employee acknowledges and agrees that incident to Employee’s employment with Company, Employee had access to and became familiar with certain proprietary, confidential, and otherwise sensitive information relating to the business or affairs of Company (“Confidential Information”). Non-exhaustive examples of Confidential Information include information not readily available to the public that Company takes reasonable steps to maintain the confidential and proprietary nature thereof, including without limitation personnel records, contractor records, sales figures, pricing information, financial records, profit and performance reports, projections, business plans, customer information (including the content, work product, or subject matter of any documents presented to Company by a customer, as well as customer financial information and information of a personal nature about a customer or its employees), customer lists, vendor information (including vendor contracts and costs), promotional methods, techniques and methods of operations, trade secrets, potentially patentable products and processes, information of third parties (including customers) that Company is obligated to keep confidential, and any information Company designates or deems proprietary or confidential.

Employee understands that Employee’s employment with Company created a relationship of confidence and trust between Employee and Company with respect to any Confidential Information. In consideration of the Severance Payment, Deferred Payments, and benefits provided in this Agreement and other good and valuable consideration, the sufficiency of which Employee hereby acknowledges, Employee agrees that Employee shall exercise Employee’s best efforts to protect Company’s Confidential Information. Employee further agrees that Employee will not disclose to any third party, including any prospective or new employer, or use for Employee’s or anyone else’s benefit or profit any Confidential Information. In the event Employee discloses or uses Confidential Information outside the scope of Employee’s employment with Company, Company will be entitled to injunctive relief from a court of competent jurisdiction, in addition to all other available remedies at law or in equity. The purpose of this non-disclosure provision is to protect, to the maximum extent permitted by law, Company’s protectable business interests in its Confidential Information. Nothing herein is intended to be or will be construed to prevent, impede, or interfere with Employee’s right to respond accurately and fully to any question, inquiry, or request for information regarding Company or Employee’s employment with Company when required by legal process, or from initiating communications directly with, or responding to any inquiry from, or providing truthful testimony and information to, any federal, state, or other regulatory authority in the course of an investigation or proceeding authorized by law and carried out by such agency. Employee is not required to contact Company regarding the subject matter of any such communications before engaging in such communications.

The federal Defend Trade Secrets Act of 2016 (the “Act”) provides immunity from liability in certain circumstances to Company employees, contractors, and consultants for limited disclosures of Company “trade secrets,” as defined by the Act. Specifically, Company employees, contractors, and consultants may disclose trade secrets: (1) in confidence, either directly or indirectly, to a federal, state, or local government official, or to an attorney, “solely for the purpose of reporting or investigating a suspected violation of law,” or (2) “in a complaint or other document filed in a lawsuit or other proceeding, if such filing is made under seal.” Additionally, employees, contractors, and consultants who file lawsuits for retaliation by an employer for reporting a suspected violation of law may use and disclose related trade secrets in the following manner: (1) the individual may disclose the trade secret to his/her attorney, and (2) the individual may use the information in the court proceeding, as long as the individual files any document containing the trade secret under seal and does not otherwise disclose the trade secret “except pursuant to court order.”

Restrictive Covenants. On or about June 24, 2015, at the time Employee accepted employment with Company, Employee agreed to non-solicitation and non-competition provisions, included within page

3 in Attachment A. On or about February 12, 2018, as part of a Severance Agreement, Employee agreed to Restrictive Covenants in Section 5 in Attachment B. On or about December 1, 2018, as part of a Restricted Stock Unit Agreement, Employee agreed to Restrictive Covenants, included within page 2 in Attachment C. On or about March 1, 2019, as part of a Restricted Stock Unit Agreement, Employee agreed to Restrictive Covenants, included within page 2 in Attachment D. On or about March 13, 2020, as part of a Performance Stock Unit Grant Notice, Employee agreed to Restrictive Covenants, included as page 10 in Attachment E. On or about March 8, 2021, as part of a Performance Stock Unit Grant Notice, Employee agreed to Restrictive Covenants, included as page 10 within Attachment F. The non-solicitation and non-competition provisions from Attachment A and each of the Restrictive Covenants from Exhibits B-F, and where applicable any Forfeiture provisions related to such Restrictive Covenants, are hereby reaffirmed by Employee as consideration for this Agreement and incorporated by reference. Additionally, as consideration for this Agreement and for other valid consideration, the receipt and sufficiency of which Employee hereby acknowledges, (i) Employee agrees to modify the duration of the twelve (12) month limitation in Exhibits A-F to eighteen (18) months, and for such time period, to notify any future employer of the non-solicitation and non-competition provisions, as modified herein and (ii) the Company hereby acknowledges and agrees that, notwithstanding anything in any non competition covenant to which Employee is subject to the contrary, it shall not be a violation of Employee’s non competition covenants for Employee to be employed or otherwise provide services in non-mortgage related finance businesses in which the Company does not materially compete.

Forfeiture & Repayment Obligation Upon Breach. If Employee breaches any provision of this Agreement (including without limitation the foregoing provisions related to cooperation, confidentiality, non-disparagement, return of Company property, non-disclosure, non-solicitation, or non-competition obligations), Employee shall not be eligible for, and shall forfeit all rights to, the Severance Payment, either Deferred Payment, or any other benefit under this Agreement. Furthermore, if Employee breaches any provision of this Agreement, Employee agrees to repay to Company the Severance Payment (or any installments thereof) and the Deferred Payments if previously paid to Employee, and agrees to make such repayment within seven (7) days of Company’s demand for such repayment. The Parties agree that this section and the preceding section, and Employee’s compliance with same, are material inducements for Company to enter into this Agreement.

Consideration of Medicare’s Interests. Employee is not a Medicare beneficiary and is not currently receiving, has not received in the past, will not have received at the time the Severance Payment or a Deferred Payment is due under this Agreement, is not entitled to, is not eligible for, and has not applied for or sought Social Security Disability or Medicare benefits. In the event any statement in the preceding sentence is incorrect (for example, but not limited to, if Employee is a Medicare beneficiary, etc.), the following sentences of this paragraph apply. Employee has made no claim for illness or injury against, nor is Employee aware of any facts supporting any claim against, the Company Releasees under which they could be liable for medical expenses incurred by Employee before or after the execution of this Agreement. Furthermore, Employee is aware of no medical expenses that Medicare has paid and for which the Company Releasees are or could be liable now or in the future. To the best of Employee’s knowledge, no liens of any governmental entities, including those for Medicare conditional payments, exist.

Indemnification. Employee shall be responsible for all federal, state, and local tax liability, if any, that may attach to amounts payable or other consideration given under this Agreement, and will defend, indemnify, and hold the Company Releasees harmless from and against, and will reimburse the Company Releasees for, any and all liability of whatever kind incurred by the Company Releasees as a result of any tax obligations of Employee, including but not limited to taxes, levies, assessments, penalties, fines, interest, attorneys’ fees, and costs. Employee warrants that Employee is not relying on the judgment or advice of any of the Company Releasees or legal counsel concerning the tax consequences, if any, of this Agreement.

Neutral Reference. Employee agrees to direct any person or entity seeking a reference for Employee to Kelly Ann Doherty, Chief People Officer, 8950 Cypress Waters Blvd., Coppell, TX 75019, kellyann.doherty@mrcooper.com, or her successor. In response to such reference inquiries, Company agrees to release only Employee’s dates of employment and final position held.

Resignation & No Future Employment. As consideration for this Agreement, Employee agrees to resign from all positions, and to not to seek future employment, with any of the Company Releasees. Employee shall have no recourse against the Company Releasees for any decision by any of the Company Releasees not to hire Employee or to discharge Employee in the future. Employee further agrees that this Agreement constitutes a legitimate, non-discriminatory, and non-retaliatory reason for the termination of any future employment or the rejection of any pending or future application for employment by Employee. The Parties stipulate and agree that Company has legitimate, non-discriminatory, and non-retaliatory reasons for the inclusion of this paragraph, which is a material inducement for Company to enter into this Agreement.

No Admissions or Waiver. This Agreement is not and shall not in any way be construed as an admission by any of the Company Releasees of any acts of liability or fault whatsoever with respect to Employee or any other person, or that any Company Releasee violated any federal, state, or local law, or that any Company Releasee’s actions were unwarranted, discriminatory, retaliatory, or otherwise unlawful. Company specifically denies and disclaims any liability to Employee or any other person or entity. Any failure of Company to enforce its rights and privileges under this Agreement shall not be deemed to constitute waiver of any rights and privileges contained herein.

Entire Agreement. This Agreement supersedes any and all prior agreements, arrangements, or understandings between the Parties regarding the subject matter hereof, other than any prior non-disclosure, non-competition, or non-solicitation provision, and any forfeiture provision related thereto, which are re-affirmed (where applicable, as modified herein) by Employee as consideration for this Agreement and incorporated (where applicable, as modified herein) by reference herein. There have been no representations, promises, understandings, or agreements made by either Party as an inducement for the other Party to enter into this Agreement other than what are expressly set forth and contained in the terms of this Agreement. Evidence of prior promises, commitments, agreements, arrangements, or understandings cannot be used to attempt to alter, amend, modify, or in any way change the written terms of this Agreement. Furthermore, the Parties cannot orally agree to alter, amend, modify, or in any way change the terms of this Agreement, and can make such alterations, amendments, modifications, or changes only in a written document that specifically references this Agreement and is signed by an authorized representative of each Party.

Governing Law; Jurisdiction and Venue. This Agreement is made and entered into in the state of Texas and shall be construed and enforced under the laws of the state of Texas, without giving effect to any choice or conflict of law provision or rule that would cause the application of the laws of any jurisdiction other than the state of Texas. The normal rule of construction that ambiguities shall be construed against the drafter shall not be employed in the interpretation of this Agreement. The Parties agree that the sole and exclusive jurisdiction and venue for any disputes arising out of or related to this Agreement among any of the Parties, the Company Releasees, or any other person released hereby shall be in the state or federal courts sitting in Dallas County, Texas.

Severability. The provisions of this Agreement are severable. If any clause is found to be unenforceable, it shall be modified to the minimum extent necessary to be enforceable, and if it cannot be so modified, it shall be severed. If one or more clauses are severed, the entire Agreement shall not fail but shall be construed or enforced without any severed clauses in accordance with the terms of this Agreement.

Counterparts. This Agreement can be executed in any number of counterparts, each of which shall be effective only upon delivery and thereafter shall be deemed an original, and all of which shall be taken to be one and the same instrument for the same effect as if all Parties hereto had signed the same

signature page. A facsimile or e-mail copy of any Party’s signature is as legally binding as the original signature.

Ownership of Claims. Employee is the sole and lawful owner of all rights, title, and interest in and to all released matters, claims, and demands referred to herein. There has been no assignment or other transfer of any interest in such matters, claims, or demands that Employee may have against Company.

Other Representations and Warranties. The Parties represent and warrant that: (a) they had the option to consult with counsel of their own choosing prior to executing this Agreement and are relying upon their own or their attorney’s judgment, belief, and knowledge with respect to the terms and effect of this Agreement; (b) neither of the Parties are relying on the other Party, or the other Party’s attorneys, for any advice or counsel, whether same is legal, tax, or other advice; (c) they have not been induced to enter this Agreement by a statement, action, or representation of any kind or character made by the persons or entities released under this Agreement, or any person or persons representing them, other than those expressly made in this Agreement; (d) they are legally competent to execute this Agreement; (e) they have carefully read and understand this Agreement, and have executed it freely, voluntarily, and without duress; (f) they are fully and completely informed of the facts relating to the subject matter of this Agreement, and all enter into this Agreement voluntarily after having given careful and mature consideration of the making of this Agreement; (g) they fully understand and intend this Agreement to be a full, final, and complete resolution of all matters described herein; and (h) they have actual authority to execute this Agreement.

_____________________________________ Anthony Ebers Date:________________________________ Mr. Cooper Group Inc. _________________________________________ Printed Name:_____________________________ Title:____________________________________ Date:____________________________________

EX-31.1

Exhibit 31.1

Certification Pursuant to Rules 13a-14(a) and 15d-14(a) as Adopted Pursuant to Section

302 of the Sarbanes-Oxley Act of 2002

I, Jay Bray, certify that:

1.I have reviewed this Quarterly Report on Form 10-Q for the six months ended June 30, 2021, of Mr. Cooper Group Inc.;

2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a - 15(e) and 15d - 15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a - 15(f) and 15d - 15(f)) for the registrant and have:

a.Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b.Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c.Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d.Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

5.The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):

a.All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

b.Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

Date:	July 29, 2021
/s/ Jay Bray
Jay Bray
Chief Executive Officer

EX-31.2

Exhibit 31.2

Certification Pursuant to Rules 13a-14(a) and 15d-14(a) as Adopted Pursuant to Section

302 of the Sarbanes-Oxley Act of 2002

I, Christopher G. Marshall, certify that:

1.I have reviewed this Quarterly Report on Form 10-Q for the six months ended June 30, 2021, of Mr. Cooper Group Inc.;

2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a - 15(e) and 15d - 15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a - 15(f) and 15d - 15(f)) for the registrant and have:

a.Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b.Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c.Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d.Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

5.The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):

a.All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

b.Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

Date:	July 29, 2021
/s/ Christopher G. Marshall
Christopher G. Marshall
Vice Chairman, President & Chief Financial Officer

EX-32.1

Exhibit 32.1

Certification Pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the

Sarbanes-Oxley Act of 2002

In connection with the Quarterly Report of Mr. Cooper Group Inc. (the “Company”) on Form 10-Q for the six months ended June 30, 2021, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Jay Bray, Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, to my knowledge, that:

(1)The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and

(2)The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date:	July 29, 2021
/s/ Jay Bray
Jay Bray
Chief Executive Officer

EX-32.2

Exhibit 32.2

Certification Pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the

Sarbanes-Oxley Act of 2002

In connection with the Quarterly Report of Mr. Cooper Group Inc. (the “Company”) on Form 10-Q for the six months ended June 30, 2021, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Christopher G. Marshall, Vice Chairman, President & Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, to my knowledge, that:

(1)The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and

(2)The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date:	July 29, 2021
/s/ Christopher G. Marshall
Christopher G. Marshall
Vice Chairman, President & Chief Financial Officer

XML

Cover Page - shares	6 Months Ended
	Jun. 30, 2021	Jul. 22, 2021
Cover [Abstract]
Document Type	10-Q
Document Quarterly Report	true
Document Period End Date	Jun. 30, 2021
Document Transition Report	false
Entity File Number	001-14667
Entity Registrant Name	Mr. Cooper Group Inc.
Entity Incorporation, State or Country Code	DE
Entity Tax Identification Number	91-1653725
Entity Address, Address Line One	8950 Cypress Waters Blvd
Entity Address, City or Town	Coppell
Entity Address, State or Province	TX
Entity Address, Postal Zip Code	75019
City Area Code	469
Local Phone Number	549-2000
Title of 12(b) Security	Common stock, $0.01 par value per share
Trading Symbol	COOP
Security Exchange Name	NASDAQ
Entity Current Reporting Status	Yes
Entity Interactive Data Current	Yes
Entity Filer Category	Large Accelerated Filer
Entity Small Business	false
Entity Emerging Growth Company	false
Entity Shell Company	false
Entity Common Stock, Shares Outstanding		86,148,567
Entity Central Index Key	0000933136
Current Fiscal Year End Date	--12-31
Document Fiscal Year Focus	2021
Document Fiscal Period Focus	Q2
Amendment Flag	false

XML

Condensed Consolidated Balance Sheets - USD ($) $ in Millions	Jun. 30, 2021	Dec. 31, 2020
Assets
Cash and cash equivalents	$ 716	$ 695
Restricted cash	113	135
Mortgage servicing rights at fair value	3,307	2,703
Advances and other receivables, net of reserves of $191 and $208, respectively	837	940
Mortgage loans held for sale at fair value	6,961	5,720
Property and equipment, net of accumulated depreciation of $108 and $96, respectively	110	113
Deferred tax assets, net	1,118	1,339
Other assets	5,211	7,173
Total assets of discontinues operations	4,935	5,347
Total assets	23,308	24,165
Liabilities and Stockholders’ Equity
Unsecured senior notes, net	2,075	2,074
Advance and warehouse facilities, net	7,310	6,258
Payables and other liabilities	4,895	7,159
MSR related liabilities - nonrecourse at fair value	888	967
Liabilities of discontinued operations	4,790	5,203
Total liabilities	19,958	21,661
Commitments and contingencies (Note 15)
Preferred stock at $0.00001 - 10 million shares authorized, 1.0 million shares issued and outstanding, respectively; aggregate liquidation preference of ten dollars, respectively	0	0
Common stock at $0.01 par value - 300 million shares authorized, 93.2 million and 92.0 million shares issued, respectively	1	1
Additional paid-in-capital	1,120	1,126
Retained earnings	2,434	1,434
Treasury shares at cost - 7.1 million and 2.6 million shares, respectively	(206)	(58)
Total Mr. Cooper stockholders’ equity	3,349	2,503
Non-controlling interests	1	1
Total stockholders’ equity	3,350	2,504
Total liabilities and stockholders’ equity	$ 23,308	$ 24,165

XML

Condensed Consolidated Balance Sheets (Parenthetical) - USD ($)	Jun. 30, 2021	Dec. 31, 2020
Statement of Financial Position [Abstract]
Advances and other receivables, reserves	$ 191,000,000	$ 208,000,000
Accumulated depreciation	$ 108,000,000	$ 96,000,000
Preferred stock, par value (in dollars per share)	$ 0.00001	$ 0.00001
Preferred stock, shares authorized (in shares)	10,000,000	10,000,000
Preferred stock, shares issued (in shares)	1,000,000.0	1,000,000.0
Preferred stock, shares outstanding (in shares)	1,000,000.0	1,000,000.0
Preferred stock, liquidation preference	$ 10	$ 10
Common stock, par value (in dollars per share)	$ 0.01	$ 0.01
Common stock, shares authorized (in shares)	300,000,000	300,000,000
Common stock, shares, issued (in shares)	93,200,000	92,000,000.0
Treasury stock (in shares)	7,100,000	2,600,000

XML

Unaudited Condensed Consolidated Statements of Operations - USD ($) $ in Millions	3 Months Ended		6 Months Ended
	Jun. 30, 2021	Jun. 30, 2020	Jun. 30, 2021	Jun. 30, 2020
Revenues:
Service related, net	$ (8)	$ 0	$ 572	$ (67)
Net gain on mortgage loans held for sale	582	618	1,261	949
Total revenues	574	618	1,833	882
Expenses:
Salaries, wages and benefits	277	238	554	472
General and administrative	148	160	325	350
Total expenses	425	398	879	822
Interest income	51	22	97	97
Interest expense	(119)	(127)	(245)	(266)
Other income, net	486	0	486	1
Total other income (expenses), net	418	(105)	338	(168)
Income (loss) from continuing operations before income tax expense (benefit)	567	115	1,292	(108)
Less: Income tax expense (benefit)	140	38	306	(26)
Net income (loss) from continuing operations	427	77	986	(82)
Net income (loss) from discontinued operations	12	(4)	14	(16)
Net income (loss)	439	73	1,000	(98)
Less: Net loss attributable to non-controlling interests	0	0	0	(3)
Net income (loss) attributable to Mr. Cooper	439	73	1,000	(95)
Less: Undistributed earnings attributable to participating stockholders	4	1	9	0
Net income (loss) attributable to common stockholders	$ 435	$ 72	$ 991	$ (95)
Earnings Per Share [Abstract]
Income (Loss) from Continuing Operations, Per Basic Share	$ 4.91	$ 0.82	$ 11.13	$ (0.86)
Income (Loss) from Continuing Operations, Per Diluted Share	4.72	0.81	10.65	(0.86)
Discontinued Operation, Income (Loss) from Discontinued Operation, Net of Tax, Per Basic Share	0.14	(0.04)	0.16	(0.18)
Discontinued Operation, Income (Loss) from Discontinued Operation, Net of Tax, Per Diluted Share	0.13	(0.04)	0.15	(0.18)
Basic (in dollars per share)	5.05	0.78	11.29	(1.04)
Diluted (in dollars per share)	$ 4.85	$ 0.77	$ 10.80	$ (1.04)

XML

Unaudited Condensed Consolidated Statements of Stockholders' Equity - USD ($) shares in Thousands, $ in Millions	Total	Cumulative effect, period of adoption, adjustment	Preferred Stock	Common Stock	Additional Paid-in Capital	Retained Earnings	Retained Earnings Cumulative effect, period of adoption, adjustment	Treasury Share Amount	Total Mr. Cooper Stockholders’ Equity	Total Mr. Cooper Stockholders’ Equity Cumulative effect, period of adoption, adjustment	Non-controlling Interests
Shares outstanding, beginning balance (in shares) at Dec. 31, 2019			1,000	91,118
Stockholders' equity, beginning balance at Dec. 31, 2019	$ 2,231	$ 7	$ 0	$ 1	$ 1,109	$ 1,122	$ 7	$ 0	$ 2,232	$ 7	$ (1)
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Shares issued / (surrendered) under incentive compensation plan (in shares)				904
Shares issued / (surrendered) under incentive compensation plan	(5)				(5)				(5)
Share-based compensation	10				10				10
Net income (loss)	(98)					(95)			(95)		(3)
Shares outstanding, ending balance (in shares) at Jun. 30, 2020			1,000	92,022
Stockholders' equity, ending balance at Jun. 30, 2020	2,145		$ 0	$ 1	1,114	1,034		0	2,149		(4)
Shares outstanding, beginning balance (in shares) at Mar. 31, 2020			1,000	91,970
Stockholders' equity, beginning balance at Mar. 31, 2020	2,066		$ 0	$ 1	1,108	961		0	2,070		(4)
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Shares issued / (surrendered) under incentive compensation plan (in shares)				52
Shares issued / (surrendered) under incentive compensation plan	0				0				0
Share-based compensation	6				6				6
Net income (loss)	73					73			73		0
Shares outstanding, ending balance (in shares) at Jun. 30, 2020			1,000	92,022
Stockholders' equity, ending balance at Jun. 30, 2020	2,145		$ 0	$ 1	1,114	1,034		0	2,149		(4)
Shares outstanding, beginning balance (in shares) at Dec. 31, 2020			1,000	89,457
Stockholders' equity, beginning balance at Dec. 31, 2020	2,504		$ 0	$ 1	1,126	1,434		(58)	2,503		1
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Shares issued / (surrendered) under incentive compensation plan (in shares)				1,197
Shares issued / (surrendered) under incentive compensation plan	(20)				(20)				(20)
Share-based compensation	14				14				14
Repurchase of common stock (in shares)				(4,505)
Repurchase of common stock	(148)							(148)	(148)
Net income (loss)	1,000					1,000			1,000		0
Shares outstanding, ending balance (in shares) at Jun. 30, 2021			1,000	86,149
Stockholders' equity, ending balance at Jun. 30, 2021	3,350		$ 0	$ 1	1,120	2,434		(206)	3,349		1
Shares outstanding, beginning balance (in shares) at Mar. 31, 2021			1,000	86,135
Stockholders' equity, beginning balance at Mar. 31, 2021	2,904		$ 0	$ 1	1,113	1,995		(206)	2,903		1
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Shares issued / (surrendered) under incentive compensation plan (in shares)				14
Shares issued / (surrendered) under incentive compensation plan	(1)				(1)				(1)
Share-based compensation	8				8				8
Net income (loss)	439					439			439		0
Shares outstanding, ending balance (in shares) at Jun. 30, 2021			1,000	86,149
Stockholders' equity, ending balance at Jun. 30, 2021	$ 3,350		$ 0	$ 1	$ 1,120	$ 2,434		$ (206)	$ 3,349		$ 1

XML

Unaudited Condensed Consolidated Statements of Cash Flows - USD ($) $ in Millions		6 Months Ended
		Jun. 30, 2021	Jun. 30, 2020
Operating Activities
Net income (loss)		$ 1,000	$ (98)
Net income (loss) from discontinued operations		14	(16)
Net income (loss) from continuing operations		986	(82)
Adjustments to reconcile net income (loss) from continuing operations to net cash attributable to operating activities:
Deferred tax expense (benefit)		220	(49)
Net gain on mortgage loans held for sale		(1,261)	(949)
Provision for servicing and non-servicing reserves		21	11
Fair value changes and amortization of mortgage servicing rights		190	1,055
Fair value changes in MSR related liabilities		2	(89)
Depreciation and amortization for property and equipment and intangible assets		31	36
Gain on sale of business		(487)	0
Other operating activities		24	26
Repurchases of forward loan assets out of Ginnie Mae securitizations		(5,812)	(2,092)
Mortgage loans originated and purchased for sale, net of fees		(47,560)	(23,110)
Sales proceeds and loan payment proceeds for mortgage loans held for sale		52,923	26,606
Changes in assets and liabilities:
Advances and other receivables		48	270
Other assets		101	(5)
Payables and other liabilities		13	(119)
Net cash attributable to operating activities - continuing operations		(561)	1,509
Net cash attributable to operating activities - discontinued operations		447	557
Net cash attributable to operating activities		(114)	2,066
Investing Activities
Property and equipment additions, net of disposals		(26)	(26)
Purchase of forward mortgage servicing rights		(217)	(31)
Proceeds on sale of forward mortgage servicing rights		13	43
Other investing activities		(17)	0
Net cash attributable to investing activities - continuing operations		(247)	(14)
Net cash attributable to investing activities - discontinued operations		0	0
Net cash attributable to investing activities		(247)	(14)
Financing Activities
Increase in advance and warehouse facilities		1,047	(520)
Settlements and repayments of excess spread financing		(81)	(110)
Issuance of unsecured senior notes		0	600
Redemption and repayment of unsecured senior notes		0	(698)
Repurchase of common stock		(148)	0
Other financing activities		(24)	(2)
Net cash attributable to financing activities - continuing operations		794	(730)
Net cash attributable to financing activities - discontinued operations		(440)	(633)
Net cash attributable to financing activities		354	(1,363)
Net (decrease) increase in cash, cash equivalents, and restricted cash		(7)	689
Cash, cash equivalents, and restricted cash - beginning of period		913	612
Cash, cash equivalents, and restricted cash - end of period(1)	[1]	906	1,301
Cash Flow, Noncash Investing and Financing Activities Disclosure [Abstract]
Consideration from sale of business		499	0
Purchase of forward mortgage servicing rights		$ 7	$ 0

[1] The following table provides a reconciliation of cash, cash equivalents and restricted cash to amounts reported within the condensed consolidated balance sheets. June 30, 2021June 30, 2020Cash and cash equivalents$716 $1,041 Restricted cash113 178 Restricted cash within assets of discontinued operations77 82 Total cash, cash equivalents, and restricted cash$906 $1,301 

XML

Unaudited Condensed Consolidated Statements of Cash Flows (Parenthetical) - USD ($) $ in Millions		Jun. 30, 2021	Jun. 30, 2020
Statement of Cash Flows [Abstract]
Cash and cash equivalents		$ 716	$ 1,041
Restricted cash		113	178
Restricted cash within assets of discontinued operations		77	82
Total cash, cash equivalents, and restricted cash	[1]	$ 906	$ 1,301

[1] The following table provides a reconciliation of cash, cash equivalents and restricted cash to amounts reported within the condensed consolidated balance sheets. June 30, 2021June 30, 2020Cash and cash equivalents$716 $1,041 Restricted cash113 178 Restricted cash within assets of discontinued operations77 82 Total cash, cash equivalents, and restricted cash$906 $1,301 

XML

Nature of Business and Basis of Presentation

6 Months Ended

Jun. 30, 2021

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Nature of Business and Basis of Presentation

1. Nature of Business and Basis of Presentation

Nature of Business

Mr. Cooper Group Inc., collectively with its consolidated subsidiaries, (“Mr. Cooper,” the “Company,” “we,” “us” or “our”) provides servicing, origination and transaction-based services related to single family residences throughout the United States with operations under its primary brands: Mr. Cooper® and Xome®. Mr. Cooper is one of the largest home loan originators and servicers in the country focused on delivering a variety of servicing and lending products, services and technologies. Xome provides technology and data enhanced solutions to homebuyers, home sellers, real estate agents and mortgage companies. The Company’s corporate website is located at www.mrcoopergroup.com. The Company has provided a glossary of terms, which defines certain industry-specific and other terms that are used herein, in Item 2, Management’s Discussion and Analysis of Financial Condition and Results of Operations, of this Form 10-Q.

On March 12, 2021, the Company entered into a Stock Purchase Agreement with Blend Labs, Inc. (“Blend Labs”), a Delaware corporation, pursuant to which Blend Labs will acquire the title business of the Company for a purchase price of approximately $500, consisting of approximately $450 in cash, subject to certain adjustments specified therein, and a retained interest of 9.9% for the Company (the “Title Transaction”). The Title Transaction was completed on June 30, 2021, with consideration received on July 1, 2021. A receivable for consideration was recorded in other assets in the Company’s condensed consolidated balance sheets as of June 30, 2021. Pursuant to the Stock Purchase Agreement, all cash generated, subject to certain adjustments, between March 13, 2021 and the closing date of the Title Transaction, were held for the benefit of Blend Labs. A $487 gain on the Title Transaction was recorded in the second quarter of 2021 upon closing of the Title Transaction, which was included in other income, net within the condensed consolidated statements of operations. In addition, the Company recorded total transaction costs of $2 and $5 for the three and six months ended June 30, 2021, respectively. The results of the title business were previously reported under the Xome segment. The carrying amounts of assets and liabilities associated with the title business were not material to the condensed consolidated balance sheets as of December 31, 2020.

On July 1, 2021, the Company entered into a definitive agreement for the sale of its reverse servicing portfolio, operating under the Champion Mortgage brand (“Champion”), to Mortgage Assets Management, LLC and its affiliates (“MAM”). The reverse servicing operation was previously reported in the Company’s Servicing segment. The Company determined the sale of the reverse servicing portfolio qualified for reporting as discontinued operations as of June 30, 2021. As a result, the reverse servicing operation is presented as discontinued operations in the Company’s condensed consolidated statements of operations and the assets and liabilities of the reverse servicing operation are presented as discontinued operations in the Company’s condensed consolidated balance sheets for all periods presented. Unless otherwise indicated, information in this report relates to the Company’s continuing operations. Refer to Note 2, Discontinued Operations for further details.

Basis of Presentation

The interim condensed consolidated financial statements of the Company have been prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) for interim financial information and in accordance with the instructions to Form 10-Q and Article 10 of Regulation S-X as promulgated by the Securities and Exchange Commission. Accordingly, the financial statements do not include all of the information and footnotes required by GAAP for complete financial statements and should be read in conjunction with the audited consolidated financial statements and notes thereto included in the Company’s Annual Reports on Form 10-K for the year ended December 31, 2020.

The interim condensed consolidated financial statements are unaudited; however, in the opinion of management, all adjustments, consisting of normal recurring items, considered necessary for a fair presentation of the results of the interim periods have been included. Dollar amounts are reported in millions, except per share data and other key metrics, unless otherwise noted.

Basis of Consolidation

The condensed consolidated financial statements include the accounts of the Company, its wholly-owned subsidiaries, other entities in which the Company has a controlling financial interest and those variable interest entities (“VIE”) where the Company’s wholly-owned subsidiaries are the primary beneficiaries. Assets and liabilities of VIEs and their respective results of operations are consolidated from the date that the Company became the primary beneficiary through the date the Company ceases to be the primary beneficiary. The Company applies the equity method of accounting to investments where it is able to exercise significant influence, but not control, over the policies and procedures of the entity and owns less than 50% of the voting interests. Investments in certain companies over which the Company does not exert significant influence are accounted for as cost method investments. Intercompany balances and transactions on consolidated entities have been eliminated.

Use of Estimates

The preparation of the condensed consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts reported in the condensed consolidated financial statements and accompanying notes. Actual results could differ from these estimates due to factors such as adverse changes in the economy, changes in interest rates, secondary market pricing for loans held for sale and derivatives, strength of underwriting and servicing practices, changes in prepayment assumptions, declines in home prices or discrete events adversely affecting specific borrowers, uncertainties in the economy from the COVID-19 pandemic, and such differences could be material.

In the second quarter of 2021, the Company refined its estimation process for determining the fair value of forward MSRs by incorporating an estimate of future cash flows from existing loans that are expected to be recaptured, which is consistent with recent pricing observed from market participants. This refinement did not result in a significant change to the overall valuation of the Company’s mortgage servicing rights (“MSRs”) portfolio. See Note 3, Mortgage Servicing Rights and Related Liabilities and Note 13, Fair Value Measurements for further discussion. There were no other changes to the Company’s use of estimates for the period ended June 30, 2021.

Recent Accounting Guidance Adopted

Accounting Standards Update 2019-12, Income Taxes (Topic 740) - Simplifying the Accounting for Income Taxes (“ASU 2019-12”) simplifies accounting for income taxes by removing certain exceptions from the general principles in Topic 740 including elimination of the exception to the incremental approach for intraperiod tax allocation when there is a loss from continuing operations and income or a gain from other items such as other comprehensive income. ASU 2019-12 also clarifies and amends certain guidance in Topic 740. ASU 2019-12 is effective for the Company on January 1, 2021. The adoption of the standard did not have a material impact to the Company’s condensed consolidated financial statements.

XML

Discontinued Operations and Disposal Groups

6 Months Ended

Jun. 30, 2021

Discontinued Operations and Disposal Groups [Abstract]

Disposal Groups, Including Discontinued Operations, Disclosure

2. Discontinued Operations

On July 1, 2021, the Company entered into a definitive agreement for the sale of its reverse servicing portfolio, operating under Champion, to MAM. Upon close of the transaction, which is subject to regulatory approvals and other closing conditions, MAM will assume Champion’s reverse portfolio and related operations. The sale is expected to close prior to the end of 2021. The carrying amounts of assets and liabilities associated with the reverse servicing operation are reported under the Servicing segment. The Company determined reverse servicing operations met the criteria for classification as held for sale as of June 30, 2021 and represents a strategic shift in the Company’s operations. Therefore, the sale of the reverse servicing portfolio qualifies for reporting as discontinued operations, and the assets and liabilities of the reverse servicing portfolio are reported as discontinued operations in the condensed consolidated balance sheets and related results of operations are reported as discontinued operations in the condensed consolidated statements of operations for all periods presented.

As part of the transaction, the Company entered into a servicing agreement with MAM, under which the Company will be compensated for continuing to service these reverse loans through the date that the loans are transferred out of Company’s servicing system, which will be the date of close. In addition, the Company will retain certain loans related to the reverse servicing portfolio, primarily related to previously liquidated loans, with total assets of $112 and total liabilities of $88 as of June 30, 2021.

The following table sets forth the assets and liabilities included in discontinued operations:

	June 30, 2021		December 31, 2020
Carrying amounts of assets of discontinued operations
Restricted cash	$	77	$	83
Reverse mortgage interests, net	4,910		5,253
Other	9		11
Loss recognized on classification as discontinued operations	(61)		—
Total assets of discontinues operations	$	4,935	$	5,347
Carrying amounts of liabilities of discontinued operations
Advances and warehouse facilities, net	$	525	$	505
Payables and other liabilities	224		233
Mortgage servicing liabilities	42		41
Other nonrecourse debt, net	3,999		4,424
Total liabilities of discontinued operations	$	4,790	$	5,203

The following table sets forth the condensed consolidated statements of operations data for discontinued operations:

	Three Months Ended June 30,				Six Months Ended June 30,
	2021		2020		2021		2020
Revenue - service related, net	$	1	$	12	$	9	$	26
Salaries, wages and benefits expense	(8)		(10)		(16)		(22)
General and administrative expense	71		(10)		64		(18)
Interest income	43		53		87		96
Interest expense	(30)		(50)		(64)		(103)
Loss on classification as discontinued operations	(61)		—		(61)		—
Income (loss) from discontinued operations before income tax expense (benefit)	16		(5)		19		(21)
Less: Income tax expense (benefit)	4		(1)		5		(5)
Net income (loss) from discontinued operations	$	12	$	(4)	$	14	$	(16)

XML

Mortgage Servicing Rights and Related Liabilities

6 Months Ended

Jun. 30, 2021

Transfers and Servicing [Abstract]

Mortgage Servicing Rights and Related Liabilities

3. Mortgage Servicing Rights and Related Liabilities

The following table sets forth the carrying value of the Company’s mortgage servicing rights (“MSRs”) and the related liabilities. In estimating the fair value of all mortgage servicing rights and related liabilities, the impact of the current environment was considered in the determination of key assumptions.

MSRs and Related Liabilities	June 30, 2021		December 31, 2020
Forward MSRs - fair value	$	3,307	$	2,703
Excess spread financing - fair value	$	867	$	934
Mortgage servicing rights financing - fair value	21		33
MSR related liabilities - nonrecourse at fair value	$	888	$	967

Forward Mortgage Servicing Rights

The following table sets forth the activities of forward MSRs:

	Six Months Ended June 30,
Forward MSRs - Fair Value	2021		2020
Fair value - beginning of period	$	2,703	$	3,496
Additions:
Servicing retained from mortgage loans sold	554		249
Purchases of servicing rights	218		24
Dispositions:
Sales of servicing assets	(12)		—
Changes in fair value:
Changes in valuation inputs or assumptions used in the valuation model	270		(717)
Changes in valuation due to amortization	(460)		(338)
Other changes	34		43
Fair value - end of period	$	3,307	$	2,757

During the six months ended June 30, 2021 and 2020, the Company sold $1,076 and $71 in unpaid principal balance (“UPB”) of forward MSRs, of which $1,008 and none were retained by the Company as subservicer, respectively.

MSRs measured at fair value are segregated between investor type into agency and non-agency pools (referred to herein as “investor pools”) based upon contractual servicing agreements with investors at the respective balance sheet date to evaluate the MSR portfolio and fair value of the portfolio. Agency investors primarily consist of government sponsored enterprises (“GSE”), such as the Federal National Mortgage Association (“Fannie Mae” or “FNMA”) and the Federal Home Loan Mortgage Corp (“Freddie Mac” or “FHLMC”), and the Government National Mortgage Association (“Ginnie Mae” or “GNMA”). Non-agency investors consist of investors in private-label securitizations.

The following table provides a breakdown of UPB and fair value for the Company’s forward MSRs:

	June 30, 2021				December 31, 2020
Forward MSRs - UPB and Fair Value Breakdown	UPB		Fair Value		UPB		Fair Value
Investor Pools
Agency	$	248,799	$	2,955	$	227,136	$	2,305
Non-agency	38,656		352		44,053		398
Total	$	287,455	$	3,307	$	271,189	$	2,703

In the second quarter of 2021, the Company refined its estimate of the fair value of forward MSRs by incorporating an estimate of future cash flows from existing loans that are expected to be recaptured. The estimate of future cash flows related to recapture is consistent with recent pricing observed from various market participants, including the Company’s independent, third-party valuation firms. As a result of considering the recapture rate, the Company adjusted its discount rate assumption in order to ensure that the fair value of forward MSRs remains consistent with current market participant pricing and was also corroborated with valuations provided by independent, third parties. The net impact on the overall forward MSRs fair value was not significant during the three and six months ended June 30, 2021. Refer to Note 13, Fair Value Measurements, for further discussion on key weighted-average inputs and assumptions used in estimating the fair value of forward MSRs.

The following table shows the hypothetical effect on the fair value of the Company’s forward MSRs when applying certain unfavorable variations of key assumptions to these assets for the dates indicated:

	Discount Rate				Total Prepayment Speeds				Cost to Service per Loan
Forward MSRs - Hypothetical Sensitivities	100 bps Adverse Change		200 bps Adverse Change		10% Adverse Change		20% Adverse Change		10% Adverse Change		20% Adverse Change
June 30, 2021
Mortgage servicing rights	$	(112)	$	(216)	$	(139)	$	(268)	$	(43)	$	(87)
December 31, 2020
Mortgage servicing rights	$	(100)	$	(192)	$	(181)	$	(347)	$	(45)	$	(89)

These hypothetical sensitivities should be evaluated with care. The effect on fair value of an adverse change in assumptions generally cannot be determined because the relationship of the change in assumptions to the fair value may not be linear. Additionally, the impact of a variation in a particular assumption on the fair value is calculated while holding other assumptions constant. In reality, changes in one factor may lead to changes in other factors, which could impact the above hypothetical effects.

Excess Spread Financing - Fair Value

The Company had excess spread financing liability of $867 and $934 as of June 30, 2021 and December 31, 2020, respectively. Refer to Note 13, Fair Value Measurements, for key weighted-average inputs and assumptions used in the valuation of excess spread financing.

The following table shows the hypothetical effect on the Company’s excess spread financing fair value when applying certain unfavorable variations of key assumptions to these liabilities for the dates indicated:

	Discount Rate				Prepayment Speeds
Excess Spread Financing - Hypothetical Sensitivities	100 bps Adverse Change		200 bps Adverse Change		10% Adverse Change		20% Adverse Change
June 30, 2021
Excess spread financing	$	30	$	61	$	34	$	70
December 31, 2020
Excess spread financing	$	30	$	62	$	41	$	84

These hypothetical sensitivities should be evaluated with care. The effect on fair value of an adverse change in assumptions generally cannot be determined because the relationship of the change in assumptions to the fair value may not be linear. Additionally, the impact of a variation in a particular assumption on the fair value is calculated while holding other assumptions constant. In reality, changes in one factor may lead to changes in other factors, which could impact the above hypothetical effects. Also, a positive change in the above assumptions would not necessarily correlate with the corresponding decrease in the net carrying amount of the excess spread financing. Excess spread financing’s cash flow assumptions that are utilized in determining fair value are based on the related cash flow assumptions used in the financed MSRs. Any fair value change recognized in the financed MSRs attributable to related cash flows assumptions would inherently have an inverse impact on the carrying amount of the related excess spread financing.

Mortgage Servicing Rights Financing - Fair Value

The Company had MSR financing liability of $21 and $33 as of June 30, 2021 and December 31, 2020, respectively. Refer to Note 13, Fair Value Measurements, for key weighted-average inputs and assumptions used in the valuation of the MSR financing liability.

Servicing Segment Revenues

The following table sets forth the items comprising total revenues for the Servicing segment:

	Three Months Ended June 30,				Six Months Ended June 30,
Total Revenues - Servicing	2021		2020		2021		2020
Contractually specified servicing fees(1)	$	275	$	285	$	551	$	582
Other service-related income(1)	214		62		359		111
Incentive and modification income(1)	14		8		28		18
Late fees(1)	16		20		34		47
Mark-to-market adjustments(2)	(180)		(261)		174		(644)
Counterparty revenue share(3)	(76)		(88)		(159)		(164)
Amortization, net of accretion(4)	(158)		(107)		(314)		(191)
Total revenues - Servicing	$	105	$	(81)	$	673	$	(241)

(1)The Company recognizes revenue on an earned basis for services performed. Amounts include subservicing related revenues.

(2)Mark-to-market (“MTM”) adjustments include fair value adjustments on MSR, excess spread financing and MSR financing liabilities. The amount of MSR MTM includes the impact of negative modeled cash flows which have been transferred to reserves on advances and other receivables. The negative modeled cash flows relate to advances and other receivables associated with inactive and liquidated loans that are no longer part of the MSR portfolio. The impact of negative modeled cash flows was $8 and $3 for the three months ended June 30, 2021 and 2020 and $20 and $13 for the six months ended June 30, 2021 and 2020, respectively.

(3)Counterparty revenue share represents the excess servicing fee that the Company pays to the counterparties under the excess spread financing arrangements and the payments made associated with MSR financing arrangements.

(4)Amortization is net of excess spread accretion of $70 and $79 during the three months ended June 30, 2021 and 2020, respectively. For the six months ended June 30, 2021 and 2020, amortization is net of excess spread accretion of $146 and $147, respectively.

XML

Advances and Other Receivables

6 Months Ended

Jun. 30, 2021

Receivables [Abstract]

Advances and Other Receivables

4. Advances and Other Receivables

Advances and other receivables, net, consists of the following:

Advances and Other Receivables, Net	June 30, 2021		December 31, 2020
Servicing advances, net of $26 and $72 purchase discount, respectively	$	856	$	975
Receivables from agencies, investors and prior servicers, net of $20 and $21 purchase discount, respectively	172		173
Reserves	(191)		(208)
Total advances and other receivables, net	$	837	$	940

The following table sets forth the activities of the servicing reserves for advances and other receivables:

	Three Months Ended June 30,				Six Months Ended June 30,
Reserves for Advances and Other Receivables	2021		2020		2021		2020
Balance - beginning of period	$	206	$	193	$	208	$	168
Provision and other additions(1)	26		29		41		59
Write-offs	(41)		(6)		(58)		(11)
Balance - end of period	$	191	$	216	$	191	$	216

(1)The Company recorded a provision of $8 and $3 through the MTM adjustments in revenues - service related, net, in the unaudited condensed consolidated statements of operations during the three months ended June 30, 2021 and 2020, respectively, and $20 and $13 during the six months ended June 30, 2021 and 2020, respectively, for inactive and liquidated loans that are no longer part of the MSR portfolio. Other additions represent reclassifications of required reserves provisioned within other balance sheet accounts as associated serviced loans become inactive or liquidate.

Purchase Discount for Advances and Other Receivables

The following tables set forth the activities of the purchase discounts for advances and other receivables:

	Three Months Ended June 30,
	2021				2020
Purchase Discount for Advances and Other Receivables	Servicing Advances		Receivables from Agencies, Investors and Prior Servicers		Servicing Advances		Receivables from Agencies, Investors and Prior Servicers
Balance - beginning of period	$	63	$	20	$	125	$	21
Utilization of purchase discounts	(37)		—		(8)		—
Balance - end of period	$	26	$	20	$	117	$	21

	Six Months Ended June 30,
	2021				2020
Purchase Discount for Advances and Other Receivables	Servicing Advances		Receivables from Agencies, Investors and Prior Servicers		Servicing Advances		Receivables from Agencies, Investors and Prior Servicers
Balance - beginning of period	$	72	$	21	$	131	$	21
Utilization of purchase discounts	(46)		(1)		(14)		—
Balance - end of period	$	26	$	20	$	117	$	21

Credit Loss for Advances and Other Receivables

During the three and six months ended June 30, 2021, the Company increased the current expected credit loss (“CECL”) reserve by $3 and $4, respectively. During the three and six months ended June 30, 2020, the Company increased the CECL reserve by $8 and $14, respectively. As of June 30, 2021, the total CECL reserve was $42, of which $25 and $17 were recorded in reserves and purchase discount for advances and other receivables, respectively. As of June 30, 2020, the total CECL reserve was $31, of which $14 and $17 were recorded in reserves and purchase discount for advances and other receivables, respectively.

The Company determined that the credit-related risk associated with applicable financial instruments typically increase with the passage of time. The CECL reserve methodology considers these financial instruments collectible to a point in time of 39 months. Any projected remaining balance at the end of the collection period is considered a loss and factors into the overall CECL loss rate required.

XML

Mortgage Loans Held for Sale

6 Months Ended

Jun. 30, 2021

Mortgage Loans Held for Sale and Investment [Abstract]

Mortgage Loans Held for Sale

5. Mortgage Loans Held for Sale

Mortgage loans held for sale are recorded at fair value as set forth below:

Mortgage Loans Held for Sale	June 30, 2021		December 31, 2020
Mortgage loans held for sale – UPB	$	6,706	$	5,438
Mark-to-market adjustment(1)	255		282
Total mortgage loans held for sale	$	6,961	$	5,720

(1)The mark-to-market adjustment includes net change in unrealized gain/loss, premium on correspondent loans and fees on direct-to-consumer loans. The mark-to-market adjustment is recorded in net gain on mortgage loans held for sale in the unaudited condensed consolidated statements of operations.

The following table sets forth the activities of mortgage loans held for sale:

	Six Months Ended June 30,
Mortgage Loans Held for Sale	2021		2020
Balance - beginning of period	$	5,720	$	4,077
Loans sold	(52,128)		(26,149)
Mortgage loans originated and purchased, net of fees	47,560		23,110
Repurchase of loans out of Ginnie Mae securitizations	5,812		2,092
Net change in unrealized (loss) gain on retained loans held for sale	(5)		42
Net transfers of mortgage loans held for sale(1)	2		7
Balance - end of period	$	6,961	$	3,179

(1)Amount reflects transfers to other assets for loans transitioning into REO status and transfers to advances and other receivables, net, for claims made on certain government insurance mortgage loans. Transfers out are net of transfers in upon receipt of proceeds from an REO sale or claim filing.

During the six months ended June 30, 2021 and 2020, the Company received proceeds of $52,923 and $26,606, respectively, on the sale of mortgage loans held for sale, resulting in gains of $795 and $457, respectively.

The total UPB and fair value of mortgage loans held for sale on non-accrual status was as follows:

	June 30, 2021				December 31, 2020
Mortgage Loans Held for Sale	UPB		Fair Value		UPB		Fair Value
Non-accrual(1)	$	1,178	$	1,216	$	64	$	54

(1)Non-accrual UPB includes $1,149 and $48 of UPB related to Ginnie Mae repurchased loans as of June 30, 2021 and December 31, 2020, respectively.

The total UPB of mortgage loans held for sale for which the Company has begun formal foreclosure proceedings was $19 and $20 as of June 30, 2021 and December 31, 2020, respectively.

XML

Loans Subject to Repurchase from Ginnie Mae

6 Months Ended

Jun. 30, 2021

Receivables [Abstract]

Loans Subject to Repurchase from Ginnie Mae

6. Loans Subject to Repurchase from Ginnie Mae

Forward loans are sold to Ginnie Mae in conjunction with the issuance of mortgage backed securities. The Company, as the issuer of the mortgage backed securities, has the unilateral right to repurchase any individual loan in a Ginnie Mae securitization pool if that loan meets certain criteria, including payments not being received from borrowers for greater than 90 days. Once the Company has the unilateral right to repurchase a delinquent loan, it has effectively regained control over the loan and recognizes these rights to the loan on its condensed consolidated balance sheets and establishes a corresponding repurchase liability regardless of the Company’s intention to repurchase the loan. The Company had loans subject to repurchase from Ginnie Mae of $4,057 and $6,159 as of June 30, 2021 and December 31, 2020, respectively, which are included in both other assets and payables and other liabilities in the condensed consolidated balance sheets. Loans subject to repurchase from Ginnie Mae as of June 30, 2021 and December 31, 2020 include $3,825 and $5,879 loans in forbearance related to the Coronavirus Aid, Relief, and Economic Security Act (“CARES Act”), respectively, whereby no payments have been received from borrowers for greater than 90 days.

XML

Goodwill and Intangible Assets	6 Months Ended
	Jun. 30, 2021
Goodwill and Intangible Assets Disclosure [Abstract]
Goodwill and Intangible Assets	7. Goodwill and Intangible Assets The Company had goodwill of $120 as of June 30, 2021 and December 31, 2020. The Company had intangible assets of $22 and $31 as of June 30, 2021 and December 31, 2020, respectively. Goodwill and intangible assets are included in other assets within the condensed consolidated balance sheets.

XML

Derivative Financial Instruments

6 Months Ended

Jun. 30, 2021

Derivative Instruments and Hedging Activities Disclosure [Abstract]

Derivative Financial Instruments

8. Derivative Financial Instruments

Derivative instruments are used as part of the overall strategy to manage exposure to market risks primarily associated with fluctuations in interest rates related to originations. Derivative instruments utilized by the Company primarily include interest rate lock commitments (“IRLCs”), loan purchase commitments (“LPCs”), forward Mortgage Backed Securities (“MBS”) purchase commitments, Eurodollar and Treasury futures and interest rate swap agreements. The changes in value on the derivative instruments are recorded in earnings as a component of net gain on mortgage loans held for sale on the condensed consolidated statements of operations and condensed consolidated statement of cash flows, except for a portion of forward MBS trades to hedge MSR pipelines and related fair value changes, which is recorded in service related, net on the condensed consolidated statements of operations and in changes in other assets or other liabilities on the condensed consolidated statements of cash flows.

The following tables provide the outstanding notional balances, fair values of outstanding positions and recorded gains/(losses) for the derivative financial instruments:

		June 30, 2021				Six Months Ended June 30, 2021
Derivative Financial Instruments	Expiration Dates	Outstanding Notional		Fair Value		Gains/(Losses)
Assets
Mortgage loans held for sale
Loan sale commitments	2021	$	1,514	$	39	$	(63)
Derivative financial instruments
IRLCs	2021	6,730		204		(210)
LPCs	2021	1,984		10		(28)
Forward MBS trades	2021	9,749		27		(10)
Swap futures	2021	60		—		—
Total derivative financial instruments - assets		$	18,523	$	241	$	(248)
Liabilities
Derivative financial instruments
IRLCs	2021	$	9	$	—	$	—
LPCs	2021	708		1		—
Forward MBS trades	2021	11,747		25		(131)
Total derivative financial instruments - liabilities		$	12,464	$	26	$	(131)

		June 30, 2020				Six Months Ended June 30, 2020
Derivative Financial Instruments	Expiration Dates	Outstanding Notional		Fair Value		Gains/(Losses)
Assets
Mortgage loans held for sale
Loan sale commitments	2020	$	1,673	$	81	$	48
Derivative financial instruments
IRLCs	2020	9,227		370		235
LPCs	2020	1,823		18		6
Forward MBS trades	2020	1,239		3		(3)
Eurodollar futures	2020-2021	6		—		—
Total derivative financial instruments - assets		$	12,295	$	391	$	238
Liabilities
Derivative financial instruments
LPCs	2020	$	55	$	—	$	(2)
Forward MBS trades	2020	10,119		50		37
Eurodollar futures	2020-2021	5		—		—
Total derivative financial instruments - liabilities		$	10,179	$	50	$	35

The Company held $2 and $61 in collateral deposits on derivative instruments as of June 30, 2021 and December 31, 2020, respectively, which are recorded in other assets in the Company’s condensed consolidated balance sheets. The Company does not offset fair value amounts recognized for derivative instruments with amounts collected or deposited on derivative instruments in the condensed consolidated balance sheets.

XML

Indebtedness

6 Months Ended

Jun. 30, 2021

Debt Disclosure [Abstract]

Indebtedness

9. Indebtedness

Advance and Warehouse Facilities

						June 30, 2021				December 31, 2020
	Interest Rate	Maturity Date	Collateral	Capacity Amount		Outstanding		Collateral Pledged		Outstanding		Collateral Pledged
Advance Facilities
$875 advance facility	CP+2.0% to 6.5%	January 2022	Servicing advance receivables	$	875	$	143	$	168	$	168	$	195
$640 advance facility(1)	LIBOR+3.9%	August 2022	Servicing advance receivables	640		201		264		235		305
$425 advance facility	LIBOR+1.7% to 6.5%	October 2021	Servicing advance receivables	425		167		219		192		246
$100 advance facility	LIBOR+2.5%	January 2022	Servicing advance receivables	100		66		69		74		98
Advance facilities principal amount						577		720		669		844
Warehouse Facilities
$2,500 warehouse facility(2)	LIBOR+1.6% to 1.9%	October 2021	Mortgage loans or MBS	2,500		1,374		1,424		1,003		1,037
$2,000 warehouse facility(3)	LIBOR+1.5% to 1.8%	February 2023	Mortgage loans or MBS	2,000		1,968		2,124		339		392
$1,500 warehouse facility	LIBOR+1.5%	June 2022	Mortgage loans or MBS	1,500		607		584		1,081		1,028
$1,350 warehouse facility(4)(5)	LIBOR+1.8% to 3.9%	September 2022	Mortgage loans or MBS	1,350		1,018		1,065		951		977
$1,200 warehouse facility(5)	LIBOR+1.8% to 3.0%	November 2021	Mortgage loans or MBS	1,200		293		303		586		607
$750 warehouse facility	LIBOR+1.8% to 2.3%	August 2021	Mortgage loans or MBS	750		400		412		477		492
$750 warehouse facility	LIBOR+1.7% to 2.8%	October 2021	Mortgage loans or MBS	750		303		313		562		574
$600 warehouse facility(5)	LIBOR+2.5%	February 2022	Mortgage loans or MBS	600		77		78		—		—
$500 warehouse facility	LIBOR+1.5% to 3.0%	June 2023	Mortgage loans or MBS	500		—		—		—		—
$500 warehouse facility(5)	LIBOR+1.5% to 4.0%	June 2022	Mortgage loans or MBS	500		146		145		—		—
$300 warehouse facility	LIBOR+1.4%	January 2022	Mortgage loans or MBS	300		93		94		163		164
$200 warehouse facility	LIBOR+1.8%	August 2021	Mortgage loans or MBS	200		180		184		131		134
$50 warehouse facility	LIBOR+1.8% to 4.8%	April 2022	Mortgage loans or MBS	50		11		15		37		42
$30 warehouse facility(5)(6)	LIBOR+3.3%	January 2022	Mortgage loans or MBS	30		—		—		—		—
Warehouse facilities principal amount						6,470		6,741		5,330		5,447
MSR Facilities
$260 warehouse facility(1)	LIBOR+3.9%	August 2022	MSR	260		260		865		260		668
$200 warehouse facility	LIBOR+3.5%	August 2021	MSR	200		—		517		—		247
$150 warehouse facility(4)	LIBOR+3.8%	September 2022	MSR	150		—		453		—		228
$50 warehouse facility	LIBOR+3.3%	November 2022	MSR	50		10		72		10		74
MSR facilities principal amount						270		1,907		270		1,217
Advance, warehouse and MSR facilities principal amount						7,317		$	9,368	6,269		$	7,508
Unamortized debt issuance costs						(7)				(11)
Advance and warehouse facilities, net						$	7,310			$	6,258
Pledged Collateral for warehouse and MSR facilities:
Mortgage loans held for sale						$	6,470	$	6,741	$	5,330	$	5,447
MSR						270		1,907		270		1,217

(1)Total capacity for this facility is $900, of which $640 is internally allocated for advance financing and $260 is internally allocated for MSR financing; capacity is fully fungible and is not restricted by these allocations.

(2)The capacity amount for this warehouse facility increased from $1,500 to $2,500 in 2021.

(3)The capacity amount for this warehouse facility subsequently increased from $2,000 to $4,000 in July 2021.

(4)Total capacity amount for this facility is $1,500, of which $150 is a sublimit for MSR financing.

(5)The outstanding and collateral pledged amounts excluded balances related to reverse mortgage interests, which are included in liabilities of discontinued operations. Refer to Note 2, Discontinued Operations for further details on liabilities of discontinued operations.

(6)The capacity amount for this warehouse facility decreased from $40 to $30 in 2021.

Unsecured Senior Notes

Unsecured senior notes consist of the following:

Unsecured Senior Notes	June 30, 2021		December 31, 2020
$850 face value, 5.500% interest rate payable semi-annually, due August 2028	$	850	$	850
$650 face value, 5.125% interest rate payable semi-annually, due December 2030	650		650
$600 face value, 6.000% interest rate payable semi-annually, due January 2027	600		600
Unsecured senior notes principal amount	2,100		2,100
Unamortized debt issuance costs	(25)		(26)
Unsecured senior notes, net	$	2,075	$	2,074

The indentures provide that on or before certain fixed dates, the Company may redeem up to 40% 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. 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 six months ended June 30, 2021 and three months ended June 30, 2020. During the six months ended June 30, 2020, the Company repaid $100 in principal of outstanding notes, and redeemed $598 in principal of outstanding notes, resulting in a gain of $1.

As of June 30, 2021, the expected maturities of the Company’s unsecured senior notes based on contractual maturities are as follows:

Year Ending December 31,	Amount
2021 through 2025	$	—
Thereafter	2,100
Total unsecured senior notes principal amount	$	2,100

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, 2021.

XML

Securitizations and Financings

6 Months Ended

Jun. 30, 2021

Variable Interest Entities and Securitizations [Abstract]

Securitizations and Financings

10. Securitizations and Financings

Variable Interest Entities

In the normal course of business, the Company enters into various types of on- and off-balance sheet transactions with special purpose entities (“SPEs”) determined to be VIEs, which primarily consist of securitization trusts established for a limited purpose. Generally, these SPEs are formed for the purpose of securitization transactions in which the Company transfers assets to an SPE, which then issues to investors various forms of debt obligations supported by those assets.

The Company has determined that the SPEs created in connection with certain advance facilities trusts should be consolidated as the Company is the primary beneficiary of each of these entities.

A summary of the assets and liabilities of the Company’s transactions with VIEs included in the Company’s condensed consolidated balance sheets is presented below:

	June 30, 2021		December 31, 2020
Consolidated Transactions with VIEs	Transfers Accounted for as Secured Borrowings		Transfers Accounted for as Secured Borrowings
Assets
Restricted cash	$	44	$	47
Advances and other receivables, net	387		441
Total assets	$	431	$	488
Liabilities
Advance facilities(1)	$	310	$	358
Payables and other liabilities	—		1
Total liabilities	$	310	$	359

(1)Refer to advance facilities in Note 9, Indebtedness, for additional information.

The following table shows a summary of the outstanding collateral and certificate balances for securitization trusts for which the Company was the transferor, including any retained beneficial interests and MSRs, that were not consolidated by the Company:

Unconsolidated Securitization Trusts	June 30, 2021		December 31, 2020
Total collateral balances - UPB	$	1,230	$	1,326
Total certificate balances	$	1,229	$	1,329

The Company has not retained any variable interests in the unconsolidated securitization trusts that were outstanding as of June 30, 2021 and December 31, 2020. Therefore, it does not have a significant maximum exposure to loss related to these unconsolidated VIEs.

A summary of mortgage loans transferred by the Company to unconsolidated securitization trusts that are 60 days or more past due are presented below:

Principal Amount of Transferred Loans 60 Days or More Past Due	June 30, 2021		December 31, 2020
Unconsolidated securitization trusts	$	141	$	154

XML

Earnings Per Share

6 Months Ended

Jun. 30, 2021

Earnings Per Share [Abstract]

Earnings Per Share

11. Earnings Per Share

The Company computes earnings per share using the two-class method, which is an earnings allocation formula that determines earnings per share for common stock and any participating securities according to dividends declared (whether paid or unpaid) and participation rights in undistributed earnings. The Series A Preferred Stock is considered participating securities because it has dividend rights determined on an as-converted basis in the event of Company’s declaration of a dividend or distribution for common shares. On March 26, 2021, the Company repurchased 3,700 thousand shares of its common stock from affiliates of Kohlberg Kravis Roberts & Co. L.P., a related party of the Company, for a total cost of $119 or $32.25 per share.

The following table sets forth the computation of basic and diluted net income (loss) per common share (amounts in millions, except per share amounts):

	Three Months Ended June 30,				Six Months Ended June 30,
Computation of Earnings Per Share	2021		2020		2021		2020
Net income (loss) from continuing operations	$	427	$	77	$	986	$	(82)
Less: Net loss attributable to non-controlling interests	—		—		—		(3)
Less: Undistributed earnings from continuing operations attributable to participating stockholders	4		1		9		—
Net income (loss) from continuing operations attributable to Mr. Cooper common stockholders	$	423	$	76	$	977	$	(79)
Net income (loss) from discontinued operations	$	12	$	(4)	$	14	$	(16)
Less: Undistributed earnings from discontinued operations attributable to participating stockholders	—		—		—		—
Net income (loss) from discontinued operations attributable to Mr. Cooper common stockholders	$	12	$	(4)	$	14	$	(16)
Net income (loss)	$	439	$	73	$	1,000	$	(98)
Less: Net loss attributable to non-controlling interests	—		—		—		(3)
Net income (loss) attributable to Mr. Cooper	439		73		1,000		(95)
Less: Undistributed earnings attributable to participating stockholders	4		1		9		—
Net income (loss) attributable to common stockholders	$	435	$	72	$	991	$	(95)
Earnings from continuing operations per common share attributable to Mr. Cooper:
Basic	$	4.91	$	0.82	$	11.13	$	(0.86)
Diluted	$	4.72	$	0.81	$	10.65	$	(0.86)
Earnings from discontinued operations per common share attributable to Mr. Cooper:
Basic	$	0.14	$	(0.04)	$	0.16	$	(0.18)
Diluted	$	0.13	$	(0.04)	$	0.15	$	(0.18)
Earnings per common share attributable to Mr. Cooper:
Basic	$	5.05	$	0.78	$	11.29	$	(1.04)
Diluted	$	4.85	$	0.77	$	10.80	$	(1.04)
Weighted average shares of common stock outstanding (in thousands):
Basic	86,142		91,997		87,791		91,691
Dilutive effect of stock awards(1)	2,664		176		3,123		—
Dilutive effect of participating securities(1)	839		839		839		—
Diluted	89,645		93,012		91,753		91,691

(1)For periods with net loss, the Company excluded potential common shares from the computation of diluted EPS because inclusion would be antidilutive.

XML

Income Taxes

6 Months Ended

Jun. 30, 2021

Income Tax Disclosure [Abstract]

Income Taxes

12. Income Taxes

For the three and six months ended June 30, 2021, the effective tax rate was 24.8% and 23.7%, respectively, which differed from the statutory federal rate of 21% primarily due to state income taxes and nondeductible executive compensation. The effective tax rate decreased during the six months ended June 30, 2021 compared to the same period in 2020, primarily due to quarterly discrete tax items related to the completion of the Title Transaction and excess tax benefit from stock-based compensation.

For the three and six months ended June 30, 2020, the effective tax rate was 33.0% and 24.2%, respectively, which differed from the statutory federal rate of 21% primarily due to state income taxes and nondeductible executive compensation.

XML

Fair Value Measurements

6 Months Ended

Jun. 30, 2021

Fair Value Disclosures [Abstract]

Fair Value Measurements

13. Fair Value Measurements

Fair value is a market-based measurement, not an entity-specific measurement, and should be determined based on the assumptions that market participants would use in pricing the asset or liability. As a basis for considering market participant assumptions in fair value measurements, a three-tiered fair value hierarchy has been established based on the level of observable inputs used in the measurement of fair value (e.g., Level 1 representing quoted prices for identical assets or liabilities in an active market; Level 2 representing values using observable inputs other than quoted prices included within Level 1; and Level 3 representing estimated values based on significant unobservable inputs).

There have been no significant changes to the valuation techniques and inputs used by the Company in estimating fair values of Level 2 and Level 3 assets and liabilities as disclosed in the Company’s Annual Reports on Form 10-K for the year ended December 31, 2020, with the exception of the following:

Mortgage Servicing Rights – Fair Value (Level 3) – The Company estimates the fair value of its forward MSRs on a recurring basis using a process that combines the use of a discounted cash flow model and analysis of current market data to arrive at an estimate of fair value. The cash flow assumptions and prepayment assumptions used in the model are based on a discounted cash flow model which incorporates prepayment speeds, delinquencies, discount rate, ancillary revenues, float earnings and other assumptions (including costs to service, recapture rates and forbearance rates), with the key assumptions being mortgage prepayment speeds, discount rates, and cost to service. In the second quarter of 2021, the Company refined its estimate of the fair value of forward MSRs by incorporating an estimate of future cash flows from loans that are expected to be recaptured. The estimate of future cash flows related to recapture is consistent with recent pricing observed from various market participants, including the Company’s independent third-party valuation firms As a result of considering the recapture rate, the Company adjusted its discount rate assumption in order to ensure that the fair value of forward MSRs remains consistent with current market participant pricing and is reflective of an exit price. The estimated fair value was also corroborated with valuations provided by independent third parties. The net impact on the overall forward MSRs fair value was not significant during the three and six months ended June 30, 2021. These assumptions are generated and applied based on collateral stratifications including product type, remittance type, geography, delinquency and coupon dispersion. These assumptions require the use of judgment by the Company and can have a significant impact on the fair value of the MSRs. Quarterly, management obtains third-party valuations to assess the reasonableness of the fair value calculations provided by the internal cash flow model. Because of the nature of the valuation inputs, the Company classifies these valuations as Level 3 in the fair value disclosures. See Note 3, Mortgage Servicing Rights and Related Liabilities, for more information.

The following tables present the estimated carrying amount and fair value of the Company’s financial instruments and other assets and liabilities measured at fair value on a recurring basis:

	June 30, 2021
			Recurring Fair Value Measurements
Fair Value - Recurring Basis	Total Fair Value		Level 1		Level 2		Level 3
Assets
Mortgage loans held for sale	$	6,961	$	—	$	6,961	$	—
Forward mortgage servicing rights	3,307		—		—		3,307
Derivative financial instruments
IRLCs	204		—		—		204
LPCs	10		—		—		10
Forward MBS trades	27		—		27		—
Liabilities
Derivative financial instruments
LPCs	1		—		—		1
Forward MBS trades	25		—		25		—
Mortgage servicing rights financing	21		—		—		21
Excess spread financing	867		—		—		867

	December 31, 2020
			Recurring Fair Value Measurements
Fair Value - Recurring Basis	Total Fair Value		Level 1		Level 2		Level 3
Assets
Mortgage loans held for sale	$	5,720	$	—	$	5,720	$	—
Forward mortgage servicing rights	2,703		—		—		2,703
Derivative financial instruments
IRLCs	414		—		—		414
LPCs	38		—		—		38
Forward MBS trades	37		—		37		—
Liabilities
Derivative financial instruments
LPCs	1		—		—		1
Forward MBS trades	156		—		156		—
Mortgage servicing rights financing	33		—		—		33
Excess spread financing	934		—		—		934

The tables below present a reconciliation for all of the Company’s Level 3 assets and liabilities measured at fair value on a recurring basis:

	Six Months Ended June 30, 2021
	Assets						Liabilities
Fair Value - Level 3 Assets and Liabilities	Forward mortgage servicing rights		IRLCs		LPCs		Excess spread financing		Mortgage servicing rights financing
Balance - beginning of period	$	2,703	$	414	$	38	$	934	$	33
Changes in fair value included in earnings	(190)		(210)		(28)		14		(12)
Other changes	34		—		—		—		—
Purchases, issuances, sales, repayments and settlements
Purchases	218		—		—		—		—
Issuances	554		—		—		—		—
Sales	(12)		—		—		—		—
Settlements and repayments	—		—		—		(81)		—
Balance - end of period	$	3,307	$	204	$	10	$	867	$	21

	Six Months Ended June 30, 2020
	Assets				Liabilities
Fair Value - Level 3 Assets and Liabilities	Forward mortgage servicing rights		IRLCs		Excess spread financing		Mortgage servicing rights financing
Balance - beginning of period	$	3,496	$	135	$	1,311	$	37
Changes in fair value included in earnings	(1,055)		235		(101)		12
Other changes	43		—		—		—
Purchases, issuances, sales, repayments and settlements
Purchases	24		—		—		—
Issuances	249		—		24		—
Settlements and repayments	—		—		(110)		—
Balance - end of period	$	2,757	$	370	$	1,124	$	49

No transfers were made in or out of Level 3 fair value assets and liabilities for the Company during the six months ended June 30, 2021 and 2020.

The tables below present the quantitative information for significant unobservable inputs used in the fair value measurement of Level 3 assets and liabilities:

	June 30, 2021									December 31, 2020
	Range						Weighted Average			Range						Weighted Average
Level 3 Inputs	Min			Max						Min			Max
Forward MSR
Discount rate	9.5		%	13.8		%	11.0		%	8.2		%	12.0		%	9.4		%
Prepayment speed	12.4		%	18.8		%	13.6		%	14.2		%	21.3		%	15.4		%
Cost to service per loan(1)	$	63		$	223		$	86		$	66		$	257		$	98
Average life(2)							5.5 years									5.0 years
IRLCs
Value of servicing (basis points per loan)	(0.7)			2.3			1.4			(1.0)			2.2			1.2
Excess spread financing
Discount rate	9.5		%	13.8		%	11.2		%	9.9		%	15.7		%	12.2		%
Prepayment speed	12.6		%	15.3		%	13.5		%	13.9		%	15.0		%	14.4		%
Recapture rate	13.7		%	29.5		%	21.3		%	17.7		%	24.2		%	19.5		%
Average life(2)							5.4 years									5.1 years
Mortgage servicing rights financing
Advance financing and counterparty fee rates	5.3		%	8.2		%	6.9		%	4.6		%	8.5		%	7.5		%
Annual advance recovery rates	18.9		%	22.7		%	20.8		%	18.3		%	22.0		%	19.9		%

(1)Presented in whole dollar amounts.

(2)Average life is included for informational purposes.

The tables below present a summary of the estimated carrying amount and fair value of the Company’s financial instruments not carried at fair value:

	June 30, 2021
	Carrying Amount		Fair Value
Financial Instruments			Level 1		Level 2		Level 3
Financial assets
Cash and cash equivalents	$	716	$	716	$	—	$	—
Restricted cash	113		113		—		—
Advances and other receivables, net	837		—		—		837
Loans subject to repurchase from Ginnie Mae	4,057		—		4,057		—
Financial liabilities
Unsecured senior notes, net	2,075		2,117		—		—
Advance and warehouse facilities, net	7,310		—		7,317		—
Liability for loans subject to repurchase from Ginnie Mae	4,057		—		4,057		—

	December 31, 2020
	Carrying Amount		Fair Value
Financial Instruments			Level 1		Level 2		Level 3
Financial assets
Cash and cash equivalents	$	695	$	695	$	—	$	—
Restricted cash	135		135		—		—
Advances and other receivables, net	940		—		—		940
Loans subject to repurchase from Ginnie Mae	6,159		—		6,159		—
Financial liabilities
Unsecured senior notes, net	2,074		2,208		—		—
Advance and warehouse facilities, net	6,258		—		6,269		—
Liability for loans subject to repurchase from Ginnie Mae	6,159		—		6,159		—

XML

Capital Requirements

6 Months Ended

Jun. 30, 2021

Mortgage Banking [Abstract]

Capital Requirements

14. Capital Requirements

Certain of the Company’s secondary market investors require minimum net worth (“capital”) requirements, as specified in the respective selling and servicing agreements. In addition, these investors may require capital ratios in excess of the stated requirements to approve large servicing transfers. To the extent that these requirements are not met, the Company’s secondary market investors may utilize a range of remedies ranging from sanctions, suspension or ultimately termination of the Company’s selling and servicing agreements, which would prohibit the Company from further originating or securitizing these specific types of mortgage loans or being an approved servicer. The Company’s various capital requirements related to its outstanding selling and servicing agreements are measured based on the Company’s operating subsidiary, Nationstar Mortgage LLC. As of June 30, 2021, the Company was in compliance with its selling and servicing capital requirements.

XML

Commitments and Contingencies

6 Months Ended

Jun. 30, 2021

Commitments and Contingencies Disclosure [Abstract]

Commitments and Contingencies

15. Commitments and Contingencies

Litigation and Regulatory

The Company and its subsidiaries are routinely and currently involved in a significant number of legal proceedings, including, but not limited to, judicial, arbitration, regulatory and governmental proceedings related to matters that arise in connection with the conduct of the Company’s business. The legal proceedings are at varying stages of adjudication, arbitration or investigation and are generally based on alleged violations of consumer protection, securities, employment, contract, tort, common law fraud and other numerous laws, including, without limitation, the Equal Credit Opportunity Act, Fair Debt Collection Practices Act, Fair Credit Reporting Act, Real Estate Settlement Procedures Act, National Housing Act, Homeowners Protection Act, Service Member’s Civil Relief Act, Telephone Consumer Protection Act, Truth in Lending Act, Financial Institutions Reform, Recovery, and Enforcement Act of 1989, unfair, deceptive or abusive acts or practices in violation of the Dodd-Frank Act, the Securities Act of 1933, the Securities Exchange Act of 1934, the Home Mortgage Disclosure Act, Title 11 of the United States Code (aka the “Bankruptcy Code”), False Claims Act and Making Home Affordable loan modification programs.

In addition, along with others in its industry, the Company is subject to repurchase and indemnification claims and may continue to receive claims in the future, regarding alleged breaches of representations and warranties relating to the sale of mortgage loans, the placement of mortgage loans into securitization trusts or the servicing of mortgage loans securitizations. The Company is also subject to legal actions or proceedings related to loss sharing and indemnification provisions of its various acquisitions. Certain of the pending or threatened legal proceedings include claims for substantial compensatory, punitive and/ or statutory damages or claims for an indeterminate amount of damages.

The Company operates within highly regulated industries on a federal, state and local level. In the normal and ordinary course of its business, the Company is routinely subject to extensive examinations, investigations, subpoenas, inquiries and reviews by various federal, state and local governmental, regulatory and enforcement agencies, including the Consumer Financial Protection Bureau, the Securities and Exchange Commission, the Department of Justice, the Office of the Special Inspector General for the Troubled Asset Relief Program, the U.S. Department of Housing and Urban Development, various State mortgage banking regulators and various State Attorneys General, related to the Company’s residential loan servicing and origination practices, its financial reporting and other aspects of its businesses. Any pending or potential future investigations, subpoenas, examinations or inquiries may lead to administrative, civil or criminal proceedings or settlements, and possibly result in remedies including fines, penalties, restitution, or alterations in the Company’s business practices, and additional expenses and collateral costs. The Company is cooperating fully in these matters. Responding to these matters requires the Company to devote substantial resources, resulting in higher costs and lower net cash flows. Adverse results in any of these matters could further increase the Company’s operating expenses and reduce its revenues, require it to change business practices and limit its ability to grow and otherwise materially and adversely affect its business, reputation, financial condition and results of operation.

The Company seeks to resolve all legal proceedings and other matters in the manner management believes is in the best interest of the Company and contests liability, allegations of wrongdoing and, where applicable, the amount of damages or scope of any penalties or other relief sought as appropriate in each pending matter. The Company has entered into agreements with a number of entities and regulatory agencies that toll applicable limitations periods with respect to their claims.

On at least a quarterly basis, the Company assesses its liabilities and contingencies in connection with outstanding legal and regulatory and governmental proceedings utilizing the latest information available. Where available information indicates that it is probable, a liability has been incurred, and the Company can reasonably estimate the amount of the loss, an accrued liability is established. The actual costs of resolving these proceedings may be substantially higher or lower than the amounts accrued.

As a legal matter develops, the Company, in conjunction with any outside counsel handling the matter, evaluates on an ongoing basis whether such matter presents a loss contingency that is both probable and estimable. If, at the time of evaluation, the loss contingency is not both probable and reasonably estimable, the matter will continue to be monitored for further developments that would make such loss contingency both probable and reasonably estimable. Once the matter is deemed to be both probable and reasonably estimable, the Company will establish an accrued liability and record a corresponding amount to legal-related expense. The Company will continue to monitor the matter for further developments that could affect the amount of the accrued liability that has been previously established. Legal-related expense for the Company, which includes legal settlements and the fees paid to external legal service providers, of $8 and $21 for three and six months ended June 30, 2021, respectively, and $12 and $27 for three and six months ended June 30, 2020, respectively, was included in general and administrative expenses on the unaudited condensed consolidated statements of operations.

For matters for which a loss is probable or reasonably possible in future periods, whether in excess of a related accrued liability or where there is no accrued liability, the Company may be able to estimate a range of possible loss. In determining whether it is possible to provide an estimate of loss or range of possible loss, the Company reviews and evaluates its material legal matters on an ongoing basis, in conjunction with any outside counsel handling the matter. Management currently believes the aggregate range of reasonably possible loss is $2 to $17 in excess of the accrued liability (if any) related to those matters as of June 30, 2021. This estimated range of possible loss is based upon currently available information and is subject to significant judgment, numerous assumptions and known and unknown uncertainties. The matters underlying the estimated range will change from time to time, and actual results may vary substantially from the current estimate. Those matters for which an estimate is not possible are not included within the estimated range. Therefore, this estimated range of possible loss represents what management believes to be an estimate of possible loss only for certain matters meeting these criteria. It does not represent the Company’s maximum loss exposure and the Company cannot provide assurance that its litigations reserves will not need to be adjusted in the future. Thus, the Company’s exposure and ultimate losses may be higher, possibly significantly so, than the amounts accrued or this aggregate amount.    

In the Company’s experience, legal proceedings are inherently unpredictable. One or more of the following factors frequently contribute to this inherent unpredictability: the proceeding is in its early stages; the damages sought are unspecified, unsupported or uncertain; it is unclear whether a case brought as a class action will be allowed to proceed on that basis or, if permitted to proceed as a class action, how the class will be defined; the other party is seeking relief other than or in addition to compensatory damages (including, in the case of regulatory and governmental investigations and inquiries, the possibility of fines and penalties); the matter presents meaningful legal uncertainties, including novel issues of law; the Company has not engaged in meaningful settlement discussions; discovery has not started or is not complete; there are significant facts in dispute; predicting possible outcomes depends on making assumptions about future decisions of courts or governmental or regulatory bodies or the behavior of other parties; and there are a large number of parties named as defendants (including where it is uncertain how damages or liability, if any, will be shared among multiple defendants). Generally, the less progress that has been made in the proceedings or the broader the range of potential results, the harder it is for the Company to estimate losses or ranges of losses that is reasonably possible the Company could incur.

Based on current knowledge, and after consultation with counsel, management believes that the current legal accrued liability within payables and accrued liabilities, is appropriate, and the amount of any incremental liability arising from these matters is not expected to have a material adverse effect on the consolidated financial condition of the Company, although the outcome of such proceedings could be material to the Company’s operating results and cash flows for a particular period depending, on among other things, the level of the Company’s revenues or income for such period. However, in the event of significant developments on existing cases, it is possible that the ultimate resolution, if unfavorable, may be material to the Company’s condensed consolidated financial statements.

Other Loss Contingencies

As part of the Company’s ongoing operations, it acquires servicing rights of forward mortgage loan portfolios that are subject to indemnification based on the representations and warranties of the seller. From time to time, the Company will seek recovery under these representations and warranties for incurred costs. The Company believes all balances sought from sellers recorded in advances and other receivables represent valid claims. However, the Company acknowledges that the claims process can be prolonged due to the required time to perfect claims at the loan level. Because of the required time to perfect or remediate these claims, management relies on the sufficiency of documentation supporting the claim, current negotiations with the counterparty and other evidence to evaluate whether a reserve is required for non-recoverable balances. In the absence of successful negotiations with the seller, all amounts claimed may not be recovered. Balances may be written-off and charged against earnings when management identifies amounts where recoverability from the seller is not likely. As of June 30, 2021, the Company believes all recorded balances for which recovery is sought from the seller are valid claims, and no evidence suggests additional reserves are warranted.

Loan and Other Commitments

The Company enters into IRLCs with prospective borrowers whereby the Company commits to lend a certain loan amount under specific terms and interest rates to the borrower. The Company also enters into LPCs with prospective sellers. These loan commitments are treated as derivatives and are carried at fair value. See Note 8, Derivative Financial Instruments, for more information.

In the second quarter of 2021, the Company entered into an agreement, under which the Company committed a total of $83 over a period of 5 years in exchange for cloud platform service.

XML

Segment Information

6 Months Ended

Jun. 30, 2021

Segment Reporting [Abstract]

Segment Information

16. Segment Information

The Company’s segments are based upon the Company’s organizational structure, which focuses primarily on the services offered. Corporate functional expenses are allocated to individual segments based on the actual cost of services performed, direct resource utilization, estimate of percentage use for shared services or headcount percentage for certain functions. Facility costs are allocated to individual segments based on cost per headcount for specific facilities utilized. Group insurance costs are allocated to individual segments based on global cost per headcount. Non-allocated corporate expenses include the administrative costs of executive management and other corporate functions that are not directly attributable to Company’s operating segments. Revenues generated on inter-segment services performed are valued based on similar services provided to external parties.

On June 30, 2021, the Company closed the previously announced sale of title business to Blend Labs. Pursuant to the Stock Purchase Agreement, all cash generated, subject to certain adjustments, between March 13, 2021 and the closing date of the Title Transaction, were held for the benefit of Blend Labs. The title business was reported in the Company’s Xome segment. See Note 1, Nature of Business and Basis of Presentation for further details. The Company recorded a $487 gain in the second quarter of 2021 upon closing of the transaction. The gain was included in other income, net in the condensed statements of operations and reported under the Xome segment.

On July 1, 2021, the Company entered into a definitive agreement for the sale of its reverse servicing portfolio, operating under the Champion Mortgage brand, to Mortgage Assets Management, LLC and its affiliates. The reverse servicing operation was previously reported in the Company’s Servicing segment. The reverse servicing operation is presented as discontinued operations in Company’s condensed consolidated financial statements for all periods presented and as such is not included in the continuing operations of the Servicing segment. Refer to Note 2, Discontinued Operations for further details. As of June 30, 2021 and December 31, 2020, total assets of discontinued operations was $4,935 and $5,347, respectively.

The following tables present financial information by segment:

	Three Months Ended June 30, 2021
Financial Information by Segment	Servicing		Originations		Xome		Corporate/Other		Consolidated
Revenues
Service related, net	$	(92)	$	45	$	39	$	—	$	(8)
Net gain on mortgage loans held for sale	197		385		—		—		582
Total revenues	105		430		39		—		574
Total expenses	121		226		45		33		425
Interest income	25		26		—		—		51
Interest expense	(65)		(23)		—		(31)		(119)
Other income, net	—		—		486		—		486
Total other (expenses) income, net	(40)		3		486		(31)		418
(Loss) Income from continuing operations before income tax (benefit) expense	$	(56)	$	207	$	480	$	(64)	$	567
Depreciation and amortization for property and equipment and intangible assets from continuing operations	$	7	$	6	$	3	$	—	$	16
Total assets	$	15,973	$	4,582	$	573	$	2,180	$	23,308

	Three Months Ended June 30, 2020
Financial Information by Segment	Servicing		Originations		Xome		Corporate/Other		Consolidated
Revenues
Service related, net	$	(126)	$	21	$	106	$	(1)	$	—
Net gain on mortgage loans held for sale	45		573		—		—		618
Total revenues	(81)		594		106		(1)		618
Total expenses	102		167		95		34		398
Interest income	3		19		—		—		22
Interest expense	(67)		(13)		—		(47)		(127)
Other income (expense), net	—		—		1		(1)		—
Total other (expenses) income, net	(64)		6		1		(48)		(105)
(Loss) income from continuing operations before income tax (benefit) expense	$	(247)	$	433	$	12	$	(83)	$	115
Depreciation and amortization for property and equipment and intangible assets from continuing operations	$	4	$	4	$	3	$	6	$	17
Total assets	$	10,736	$	3,592	$	135	$	2,837	$	17,300

	Six Months Ended June 30, 2021
Financial information by segment	Servicing		Originations		Xome		Corporate/Other		Consolidated
Revenues
Service related, net	$	349	$	88	$	135	$	—	$	572
Net gain on mortgage loans held for sale	324		937		—		—		1,261
Total revenues	673		1,025		135		—		1,833
Total expenses	231		457		132		59		879
Interest income	48		49		—		—		97
Interest expense	(136)		(48)		—		(61)		(245)
Other income, net	—		—		486		—		486
Total other (expenses) income, net	(88)		1		486		(61)		338
Income (loss) from continuing operations before income tax (benefit) expense	$	354	$	569	$	489	$	(120)	$	1,292
Depreciation and amortization for property and equipment and intangible assets from continuing operations	$	12	$	10	$	6	$	3	$	31
Total assets	$	15,973	$	4,582	$	573	$	2,180	$	23,308

	Six Months Ended June 30, 2020
Financial information by segment	Servicing		Originations		Xome		Corporate/Other		Consolidated
Revenues
Service related, net	$	(320)	$	41	$	212	$	—	$	(67)
Net gain on mortgage loans held for sale	79		870		—		—		949
Total revenues	(241)		911		212		—		882
Total expenses	231		333		191		67		822
Interest income	43		53		—		1		97
Interest expense	(127)		(40)		—		(99)		(266)
Other income (expense), net	—		—		2		(1)		1
Total other (expenses) income, net	(84)		13		2		(99)		(168)
(Loss) income from continuing operations before income tax expense (benefit)	$	(556)	$	591	$	23	$	(166)	$	(108)
Depreciation and amortization for property and equipment and intangible assets from continuing operations	$	8	$	7	$	6	$	15	$	36
Total assets	$	10,736	$	3,592	$	135	$	2,837	$	17,300

XML

Nature of Business and Basis of Presentation (Policies)

6 Months Ended

Jun. 30, 2021

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Basis of presentation

Basis of Presentation

The interim condensed consolidated financial statements of the Company have been prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) for interim financial information and in accordance with the instructions to Form 10-Q and Article 10 of Regulation S-X as promulgated by the Securities and Exchange Commission. Accordingly, the financial statements do not include all of the information and footnotes required by GAAP for complete financial statements and should be read in conjunction with the audited consolidated financial statements and notes thereto included in the Company’s Annual Reports on Form 10-K for the year ended December 31, 2020.

The interim condensed consolidated financial statements are unaudited; however, in the opinion of management, all adjustments, consisting of normal recurring items, considered necessary for a fair presentation of the results of the interim periods have been included. Dollar amounts are reported in millions, except per share data and other key metrics, unless otherwise noted.

Basis of consolidation

Basis of ConsolidationThe condensed consolidated financial statements include the accounts of the Company, its wholly-owned subsidiaries, other entities in which the Company has a controlling financial interest and those variable interest entities (“VIE”) where the Company’s wholly-owned subsidiaries are the primary beneficiaries. Assets and liabilities of VIEs and their respective results of operations are consolidated from the date that the Company became the primary beneficiary through the date the Company ceases to be the primary beneficiary. The Company applies the equity method of accounting to investments where it is able to exercise significant influence, but not control, over the policies and procedures of the entity and owns less than 50% of the voting interests. Investments in certain companies over which the Company does not exert significant influence are accounted for as cost method investments. Intercompany balances and transactions on consolidated entities have been eliminated.

Use of estimates

Use of Estimates

The preparation of the condensed consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts reported in the condensed consolidated financial statements and accompanying notes. Actual results could differ from these estimates due to factors such as adverse changes in the economy, changes in interest rates, secondary market pricing for loans held for sale and derivatives, strength of underwriting and servicing practices, changes in prepayment assumptions, declines in home prices or discrete events adversely affecting specific borrowers, uncertainties in the economy from the COVID-19 pandemic, and such differences could be material.

In the second quarter of 2021, the Company refined its estimation process for determining the fair value of forward MSRs by incorporating an estimate of future cash flows from existing loans that are expected to be recaptured, which is consistent with recent pricing observed from market participants. This refinement did not result in a significant change to the overall valuation of the Company’s mortgage servicing rights (“MSRs”) portfolio. See Note 3, Mortgage Servicing Rights and Related Liabilities and Note 13, Fair Value Measurements for further discussion. There were no other changes to the Company’s use of estimates for the period ended June 30, 2021.

Recent accounting guidance adopted

Recent Accounting Guidance AdoptedAccounting Standards Update 2019-12, Income Taxes (Topic 740) - Simplifying the Accounting for Income Taxes (“ASU 2019-12”) simplifies accounting for income taxes by removing certain exceptions from the general principles in Topic 740 including elimination of the exception to the incremental approach for intraperiod tax allocation when there is a loss from continuing operations and income or a gain from other items such as other comprehensive income. ASU 2019-12 also clarifies and amends certain guidance in Topic 740. ASU 2019-12 is effective for the Company on January 1, 2021. The adoption of the standard did not have a material impact to the Company’s condensed consolidated financial statements.

XML

Discontinued Operations and Disposal Groups (Tables)

6 Months Ended

Jun. 30, 2021

Discontinued Operations and Disposal Groups [Abstract]

Disposal Groups, Including Discontinued Operations

The following table sets forth the assets and liabilities included in discontinued operations:

	June 30, 2021		December 31, 2020
Carrying amounts of assets of discontinued operations
Restricted cash	$	77	$	83
Reverse mortgage interests, net	4,910		5,253
Other	9		11
Loss recognized on classification as discontinued operations	(61)		—
Total assets of discontinues operations	$	4,935	$	5,347
Carrying amounts of liabilities of discontinued operations
Advances and warehouse facilities, net	$	525	$	505
Payables and other liabilities	224		233
Mortgage servicing liabilities	42		41
Other nonrecourse debt, net	3,999		4,424
Total liabilities of discontinued operations	$	4,790	$	5,203

The following table sets forth the condensed consolidated statements of operations data for discontinued operations:

	Three Months Ended June 30,				Six Months Ended June 30,
	2021		2020		2021		2020
Revenue - service related, net	$	1	$	12	$	9	$	26
Salaries, wages and benefits expense	(8)		(10)		(16)		(22)
General and administrative expense	71		(10)		64		(18)
Interest income	43		53		87		96
Interest expense	(30)		(50)		(64)		(103)
Loss on classification as discontinued operations	(61)		—		(61)		—
Income (loss) from discontinued operations before income tax expense (benefit)	16		(5)		19		(21)
Less: Income tax expense (benefit)	4		(1)		5		(5)
Net income (loss) from discontinued operations	$	12	$	(4)	$	14	$	(16)

XML

Mortgage Servicing Rights and Related Liabilities (Tables)

6 Months Ended

Jun. 30, 2021

Transfers and Servicing [Abstract]

Schedule of servicing assets at fair value

The following table sets forth the carrying value of the Company’s mortgage servicing rights (“MSRs”) and the related liabilities. In estimating the fair value of all mortgage servicing rights and related liabilities, the impact of the current environment was considered in the determination of key assumptions.

MSRs and Related Liabilities	June 30, 2021		December 31, 2020
Forward MSRs - fair value	$	3,307	$	2,703
Excess spread financing - fair value	$	867	$	934
Mortgage servicing rights financing - fair value	21		33
MSR related liabilities - nonrecourse at fair value	$	888	$	967

The following table sets forth the activities of forward MSRs:

	Six Months Ended June 30,
Forward MSRs - Fair Value	2021		2020
Fair value - beginning of period	$	2,703	$	3,496
Additions:
Servicing retained from mortgage loans sold	554		249
Purchases of servicing rights	218		24
Dispositions:
Sales of servicing assets	(12)		—
Changes in fair value:
Changes in valuation inputs or assumptions used in the valuation model	270		(717)
Changes in valuation due to amortization	(460)		(338)
Other changes	34		43
Fair value - end of period	$	3,307	$	2,757

The following table provides a breakdown of UPB and fair value for the Company’s forward MSRs:

	June 30, 2021				December 31, 2020
Forward MSRs - UPB and Fair Value Breakdown	UPB		Fair Value		UPB		Fair Value
Investor Pools
Agency	$	248,799	$	2,955	$	227,136	$	2,305
Non-agency	38,656		352		44,053		398
Total	$	287,455	$	3,307	$	271,189	$	2,703

Schedule of sensitivity analysis of fair value, transferor's interests in transferred financial assets

The following table shows the hypothetical effect on the fair value of the Company’s forward MSRs when applying certain unfavorable variations of key assumptions to these assets for the dates indicated:

	Discount Rate				Total Prepayment Speeds				Cost to Service per Loan
Forward MSRs - Hypothetical Sensitivities	100 bps Adverse Change		200 bps Adverse Change		10% Adverse Change		20% Adverse Change		10% Adverse Change		20% Adverse Change
June 30, 2021
Mortgage servicing rights	$	(112)	$	(216)	$	(139)	$	(268)	$	(43)	$	(87)
December 31, 2020
Mortgage servicing rights	$	(100)	$	(192)	$	(181)	$	(347)	$	(45)	$	(89)

The following table shows the hypothetical effect on the Company’s excess spread financing fair value when applying certain unfavorable variations of key assumptions to these liabilities for the dates indicated:

	Discount Rate				Prepayment Speeds
Excess Spread Financing - Hypothetical Sensitivities	100 bps Adverse Change		200 bps Adverse Change		10% Adverse Change		20% Adverse Change
June 30, 2021
Excess spread financing	$	30	$	61	$	34	$	70
December 31, 2020
Excess spread financing	$	30	$	62	$	41	$	84

Schedule of fees earned in exchange for servicing financial assets

The following table sets forth the items comprising total revenues for the Servicing segment:

	Three Months Ended June 30,				Six Months Ended June 30,
Total Revenues - Servicing	2021		2020		2021		2020
Contractually specified servicing fees(1)	$	275	$	285	$	551	$	582
Other service-related income(1)	214		62		359		111
Incentive and modification income(1)	14		8		28		18
Late fees(1)	16		20		34		47
Mark-to-market adjustments(2)	(180)		(261)		174		(644)
Counterparty revenue share(3)	(76)		(88)		(159)		(164)
Amortization, net of accretion(4)	(158)		(107)		(314)		(191)
Total revenues - Servicing	$	105	$	(81)	$	673	$	(241)

(1)The Company recognizes revenue on an earned basis for services performed. Amounts include subservicing related revenues.

(2)Mark-to-market (“MTM”) adjustments include fair value adjustments on MSR, excess spread financing and MSR financing liabilities. The amount of MSR MTM includes the impact of negative modeled cash flows which have been transferred to reserves on advances and other receivables. The negative modeled cash flows relate to advances and other receivables associated with inactive and liquidated loans that are no longer part of the MSR portfolio. The impact of negative modeled cash flows was $8 and $3 for the three months ended June 30, 2021 and 2020 and $20 and $13 for the six months ended June 30, 2021 and 2020, respectively.

(3)Counterparty revenue share represents the excess servicing fee that the Company pays to the counterparties under the excess spread financing arrangements and the payments made associated with MSR financing arrangements.

(4)Amortization is net of excess spread accretion of $70 and $79 during the three months ended June 30, 2021 and 2020, respectively. For the six months ended June 30, 2021 and 2020, amortization is net of excess spread accretion of $146 and $147, respectively.

XML

Advances and Other Receivables (Tables)

6 Months Ended

Jun. 30, 2021

Receivables [Abstract]

Schedule of accounts receivable

Advances and other receivables, net, consists of the following:

Advances and Other Receivables, Net	June 30, 2021		December 31, 2020
Servicing advances, net of $26 and $72 purchase discount, respectively	$	856	$	975
Receivables from agencies, investors and prior servicers, net of $20 and $21 purchase discount, respectively	172		173
Reserves	(191)		(208)
Total advances and other receivables, net	$	837	$	940

The following table sets forth the activities of the servicing reserves for advances and other receivables:

	Three Months Ended June 30,				Six Months Ended June 30,
Reserves for Advances and Other Receivables	2021		2020		2021		2020
Balance - beginning of period	$	206	$	193	$	208	$	168
Provision and other additions(1)	26		29		41		59
Write-offs	(41)		(6)		(58)		(11)
Balance - end of period	$	191	$	216	$	191	$	216

(1)The Company recorded a provision of $8 and $3 through the MTM adjustments in revenues - service related, net, in the unaudited condensed consolidated statements of operations during the three months ended June 30, 2021 and 2020, respectively, and $20 and $13 during the six months ended June 30, 2021 and 2020, respectively, for inactive and liquidated loans that are no longer part of the MSR portfolio. Other additions represent reclassifications of required reserves provisioned within other balance sheet accounts as associated serviced loans become inactive or liquidate.

The following tables set forth the activities of the purchase discounts for advances and other receivables:

	Three Months Ended June 30,
	2021				2020
Purchase Discount for Advances and Other Receivables	Servicing Advances		Receivables from Agencies, Investors and Prior Servicers		Servicing Advances		Receivables from Agencies, Investors and Prior Servicers
Balance - beginning of period	$	63	$	20	$	125	$	21
Utilization of purchase discounts	(37)		—		(8)		—
Balance - end of period	$	26	$	20	$	117	$	21

	Six Months Ended June 30,
	2021				2020
Purchase Discount for Advances and Other Receivables	Servicing Advances		Receivables from Agencies, Investors and Prior Servicers		Servicing Advances		Receivables from Agencies, Investors and Prior Servicers
Balance - beginning of period	$	72	$	21	$	131	$	21
Utilization of purchase discounts	(46)		(1)		(14)		—
Balance - end of period	$	26	$	20	$	117	$	21

XML

Mortgage Loans Held for Sale (Tables)

6 Months Ended

Jun. 30, 2021

Mortgage Loans Held for Sale and Investment [Abstract]

Schedule of mortgage loans held-for-sale

Mortgage loans held for sale are recorded at fair value as set forth below:

Mortgage Loans Held for Sale	June 30, 2021		December 31, 2020
Mortgage loans held for sale – UPB	$	6,706	$	5,438
Mark-to-market adjustment(1)	255		282
Total mortgage loans held for sale	$	6,961	$	5,720

(1)The mark-to-market adjustment includes net change in unrealized gain/loss, premium on correspondent loans and fees on direct-to-consumer loans. The mark-to-market adjustment is recorded in net gain on mortgage loans held for sale in the unaudited condensed consolidated statements of operations.

The following table sets forth the activities of mortgage loans held for sale:

	Six Months Ended June 30,
Mortgage Loans Held for Sale	2021		2020
Balance - beginning of period	$	5,720	$	4,077
Loans sold	(52,128)		(26,149)
Mortgage loans originated and purchased, net of fees	47,560		23,110
Repurchase of loans out of Ginnie Mae securitizations	5,812		2,092
Net change in unrealized (loss) gain on retained loans held for sale	(5)		42
Net transfers of mortgage loans held for sale(1)	2		7
Balance - end of period	$	6,961	$	3,179

(1)Amount reflects transfers to other assets for loans transitioning into REO status and transfers to advances and other receivables, net, for claims made on certain government insurance mortgage loans. Transfers out are net of transfers in upon receipt of proceeds from an REO sale or claim filing.

The total UPB and fair value of mortgage loans held for sale on non-accrual status was as follows:

	June 30, 2021				December 31, 2020
Mortgage Loans Held for Sale	UPB		Fair Value		UPB		Fair Value
Non-accrual(1)	$	1,178	$	1,216	$	64	$	54

(1)Non-accrual UPB includes $1,149 and $48 of UPB related to Ginnie Mae repurchased loans as of June 30, 2021 and December 31, 2020, respectively.

XML

Derivative Financial Instruments (Tables)

6 Months Ended

Jun. 30, 2021

Derivative Instruments and Hedging Activities Disclosure [Abstract]

Schedule of derivative instruments

The following tables provide the outstanding notional balances, fair values of outstanding positions and recorded gains/(losses) for the derivative financial instruments:

		June 30, 2021				Six Months Ended June 30, 2021
Derivative Financial Instruments	Expiration Dates	Outstanding Notional		Fair Value		Gains/(Losses)
Assets
Mortgage loans held for sale
Loan sale commitments	2021	$	1,514	$	39	$	(63)
Derivative financial instruments
IRLCs	2021	6,730		204		(210)
LPCs	2021	1,984		10		(28)
Forward MBS trades	2021	9,749		27		(10)
Swap futures	2021	60		—		—
Total derivative financial instruments - assets		$	18,523	$	241	$	(248)
Liabilities
Derivative financial instruments
IRLCs	2021	$	9	$	—	$	—
LPCs	2021	708		1		—
Forward MBS trades	2021	11,747		25		(131)
Total derivative financial instruments - liabilities		$	12,464	$	26	$	(131)

		June 30, 2020				Six Months Ended June 30, 2020
Derivative Financial Instruments	Expiration Dates	Outstanding Notional		Fair Value		Gains/(Losses)
Assets
Mortgage loans held for sale
Loan sale commitments	2020	$	1,673	$	81	$	48
Derivative financial instruments
IRLCs	2020	9,227		370		235
LPCs	2020	1,823		18		6
Forward MBS trades	2020	1,239		3		(3)
Eurodollar futures	2020-2021	6		—		—
Total derivative financial instruments - assets		$	12,295	$	391	$	238
Liabilities
Derivative financial instruments
LPCs	2020	$	55	$	—	$	(2)
Forward MBS trades	2020	10,119		50		37
Eurodollar futures	2020-2021	5		—		—
Total derivative financial instruments - liabilities		$	10,179	$	50	$	35

XML

Indebtedness (Tables)

6 Months Ended

Jun. 30, 2021

Debt Disclosure [Abstract]

Schedule of advance and warehouse facilities

Advance and Warehouse Facilities

						June 30, 2021				December 31, 2020
	Interest Rate	Maturity Date	Collateral	Capacity Amount		Outstanding		Collateral Pledged		Outstanding		Collateral Pledged
Advance Facilities
$875 advance facility	CP+2.0% to 6.5%	January 2022	Servicing advance receivables	$	875	$	143	$	168	$	168	$	195
$640 advance facility(1)	LIBOR+3.9%	August 2022	Servicing advance receivables	640		201		264		235		305
$425 advance facility	LIBOR+1.7% to 6.5%	October 2021	Servicing advance receivables	425		167		219		192		246
$100 advance facility	LIBOR+2.5%	January 2022	Servicing advance receivables	100		66		69		74		98
Advance facilities principal amount						577		720		669		844
Warehouse Facilities
$2,500 warehouse facility(2)	LIBOR+1.6% to 1.9%	October 2021	Mortgage loans or MBS	2,500		1,374		1,424		1,003		1,037
$2,000 warehouse facility(3)	LIBOR+1.5% to 1.8%	February 2023	Mortgage loans or MBS	2,000		1,968		2,124		339		392
$1,500 warehouse facility	LIBOR+1.5%	June 2022	Mortgage loans or MBS	1,500		607		584		1,081		1,028
$1,350 warehouse facility(4)(5)	LIBOR+1.8% to 3.9%	September 2022	Mortgage loans or MBS	1,350		1,018		1,065		951		977
$1,200 warehouse facility(5)	LIBOR+1.8% to 3.0%	November 2021	Mortgage loans or MBS	1,200		293		303		586		607
$750 warehouse facility	LIBOR+1.8% to 2.3%	August 2021	Mortgage loans or MBS	750		400		412		477		492
$750 warehouse facility	LIBOR+1.7% to 2.8%	October 2021	Mortgage loans or MBS	750		303		313		562		574
$600 warehouse facility(5)	LIBOR+2.5%	February 2022	Mortgage loans or MBS	600		77		78		—		—
$500 warehouse facility	LIBOR+1.5% to 3.0%	June 2023	Mortgage loans or MBS	500		—		—		—		—
$500 warehouse facility(5)	LIBOR+1.5% to 4.0%	June 2022	Mortgage loans or MBS	500		146		145		—		—
$300 warehouse facility	LIBOR+1.4%	January 2022	Mortgage loans or MBS	300		93		94		163		164
$200 warehouse facility	LIBOR+1.8%	August 2021	Mortgage loans or MBS	200		180		184		131		134
$50 warehouse facility	LIBOR+1.8% to 4.8%	April 2022	Mortgage loans or MBS	50		11		15		37		42
$30 warehouse facility(5)(6)	LIBOR+3.3%	January 2022	Mortgage loans or MBS	30		—		—		—		—
Warehouse facilities principal amount						6,470		6,741		5,330		5,447
MSR Facilities
$260 warehouse facility(1)	LIBOR+3.9%	August 2022	MSR	260		260		865		260		668
$200 warehouse facility	LIBOR+3.5%	August 2021	MSR	200		—		517		—		247
$150 warehouse facility(4)	LIBOR+3.8%	September 2022	MSR	150		—		453		—		228
$50 warehouse facility	LIBOR+3.3%	November 2022	MSR	50		10		72		10		74
MSR facilities principal amount						270		1,907		270		1,217
Advance, warehouse and MSR facilities principal amount						7,317		$	9,368	6,269		$	7,508
Unamortized debt issuance costs						(7)				(11)
Advance and warehouse facilities, net						$	7,310			$	6,258
Pledged Collateral for warehouse and MSR facilities:
Mortgage loans held for sale						$	6,470	$	6,741	$	5,330	$	5,447
MSR						270		1,907		270		1,217

(1)Total capacity for this facility is $900, of which $640 is internally allocated for advance financing and $260 is internally allocated for MSR financing; capacity is fully fungible and is not restricted by these allocations.

(2)The capacity amount for this warehouse facility increased from $1,500 to $2,500 in 2021.

(3)The capacity amount for this warehouse facility subsequently increased from $2,000 to $4,000 in July 2021.

(4)Total capacity amount for this facility is $1,500, of which $150 is a sublimit for MSR financing.

(5)The outstanding and collateral pledged amounts excluded balances related to reverse mortgage interests, which are included in liabilities of discontinued operations. Refer to Note 2, Discontinued Operations for further details on liabilities of discontinued operations.

(6)The capacity amount for this warehouse facility decreased from $40 to $30 in 2021.

Schedule of unsecured senior notes

Unsecured senior notes consist of the following:

Unsecured Senior Notes	June 30, 2021		December 31, 2020
$850 face value, 5.500% interest rate payable semi-annually, due August 2028	$	850	$	850
$650 face value, 5.125% interest rate payable semi-annually, due December 2030	650		650
$600 face value, 6.000% interest rate payable semi-annually, due January 2027	600		600
Unsecured senior notes principal amount	2,100		2,100
Unamortized debt issuance costs	(25)		(26)
Unsecured senior notes, net	$	2,075	$	2,074

Schedule of maturities of long-term debt

As of June 30, 2021, the expected maturities of the Company’s unsecured senior notes based on contractual maturities are as follows:

Year Ending December 31,	Amount
2021 through 2025	$	—
Thereafter	2,100
Total unsecured senior notes principal amount	$	2,100

XML

Securitizations and Financings (Tables)

6 Months Ended

Jun. 30, 2021

Variable Interest Entities and Securitizations [Abstract]

Schedule of assets and liabilities of VIEs included in financial statements

A summary of the assets and liabilities of the Company’s transactions with VIEs included in the Company’s condensed consolidated balance sheets is presented below:

	June 30, 2021		December 31, 2020
Consolidated Transactions with VIEs	Transfers Accounted for as Secured Borrowings		Transfers Accounted for as Secured Borrowings
Assets
Restricted cash	$	44	$	47
Advances and other receivables, net	387		441
Total assets	$	431	$	488
Liabilities
Advance facilities(1)	$	310	$	358
Payables and other liabilities	—		1
Total liabilities	$	310	$	359

(1)Refer to advance facilities in Note 9, Indebtedness, for additional information.

The following table shows a summary of the outstanding collateral and certificate balances for securitization trusts for which the Company was the transferor, including any retained beneficial interests and MSRs, that were not consolidated by the Company:

Unconsolidated Securitization Trusts	June 30, 2021		December 31, 2020
Total collateral balances - UPB	$	1,230	$	1,326
Total certificate balances	$	1,229	$	1,329

A summary of mortgage loans transferred by the Company to unconsolidated securitization trusts that are 60 days or more past due are presented below:

Principal Amount of Transferred Loans 60 Days or More Past Due	June 30, 2021		December 31, 2020
Unconsolidated securitization trusts	$	141	$	154

XML

Earnings Per Share (Tables)

6 Months Ended

Jun. 30, 2021

Earnings Per Share [Abstract]

Schedule of earnings per share

The following table sets forth the computation of basic and diluted net income (loss) per common share (amounts in millions, except per share amounts):

	Three Months Ended June 30,				Six Months Ended June 30,
Computation of Earnings Per Share	2021		2020		2021		2020
Net income (loss) from continuing operations	$	427	$	77	$	986	$	(82)
Less: Net loss attributable to non-controlling interests	—		—		—		(3)
Less: Undistributed earnings from continuing operations attributable to participating stockholders	4		1		9		—
Net income (loss) from continuing operations attributable to Mr. Cooper common stockholders	$	423	$	76	$	977	$	(79)
Net income (loss) from discontinued operations	$	12	$	(4)	$	14	$	(16)
Less: Undistributed earnings from discontinued operations attributable to participating stockholders	—		—		—		—
Net income (loss) from discontinued operations attributable to Mr. Cooper common stockholders	$	12	$	(4)	$	14	$	(16)
Net income (loss)	$	439	$	73	$	1,000	$	(98)
Less: Net loss attributable to non-controlling interests	—		—		—		(3)
Net income (loss) attributable to Mr. Cooper	439		73		1,000		(95)
Less: Undistributed earnings attributable to participating stockholders	4		1		9		—
Net income (loss) attributable to common stockholders	$	435	$	72	$	991	$	(95)
Earnings from continuing operations per common share attributable to Mr. Cooper:
Basic	$	4.91	$	0.82	$	11.13	$	(0.86)
Diluted	$	4.72	$	0.81	$	10.65	$	(0.86)
Earnings from discontinued operations per common share attributable to Mr. Cooper:
Basic	$	0.14	$	(0.04)	$	0.16	$	(0.18)
Diluted	$	0.13	$	(0.04)	$	0.15	$	(0.18)
Earnings per common share attributable to Mr. Cooper:
Basic	$	5.05	$	0.78	$	11.29	$	(1.04)
Diluted	$	4.85	$	0.77	$	10.80	$	(1.04)
Weighted average shares of common stock outstanding (in thousands):
Basic	86,142		91,997		87,791		91,691
Dilutive effect of stock awards(1)	2,664		176		3,123		—
Dilutive effect of participating securities(1)	839		839		839		—
Diluted	89,645		93,012		91,753		91,691

(1)For periods with net loss, the Company excluded potential common shares from the computation of diluted EPS because inclusion would be antidilutive.

XML

Fair Value Measurements (Tables)

6 Months Ended

Jun. 30, 2021

Fair Value Disclosures [Abstract]

Schedule of fair value, assets and liabilities measured on recurring basis

The following tables present the estimated carrying amount and fair value of the Company’s financial instruments and other assets and liabilities measured at fair value on a recurring basis:

	June 30, 2021
			Recurring Fair Value Measurements
Fair Value - Recurring Basis	Total Fair Value		Level 1		Level 2		Level 3
Assets
Mortgage loans held for sale	$	6,961	$	—	$	6,961	$	—
Forward mortgage servicing rights	3,307		—		—		3,307
Derivative financial instruments
IRLCs	204		—		—		204
LPCs	10		—		—		10
Forward MBS trades	27		—		27		—
Liabilities
Derivative financial instruments
LPCs	1		—		—		1
Forward MBS trades	25		—		25		—
Mortgage servicing rights financing	21		—		—		21
Excess spread financing	867		—		—		867

	December 31, 2020
			Recurring Fair Value Measurements
Fair Value - Recurring Basis	Total Fair Value		Level 1		Level 2		Level 3
Assets
Mortgage loans held for sale	$	5,720	$	—	$	5,720	$	—
Forward mortgage servicing rights	2,703		—		—		2,703
Derivative financial instruments
IRLCs	414		—		—		414
LPCs	38		—		—		38
Forward MBS trades	37		—		37		—
Liabilities
Derivative financial instruments
LPCs	1		—		—		1
Forward MBS trades	156		—		156		—
Mortgage servicing rights financing	33		—		—		33
Excess spread financing	934		—		—		934

Schedule of fair value, assets and liabilities measured on recurring basis, unobservable input reconciliation

The tables below present a reconciliation for all of the Company’s Level 3 assets and liabilities measured at fair value on a recurring basis:

	Six Months Ended June 30, 2021
	Assets						Liabilities
Fair Value - Level 3 Assets and Liabilities	Forward mortgage servicing rights		IRLCs		LPCs		Excess spread financing		Mortgage servicing rights financing
Balance - beginning of period	$	2,703	$	414	$	38	$	934	$	33
Changes in fair value included in earnings	(190)		(210)		(28)		14		(12)
Other changes	34		—		—		—		—
Purchases, issuances, sales, repayments and settlements
Purchases	218		—		—		—		—
Issuances	554		—		—		—		—
Sales	(12)		—		—		—		—
Settlements and repayments	—		—		—		(81)		—
Balance - end of period	$	3,307	$	204	$	10	$	867	$	21

	Six Months Ended June 30, 2020
	Assets				Liabilities
Fair Value - Level 3 Assets and Liabilities	Forward mortgage servicing rights		IRLCs		Excess spread financing		Mortgage servicing rights financing
Balance - beginning of period	$	3,496	$	135	$	1,311	$	37
Changes in fair value included in earnings	(1,055)		235		(101)		12
Other changes	43		—		—		—
Purchases, issuances, sales, repayments and settlements
Purchases	24		—		—		—
Issuances	249		—		24		—
Settlements and repayments	—		—		(110)		—
Balance - end of period	$	2,757	$	370	$	1,124	$	49

Fair value measurement inputs and valuation techniques

The tables below present the quantitative information for significant unobservable inputs used in the fair value measurement of Level 3 assets and liabilities:

	June 30, 2021									December 31, 2020
	Range						Weighted Average			Range						Weighted Average
Level 3 Inputs	Min			Max						Min			Max
Forward MSR
Discount rate	9.5		%	13.8		%	11.0		%	8.2		%	12.0		%	9.4		%
Prepayment speed	12.4		%	18.8		%	13.6		%	14.2		%	21.3		%	15.4		%
Cost to service per loan(1)	$	63		$	223		$	86		$	66		$	257		$	98
Average life(2)							5.5 years									5.0 years
IRLCs
Value of servicing (basis points per loan)	(0.7)			2.3			1.4			(1.0)			2.2			1.2
Excess spread financing
Discount rate	9.5		%	13.8		%	11.2		%	9.9		%	15.7		%	12.2		%
Prepayment speed	12.6		%	15.3		%	13.5		%	13.9		%	15.0		%	14.4		%
Recapture rate	13.7		%	29.5		%	21.3		%	17.7		%	24.2		%	19.5		%
Average life(2)							5.4 years									5.1 years
Mortgage servicing rights financing
Advance financing and counterparty fee rates	5.3		%	8.2		%	6.9		%	4.6		%	8.5		%	7.5		%
Annual advance recovery rates	18.9		%	22.7		%	20.8		%	18.3		%	22.0		%	19.9		%

(1)Presented in whole dollar amounts.

(2)Average life is included for informational purposes.

Schedule of fair value, by balance sheet grouping

The tables below present a summary of the estimated carrying amount and fair value of the Company’s financial instruments not carried at fair value:

	June 30, 2021
	Carrying Amount		Fair Value
Financial Instruments			Level 1		Level 2		Level 3
Financial assets
Cash and cash equivalents	$	716	$	716	$	—	$	—
Restricted cash	113		113		—		—
Advances and other receivables, net	837		—		—		837
Loans subject to repurchase from Ginnie Mae	4,057		—		4,057		—
Financial liabilities
Unsecured senior notes, net	2,075		2,117		—		—
Advance and warehouse facilities, net	7,310		—		7,317		—
Liability for loans subject to repurchase from Ginnie Mae	4,057		—		4,057		—

	December 31, 2020
	Carrying Amount		Fair Value
Financial Instruments			Level 1		Level 2		Level 3
Financial assets
Cash and cash equivalents	$	695	$	695	$	—	$	—
Restricted cash	135		135		—		—
Advances and other receivables, net	940		—		—		940
Loans subject to repurchase from Ginnie Mae	6,159		—		6,159		—
Financial liabilities
Unsecured senior notes, net	2,074		2,208		—		—
Advance and warehouse facilities, net	6,258		—		6,269		—
Liability for loans subject to repurchase from Ginnie Mae	6,159		—		6,159		—

XML

Segment Information (Tables)

6 Months Ended

Jun. 30, 2021

Segment Reporting [Abstract]

Schedule of segment reporting information

The following tables present financial information by segment:

	Three Months Ended June 30, 2021
Financial Information by Segment	Servicing		Originations		Xome		Corporate/Other		Consolidated
Revenues
Service related, net	$	(92)	$	45	$	39	$	—	$	(8)
Net gain on mortgage loans held for sale	197		385		—		—		582
Total revenues	105		430		39		—		574
Total expenses	121		226		45		33		425
Interest income	25		26		—		—		51
Interest expense	(65)		(23)		—		(31)		(119)
Other income, net	—		—		486		—		486
Total other (expenses) income, net	(40)		3		486		(31)		418
(Loss) Income from continuing operations before income tax (benefit) expense	$	(56)	$	207	$	480	$	(64)	$	567
Depreciation and amortization for property and equipment and intangible assets from continuing operations	$	7	$	6	$	3	$	—	$	16
Total assets	$	15,973	$	4,582	$	573	$	2,180	$	23,308

	Three Months Ended June 30, 2020
Financial Information by Segment	Servicing		Originations		Xome		Corporate/Other		Consolidated
Revenues
Service related, net	$	(126)	$	21	$	106	$	(1)	$	—
Net gain on mortgage loans held for sale	45		573		—		—		618
Total revenues	(81)		594		106		(1)		618
Total expenses	102		167		95		34		398
Interest income	3		19		—		—		22
Interest expense	(67)		(13)		—		(47)		(127)
Other income (expense), net	—		—		1		(1)		—
Total other (expenses) income, net	(64)		6		1		(48)		(105)
(Loss) income from continuing operations before income tax (benefit) expense	$	(247)	$	433	$	12	$	(83)	$	115
Depreciation and amortization for property and equipment and intangible assets from continuing operations	$	4	$	4	$	3	$	6	$	17
Total assets	$	10,736	$	3,592	$	135	$	2,837	$	17,300

	Six Months Ended June 30, 2021
Financial information by segment	Servicing		Originations		Xome		Corporate/Other		Consolidated
Revenues
Service related, net	$	349	$	88	$	135	$	—	$	572
Net gain on mortgage loans held for sale	324		937		—		—		1,261
Total revenues	673		1,025		135		—		1,833
Total expenses	231		457		132		59		879
Interest income	48		49		—		—		97
Interest expense	(136)		(48)		—		(61)		(245)
Other income, net	—		—		486		—		486
Total other (expenses) income, net	(88)		1		486		(61)		338
Income (loss) from continuing operations before income tax (benefit) expense	$	354	$	569	$	489	$	(120)	$	1,292
Depreciation and amortization for property and equipment and intangible assets from continuing operations	$	12	$	10	$	6	$	3	$	31
Total assets	$	15,973	$	4,582	$	573	$	2,180	$	23,308

	Six Months Ended June 30, 2020
Financial information by segment	Servicing		Originations		Xome		Corporate/Other		Consolidated
Revenues
Service related, net	$	(320)	$	41	$	212	$	—	$	(67)
Net gain on mortgage loans held for sale	79		870		—		—		949
Total revenues	(241)		911		212		—		882
Total expenses	231		333		191		67		822
Interest income	43		53		—		1		97
Interest expense	(127)		(40)		—		(99)		(266)
Other income (expense), net	—		—		2		(1)		1
Total other (expenses) income, net	(84)		13		2		(99)		(168)
(Loss) income from continuing operations before income tax expense (benefit)	$	(556)	$	591	$	23	$	(166)	$	(108)
Depreciation and amortization for property and equipment and intangible assets from continuing operations	$	8	$	7	$	6	$	15	$	36
Total assets	$	10,736	$	3,592	$	135	$	2,837	$	17,300

XML

Nature of Business and Basis of Presentation - Additional Information (Details) - Disposal Group, Disposed of by Sale, Not Discontinued Operations - Title Business - USD ($) $ in Millions	3 Months Ended	6 Months Ended
	Jun. 30, 2021	Jun. 30, 2021	Mar. 12, 2021
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Purchase price			$ 500
Cash received from disposal			$ 450
Disposal Group, Not Discontinued Operation, Gain (Loss) on Disposal	$ 487
Disposal Group, Not Discontinued Operation, Transaction Cost	$ 2	$ 5
Mr. Cooper Group Inc. | Blend Labs, Inc.
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Ownership interest percentage			9.90%

XML

Discontinued Operations and Disposal Groups (Details) - USD ($) $ in Millions	3 Months Ended		6 Months Ended
	Jun. 30, 2021	Jun. 30, 2020	Jun. 30, 2021	Jun. 30, 2020	Dec. 31, 2020
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items]
Total assets of discontinues operations	$ 4,935		$ 4,935		$ 5,347
Liabilities of discontinued operations	4,790		4,790		5,203
Net income (loss) from discontinued operations	12	$ (4)	14	$ (16)
Discontinued Operation, Loan Asset Retained	112		112
Discontinued Operation, Loan Liability Retained	88		88
Discontinued Operations, Held-for-sale or Disposed of by Sale [Member] | Champion Mortgage [Member]
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items]
Restricted cash	77		77		83
Reverse mortgage interests, net	4,910		4,910		5,253
Other	9		9		11
Loss recognized on classification as discontinued operations	(61)		(61)		0
Total assets of discontinues operations	4,935		4,935		5,347
Advances and warehouse facilities, net	525		525		505
Payables and other liabilities	224		224		233
Mortgage servicing liabilities	42		42		41
Other nonrecourse debt, net	3,999		3,999		4,424
Liabilities of discontinued operations	4,790		4,790		$ 5,203
Revenue - service related, net	1	12	9	26
Salaries, wages and benefits expense	(8)	(10)	(16)	(22)
General and administrative expense	71	(10)	64	(18)
Interest income	43	53	87	96
Interest expense	(30)	(50)	(64)	(103)
Loss on classification as discontinued operations	(61)	0	(61)	0
Income (loss) from discontinued operations before income tax expense (benefit)	16	(5)	19	(21)
Less: Income tax expense (benefit)	4	(1)	5	(5)
Net income (loss) from discontinued operations	$ 12	$ (4)	$ 14	$ (16)

XML

Mortgage Servicing Rights and Related Liabilities - MSRs and Related Liabilities (Details) - USD ($) $ in Millions	Jun. 30, 2021	Dec. 31, 2020
Mortgage Servicing Rights [Line Items]
Excess spread financing - fair value	$ 867	$ 934
Mortgage servicing rights financing - fair value	21	33
MSR related liabilities - nonrecourse at fair value	888	967
Mortgage servicing rights
Mortgage Servicing Rights [Line Items]
Forward MSRs - fair value	$ 3,307	$ 2,703

XML

Mortgage Servicing Rights and Related Liabilities - MSR's at Fair Value (Details) - Mortgage servicing rights - USD ($) $ in Millions	6 Months Ended
	Jun. 30, 2021	Jun. 30, 2020
Servicing Asset at Fair Value, Amount [Roll Forward]
Fair value - beginning of period	$ 2,703	$ 3,496
Servicing retained from mortgage loans sold	554	249
Purchases of servicing rights	218	24
Sales of servicing assets	(12)	0
Changes in valuation inputs or assumptions used in the valuation model	270	(717)
Changes in valuation due to amortization	(460)	(338)
Other changes	34	43
Fair value - end of period	$ 3,307	$ 2,757

XML

Mortgage Servicing Rights and Related Liabilities - Narrative (Details) - USD ($) $ in Millions	Jun. 30, 2021	Dec. 31, 2020	Jun. 30, 2020
Servicing Asset at Amortized Cost [Line Items]
Excess spread financing - fair value	$ 867	$ 934
Mortgage servicing rights financing - fair value	21	$ 33
Forward MSRs Sold
Servicing Asset at Amortized Cost [Line Items]
Principal Amount Outstanding on Loans Managed and Securitized or Asset-backed Financing Arrangement	1,076		$ 71
Forward MSRs Sold, Subservicing Retained
Servicing Asset at Amortized Cost [Line Items]
Principal Amount Outstanding on Loans Managed and Securitized or Asset-backed Financing Arrangement	$ 1,008		$ 0

XML

Mortgage Servicing Rights and Related Liabilities - UPB related to owned MSRs (Details) - Mortgage servicing rights - USD ($) $ in Millions	Jun. 30, 2021	Dec. 31, 2020
Owned Service Loans [Line Items]
Principal Amount Outstanding on Loans Managed and Securitized or Asset-backed Financing Arrangement	$ 287,455	$ 271,189
Fair Value	3,307	2,703
Agency
Owned Service Loans [Line Items]
Principal Amount Outstanding on Loans Managed and Securitized or Asset-backed Financing Arrangement	248,799	227,136
Fair Value	2,955	2,305
Non-agency
Owned Service Loans [Line Items]
Principal Amount Outstanding on Loans Managed and Securitized or Asset-backed Financing Arrangement	38,656	44,053
Fair Value	$ 352	$ 398

XML

Mortgage Servicing Rights and Related Liabilities - Fair Value Sensitivity Analysis (Details) - USD ($) $ in Millions	Jun. 30, 2021	Dec. 31, 2020
Mortgage servicing rights
Excess Spread Financing - Hypothetical Sensitivities
Total prepayment speeds, 10% Adverse Change	$ (139)	$ (181)
Total prepayment speeds, 20% Adverse Change	(268)	(347)
Cost to Service per Loan, 10% Adverse Change	(43)	(45)
Cost to Service per Loan, 20% Adverse Change	(87)	(89)
Excess spread financing
Excess Spread Financing - Hypothetical Sensitivities
Total prepayment speeds, 10% Adverse Change	34	41
Total prepayment speeds, 20% Adverse Change	70	84
100 bps Adverse Change | Mortgage servicing rights
Excess Spread Financing - Hypothetical Sensitivities
Discount Rate	(112)	(100)
100 bps Adverse Change | Excess spread financing
Excess Spread Financing - Hypothetical Sensitivities
Discount Rate	30	30
200 bps Adverse Change | Mortgage servicing rights
Excess Spread Financing - Hypothetical Sensitivities
Discount Rate	(216)	(192)
200 bps Adverse Change | Excess spread financing
Excess Spread Financing - Hypothetical Sensitivities
Discount Rate	$ 61	$ 62

XML

Mortgage Servicing Rights and Related Liabilities - Servicing Revenue (Details) - USD ($) $ in Millions	3 Months Ended		6 Months Ended
	Jun. 30, 2021	Jun. 30, 2020	Jun. 30, 2021	Jun. 30, 2020
Transfers and Servicing [Abstract]
Contractually specified servicing fees(1)	$ 275	$ 285	$ 551	$ 582
Other service-related income(1)	214	62	359	111
Incentive and modification income(1)	14	8	28	18
Late fees(1)	16	20	34	47
Mark-to-market adjustments(2)	(180)	(261)	174	(644)
Counterparty revenue share(3)	(76)	(88)	(159)	(164)
Amortization, net of accretion(4)	(158)	(107)	(314)	(191)
Total revenues - Servicing	105	(81)	673	(241)
Cumulative incurred losses related to advances and other receivables associated with inactive and liquidated loans	8	3	20	13
Servicing fee income accretion expense	$ 70	$ 79	$ 146	$ 147

XML

Advances and Other Receivables - Schedule of Accounts Receivable (Details) - USD ($) $ in Millions	Jun. 30, 2021	Mar. 31, 2021	Dec. 31, 2020	Jun. 30, 2020	Mar. 31, 2020	Dec. 31, 2019
Receivables [Abstract]
Servicing advances, net of $26 and $72 purchase discount, respectively	$ 856		$ 975
Receivables from agencies, investors and prior servicers, net of $20 and $21 purchase discount, respectively	172		173
Reserves	(191)		(208)
Total advances and other receivables, net	837		940
Servicing advances discount	26	$ 63	72	$ 117	$ 125	$ 131
Receivables discount	$ 20	$ 20	$ 21	$ 21	$ 21	$ 21

XML

Advances and Other Receivables - Advances and Other Receivables Roll Forward (Details) - USD ($) $ in Millions	3 Months Ended		6 Months Ended
	Jun. 30, 2021	Jun. 30, 2020	Jun. 30, 2021	Jun. 30, 2020
Advances And Other Receivables, Reserves [Roll Forward]
Balance - beginning of period	$ 206	$ 193	$ 208	$ 168
Provision and other additions(1)	26	29	41	59
Write-offs	(41)	(6)	(58)	(11)
Balance - end of period	191	216	191	216
Cumulative incurred losses related to advances and other receivables associated with inactive and liquidated loans	$ 8	$ 3	$ 20	$ 13

XML

Advances and Other Receivables - Narrative (Details) - USD ($) $ in Millions	3 Months Ended		6 Months Ended
	Jun. 30, 2021	Jun. 30, 2020	Jun. 30, 2021	Jun. 30, 2020
Accounts, Notes, Loans and Financing Receivable [Line Items]
Financing receivable, allowance for credit loss	$ 42	$ 31	$ 42	$ 31
Financial instruments collection period			39 months
Advances and other receivables reserve
Accounts, Notes, Loans and Financing Receivable [Line Items]
Provision for credit loss	3	8	$ 4	14
Financing receivable, allowance for credit loss	25	14	25	14
Purchase Discount
Accounts, Notes, Loans and Financing Receivable [Line Items]
Financing receivable, allowance for credit loss	$ 17	$ 17	$ 17	$ 17

XML

Advances and Other Receivables - Purchase Discount (Details) - USD ($) $ in Millions	3 Months Ended		6 Months Ended
	Jun. 30, 2021	Jun. 30, 2020	Jun. 30, 2021	Jun. 30, 2020
Servicing Advances
Balance - beginning of period	$ 63	$ 125	$ 72	$ 131
Utilization of purchase discounts	(37)	(8)	(46)	(14)
Balance - end of period	26	117	26	117
Receivables from Agencies, Investors and Prior Servicers
Balance - beginning of period	20	21	20	21
Utilization of purchase discounts	0	0	(1)	0
Balance - end of period	$ 20	$ 21	$ 21	$ 21

XML

Mortgage Loans Held for Sale - Mortgage Loans Held for Sale (Details) - USD ($) $ in Millions	Jun. 30, 2021	Dec. 31, 2020
Accounts, Notes, Loans and Financing Receivable [Line Items]
Mortgage loans held for sale – UPB	$ 6,706	$ 5,438
Mark-to-market adjustment(1)	255	282
Total mortgage loans held for sale	6,961	5,720
Mortgage Loans Held for Sale, Nonaccrual Basis Unpaid Principal Balance	1,178	64
Fair Value, Mortgage Loans Held for Sale non-accrual status	1,216	54
Ginnie mae repurchased loans
Accounts, Notes, Loans and Financing Receivable [Line Items]
Mortgage Loans Held for Sale, Nonaccrual Basis Unpaid Principal Balance	$ 1,149	$ 48

XML

Mortgage Loans Held for Sale - Reconciliation to Cash Flow (Details) - USD ($) $ in Millions	6 Months Ended
	Jun. 30, 2021	Jun. 30, 2020
Loans Receivable Held-for-sale, Net, Reconciliation to Cash Flow [Roll Forward]
Balance - beginning of period	$ 5,720	$ 4,077
Loans sold	(52,128)	(26,149)
Mortgage loans originated and purchased, net of fees	47,560	23,110
Repurchase of loans out of Ginnie Mae securitizations	5,812	2,092
Net change in unrealized (loss) gain on retained loans held for sale	(5)	42
Net transfers of mortgage loans held for sale(1)	2	7
Balance - end of period	$ 6,961	$ 3,179

XML

Mortgage Loans Held for Sale - Narrative (Details) - USD ($) $ in Millions	6 Months Ended
	Jun. 30, 2021	Jun. 30, 2020	Dec. 31, 2020
Mortgage Loans Held for Sale and Investment [Abstract]
Sale of mortgage loans held for sale	$ 52,923	$ 26,606
Gain on sale of mortgage loans held for sale	795	$ 457
Mortgage loans held for sale in foreclosure	$ 19		$ 20

XML

Loans Subject to Repurchase from Ginnie Mae (Details) - USD ($) $ in Millions	Jun. 30, 2021	Dec. 31, 2020
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans subject to repurchase from Ginnie Mae	$ 4,057	$ 6,159
Financial Asset, Equal to or Greater than 90 Days Past Due | Payment Deferral
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans subject to repurchase from Ginnie Mae	$ 3,825	$ 5,879

XML

Goodwill and Intangible Assets (Details) - USD ($) $ in Millions	Jun. 30, 2021	Dec. 31, 2020
Goodwill and Intangible Assets Disclosure [Abstract]
Goodwill	$ 120	$ 120
Intangible assets	$ 22	$ 31

XML

Derivative Financial Instruments - Derivative Instruments (Details) - USD ($) $ in Millions	6 Months Ended
	Jun. 30, 2021	Jun. 30, 2020
Assets
Derivatives, Fair Value [Line Items]
Outstanding Notional	$ 18,523	$ 12,295
Fair Value	241	391
Gains/(Losses)	(248)	238
Assets | Loan sale commitments
Derivatives, Fair Value [Line Items]
Outstanding Notional	1,514	1,673
Fair Value	39	81
Gains/(Losses)	(63)	48
Assets | IRLCs
Derivatives, Fair Value [Line Items]
Outstanding Notional	6,730	9,227
Fair Value	204	370
Gains/(Losses)	(210)	235
Assets | LPCs
Derivatives, Fair Value [Line Items]
Outstanding Notional	1,984	1,823
Fair Value	10	18
Gains/(Losses)	(28)	6
Assets | Forward MBS trades
Derivatives, Fair Value [Line Items]
Outstanding Notional	9,749	1,239
Fair Value	27	3
Gains/(Losses)	(10)	(3)
Assets | Swap futures
Derivatives, Fair Value [Line Items]
Outstanding Notional	60
Fair Value	0
Gains/(Losses)	0
Assets | Eurodollar futures
Derivatives, Fair Value [Line Items]
Outstanding Notional		6
Fair Value		0
Gains/(Losses)		0
Liabilities
Derivatives, Fair Value [Line Items]
Outstanding Notional	12,464	10,179
Derivative financial instruments	26	50
Gains/(Losses)	(131)	35
Liabilities | IRLCs
Derivatives, Fair Value [Line Items]
Outstanding Notional	9
Derivative financial instruments	0
Gains/(Losses)	0
Liabilities | LPCs
Derivatives, Fair Value [Line Items]
Outstanding Notional	708	55
Derivative financial instruments	1	0
Gains/(Losses)	0	(2)
Liabilities | Forward MBS trades
Derivatives, Fair Value [Line Items]
Outstanding Notional	11,747	10,119
Derivative financial instruments	25	50
Gains/(Losses)	$ (131)	37
Liabilities | Eurodollar futures
Derivatives, Fair Value [Line Items]
Outstanding Notional		5
Derivative financial instruments		0
Gains/(Losses)		$ 0

XML

Derivative Financial Instruments - Narrative (Details) - USD ($) $ in Millions	Jun. 30, 2021	Dec. 31, 2020
Other assets
Derivative Instruments and Hedging Activities Disclosures [Line Items]
Collateral deposit assets (liabilities)	$ 2	$ 61

XML

Indebtedness - Advance and Warehouse Facilities Summary (Details) - USD ($)	6 Months Ended
	Jun. 30, 2021	Jul. 01, 2021	Dec. 31, 2020
Debt Instrument [Line Items]
Advance and warehouse facilities, net	$ 7,310,000,000		$ 6,258,000,000
Servicing | MSR
Debt Instrument [Line Items]
Collateral Pledged	1,907,000,000		1,217,000,000
Advance and warehouse facilities, net	270,000,000		270,000,000
Originations | Mortgage loans held for sale
Debt Instrument [Line Items]
Collateral Pledged	6,741,000,000		5,447,000,000
Advance and warehouse facilities, net	6,470,000,000		5,330,000,000
Advance Facilities | Servicing | Loans payable | $875 advance facility
Debt Instrument [Line Items]
Capacity Amount	875,000,000
Debt outstanding, gross	143,000,000		168,000,000
Collateral Pledged	$ 168,000,000		195,000,000
Advance Facilities | Servicing | Loans payable | $875 advance facility | CP rate | Minimum
Debt Instrument [Line Items]
Basis spread on rate	2.00%
Advance Facilities | Servicing | Loans payable | $875 advance facility | CP rate | Maximum
Debt Instrument [Line Items]
Basis spread on rate	6.50%
Advance Facilities | Servicing | Loans payable | $425 advance facility
Debt Instrument [Line Items]
Capacity Amount	$ 425,000,000
Debt outstanding, gross	167,000,000		192,000,000
Collateral Pledged	$ 219,000,000		246,000,000
Advance Facilities | Servicing | Loans payable | $425 advance facility | LIBOR | Minimum
Debt Instrument [Line Items]
Basis spread on rate	1.70%
Advance Facilities | Servicing | Loans payable | $425 advance facility | LIBOR | Maximum
Debt Instrument [Line Items]
Basis spread on rate	6.50%
Advance Facilities | Servicing | Notes payable to banks
Debt Instrument [Line Items]
Debt outstanding, gross	$ 577,000,000		669,000,000
Collateral Pledged	720,000,000		844,000,000
Advance Facilities | Servicing | Notes payable to banks | $100 advance facility
Debt Instrument [Line Items]
Capacity Amount	100,000,000
Debt outstanding, gross	66,000,000		74,000,000
Collateral Pledged	$ 69,000,000		98,000,000
Advance Facilities | Servicing | Notes payable to banks | $100 advance facility | LIBOR
Debt Instrument [Line Items]
Basis spread on rate	2.50%
Warehouse Facilities | Originations | Notes payable to banks
Debt Instrument [Line Items]
Debt outstanding, gross	$ 6,470,000,000		5,330,000,000
Collateral Pledged	6,741,000,000		5,447,000,000
Warehouse Facilities | Originations | Notes payable to banks | $2,000 warehouse facility(3)
Debt Instrument [Line Items]
Capacity Amount	2,000,000,000	$ 4,000,000,000
Debt outstanding, gross	1,968,000,000		339,000,000
Collateral Pledged	$ 2,124,000,000		392,000,000
Warehouse Facilities | Originations | Notes payable to banks | $2,000 warehouse facility(3) | LIBOR | Minimum
Debt Instrument [Line Items]
Basis spread on rate	1.50%
Warehouse Facilities | Originations | Notes payable to banks | $2,000 warehouse facility(3) | LIBOR | Maximum
Debt Instrument [Line Items]
Basis spread on rate	1.80%
Warehouse Facilities | Originations | Notes payable to banks | $1,500 warehouse facility
Debt Instrument [Line Items]
Capacity Amount	$ 1,500,000,000
Debt outstanding, gross	607,000,000		1,081,000,000
Collateral Pledged	$ 584,000,000		1,028,000,000
Warehouse Facilities | Originations | Notes payable to banks | $1,500 warehouse facility | LIBOR
Debt Instrument [Line Items]
Basis spread on rate	1.50%
Warehouse Facilities | Originations | Notes payable to banks | $2,500 warehouse facility
Debt Instrument [Line Items]
Capacity Amount	$ 2,500,000,000		1,500,000,000
Debt outstanding, gross	1,374,000,000		1,003,000,000
Collateral Pledged	$ 1,424,000,000		1,037,000,000
Warehouse Facilities | Originations | Notes payable to banks | $2,500 warehouse facility | LIBOR | Minimum
Debt Instrument [Line Items]
Basis spread on rate	1.60%
Warehouse Facilities | Originations | Notes payable to banks | $2,500 warehouse facility | LIBOR | Maximum
Debt Instrument [Line Items]
Basis spread on rate	1.90%
Warehouse Facilities | Originations | Notes payable to banks | $1,350 warehouse facility
Debt Instrument [Line Items]
Capacity Amount	$ 1,350,000,000
Debt outstanding, gross	1,018,000,000		951,000,000
Collateral Pledged	$ 1,065,000,000		977,000,000
Warehouse Facilities | Originations | Notes payable to banks | $1,350 warehouse facility | LIBOR | Minimum
Debt Instrument [Line Items]
Basis spread on rate	1.80%
Warehouse Facilities | Originations | Notes payable to banks | $1,350 warehouse facility | LIBOR | Maximum
Debt Instrument [Line Items]
Basis spread on rate	3.90%
Warehouse Facilities | Originations | Notes payable to banks | $1,200 warehouse facility(5)
Debt Instrument [Line Items]
Capacity Amount	$ 1,200,000,000
Debt outstanding, gross	293,000,000		586,000,000
Collateral Pledged	$ 303,000,000		607,000,000
Warehouse Facilities | Originations | Notes payable to banks | $1,200 warehouse facility(5) | LIBOR | Minimum
Debt Instrument [Line Items]
Basis spread on rate	1.80%
Warehouse Facilities | Originations | Notes payable to banks | $1,200 warehouse facility(5) | LIBOR | Maximum
Debt Instrument [Line Items]
Basis spread on rate	3.00%
Warehouse Facilities | Originations | Notes payable to banks | $750 million warehouse
Debt Instrument [Line Items]
Capacity Amount	$ 750,000,000
Debt outstanding, gross	303,000,000		562,000,000
Collateral Pledged	$ 313,000,000		574,000,000
Warehouse Facilities | Originations | Notes payable to banks | $750 million warehouse | LIBOR | Minimum
Debt Instrument [Line Items]
Basis spread on rate	1.70%
Warehouse Facilities | Originations | Notes payable to banks | $750 million warehouse | LIBOR | Maximum
Debt Instrument [Line Items]
Basis spread on rate	2.80%
Warehouse Facilities | Originations | Notes payable to banks | $750 warehouse facility
Debt Instrument [Line Items]
Capacity Amount	$ 750,000,000
Debt outstanding, gross	400,000,000		477,000,000
Collateral Pledged	$ 412,000,000		492,000,000
Warehouse Facilities | Originations | Notes payable to banks | $750 warehouse facility | LIBOR | Minimum
Debt Instrument [Line Items]
Basis spread on rate	1.80%
Warehouse Facilities | Originations | Notes payable to banks | $750 warehouse facility | LIBOR | Maximum
Debt Instrument [Line Items]
Basis spread on rate	2.30%
Warehouse Facilities | Originations | Notes payable to banks | $600 warehouse facility(5)
Debt Instrument [Line Items]
Capacity Amount	$ 600,000,000
Debt outstanding, gross	77,000,000		0
Collateral Pledged	$ 78,000,000		0
Warehouse Facilities | Originations | Notes payable to banks | $600 warehouse facility(5) | LIBOR
Debt Instrument [Line Items]
Basis spread on rate	2.50%
Warehouse Facilities | Originations | Notes payable to banks | $500 warehouse facility(5)
Debt Instrument [Line Items]
Capacity Amount	$ 500,000,000
Debt outstanding, gross	146,000,000		0
Collateral Pledged	$ 145,000,000		0
Warehouse Facilities | Originations | Notes payable to banks | $500 warehouse facility(5) | LIBOR | Minimum
Debt Instrument [Line Items]
Basis spread on rate	1.50%
Warehouse Facilities | Originations | Notes payable to banks | $500 warehouse facility(5) | LIBOR | Maximum
Debt Instrument [Line Items]
Basis spread on rate	4.00%
Warehouse Facilities | Originations | Notes payable to banks | $300 warehouse facility
Debt Instrument [Line Items]
Capacity Amount	$ 300,000,000
Debt outstanding, gross	93,000,000		163,000,000
Collateral Pledged	$ 94,000,000		164,000,000
Warehouse Facilities | Originations | Notes payable to banks | $300 warehouse facility | LIBOR
Debt Instrument [Line Items]
Basis spread on rate	1.40%
Warehouse Facilities | Originations | Notes payable to banks | $200 warehouse facility
Debt Instrument [Line Items]
Capacity Amount	$ 200,000,000
Debt outstanding, gross	180,000,000		131,000,000
Collateral Pledged	$ 184,000,000		134,000,000
Warehouse Facilities | Originations | Notes payable to banks | $200 warehouse facility | LIBOR
Debt Instrument [Line Items]
Basis spread on rate	1.80%
Warehouse Facilities | Originations | Notes payable to banks | $50 warehouse facility
Debt Instrument [Line Items]
Capacity Amount	$ 50,000,000
Debt outstanding, gross	11,000,000		37,000,000
Collateral Pledged	$ 15,000,000		42,000,000
Warehouse Facilities | Originations | Notes payable to banks | $50 warehouse facility | LIBOR | Minimum
Debt Instrument [Line Items]
Basis spread on rate	1.80%
Warehouse Facilities | Originations | Notes payable to banks | $50 warehouse facility | LIBOR | Maximum
Debt Instrument [Line Items]
Basis spread on rate	4.80%
Warehouse Facilities | Originations | Notes payable to banks | $30 warehouse facility
Debt Instrument [Line Items]
Capacity Amount	$ 30,000,000		40,000,000
Debt outstanding, gross	0		0
Collateral Pledged	$ 0		0
Warehouse Facilities | Originations | Notes payable to banks | $30 warehouse facility | LIBOR
Debt Instrument [Line Items]
Basis spread on rate	3.30%
Warehouse Facilities | Originations | Notes payable to banks | $1,500 warehouse facility
Debt Instrument [Line Items]
Capacity Amount	$ 1,500,000,000
Warehouse Facilities | Originations | Notes payable to banks | $500 Million Warehouse Facility Due June 2023
Debt Instrument [Line Items]
Capacity Amount	500,000,000
Debt outstanding, gross	0		0
Collateral Pledged	$ 0		0
Warehouse Facilities | Originations | Notes payable to banks | $500 Million Warehouse Facility Due June 2023 | LIBOR | Minimum
Debt Instrument [Line Items]
Basis spread on rate	1.50%
Warehouse Facilities | Originations | Notes payable to banks | $500 Million Warehouse Facility Due June 2023 | LIBOR | Maximum
Debt Instrument [Line Items]
Basis spread on rate	3.00%
MSR Facilities | Servicing | Notes payable to banks
Debt Instrument [Line Items]
Debt outstanding, gross	$ 270,000,000		270,000,000
Collateral Pledged	1,907,000,000		1,217,000,000
MSR Facilities | Servicing | Notes payable to banks | $200 warehouse facility
Debt Instrument [Line Items]
Capacity Amount	200,000,000
Debt outstanding, gross	0		0
Collateral Pledged	$ 517,000,000		247,000,000
MSR Facilities | Servicing | Notes payable to banks | $200 warehouse facility | LIBOR
Debt Instrument [Line Items]
Basis spread on rate	3.50%
MSR Facilities | Servicing | Notes payable to banks | $150 warehouse facility
Debt Instrument [Line Items]
Capacity Amount	$ 150,000,000
Debt outstanding, gross	0		0
Collateral Pledged	$ 453,000,000		228,000,000
MSR Facilities | Servicing | Notes payable to banks | $150 warehouse facility | LIBOR
Debt Instrument [Line Items]
Basis spread on rate	3.80%
MSR Facilities | Servicing | Notes payable to banks | $50 warehouse facility
Debt Instrument [Line Items]
Capacity Amount	$ 50,000,000
Debt outstanding, gross	10,000,000		10,000,000
Collateral Pledged	$ 72,000,000		74,000,000
MSR Facilities | Servicing | Notes payable to banks | $50 warehouse facility | LIBOR
Debt Instrument [Line Items]
Basis spread on rate	3.30%
MSR Facilities | Originations | Notes payable to banks | $900 warehouse facility
Debt Instrument [Line Items]
Capacity Amount	$ 900,000,000
Advance Financing, Internally Allocated | Servicing | Loans payable | $640 advance facility
Debt Instrument [Line Items]
Capacity Amount	640,000,000
Debt outstanding, gross	201,000,000		235,000,000
Collateral Pledged	$ 264,000,000		305,000,000
Advance Financing, Internally Allocated | Servicing | Loans payable | $640 advance facility | LIBOR
Debt Instrument [Line Items]
Basis spread on rate	3.90%
MSR Financing, Internally Allocated | Servicing | Notes payable to banks | $260 warehouse facility
Debt Instrument [Line Items]
Capacity Amount	$ 260,000,000
Debt outstanding, gross	260,000,000		260,000,000
Collateral Pledged	$ 865,000,000		668,000,000
MSR Financing, Internally Allocated | Servicing | Notes payable to banks | $260 warehouse facility | LIBOR
Debt Instrument [Line Items]
Basis spread on rate	3.90%
MSR Financing, Internally Allocated | Originations | Notes payable to banks | $260 warehouse facility
Debt Instrument [Line Items]
Capacity Amount	$ 260,000,000
Advance, Warehouse and MSR Facilities
Debt Instrument [Line Items]
Debt outstanding, gross	7,317,000,000		6,269,000,000
Collateral Pledged	9,368,000,000		7,508,000,000
Unamortized debt issuance costs	(7,000,000)		(11,000,000)
Advance and warehouse facilities, net	$ 7,310,000,000		$ 6,258,000,000

XML

Indebtedness - Summary of Unsecured Senior Notes (Details) - USD ($)	Jun. 30, 2021	Dec. 31, 2020
Debt Instrument [Line Items]
Unsecured senior notes, net	$ 2,075,000,000	$ 2,074,000,000
Unsecured Senior Notes
Debt Instrument [Line Items]
Unsecured senior notes principal amount	2,100,000,000	2,100,000,000
Unamortized debt issuance costs	(25,000,000)	(26,000,000)
Unsecured senior notes, net	2,075,000,000	2,074,000,000
Unsecured Senior Notes | $850 face value, 5.500% interest rate payable semi-annually, due August 2028
Debt Instrument [Line Items]
Unsecured senior notes principal amount	850,000,000	850,000,000
Face value	$ 850,000,000
Debt Instrument, Interest Rate, Stated Percentage	5.50%
Unsecured Senior Notes | $650 face value, 5.125% interest rate payable semi-annually, due December 2030
Debt Instrument [Line Items]
Unsecured senior notes principal amount	$ 650,000,000	650,000,000
Face value	$ 650,000,000
Debt Instrument, Interest Rate, Stated Percentage	5.125%
Unsecured Senior Notes | $600 face value, 6.000% interest rate payable semi-annually, due January 2027
Debt Instrument [Line Items]
Unsecured senior notes principal amount	$ 600,000,000	$ 600,000,000
Face value	$ 600,000,000
Debt Instrument, Interest Rate, Stated Percentage	6.00%

XML

Indebtedness - Narrative (Details) - Unsecured Senior Notes - USD ($) $ in Millions	3 Months Ended	6 Months Ended
	Jun. 30, 2020	Jun. 30, 2021	Jun. 30, 2020
Debt Instrument [Line Items]
Maximum percentage redeemable on unsecured debt		40.00%
Repayments of debt	$ 0	$ 0	$ 100
Amount of principal amount outstanding repaid	$ 0	$ 0	598
Gain on redemption of unsecured senior notes			$ 1

XML

Indebtedness - Schedule of Notes Maturity (Details) - Unsecured Senior Notes - USD ($) $ in Millions	Jun. 30, 2021	Dec. 31, 2020
Debt Instrument [Line Items]
2021 through 2025	$ 0
Thereafter	2,100
Total unsecured senior notes principal amount	$ 2,100	$ 2,100

XML

Securitizations and Financings - Assets and Liabilities of Consolidated VIEs (Details) - Residential mortgage - USD ($) $ in Millions	Jun. 30, 2021	Dec. 31, 2020
Assets and Associated Liabilities of Transfers Accounted for as Secured Borrowings [Line Items]
Assets - transfers accounted for as secured borrowings	$ 431	$ 488
Liabilities - transfers accounted for as secured borrowings	310	359
Restricted cash
Assets and Associated Liabilities of Transfers Accounted for as Secured Borrowings [Line Items]
Assets - transfers accounted for as secured borrowings	44	47
Advances and other receivables, net
Assets and Associated Liabilities of Transfers Accounted for as Secured Borrowings [Line Items]
Assets - transfers accounted for as secured borrowings	387	441
Advance facilities(1)
Assets and Associated Liabilities of Transfers Accounted for as Secured Borrowings [Line Items]
Liabilities - transfers accounted for as secured borrowings	310	358
Payables and other liabilities
Assets and Associated Liabilities of Transfers Accounted for as Secured Borrowings [Line Items]
Liabilities - transfers accounted for as secured borrowings	$ 0	$ 1

XML

Securitizations and Financings - Securitization Trusts (Details) - USD ($) $ in Millions	Jun. 30, 2021	Dec. 31, 2020
Variable Interest Entities and Securitizations [Abstract]
Total collateral balances - UPB	$ 1,230	$ 1,326
Total certificate balances	1,229	1,329
Financial Asset, Past Due
Financing Receivable, Past Due [Line Items]
Unconsolidated securitization trusts	$ 141	$ 154

XML

Earnings Per Share - Narrative (Details) $ / shares in Units, shares in Thousands, $ in Millions	Mar. 26, 2021 USD ($) $ / shares shares
Earnings Per Share [Abstract]
Shares repurchased (in shares) | shares	3,700
Value of shares repurchased | $	$ 119
Value of shares repurchased (in dollars per share) | $ / shares	$ 32.25

XML

Earnings Per Share - Computation of Basic and Diluted Net Income (Loss) Per Share (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Millions	3 Months Ended		6 Months Ended
	Jun. 30, 2021	Jun. 30, 2020	Jun. 30, 2021	Jun. 30, 2020
Earnings Per Share [Abstract]
Net income (loss) from continuing operations	$ 427	$ 77	$ 986	$ (82)
Less: Net loss attributable to non-controlling interests	0	0	0	(3)
Less: Undistributed earnings from continuing operations attributable to participating stockholders	4	1	9	0
Net income (loss) from continuing operations attributable to Mr. Cooper common stockholders	423	76	977	(79)
Net income (loss) from discontinued operations	12	(4)	14	(16)
Less: Undistributed earnings from discontinued operations attributable to participating stockholders	0	0	0	0
Net income (loss) from discontinued operations attributable to Mr. Cooper common stockholders	12	(4)	14	(16)
Net income	439	73	1,000	(98)
Less: Net loss attributable to non-controlling interests	0	0	0	(3)
Net income (loss) attributable to Mr. Cooper	439	73	1,000	(95)
Less: Undistributed earnings attributable to participating stockholders	4	1	9	0
Net income (loss) attributable to common stockholders	$ 435	$ 72	$ 991	$ (95)
Earnings Per Share, Basic [Abstract]
Income (Loss) from Continuing Operations, Per Basic Share	$ 4.91	$ 0.82	$ 11.13	$ (0.86)
Income (Loss) from Continuing Operations, Per Diluted Share	4.72	0.81	10.65	(0.86)
Discontinued Operation, Income (Loss) from Discontinued Operation, Net of Tax, Per Basic Share	0.14	(0.04)	0.16	(0.18)
Discontinued Operation, Income (Loss) from Discontinued Operation, Net of Tax, Per Diluted Share	0.13	(0.04)	0.15	(0.18)
Basic (in dollars per share)	5.05	0.78	11.29	(1.04)
Diluted (in dollars per share)	$ 4.85	$ 0.77	$ 10.80	$ (1.04)
Weighted average shares of common stock outstanding (in thousands):
Basic (in shares)	86,142	91,997	87,791	91,691
Dilutive effect of stock awards (in shares)	2,664	176	3,123	0
Dilutive effect of participating securities (in shares)	839	839	839	0
Diluted (in shares)	89,645	93,012	91,753	91,691

XML

Income Taxes (Details)	3 Months Ended		6 Months Ended
	Jun. 30, 2021	Jun. 30, 2020	Jun. 30, 2021	Jun. 30, 2020
Income Tax Disclosure [Abstract]
Effective tax rate	24.80%	33.00%	23.70%	24.20%

XML

Fair Value Measurements - Measured on a Recurring Basis (Details) - USD ($) $ in Millions	Jun. 30, 2021	Dec. 31, 2020
Assets
Mortgage loans held for sale	$ 6,961	$ 5,720
Liabilities
Mortgage servicing rights financing	21	33
Recurring Fair Value Measurements
Assets
Mortgage loans held for sale	6,961	5,720
Forward mortgage servicing rights	3,307	2,703
Liabilities
Mortgage servicing rights financing	21	33
Excess spread financing	867	934
Recurring Fair Value Measurements | IRLCs
Assets
Derivative asset, fair value	204	414
Recurring Fair Value Measurements | Forward MBS trades
Assets
Derivative asset, fair value	27	37
Liabilities
Derivative financial instruments	25	156
Recurring Fair Value Measurements | LPCs
Assets
Derivative asset, fair value	10	38
Liabilities
Derivative financial instruments	1	1
Recurring Fair Value Measurements | Level 1
Assets
Mortgage loans held for sale	0	0
Forward mortgage servicing rights	0	0
Liabilities
Mortgage servicing rights financing	0	0
Excess spread financing	0	0
Recurring Fair Value Measurements | Level 1 | IRLCs
Assets
Derivative asset, fair value	0	0
Recurring Fair Value Measurements | Level 1 | Forward MBS trades
Assets
Derivative asset, fair value	0	0
Liabilities
Derivative financial instruments	0	0
Recurring Fair Value Measurements | Level 1 | LPCs
Assets
Derivative asset, fair value	0	0
Liabilities
Derivative financial instruments	0	0
Recurring Fair Value Measurements | Level 2
Assets
Mortgage loans held for sale	6,961	5,720
Forward mortgage servicing rights	0	0
Liabilities
Mortgage servicing rights financing	0	0
Excess spread financing	0	0
Recurring Fair Value Measurements | Level 2 | IRLCs
Assets
Derivative asset, fair value	0	0
Recurring Fair Value Measurements | Level 2 | Forward MBS trades
Assets
Derivative asset, fair value	27	37
Liabilities
Derivative financial instruments	25	156
Recurring Fair Value Measurements | Level 2 | LPCs
Assets
Derivative asset, fair value	0	0
Liabilities
Derivative financial instruments	0	0
Recurring Fair Value Measurements | Level 3
Assets
Mortgage loans held for sale	0	0
Forward mortgage servicing rights	3,307	2,703
Liabilities
Mortgage servicing rights financing	21	33
Excess spread financing	867	934
Recurring Fair Value Measurements | Level 3 | IRLCs
Assets
Derivative asset, fair value	204	414
Recurring Fair Value Measurements | Level 3 | Forward MBS trades
Assets
Derivative asset, fair value	0	0
Liabilities
Derivative financial instruments	0	0
Recurring Fair Value Measurements | Level 3 | LPCs
Assets
Derivative asset, fair value	10	38
Liabilities
Derivative financial instruments	$ 1	$ 1

XML

Fair Value Measurements - Level 3 Reconciliation (Details) - Recurring Fair Value Measurements - USD ($) $ in Millions	6 Months Ended
	Jun. 30, 2021	Jun. 30, 2020
Excess spread financing
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward]
Balance - beginning of period	$ 934	$ 1,311
Changes in fair value included in earnings	14	(101)
Other changes	0	0
Purchases	0	0
Issuances	0	24
Sales	0
Settlements and repayments	(81)	(110)
Balance - end of period	867	1,124
Mortgage servicing rights financing
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward]
Balance - beginning of period	33	37
Changes in fair value included in earnings	(12)	12
Other changes	0	0
Purchases	0	0
Issuances	0	0
Sales	0
Settlements and repayments	0	0
Balance - end of period	21	49
Forward mortgage servicing rights
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward]
Balance - beginning of period	2,703	3,496
Changes in fair value included in earnings	(190)	(1,055)
Other changes	34	43
Purchases	218	24
Issuances	554	249
Sales	(12)
Settlements and repayments	0	0
Balance - end of period	3,307	2,757
IRLCs
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward]
Balance - beginning of period	414	135
Changes in fair value included in earnings	(210)	235
Other changes	0	0
Purchases	0	0
Issuances	0	0
Sales	0
Settlements and repayments	0	0
Balance - end of period	204	$ 370
LPCs
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward]
Balance - beginning of period	38
Changes in fair value included in earnings	(28)
Other changes	0
Purchases	0
Issuances	0
Sales	0
Settlements and repayments	0
Balance - end of period	$ 10

XML

Fair Value Measurements - Unobservable Inputs (Details) - USD ($)	6 Months Ended	12 Months Ended
	Jun. 30, 2021	Dec. 31, 2020
Forward MSR
Fair Value Measurement Inputs and Valuation Techniques [Line Items]
Weighted average life	5 years 6 months	5 years
Excess spread financing
Fair Value Measurement Inputs and Valuation Techniques [Line Items]
Weighted average life	5 years 4 months 24 days	5 years 1 month 6 days
Minimum | Forward MSR
Fair Value Measurement Inputs and Valuation Techniques [Line Items]
Discount rate	9.50%	8.20%
Prepayment speed	12.40%	14.20%
Cost to service per loan(1)	$ 63	$ 66
Minimum | IRLCs
Fair Value Measurement Inputs and Valuation Techniques [Line Items]
Value of servicing (basis points per loan)	(0.00007)	(0.00010)
Minimum | Excess spread financing
Fair Value Measurement Inputs and Valuation Techniques [Line Items]
Discount rate	9.50%	9.90%
Prepayment speed	12.60%	13.90%
Recapture rate	13.70%	17.70%
Minimum | Mortgage servicing rights financing
Fair Value Measurement Inputs and Valuation Techniques [Line Items]
Advance financing and counterparty fee rates	5.30%	4.60%
Annual advance recovery rates	18.90%	18.30%
Maximum | Forward MSR
Fair Value Measurement Inputs and Valuation Techniques [Line Items]
Discount rate	13.80%	12.00%
Prepayment speed	18.80%	21.30%
Cost to service per loan(1)	$ 223	$ 257
Maximum | IRLCs
Fair Value Measurement Inputs and Valuation Techniques [Line Items]
Value of servicing (basis points per loan)	0.00023	0.00022
Maximum | Excess spread financing
Fair Value Measurement Inputs and Valuation Techniques [Line Items]
Discount rate	13.80%	15.70%
Prepayment speed	15.30%	15.00%
Recapture rate	29.50%	24.20%
Maximum | Mortgage servicing rights financing
Fair Value Measurement Inputs and Valuation Techniques [Line Items]
Advance financing and counterparty fee rates	8.20%	8.50%
Annual advance recovery rates	22.70%	22.00%
Weighted-average | Forward MSR
Fair Value Measurement Inputs and Valuation Techniques [Line Items]
Discount rate	11.00%	9.40%
Prepayment speed	13.60%	15.40%
Cost to service per loan(1)	$ 86	$ 98
Weighted-average | IRLCs
Fair Value Measurement Inputs and Valuation Techniques [Line Items]
Value of servicing (basis points per loan)	0.00014	0.00012
Weighted-average | Excess spread financing
Fair Value Measurement Inputs and Valuation Techniques [Line Items]
Discount rate	11.20%	12.20%
Prepayment speed	13.50%	14.40%
Recapture rate	21.30%	19.50%
Weighted-average | Mortgage servicing rights financing
Fair Value Measurement Inputs and Valuation Techniques [Line Items]
Advance financing and counterparty fee rates	6.90%	7.50%
Annual advance recovery rates	20.80%	19.90%

XML

Fair Value Measurements - Fair Value by Balance Sheet Line Item (Details) - USD ($) $ in Millions	Jun. 30, 2021	Dec. 31, 2020	Jun. 30, 2020
Financial assets
Restricted cash	$ 113	$ 135	$ 178
Loans subject to repurchase from Ginnie Mae	4,057	6,159
Financial liabilities
Unsecured senior notes, net	2,075	2,074
Advance and warehouse facilities, net	7,310	6,258
Recurring Fair Value Measurements
Financial assets
Cash and cash equivalents	716	695
Restricted cash	113	135
Loans subject to repurchase from Ginnie Mae	4,057	6,159
Financial liabilities
Unsecured senior notes, net	2,075	2,074
Advance and warehouse facilities, net	7,310	6,258
Liability for loans subject to repurchase from Ginnie Mae	4,057	6,159
Recurring Fair Value Measurements | Level 1
Financial assets
Cash and cash equivalents	716	695
Restricted cash	113	135
Loans subject to repurchase from Ginnie Mae	0	0
Financial liabilities
Unsecured senior notes, net	2,117	2,208
Advance and warehouse facilities, net	0	0
Liability for loans subject to repurchase from Ginnie Mae	0	0
Recurring Fair Value Measurements | Level 2
Financial assets
Cash and cash equivalents	0	0
Restricted cash	0	0
Loans subject to repurchase from Ginnie Mae	4,057	6,159
Financial liabilities
Unsecured senior notes, net	0	0
Advance and warehouse facilities, net	7,317	6,269
Liability for loans subject to repurchase from Ginnie Mae	4,057	6,159
Recurring Fair Value Measurements | Level 3
Financial assets
Cash and cash equivalents	0	0
Restricted cash	0	0
Loans subject to repurchase from Ginnie Mae	0	0
Financial liabilities
Unsecured senior notes, net	0	0
Advance and warehouse facilities, net	0	0
Liability for loans subject to repurchase from Ginnie Mae	0	0
Nonrecurring Fair Value Measurements
Financial assets
Advances and other receivables, net	837	940
Nonrecurring Fair Value Measurements | Level 1
Financial assets
Advances and other receivables, net	0	0
Nonrecurring Fair Value Measurements | Level 2
Financial assets
Advances and other receivables, net	0	0
Nonrecurring Fair Value Measurements | Level 3
Financial assets
Advances and other receivables, net	$ 837	$ 940

XML

Commitments and Contingencies - Narrative (Details) - USD ($) $ in Millions	3 Months Ended		6 Months Ended
	Jun. 30, 2021	Jun. 30, 2020	Jun. 30, 2021	Jun. 30, 2020
Loss Contingencies [Line Items]
Legal fees	$ 8	$ 12	$ 21	$ 27
Contractual Obligation	$ 83		$ 83
Contractual Obligation, Term of Contract	5 years		5 years
Litigation and regulatory matters | Minimum
Loss Contingencies [Line Items]
Estimate of possible loss	$ 2		$ 2
Litigation and regulatory matters | Maximum
Loss Contingencies [Line Items]
Estimate of possible loss	$ 17		$ 17

XML

Segment Information - Financial Information (Details) - USD ($) $ in Millions	3 Months Ended		6 Months Ended
	Jun. 30, 2021	Jun. 30, 2020	Jun. 30, 2021	Jun. 30, 2020	Dec. 31, 2020
Revenues:
Service related, net	$ (8)	$ 0	$ 572	$ (67)
Net gain on mortgage loans held for sale	582	618	1,261	949
Total revenues	574	618	1,833	882
Total expenses	425	398	879	822
Other income (expenses)
Interest income	51	22	97	97
Interest expense	(119)	(127)	(245)	(266)
Other income (expense), net	486	0	486	1
Total other income (expenses), net	418	(105)	338	(168)
Income (loss) from continuing operations before income tax expense (benefit)	567	115	1,292	(108)
Depreciation and amortization for property and equipment and intangible assets from continuing operations	16	17	31	36
Total assets	23,308	17,300	23,308	17,300	$ 24,165
Total assets of discontinues operations	4,935		4,935		5,347
Disposal Group, Disposed of by Sale, Not Discontinued Operations | Title Business
Other income (expenses)
Disposal Group, Not Discontinued Operation, Gain (Loss) on Disposal	487
Discontinued Operations, Held-for-sale or Disposed of by Sale [Member] | Champion Mortgage [Member]
Other income (expenses)
Total assets of discontinues operations	4,935		4,935		$ 5,347
Operating Segments | Servicing
Revenues:
Service related, net	(92)	(126)	349	(320)
Net gain on mortgage loans held for sale	197	45	324	79
Total revenues	105	(81)	673	(241)
Total expenses	121	102	231	231
Other income (expenses)
Interest income	25	3	48	43
Interest expense	(65)	(67)	(136)	(127)
Other income (expense), net	0	0	0	0
Total other income (expenses), net	(40)	(64)	(88)	(84)
Income (loss) from continuing operations before income tax expense (benefit)	(56)	(247)	354	(556)
Depreciation and amortization for property and equipment and intangible assets from continuing operations	7	4	12	8
Total assets	15,973	10,736	15,973	10,736
Operating Segments | Originations
Revenues:
Service related, net	45	21	88	41
Net gain on mortgage loans held for sale	385	573	937	870
Total revenues	430	594	1,025	911
Total expenses	226	167	457	333
Other income (expenses)
Interest income	26	19	49	53
Interest expense	(23)	(13)	(48)	(40)
Other income (expense), net	0	0	0	0
Total other income (expenses), net	3	6	1	13
Income (loss) from continuing operations before income tax expense (benefit)	207	433	569	591
Depreciation and amortization for property and equipment and intangible assets from continuing operations	6	4	10	7
Total assets	4,582	3,592	4,582	3,592
Operating Segments | Xome
Revenues:
Service related, net	39	106	135	212
Net gain on mortgage loans held for sale	0	0	0	0
Total revenues	39	106	135	212
Total expenses	45	95	132	191
Other income (expenses)
Interest income	0	0	0	0
Interest expense	0	0	0	0
Other income (expense), net	486	1	486	2
Total other income (expenses), net	486	1	486	2
Income (loss) from continuing operations before income tax expense (benefit)	480	12	489	23
Depreciation and amortization for property and equipment and intangible assets from continuing operations	3	3	6	6
Total assets	573	135	573	135
Corporate/Other
Revenues:
Service related, net	0	(1)	0	0
Net gain on mortgage loans held for sale	0	0	0	0
Total revenues	0	(1)	0	0
Total expenses	33	34	59	67
Other income (expenses)
Interest income	0	0	0	1
Interest expense	(31)	(47)	(61)	(99)
Other income (expense), net	0	(1)	0	(1)
Total other income (expenses), net	(31)	(48)	(61)	(99)
Income (loss) from continuing operations before income tax expense (benefit)	(64)	(83)	(120)	(166)
Depreciation and amortization for property and equipment and intangible assets from continuing operations	0	6	3	15
Total assets	$ 2,180	$ 2,837	$ 2,180	$ 2,837