Introduction to Mortgage Servicing Examinations Training - March 2023

Mortgage, LLC Notes to Consolidated Financial Statements (continued) (Dollars in Thousands)

Subsequent Events

In preparing these consolidated financial statements, the Company evaluated events and transactions for potential recognition or disclosure through March 24, 2022, the date these consolidated financial statements were issued. Refer to Note 6, Borrowings for disclosures on changes to the Company’s debt agreements and Note 11, Income Taxes for distributions made subsequent to December 31, 2021. Subsequent to December 31, 2021, the Company sold MSRs relating to certain single-family mortgage loans with an aggregate unpaid principal balance of approximately $24.0 billion and a fair market value of approximately $254.4 million as of December 31, 2021. The sales represented approximately 4.4% of the Company’s total single family mortgage servicing portfolio as of December 31, 2021. Revenue Recognition Gain on sale of loans, net Gain on sale of loans, net includes all components related to the origination and sale of mortgage loans, including (1) net gain on sale of loans, which represents the premium we receive in excess of the loan principal amount and certain fees charged by investors upon sale of loans into the secondary market, (2) loan origination fees (credits), points and certain costs, (3) provision for or benefit from investor reserves, (4) the change in fair value of interest rate locks and loans held for sale, (5) the gain or loss on forward commitments hedging loans held for sale and interest rate lock commitments (IRLCs), and (6) the fair value of originated MSRs. An estimate of the gain on sale of loans, net is recognized at the time an IRLC is issued, net of a pull-through factor. Subsequent changes in the fair value of IRLCs and mortgage loans held for sale are recognized in current period earnings. When the mortgage loan is sold into the secondary market, any difference between the proceeds received and the current fair value of the loan is recognized in current period earnings in gain on sale of loans, net. Included in gain on sale of loans, net is the fair value of originated MSRs, which represents the estimated fair value of MSRs related to loans which we have sold and retained the right to service. Refer to Note 3, Mortgage Servicing Rights for information related to the gain/ (loss) on changes in the fair value of MSRs. Loan servicing income (loss), net Loan servicing income (loss), net includes income from servicing, sub-servicing and ancillary fees, and is recorded to income as earned, which is upon collection of payments from borrowers. This amount also includes the Change in fair value of MSRs, which is the adjustment for the fair value measurement of the MSR asset as of the respective Interest income, net includes interest earned on mortgage loans held for sale and mortgage loans held for investment net of the interest expense paid on our loan funding facilities. Interest income is recorded as earned and interest expense is recorded as incurred. Other income Other income includes professional service fees, which is the largest component and falls within the scope of ASC Topic 606—Revenue from Contracts with Customers and is disclosed further below: Professional service fees The Company recognizes professional service fee revenue based on the delivery of services (e.g. human resources, technology, training) over the term of a contract. Consideration for the promised services is received through a combination of a fixed fee for the period and incremental fees paid for optional services that are available at an incremental rate determined at the time such services are requested. The Company recognizes the annual fee ratably balance sheet date. Interest income, net

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