nsm-20210930

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 September 30, 2021


☐ 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 October 22, 2021 was 75,122,633.

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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 September 30, 2021 (unaudited) and December 31, 2020	3
	Condensed Consolidated Statements of Operations (unaudited) for the Three and Nine Months Ended September 30, 2021 and 2020	4
	Condensed Consolidated Statements of Stockholders’ Equity (unaudited) for the Three and Nine Months Ended September 30, 2021 and 2020	5
	Condensed Consolidated Statements of Cash Flows (unaudited) for the Nine Months Ended September 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	11
	3. Mortgage Servicing Rights and Related Liabilities	12
	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	21
	11. Earnings Per Share	22
	12. Income Taxes	24
	13. Fair Value Measurements	24
	14. Capital Requirements	28
	15. Commitments and Contingencies	28
	16. Segment Information	30
Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	34
Item 3.	Quantitative and Qualitative Disclosures about Market Risk	60
Item 4.	Controls and Procedures	61

PART II	OTHER INFORMATION
Item 1.	Legal Proceedings	62
Item 1A.	Risk Factors	62
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	62
Item 3.	Defaults Upon Senior Securities	62
Item 4.	Mine Safety Disclosures	62
Item 5.	Other Information	62
Item 6.	Exhibits	63

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PART I. Financial Information

Item 1. Financial Statements

MR. COOPER GROUP INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(millions of dollars, except share data)


	September 30, 2021		December 31, 2020
	(unaudited)
Assets
Cash and cash equivalents	$	731	$	695
Restricted cash	118		135
Mortgage servicing rights at fair value	3,666		2,703
Advances and other receivables, net of reserves of $172 and $208, respectively	909		940
Mortgage loans held for sale at fair value	7,939		5,720
Property and equipment, net of accumulated depreciation of $115 and $92, respectively	103		113
Deferred tax assets, net	1,011		1,339
Other assets	3,462		7,173
Assets of discontinued operations	3,722		5,347
Total assets	$	21,661	$	24,165

Liabilities and Stockholders’ Equity
Unsecured senior notes, net	$	2,076	$	2,074
Advance and warehouse facilities, net	8,206		6,258
Payables and other liabilities	3,537		7,159
MSR related liabilities - nonrecourse at fair value	842		967
Liabilities of discontinued operations	3,740		5,203
Total liabilities	18,401		21,661
Commitments and contingencies (Note 15)
Preferred stock at $0.00001 - 10 million shares authorized, zero and 1.0 million shares issued, zero and 1.0 million shares outstanding, respectively; aggregate liquidation preference of zero and 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	1,108		1,126
Retained earnings	2,724		1,434
Treasury shares at cost - 18.1 million and 2.6 million shares, respectively	(574)		(58)
Total Mr. Cooper stockholders’ equity	3,259		2,503
Non-controlling interests	1		1
Total stockholders’ equity	3,260		2,504
Total liabilities and stockholders’ equity	$	21,661	$	24,165

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

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MR. COOPER GROUP INC.

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

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


	Three Months Ended September 30,				Nine Months Ended September 30,
	2021		2020		2021		2020
Revenues:
Service related, net	$	288	$	218	$	860	$	151
Net gain on mortgage loans held for sale	572		645		1,833		1,594
Total revenues	860		863		2,693		1,745
Expenses:
Salaries, wages and benefits	251		265		805		737
General and administrative	151		190		476		540
Total expenses	402		455		1,281		1,277

Interest income	66		17		163		114
Interest expense	(118)		(128)		(363)		(394)
Other income (expense), net	8		(51)		494		(50)
Total other (expense) income, net	(44)		(162)		294		(330)
Income from continuing operations before income tax expense	414		246		1,706		138
Less: Income tax expense	104		59		410		33
Net income from continuing operations	310		187		1,296		105
Net (loss) income from discontinued operations	(11)		27		3		11
Net income	299		214		1,299		116
Less: Net earnings attributable to non-controlling interests	—		5		—		2
Net income attributable to Mr. Cooper	299		209		1,299		114
Less: Undistributed earnings attributable to participating stockholders	1		2		9		1
Less: Premium on retirement of preferred stock	28		—		28		—
Net income attributable to common stockholders	$	270	$	207	$	1,262	$	113

Earnings from continuing operations per common share attributable to Mr. Cooper:
Basic	$	3.56	$	1.98	$	14.85	$	1.12
Diluted	$	3.42	$	1.91	$	14.20	$	1.09

Earnings from discontinued operations per common share attributable to Mr. Cooper:
Basic	$	(0.14)	$	0.28	$	0.04	$	0.11
Diluted	$	(0.13)	$	0.27	$	0.03	$	0.11

Earnings per common share attributable to Mr. Cooper:
Basic	$	3.42	$	2.26	$	14.89	$	1.23
Diluted	$	3.29	$	2.18	$	14.23	$	1.20

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

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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 June 30, 2020	1,000	$	—	92,022	$	1	$	1,114	$	1,034	$	—	$	2,149	$	(4)	$	2,145
Shares issued / (surrendered) under incentive compensation plan	—	—		19	—		—		—		—		—		—		—
Share-based compensation	—	—		—	—		6		—		—		6		—		6
Repurchase of common stock	—	—		(1,187)	—		—		—		(24)		(24)		—		(24)
Net income	—	—		—	—		—		209		—		209		5		214
Balance at September 30, 2020	1,000	$	—	90,854	$	1	$	1,120	$	1,243	$	(24)	$	2,340	$	1	$	2,341

Balance at June 30, 2021	1,000	$	—	86,149	$	1	$	1,120	$	2,434	$	(206)	$	3,349	$	1	$	3,350
Shares issued / (surrendered) under incentive compensation plan	—	—		45	—		—		—		—		—		—		—
Share-based compensation	—	—		—	—		7		—		—		7		—		7
Repurchase of common stock	—	—		(11,073)	—		—		—		(368)		(368)		—		(368)
Retirement of preferred stock	(1,000)	—		—	—		(19)		(9)		—		(28)		—		(28)
Net income	—	—		—	—		—		299		—		299		—		299
Balance at September 30, 2021	—	$	—	75,121	$	1	$	1,108	$	2,724	$	(574)	$	3,259	$	1	$	3,260

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

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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	—	—		923	—		(5)		—		—		(5)		—		(5)
Share-based compensation	—	—		—	—		16		—		—		16		—		16
Cumulative effect adjustments pursuant to the adoption of CECL-related accounting guidance	—	—		—	—		—		7		—		7		—		7
Repurchase of common stock	—	—		(1,187)	—		—		—		(24)		(24)		—		(24)
Net income	—	—		—	—		—		114		—		114		2		116
Balance at September 30, 2020	1,000	$	—	90,854	$	1	$	1,120	$	1,243	$	(24)	$	2,340	$	1	$	2,341

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	—	—		1,242	—		(20)		—		—		(20)		—		(20)
Share-based compensation	—	—		—	—		21		—		—		21		—		21
Repurchase of common stock	—	—		(15,578)	—		—		—		(516)		(516)		—		(516)
Retirement of preferred stock	(1,000)	—		—	—		(19)		(9)		—		(28)		—		(28)
Net income	—	—		—	—		—		1,299		—		1,299		—		1,299
Balance at September 30, 2021	—	$	—	75,121	$	1	$	1,108	$	2,724	$	(574)	$	3,259	$	1	$	3,260

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

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MR. COOPER GROUP INC.

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(millions of dollars)


	Nine Months Ended September 30,
	2021		2020
Operating Activities
Net income	$	1,299	$	116
Less: Net income from discontinued operations	3		11
Net income from continuing operations	1,296		105
Adjustments to reconcile net income from continuing operations to net cash attributable to operating activities:
Deferred tax expense (benefit)	327		(1)
Net gain on mortgage loans held for sale	(1,833)		(1,594)
Provision for servicing and non-servicing reserves	28		18
Fair value changes and amortization of mortgage servicing rights	296		1,332
Fair value changes in MSR related liabilities	(7)		(122)
Depreciation and amortization for property and equipment and intangible assets	45		55
Gain on sale of business	(494)		—
Loss on redemption of unsecured senior notes	—		52
Other operating activities	36		45
Repurchases of forward loan assets out of Ginnie Mae securitizations	(8,530)		(3,173)
Mortgage loans originated and purchased for sale, net of fees	(67,507)		(38,709)
Sales proceeds and loan payment proceeds for mortgage loans held for sale	74,948		43,046
Changes in assets and liabilities:
Advances and other receivables	(41)		172
Other assets	46		31
Payables and other liabilities	7		(157)
Net cash attributable to operating activities - continuing operations	(1,383)		1,100
Net cash attributable to operating activities - discontinued operations	613		778
Net cash attributable to operating activities	(770)		1,878

Investing Activities
Sale of business, net of cash divested	432		—
Property and equipment additions, net of disposals	(33)		(43)
Purchase of forward mortgage servicing rights	(431)		(39)
Proceeds on sale of forward mortgage servicing rights	13		44
Other investing activities	1		—
Net cash attributable to investing activities - continuing operations	(18)		(38)
Net cash attributable to investing activities - discontinued operations	1,029		—
Net cash attributable to investing activities	1,011		(38)

Financing Activities
Increase (decrease) in advance and warehouse facilities	1,950		(14)
Settlements and repayments of excess spread financing	(118)		(159)
Issuance of unsecured senior notes	—		1,450
Redemption and repayment of unsecured senior notes	—		(1,686)
Repurchase of common stock	(516)		(24)
Retirement of preferred stock	(28)		—
Other financing activities	(33)		(21)
Net cash attributable to financing activities - continuing operations	1,255		(454)
Net cash attributable to financing activities - discontinued operations	(1,495)		(823)
Net cash attributable to financing activities	(240)		(1,277)
Net increase in cash, cash equivalents, and restricted cash	1		563
Cash, cash equivalents, and restricted cash - beginning of period	913		612
Cash, cash equivalents, and restricted cash - end of period(1)	$	914	$	1,175

Supplemental Disclosures of Non-cash Investing Activities
Equity consideration received from sale of business	$	53	$	—
Purchase of forward mortgage servicing rights	$	12	$	—
Forward mortgage servicing rights sales price holdback	$	2	$	—

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


	September 30, 2021		September 30, 2020
Cash and cash equivalents	$	731	$	946
Restricted cash	118		152
Restricted cash within assets of discontinued operations	65		77
Total cash, cash equivalents, and restricted cash	$	914	$	1,175

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

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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 to sell its Xome Title business to Blend Labs, Inc. (“Blend Labs”) for a total consideration 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. 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 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 $7 for the three and nine months ended September 30, 2021, respectively. The results of the Title business are reported under Corporate/Other in Note 16, Segment Information. 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, and for the unsold portion, the operations continue to meet the criteria. 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.

On August 31, 2021, the Company completed the sale of its Xome Valuations business (the “Valuations Transaction”) to Voxtur Analytics Corp. (“Voxtur”) for a total consideration of approximately $16, consisting of approximately $9 in cash and a number of Voxtur common stock with an aggregate value of $7. A $7 gain was recorded in the third quarter of 2021 upon the closing of the Valuations Transaction and was included in other income, net within the condensed consolidated statements of operations. There were no transaction costs recorded for the three and nine months ended September 30, 2021. The results of the Valuations business are reported under Corporate/Other in Note 16, Segment Information. The carrying amounts of assets and liabilities associated with the Valuations business were not material to the condensed consolidated balance sheets as of December 31, 2020.

On October 22, 2021, the Company completed the sale of its Xome Field Services business (the “Field Services Transaction”) to Cyprexx Services LLC for a total consideration of approximately $41, consisting of $36 in cash and a retained interest of 10% for the Company. The sale is expected to generate a $33 gain. There were no transaction costs recorded for the three and nine months ended September 30, 2021. The results of the Field Services business are reported under Corporate/Other in Note 16, Segment Information. The carrying amounts of assets and liabilities associated with the Field Services business were not material to the condensed consolidated balance sheets as of December 31, 2020.

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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.

Reclassifications

Certain reclassifications have been made in the 2020 condensed consolidated financial statements to conform to 2021 presentation. Such reclassifications did not affect total revenues or net income.

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.

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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. Pursuant to the agreement, total consideration for the sale is dependent on the value of the respective assets and liabilities sold on the closing date. 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 in the fourth quarter of 2021. The Company recorded total transaction costs of $5 for the nine months ended September 30, 2021. There were no transaction costs for the three months ended September 30, 2021. The carrying amounts of assets and liabilities associated with the reverse servicing operation are reported under the Servicing segment. The Company determined the reverse servicing operations met the criteria for classification as held for sale as of June 30, 2021, and for the unsold portion, the operations continue to meet the criteria. The sale of business 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. In August 2021, net assets of $1,039 were transferred to MAM. The balances as of September 30, 2021 represent the remaining balances to be transferred.

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 transfer. In addition, the Company will retain certain loans related to the reverse servicing portfolio, primarily related to previously liquidated loans, with total assets of $95 and total liabilities of $91 as of September 30, 2021.

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


	September 30, 2021		December 31, 2020
Carrying amounts of assets of discontinued operations
Restricted cash	$	65	$	83

Reverse mortgage interests, net	3,705		5,253

Other	5		11
Loss recognized on classification as discontinued operations	(53)		—
Total assets of discontinued operations	$	3,722	$	5,347

Carrying amounts of liabilities of discontinued operations
Advances and warehouse facilities, net	$	98	$	505
Payables and other liabilities	208		233
Mortgage servicing liabilities	41		41
Other nonrecourse debt, net	3,393		4,424
Total liabilities of discontinued operations	$	3,740	$	5,203

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


	Three Months Ended September 30,				Nine Months Ended September 30,
	2021		2020		2021		2020
Revenue - service related, net	$	4	$	9	$	13	$	35
Salaries, wages and benefits expense	(7)		(10)		(23)		(32)
General and administrative expense	(14)		33		50		15
Interest income	31		40		118		136
Interest expense	(26)		(37)		(90)		(140)
Loss on classification as discontinued operations	(3)		—		(64)		—
(Loss) income from discontinued operations before income tax (benefit) expense	(15)		35		4		14
Less: Income tax (benefit) expense	(4)		8		1		3
Net (loss) income from discontinued operations	$	(11)	$	27	$	3	$	11

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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	September 30, 2021		December 31, 2020
Forward MSRs - fair value	$	3,666	$	2,703

Excess spread financing - fair value	$	822	$	934
Mortgage servicing rights financing - fair value	20		33
MSR related liabilities - nonrecourse at fair value	$	842	$	967