##### Table of Contents



UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
 Washington, D.C. 20549
 
 FORM 10-Q
  þ
    

    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 For the quarterly period ended June 30, 2011
 or
 o
    
    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: 333-171370
 
 Nationstar Mortgage LLC
  Delaware
(State or other jurisdiction of 
incorporation or organization)
    
    75-2921540
(IRS Employer Identification No.)350 Highland Drive 
Lewisville, TX
(Address of principal executive offices)
    
    75067
(Zip Code)
 469-549-2000
 þ o
 þ o
  Large Accelerated Filer o
    
Accelerated Filer o
    

Non-Accelerated Filer þ
    
    Smaller reporting company o(Do not check if a smaller reporting company.)
  o þ




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##### Table of Contents



FORWARD-LOOKING STATEMENTS
   
    
    the impact of the ongoing implementation of the Dodd-Frank Wall Street Reform and
Consumer Protection Act of 2010 on our business activities and practices, costs of
operations and overall results of operations;
 
    
    the impact on our servicing practices of enforcement consent orders entered into by
14 of the largest servicers and four federal agencies;
 
    
    the continued deterioration of the residential mortgage market, increase in monthly
payments on adjustable rate mortgage loans, adverse economic conditions, decrease in
property values or increase in delinquencies and defaults;
 
    
    our ability to compete successfully in the mortgage loan servicing and mortgage loan
originations industry;
 
    
    our ability to maintain the size of our servicing portfolio by successfully
identifying attractive acquisition opportunities, including mortgage servicing rights,
subservicing contracts, servicing platforms and origination platforms;
 
    
    our ability to scale-up appropriately and integrate our acquisitions to realize the
anticipated benefits of any such potential future acquisitions;
 
    
    our ability to obtain sufficient capital to meet our financing requirements;
 
    
    our ability to grow our loan origination volume and develop a distributed retail
sales channel;
 
    
    the termination of our servicing rights and subservicing contracts;
 
    
    changes to federal, state and local laws and regulations concerning loan servicing,
loan origination, loan modification or the licensing of entities that engage in these
activities;
 
    
    changes in accounting standards;
 
    
    our ability to meet certain criteria or characteristics under the indentures
governing our securitized pools of loans;
 
    
    our ability to follow the specific guidelines of government-sponsored enterprises or
a significant change in such guidelines;
 
    
    delays in our ability to collect or be reimbursed for servicing advances;
 
    
    changes to the Home Affordable Modification Program, the Make Home Affordable Plan
or other similar government programs;
 
    
    loss of our licenses;
 2




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
    
    changes in our business relationships with Fannie Mae, Freddie Mac, Ginnie Mae and
others that facilitate the issuance of mortgage-backed securities;
 
    
    changes to the nature of the guarantees of Fannie Mae and Freddie Mac and the market
implications of such changes;
 
    
    errors in our financial models or changes in assumptions;
 
    
    requirement to write down the value of certain assets;
 
    
    changes in prevailing interest rates;
 
    
    our ability to successfully mitigate our risks through hedging strategies;
 
    
    changes to our servicer ratings;
 
    
    the accuracy and completeness of information about borrowers and counterparties;
 
    
    our ability to maintain our technology systems and our ability to adapt such systems
for future operating environments;
 
    
    failure of our internal security measures or breach of our privacy protections;
 
    
    failure of our vendors to comply with servicing criteria;
 
    
    the loss of the services of our senior managers;
 
    
    changes to our income tax status;
 
    
    failure to attract and retain a highly skilled work force;
 
    
    increase in legal proceedings and related costs;
 
    
    changes in public opinion concerning mortgage originators or debt collectors; and
 
    
    conflicts of interest with Fortress and the holders of the notes.
    3




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##### 



NATIONSTAR MORTGAGE LLC
 QUARTERLY REPORT ON FORM 10-Q
 TABLE OF CONTENTS
 PagePART I. FINANCIAL INFORMATIONItem 1. Financial Statements
    
    
    5Consolidated Balance Sheets  June 30, 2011 (unaudited) and December 31,2010
    
    
    5Unaudited Consolidated Statements of Operations  For the three- and six-months ended June 30,
2011 and 2010
    
    
    6Consolidated Statements of Members Equity  For the six-months ended June 30, 2011 (unaudited)
and for the year ended December 31, 2010
    
    
    7Unaudited Consolidated Statements of Cash Flows  For the six-months ended June 30, 2011 and 2010
    
    
    8Notes to Consolidated Financial Statements (unaudited)
    
    
    10Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations
    
    
    44Item 3. Quantitative and Qualitative Disclosures about Market Risk
    
    
    67Item 4. Controls and Procedures
    
    
    68PART II. OTHER INFORMATIONItem 1. Legal Proceedings
    
    
    69Item 1A. Risk Factors
    
    
    69Item 2. Unregistered Sales of Equity and Use of Proceeds
    
    
    69Item 3. Defaults Upon Senior Notes
    
    
    69Item 4. [Removed and Reserved]
    
    
    69Item 5. Other InformationItem 6. Exhibits
    
    
    69Signatures
    
    
    70EX-31.1EX-31.2EX-32.1EX-32.2
  4




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Part 1. Financial Information
 
 Item 1. Financial Statements
 NATIONSTAR MORTGAGE LLC AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS
 June 30,
    
    
    December 31,2011
    
    
    2010(unaudited)AssetsCash and cash equivalents
    
    $
    2,532
    
    
    $
    21,223Restricted cash (includes $1,417 and $1,472, respectively, of restricted cash,
subject to ABS nonrecourse debt)
    
    
    84,331
    
    
    
    91,125Accounts receivable (includes $2,901 and $2,392, respectively, of accrued
interest, subject to ABS nonrecourse debt)
    
    
    468,072
    
    
    
    439,071Mortgage loans held for sale
    
    
    262,597
    
    
    
    371,160Mortgage loans held for investment, subject to nonrecourse debt  Legacy Assets,
net of allowance for loan losses of $4,426 and $3,298 respectively
    
    
    255,463
    
    
    
    266,840Mortgage loans held for investment, subject to ABS nonrecourse debt (at fair value)
    
    
    490,588
    
    
    
    538,440Receivables from affiliates
    
    
    7,351
    
    
    
    8,993Mortgage servicing rights
    
    
    151,557
    
    
    
    145,062Property and equipment, net
    
    
    15,667
    
    
    
    8,394Real estate owned, net (includes $11,787 and $17,509, respectively, of real estate
owned, subject to ABS nonrecourse debt)
    
    
    17,249
    
    
    
    27,337Other assets
    
    
    35,335
    
    
    
    29,536Total assets
    
    $
    1,790,742
    
    
    $
    1,947,181Liabilities and members equityNotes payable
    
    $
    604,770
    
    
    $
    709,758Unsecured senior notes
    
    
    244,759
    
    
    
    244,061Payables and accrued liabilities(includes $59 and $95, respectively, of accrued
interest payable, subject to ABS nonrecourse debt)
    
    
    78,764
    
    
    
    75,054Derivative financial instruments
    
    
    8,214
    
    
    
    7,801Derivative financial instruments, subject to ABS nonrecourse debt
    
    
    14,151
    
    
    
    18,781Nonrecourse debt  Legacy Assets
    
    
    126,026
    
    
    
    138,662ABS nonrecourse debt (at fair value)
    
    
    447,845
    
    
    
    496,692Total liabilities
    
    
    1,524,529
    
    
    
    1,690,809Commitments and contingenciesTotal members equity
    
    
    266,213
    
    
    
    256,372Total liabilities and members equity
    
    $
    1,790,742
    
    
    $
    1,947,181
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NATIONSTAR MORTGAGE LLC AND SUBSIDIARIES
 
 CONSOLIDATED STATEMENTS OF OPERATIONS (unaudited)
 For the Three Months Ended
    
    
    For the Six Months EndedJune 30,
    
    
    June 30,2011
    
    
    2010
    
    
    2011
    
    
    2010Revenues:Servicing fee income
    
    $
    52,886
    
    
    $
    41,183
    
    
    $
    110,353
    
    
    $
    75,273Other fee income
    
    
    6,491
    
    
    
    3,695
    
    
    
    13,710
    
    
    
    8,355Total fee income
    
    
    59,377
    
    
    
    44,878
    
    
    
    124,063
    
    
    
    83,628Gain on mortgage loans held for sale
    
    
    22,822
    
    
    
    13,489
    
    
    
    43,328
    
    
    
    25,918Total revenues
    
    
    82,199
    
    
    
    58,367
    
    
    
    167,391
    
    
    
    109,546Expenses and impairments:Salaries, wages, and benefits
    
    
    48,372
    
    
    
    33,321
    
    
    
    95,295
    
    
    
    62,810General and administrative
    
    
    15,746
    
    
    
    10,789
    
    
    
    31,310
    
    
    
    19,509Provision for loan losses
    
    
    
    
    
    
    
    
    
    
    1,128
    
    
    
    Loss on foreclosed real estate
    
    
    2,099
    
    
    
    
    
    
    
    4,346
    
    
    
    Occupancy
    
    
    2,185
    
    
    
    1,889
    
    
    
    4,444
    
    
    
    3,790Total expenses and impairments
    
    
    68,402
    
    
    
    45,999
    
    
    
    136,523
    
    
    
    86,109Other income (expense):Interest income
    
    
    16,727
    
    
    
    28,261
    
    
    
    35,045
    
    
    
    59,594Interest expense
    
    
    (25,185
    )
    
    
    (31,958
    )
    
    
    (50,553
    )
    
    
    (61,093
    )Loss on interest rate swaps and caps
    
    
    
    
    
    
    (4,424
    )
    
    
    
    
    
    
    (7,203
    )Fair value changes in ABS securitizations
    
    
    (3,613
    )
    
    
    (6,573
    )
    
    
    (6,265
    )
    
    
    (16,329
    )Total other income (expense)
    
    
    (12,071
    )
    
    
    (14,694
    )
    
    
    (21,773
    )
    
    
    (25,031
    )Net income/(loss)
    
    $
    1,726
    
    
    $
    (2,326
    )
    
    $
    9,095
    
    
    $
    (1,594
    )
  6




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NATIONSTAR MORTGAGE LLC AND SUBSIDIARIES

CONSOLIDATED STATEMENT OF MEMBERS EQUITY
AND COMPREHENSIVE INCOME (unaudited)
 Accumulated Other
    
    
    Total MembersMembers
    
    
    Comprehensive
    
    
    Units andUnits
    
    
    Income
    
    
    Members EquityBalance at January 1, 2010
    
    $
    263,823
    
    
    $
    
    
    
    $
    263,823Cumulative effect of change in
accounting principles as of January
1, 2010 related to adoption of new
accounting guidance on consolidation
of variable interest entities
    
    
    (8,068
    )
    
    
    
    
    
    
    (8,068
    )Share-based compensation
    
    
    12,856
    
    
    
    
    
    
    
    12,856Tax related share-based settlement
of units by members
    
    
    (3,396
    )
    
    
    
    
    
    
    (3,396
    )Comprehensive loss:Net loss
    
    
    (9,914
    )
    
    
    
    
    
    
    (9,914
    )Change in value of cash flow hedge
    
    
    
    
    
    
    1,071
    
    
    
    1,071Total comprehensive loss
    
    
    
    
    
    
    
    
    
    
    (8,843
    )Balance at December 31, 2010
    
    
    255,301
    
    
    
    1,071
    
    
    
    256,372(unaudited)Share-based compensation
    
    
    10,526
    
    
    
    
    
    
    
    10,526Distribution to parent
    
    
    (3,900
    )
    
    
    
    
    
    
    (3,900
    )Tax related share-based settlement
of units by members
    
    
    (4,809
    )
    
    
    
    
    
    
    (4,809
    )Comprehensive income:Net income
    
    
    9,095
    
    
    
    
    
    
    
    9,095Change in value of cash flow hedge
    
    
    
    
    
    
    (1,071
    )
    
    
    (1,071
    )Total comprehensive income
    
    
    
    
    
    
    
    
    
    
    8,024Balance at June 30, 2011
    
    $
    266,213
    
    
    $
    
    
    
    $
    266,213
  7




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NATIONSTAR MORTGAGE LLC AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited)
 Six monthsEnded June 30,2011
    
    
    2010Operating activitiesNet income/(loss)
    
    $
    9,095
    
    
    $
    (1,594
    )Adjustments to reconcile net income/(loss) to net cash provided by operating activities:Share-based compensation
    
    
    10,526
    
    
    
    419Gain on mortgage loans held for sale
    
    
    (43,328
    )
    
    
    (25,918
    )Provision for loan losses
    
    
    1,128
    
    
    
    Loss on foreclosed real estate
    
    
    4,346
    
    
    
    Loss on equity method investments
    
    
    521
    
    
    
    Loss/(gain) or ineffectiveness on interest rate swaps and caps
    
    
    (1,416
    )
    
    
    7,203Fair value changes in ABS securitizations
    
    
    6,265
    
    
    
    16,329Depreciation and amortization
    
    
    1,560
    
    
    
    850Change in fair value on mortgage servicing rights
    
    
    11,722
    
    
    
    2,341Amortization of debt discount
    
    
    6,446
    
    
    
    10,392Amortization of premiums/discounts
    
    
    (2,424
    )
    
    
    (2,455
    )Mortgage loans originated and purchased, net of fees
    
    
    (1,378,039
    )
    
    
    (1,192,333
    )Cost of loans sold, net of fees
    
    
    1,490,814
    
    
    
    1,128,200Principal payments/prepayments received and other changes in mortgage loans originated
as held for sale
    
    
    24,849
    
    
    
    2,037Changes in assets and liabilities:Accounts receivable, net
    
    
    (29,001
    )
    
    
    69,460Receivables from affiliates
    
    
    1,642
    
    
    
    9,417Other assets
    
    
    (2,319
    )
    
    
    (1,554
    )Payables and accrued liabilities
    
    
    3,710
    
    
    
    24,802Net cash provided by operating activities
    
    
    116,097
    
    
    
    47,596
 Continued on following page.
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NATIONSTAR MORTGAGE LLC AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited)
(Continued)
 Six Months EndedJune 30,2011
    
    
    2010Investing activitiesPrincipal payments received and other changes on mortgage
loans held for investment, subject to ABS nonrecourse debt
    
    $
    14,285
    
    
    $
    13,434Property and equipment additions, net of disposals
    
    
    (8,833
    )
    
    
    (1,853
    )Acquisition of equity method investee
    
    
    (6,600
    )
    
    
    Purchase of mortgage servicing rights
    
    
    (232
    )
    
    
    Proceeds from sales of real estate owned
    
    
    20,002
    
    
    
    55,324Net cash provided by investing activities
    
    
    18,622
    
    
    
    66,905Financing activitiesTransfers from/(to) restricted cash, net
    
    
    6,794
    
    
    
    1,760Issuance of unsecured notes, net of issue discount
    
    
    
    
    
    
    243,012(Increase)/decrease in notes payable
    
    
    (104,988
    )
    
    
    (265,815
    )Repayment of non-recourse debt  Legacy assets
    
    
    (14,693
    )
    
    
    (23,516
    )Repayment of ABS nonrecourse debt
    
    
    (29,085
    )
    
    
    (67,059
    )Distribution to parent
    
    
    (3,900
    )
    
    
    Debt financing costs
    
    
    (2,729
    )
    
    
    (11,714
    )Tax related share-based settlement of units by members
    
    
    (4,809
    )
    
    
    Net cash used in financing activities
    
    
    (153,410
    )
    
    
    (123,332
    )Net increase (decrease) in cash and cash equivalents
    
    
    (18,691
    )
    
    
    (8,831
    )Cash and cash equivalents at beginning of period
    
    
    21,223
    
    
    
    41,645Cash and cash equivalents at end of period
    
    $
    2,532
    
    
    $
    32,814Supplemental disclosures of noncash activitiesTransfer of mortgage loans held for investment, subject to
nonrecourse debt  Legacy Assets to real estate owned
    
    $
    3,675
    
    
    $
    10,504Transfer of mortgage loans held for sale to real estate owned
    
    
    90
    
    
    
    Transfer of mortgage loans held for investment, subject to ABS
nonrecourse debt to real estate owned
    
    
    9,616
    
    
    
    27,332Mortgage servicing rights resulting from sale or securitization of mortgage loans
    
    
    17,985
    
    
    
    9,749
  9




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NATIONSTAR MORTGAGE LLC AND SUBSIDIARIES
 
 NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
 1. Nature of Business and Basis of Presentation
 Nature of Business
   Basis of Presentation
   10




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2. Recent Accounting Developments
 A Creditors Determination of Whether a Restructuring is a
Troubled Debt Restructuring
 Reconsideration of Effective Control for Repurchase
Agreements
 Amendments to Achieve Common Fair Value Measurement and
Disclosure Requirements in U.S. GAAP and IFRS
 Presentation of Comprehensive Income
 3. Variable Interest Entities and Securitizations
   11




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Financial Instruments-Overall
   12




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TransfersAccounted for asSecuritization
    
    
    SecuredJune 30, 2011
    
    Trusts
    
    
    Borrowings
    
    
    TotalASSETSRestricted cash
    
    $
    1,417
    
    
    $
    34,086
    
    
    $
    35,503Accounts receivable
    
    
    2,901
    
    
    
    255,563
    
    
    
    258,464Mortgage loans held for investment, subject to nonrecourse debt
    
    
    
    
    
    
    246,800
    
    
    
    246,800Mortgage loans held for investment, subject to ABS nonrecourse
debt
    
    
    490,588
    
    
    
    
    
    
    
    490,588Real estate owned
    
    
    11,787
    
    
    
    5,366
    
    
    
    17,153Total Assets
    
    $
    506,693
    
    
    $
    541,815
    
    
    $
    1,048,508LIABILITIESNotes payable
    
    $
    
    
    
    $
    210,704
    
    
    $
    210,704Payables and accrued liabilities
    
    
    59
    
    
    
    1,035
    
    
    
    1,094Outstanding servicer advances(1)
    
    
    31,662
    
    
    
    
    
    
    
    31,662Derivative financial instruments
    
    
    
    
    
    
    7,456
    
    
    
    7,456Derivative financial instruments, subject to ABS nonrecourse debt
    
    
    14,151
    
    
    
    
    
    
    
    14,151Nonrecourse debtLegacy Assets
    
    
    
    
    
    
    126,026
    
    
    
    126,026ABS nonrecourse debt
    
    
    447,845
    
    
    
    
    
    
    
    447,845Total Liabilities
    
    $
    493,717
    
    
    $
    345,221
    
    
    $
    838,938
 13




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TransfersAccounted for asSecuritization
    
    
    SecuredDecember 31, 2010
    
    Trusts
    
    
    Borrowings
    
    
    TotalASSETSRestricted cash
    
    $
    1,472
    
    
    $
    32,075
    
    
    $
    33,547Accounts receivable
    
    
    2,392
    
    
    
    286,808
    
    
    
    289,200Mortgage loans held for investment, subject to nonrecourse debt
    
    
    
    
    
    
    261,305
    
    
    
    261,305Mortgage loans held for investment, subject to ABS nonrecourse
debt
    
    
    538,440
    
    
    
    
    
    
    
    538,440Real estate owned
    
    
    17,509
    
    
    
    9,505
    
    
    
    27,014Total Assets
    
    $
    559,813
    
    
    $
    589,693
    
    
    $
    1,149,506LIABILITIESNotes payable
    
    $
    
    
    
    $
    236,808
    
    
    $
    236,808Payables and accrued liabilities
    
    
    95
    
    
    
    1,173
    
    
    
    1,268Outstanding servicer advances(1)
    
    
    32,284
    
    
    
    
    
    
    
    32,284Derivative financial instruments
    
    
    
    
    
    
    7,801
    
    
    
    7,801Derivative financial instruments, subject to ABS nonrecourse debt
    
    
    18,781
    
    
    
    
    
    
    
    18,781Nonrecourse debtLegacy Assets
    
    
    
    
    
    
    138,662
    
    
    
    138,662ABS nonrecourse debt
    
    
    497,289
    
    
    
    
    
    
    
    497,289Total Liabilities
    
    $
    548,449
    
    
    $
    384,444
    
    
    $
    932,893
 
 (1)
    
    Outstanding servicer advances consists of principal and interest advances paid by
Nationstar to cover scheduled payments and interest that have not been timely paid by borrowers.
These outstanding servicer advances are eliminated upon the consolidation of the securitization
trusts.  June 30, 2011
    
    
    December 31, 2010Total collateral balance
    
    $
    3,848,722
    
    
    $
    4,038,978Total certificate balance
    
    
    3,876,273
    
    
    
    4,026,844Total mortgage servicing
rights at fair value
    
    
    26,319
    
    
    
    26,419
   Six months Ended
    
    
    Six months EndedJune 30, 2011
    
    
    June 30, 2010Principal Amount
    
    
    
    
    
    
    Principal Amountof Loans
    
    
    
    
    
    
    of Loans60 Days or More
    
    
    
    
    
    
    60 Days or MorePast Due
    
    
    Credit Losses
    
    
    Past Due
    
    
    Credit LossesTotal securitization Trusts
    
    $
    751,431
    
    
    $
    120,290
    
    
    $
    811,515
    
    
    $
    104,471
 14




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For the three months ended
    
    For the six months endedJune 30, 2011
    
    June 30, 2010
    
    June 30, 2011
    
    June 30, 2010Servicing
    
    
    
    Servicing
    
    
    
    Servicing
    
    
    
    ServicingFees
    
    Loan
    
    Fees
    
Loan
    
    Fees
    
Loan
    
    Fees
    
    LoanReceived
    
    Repurchases
    
    Received
    
    Repurchases
    
    Received
    
    Repurchases
    
    Received
    
    RepurchasesTotal securitization trusts
    
    $
    7,621
    
    
    $
    
    $
    5,469
    
    
    $
    
    $
    15,359
    
    
    $
    
    $
    12,497
    
    
    $
 4. Consolidated Statement of Cash Flows-Supplemental Disclosure
  5. Accounts Receivable
   June 30,
    
    
    December 31,2011
    
    
    2010Delinquency advances
    
    $
    163,302
    
    
    $
    148,752Corporate and escrow advances
    
    
    270,566
    
    
    
    233,432Insurance deposits
    
    
    1,750
    
    
    
    6,390Accrued interest (includes $2,901 and $2,392,
respectively, subject to ABS nonrecourse debt)
    
    
    4,651
    
    
    
    4,302Receivables from trusts
    
    
    8,016
    
    
    
    30,095Other
    
    
    19,787
    
    
    
    16,100Total accounts receivable
    
    $
    468,072
    
    
    $
    439,071
 6. Mortgage Loans Held for Sale and Investment
 Mortgage loans held for sale
  June 30,
    
    
    December 31,2011
    
    
    2010Mortgage loans held for sale  unpaid principal balance
    
    $
    254,183
    
    
    $
    366,880Mark-to-market adjustment
    
    
    8,414
    
    
    
    4,280Total mortgage loans held for sale
    
    $
    262,597
    
    
    $
    371,160
 15




---



##### Table of Contents



June 30,
    
    
    December 31,2011
    
    
    2010Mortgage loans held for sale  Non-performing
    
    $
    1,925
    
    
    $
    2,016
  For the six months endedJune 30, 2011
    
    
    June 30, 2010Mortgage loans held for sale  beginning balance
    
    $
    371,160
    
    
    $
    203,131Mortgage loans originated and purchased, net of fees
    
    
    1,378,039
    
    
    
    1,192,333Cost of loans sold, net of fees
    
    
    (1,490,814
    )
    
    
    (1,128,200
    )Principal payments received on mortgage loans
held for sale and other changes
    
    
    4,500
    
    
    
    8,388Transfer of mortgage loans held for sale to real
estate owned
    
    
    (288
    )
    
    
    Mortgage loans held for sale  ending balance
    
    $
    262,597
    
    
    $
    275,652
 Mortgage loans held for investment, subject to nonrecourse debt- Legacy Assets, net
   Loans and Debt Securities Acquired with
Deteriorated Credit Quality
  16




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##### Table of Contents



Loss Contingencies
   June 30,
    
    
    December 31,2011
    
    
    2010Mortgage loans held for investment, subject
to nonrecourse debt- Legacy Assets, net 
unpaid principal balance
    
    $
    393,469
    
    
    $
    412,398Transfer discountAccretable
    
    
    (23,867
    )
    
    
    (25,219
    )Non-accretable
    
    
    (109,713
    )
    
    
    (117,041
    )Allowance for loan losses
    
    
    (4,426
    )
    
    
    (3,298
    )Total mortgage loans held for investment,
subject to nonrecourse debt-Legacy Assets,
net
    
    $
    255,463
    
    
    $
    266,840
  17




---



##### Table of Contents



June 30,
    
    
    December 31,2011
    
    
    2010Balance at the beginning of the period
    
    $
    25,219
    
    
    $
    22,040Additions
    
    
    
    
    
    
    Accretion
    
    
    (2,177
    )
    
    
    (4,082
    )Reclassifications from (to) nonaccretable discount
    
    
    825
    
    
    
    7,261Disposals
    
    
    
    
    
    
    Balance at the end of the period
    
    $
    23,867
    
    
    $
    25,219
   June 30, 2011Performing
    
    
    Non-Performing
    
    
    TotalBalance at the beginning of the period
    
    $
    829
    
    
    $
    2,469
    
    
    $
    3,298Provision for loan losses
    
    
    86
    
    
    
    1,042
    
    
    
    1,128Recoveries on loans previously charged-off
    
    
    
    
    
    
    
    
    
    
    Charge-offs
    
    
    
    
    
    
    
    
    
    
    Balance at the end of the period
    
    $
    915
    
    
    $
    3,511
    
    
    $
    4,426Ending balance  Collectively evaluated for impairment
    
    $
    309,863
    
    
    $
    83,606
    
    
    $
    393,469
 December 31, 2010Performing
    
    
    Non-Performing
    
    
    TotalBalance at the beginning of the period
    
    $
    
    
    
    $
    
    
    
    $
    Provision for loan losses
    
    
    829
    
    
    
    2,469
    
    
    
    3,298Recoveries on loans previously charged-off
    
    
    
    
    
    
    
    
    
    
    Charge-offs
    
    
    
    
    
    
    
    
    
    
    Balance at the end of the period
    
    $
    829
    
    
    $
    2,469
    
    
    $
    3,298Ending balance  Collectively evaluated for impairment
    
    $
    311,122
    
    
    $
    101,276
    
    
    $
    412,398
  18




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June 30,
    
    
    December 31,2011
    
    
    2010(in thousands)Credit Quality by Delinquency StatusPerforming
    
    $
    309,863
    
    
    $
    311,122Non-Performing
    
    
    83,606
    
    
    
    101,276Total
    
    $
    393,469
    
    
    $
    412,398Credit Quality by Loan-to-Value RatioLess than 60
    
    $
    44,944
    
    
    $
    47,627Less than 70 and more than 60
    
    
    17,398
    
    
    
    17,498Less than 80 and more than 70
    
    
    25,134
    
    
    
    26,805Less than 90 and more than 80
    
    
    35,143
    
    
    
    36,125Less than 100 and more than 90
    
    
    35,733
    
    
    
    37,599Greater than 100
    
    
    235,117
    
    
    
    246,744Total
    
    $
    393,469
    
    
    $
    412,398
  Mortgage loans held for investment, subject to ABS nonrecourse debt
   June 30,
    
    
    December 31,2011
    
    
    2010(in thousands)Mortgage loans held for investment, subject to ABS nonrecourse debt 
unpaid principal balance
    
    $
    944,724
    
    
    $
    983,106Fair value adjustment
    
    
    (454,136
    )
    
    
    (444,666
    )Mortgage loans held for investment, subject to ABS nonrecourse debt, net
    
    $
    490,588
    
    
    $
    538,440
  19




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##### Table of Contents



7. Mortgage Servicing Rights (MSRs)
  Servicing Assets and
Liabilities
   Credit Sensitive MSRs
    
    June 30, 2011
    
    
    December 31, 2010Discount rate
    
    
    27.23
    %
    
    
    24.96
    %Total prepayment speeds
    
    
    18.66
    %
    
    
    18.13
    %Expected weighted-average life
    
    4.69  years
    
    4.90 yearsCredit losses
    
    
    38.43
    %
    
    
    36.71
    %
 Interest Rate Sensitive MSRs
    
    June 30, 2011
    
    
    December 31, 2010Discount rate
    
    
    15.28
    %
    
    
    13.57
    %Total prepayment speeds
    
    
    16.81
    %
    
    
    17.19
    %Expected weighted-average life
    
    5.26 years
    
    5.12 yearsCredit losses
    
    
    15.37
    %
    
    
    8.80
    %
  June 30,
    
    
    December 31,2011
    
    
    2010Fair value at the beginning of the period
    
    $
    145,062
    
    
    $
    114,605Additions:Servicing resulting from transfers of financial assets
    
    
    17,985
    
    
    
    26,253Recognition of servicing assets from derecognition of variable interest entities
    
    
    
    
    
    
    2,866Purchases of servicing assets
    
    
    232
    
    
    
    17,812Deductions:Derecognition of servicing assets due to new accounting guidance on
consolidation of variable interest entities
    
    
    
    
    
    
    (10,431
    )Changes in fair value:Due to changes in valuation inputs or assumptions used in the valuation model
    
    
    (3,746
    )
    
    
    9,455Other changes in fair value
    
    
    (7,976
    )
    
    
    (15,498
    )Fair value at the end of the period
    
    $
    151,557
    
    
    $
    145,062Unpaid principal balance of loans serviced for othersOriginated or purchased mortgage loansCredit sensitive loans
    
    $
    23,378,173
    
    
    $
    24,980,980Interest sensitive loans
    
    
    7,607,182
    
    
    
    6,705,661Total owned loans
    
    
    30,985,355
    
    
    
    31,686,641Subserviced for others
    
    
    33,007,483
    
    
    
    30,649,472Total unpaid principal balance of loans serviced for others
    
    $
    63,992,838
    
    
    $
    62,336,113
 20




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##### Table of Contents



Total PrepaymentDiscount Rate
    
    
    Speeds
    
    
    Credit Losses100 bps
    
    
    200 bps
    
    
    10%
    
    
    20%
    
    
    10%
    
    
    20%Adverse
    
    
    Adverse
    
    
    Adverse
    
    
    Adverse
    
    
    Adverse
    
    
    AdverseChange
    
    
    Change
    
    
    Change
    
    
    Change
    
    
    Change
    
    
    ChangeJUNE 30, 2011Mortgage servicing rights
    
    $
    (2,466
    )
    
    $
    (6,324
    )
    
    $
    (6,998
    )
    
    $
    (15,263
    )
    
    $
    (2,797
    )
    
    $
    (7,884
    )DECEMBER 31,
2010Mortgage servicing rights
    
    $
    (3,828
    )
    
    $
    (7,458
    )
    
    $
    (8,175
    )
    
    $
    (16,042
    )
    
    $
    (4,310
    )
    
    $
    (9,326
    )
   For the three months ended
    
    
    For the six months endedJune 30,
    
    
    June 30,
    
    
    June 30,
    
    
    June 30,2011
    
    
    2010
    
    
    2011
    
    
    2010Servicing fees
    
    $
    42,060
    
    
    $
    22,051
    
    
    $
    85,197
    
    
    $
    44,549Ancillary fees
    
    
    18,719
    
    
    
    21,198
    
    
    
    37,076
    
    
    
    34,391Total servicing and ancillary fees
    
    $
    60,779
    
    
    $
    43,249
    
    
    $
    122,273
    
    
    $
    78,940
 21




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##### Table of Contents



8. Other Assets
  June 30,
    
    
    December 31,2011
    
    
    2010Deferred financing costs
    
    $
    12,799
    
    
    $
    14,396Derivative financial instruments
    
    
    7,029
    
    
    
    8,666Prepaid expenses
    
    
    2,939
    
    
    
    3,379Equity method investment
    
    
    6,079
    
    
    
    Margin call deposits
    
    
    1,765
    
    
    
    Other
    
    
    4,724
    
    
    
    3,095Total other assets
    
    $
    35,335
    
    
    $
    29,536
    June 30, 2011ASSETSCash
    
    $
    918Accounts receivable
    
    
    4,625Receivables from affiliates
    
    
    289Equity method investments
    
    
    18,657Property and equipment, net
    
    
    1,748Goodwill and other intangible assets
    
    
    18,530Other assets
    
    
    937Total Assets
    
    $
    45,704LIABILITIESNotes payable
    
    $
    4,542Payables and accrued liabilities
    
    
    15,436Total Liabilities
    
    $
    19,978
 From AcquisitionthroughJune 30, 2011REVENUESSales
    
    $
    12,201Cost of sales
    
    
    (10,722
    )Net sales revenues
    
    
    1,479OTHER INCOME/(EXPENSE)Operating costs
    
    
    (3,951
    )Income from equity method investments
    
    
    405Depreciation and amortization
    
    
    (219
    )Other expenses
    
    
    (53
    )Loss from discontinued operations
    
    
    (27
    )Total Other income/(expense)
    
    
    (3,845
    )Net loss
    
    $
    (2,366
    )
  22




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##### Table of Contents



9. Derivative Financial Instruments
 Derivatives and Hedging
   Derivatives and Hedging
 23




---



##### Table of Contents



The Effect of Derivative Instruments on the Statement of Operations
(in thousands)
 Location of Gain(Loss) Recognizedin Income onAmount of
    
    
    Location of Gain
    
    
    Amount of Gain
    
    
    Derivative
    
    
    Amount of GainGain (Loss)
    
    
    (Loss)
    
    
    (Loss)
    
    
    (Ineffective
    
    
    (Loss)Recognized in
    
    
    Reclassified from
    
    
    Reclassified from
    
    
    Portion and
    
    
    Recognized inDerivatives in
    
    OCI on
    
    
    Accumulated
    
    
    Accumulated
    
    
    Amount Excluded
    
    
    Income onASC815 Cash
    
    Derivative
    
    
    OCI into Income
    
    
    OCI into Income
    
    
    from
    
    
    DerivativeFlow Hedging
    
    (Effective
    
    
    (Effective
    
    
    (Effective
    
    
    Effectiveness
    
    
    (IneffectiveRelationships
    
    Portion)
    
    
    Portion)
    
    
    Portion)
    
    
    Testing)
    
    
    Portion)For the three months ended June 30, 2011Interest Rate Swap
    
    $
    (1,210
    )
    
    Interest Expense
    
    $
    336
    
    
    Interest Expense
    
    $
    514For the six months ended June 30, 2011Interest Rate Swap
    
    $
    (1,071
    )
    
    Interest Expense
    
    $
    582
    
    
    Interest Expense
    
    $
    1,416For the twelve months ended December 31, 2010Interest Rate Swap
    
    $
    1,071
    
    
    Interest Expense
    
    $
    
    
    
    Interest Expense
    
    $
    930
  24




---



##### Table of Contents



RecordedExpiration
    
    
    Outstanding
    
    
    
    
    
    
    Gains /Dates
    
    
    Notional
    
    
    Fair Value
    
    
    (Losses)SIX MONTHS ENDED JUNE 30, 2011MORTGAGE LOANS HELD FOR SALELoan sale commitments
    
    
    2011
    
    
    $
    37,052
    
    
    $
    1,046
    
    
    $
    1,003OTHER ASSETSIRLCs
    
    
    2011
    
    
    
    561,122
    
    
    
    7,029
    
    
    
    2,326LIABILITIESInterest rate swaps and caps
    
    
    2011-2013
    
    
    
    365,500
    
    
    
    7,456
    
    
    
    1,416Forward MBS trades
    
    
    2011
    
    
    
    438,200
    
    
    
    758
    
    
    
    (4,722
    )Interest rate swap, subject to ABS nonrecourse debt
    
    
    2013
    
    
    
    211,786
    
    
    
    14,151
    
    
    
    4,630YEAR ENDED DECEMBER 31, 2010MORTGAGE LOANS HELD FOR SALELoan sale commitments
    
    
    2011
    
    
    $
    28,641
    
    
    $
    42
    
    
    $
    (1,397
    )OTHER ASSETSIRLCs
    
    
    2011
    
    
    
    391,990
    
    
    
    4,703
    
    
    
    2,289Forward MBS trades
    
    
    2011
    
    
    
    546,500
    
    
    
    3,963
    
    
    
    580LIABILITIESInterest rate swaps and caps
    
    
    2011-2013
    
    
    
    429,000
    
    
    
    7,801
    
    
    
    8,872Interest rate swap, subject to ABS nonrecourse debt
    
    
    2013
    
    
    
    245,119
    
    
    
    18,781
    
    
    
    2,049
 10. Indebtedness
 Notes Payable
  June 30, 2011
    
    
    December 31, 2010Collateral
    
    
    
    
    
    
    CollateralOutstanding
    
    
    Pledged
    
    
    Outstanding
    
    
    PledgedFinancial institutions repurchase facility (2011)
    
    $
    15,428
    
    
    $
    16,709
    
    
    $
    
    
    
    $
    Financial institutions repurchase facility (2010)
    
    
    26,521
    
    
    
    28,547
    
    
    
    43,059
    
    
    
    45,429Financial services company repurchase facility
    
    
    164,507
    
    
    
    173,210
    
    
    
    209,477
    
    
    
    223,119Financial institutions repurchase facility (2009)
    
    
    25,510
    
    
    
    26,572
    
    
    
    39,014
    
    
    
    40,640Financial services company 2009-ADV1 advance
facility
    
    
    210,703
    
    
    
    254,138
    
    
    
    236,808
    
    
    
    285,226Financial institutions 2010-ADV1 advance facility
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    GSE MSR facility
    
    
    12,956
    
    
    
    17,636
    
    
    
    15,733
    
    
    
    18,951GSE ASAP+ facility
    
    
    1,451
    
    
    
    1,440
    
    
    
    51,105
    
    
    
    53,230GSE EAF facility
    
    
    147,694
    
    
    
    174,450
    
    
    
    114,562
    
    
    
    142,327Total notes payable
    
    $
    604,770
    
    
    $
    692,702
    
    
    $
    709,758
    
    
    $
    808,922
   25




---



##### Table of Contents



26




---



##### Table of Contents



Senior Unsecured Notes
   Nonrecourse DebtLegacy Assets
  ABS Nonrecourse Debt
  Financial Covenants
  27




---



##### Table of Contents



11. General and Administrative
  For the three months ended
    
    
    For the six months endedJune 30,
    
    
    June 30,
    
    
    June 30,
    
    
    June 30,2011
    
    
    2010
    
    
    2011
    
    
    2010Depreciation and amortization
    
    $
    808
    
    
    $
    452
    
    
    $
    1,560
    
    
    $
    850Advertising
    
    
    1,204
    
    
    
    1,131
    
    
    
    2,053
    
    
    
    2,566Equipment
    
    
    1,086
    
    
    
    991
    
    
    
    1,994
    
    
    
    1,699Servicing
    
    
    4,573
    
    
    
    1,791
    
    
    
    9,219
    
    
    
    2,965Telecommunications
    
    
    971
    
    
    
    628
    
    
    
    1,791
    
    
    
    1,129Legal and professional fees
    
    
    1,541
    
    
    
    1,629
    
    
    
    4,637
    
    
    
    2,596Postage
    
    
    898
    
    
    
    910
    
    
    
    2,415
    
    
    
    1,941Stationary and supplies
    
    
    949
    
    
    
    648
    
    
    
    1,951
    
    
    
    1,130Travel
    
    
    818
    
    
    
    501
    
    
    
    1,512
    
    
    
    980Insurance and Other
    
    
    2,898
    
    
    
    2,108
    
    
    
    4,178
    
    
    
    3,653Total general and administrative expense
    
    $
    15,746
    
    
    $
    10,789
    
    
    $
    31,310
    
    
    $
    19,509
 12. Fair Value Measurements
    Cash and Cash Equivalents, Restricted Cash, Notes Payable 
 Mortgage Loans Held for Sale 
   28




---



##### Table of Contents



Mortgage Loans Held for Investment, subject to nonrecourse debt 
 Mortgage Loans Held for Investment, subject to ABS nonrecourse debt 
 Mortgage Servicing Rights 
 Real Estate Owned 
 Derivative Instruments 
 Unsecured Senior Notes 
 Nonrecourse Debt  Legacy Assets 
 ABS Nonrecourse Debt 
 29




---



##### Table of Contents



June 30, 2011Recurring Fair Value MeasurementsTotal Fair Value
    
    
    Level 1
    
    
    Level 2
    
    
    Level 3ASSETSMortgage loans held for sale(1)
    
    $
    262,597
    
    
    $
    
    
    
    $
    262,597
    
    
    $
    Mortgage loans held for investment,
subject to ABS nonrecourse
debt(1)
    
    
    490,588
    
    
    
    
    
    
    
    
    
    
    
    490,588Mortgage servicing rights(1)
    
    
    151,557
    
    
    
    
    
    
    
    
    
    
    
    151,557Other assets:Interest Rate Lock Commitments (IRLC)
    
    
    7,029
    
    
    
    
    
    
    
    7,029
    
    
    
    Total assets
    
    $
    911,771
    
    
    $
    
    
    
    $
    269,626
    
    
    $
    642,145LIABILITIESDerivative financial instrumentsInterest rate swaps and caps
    
    $
    7,456
    
    
    $
    
    
    
    $
    7,456
    
    
    $
    Forward MBS trades
    
    
    758
    
    
    
    
    
    
    
    758
    
    
    
    Derivative financial instruments, subject
to ABS nonrecourse debt
    
    
    14,151
    
    
    
    
    
    
    
    14,151
    
    
    
    ABS nonrecourse debt(1)
    
    
    447,845
    
    
    
    
    
    
    
    
    
    
    
    447,845Total liabilities
    
    $
    470,210
    
    
    $
    
    
    
    $
    22,365
    
    
    $
    447,845
 
 (1)
    
    Based on the nature and risks of these assets and liabilities, the Company has determined
that presenting them as a single class is appropriate. December 31, 2010Recurring Fair Value MeasurementsTotal Fair Value
    
    
    Level 1
    
    
    Level 2
    
    
    Level 3ASSETSMortgage loans held for sale(1)
    
    $
    371,160
    
    
    $
    
    
    
    $
    371,160
    
    
    $
    Mortgage loans held for investment,
subject to ABS nonrecourse
debt(1)
    
    
    538,440
    
    
    
    
    
    
    
    
    
    
    
    538,440Mortgage servicing rights(1)
    
    
    145,062
    
    
    
    
    
    
    
    
    
    
    
    145,062Other assets:IRLCs
    
    
    4,703
    
    
    
    
    
    
    
    4,703
    
    
    
    Forward MBS trades
    
    
    3,963
    
    
    
    
    
    
    
    3,963
    
    
    
    Total assets
    
    $
    1,063,328
    
    
    $
    
    
    
    $
    379,826
    
    
    $
    683,502LIABILITIESDerivative financial instrumentsInterest rate swaps and caps
    
    $
    7,801
    
    
    $
    
    
    
    $
    7,801
    
    
    $
    Derivative financial instruments, subject
to ABS nonrecourse debt
    
    
    18,781
    
    
    
    
    
    
    
    18,781
    
    
    
    ABS nonrecourse debt(1)
    
    
    496,692
    
    
    
    
    
    
    
    
    
    
    
    496,692Total liabilities
    
    $
    523,274
    
    
    $
    
    
    
    $
    26,582
    
    
    $
    496,692
 
 (1)
    
    Based on the nature and risks of these assets and liabilities, the Company has determined that
presenting them as a single class is appropriate. 30




---



##### Table of Contents



ASSETS
    
    
    LIABILITIESMortgage loansheld for investment,subject to ABS
    
    
    Mortgage
    
    
    
    
    
    
    ABS non-nonrecourse debt
    
    
    servicing rights
    
    
    Total assets
    
    
    recourse debtTHREE MONTHS ENDED JUNE 30, 2011Beginning balance
    
    $
    535,590
    
    
    $
    151,159
    
    
    $
    686,749
    
    
    $
    489,321Transfers into Level 3
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Transfers out of Level 3
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Total gains or lossesIncluded in earnings
    
    
    (25,850
    )
    
    
    (7,938
    )
    
    
    (33,788
    )
    
    
    (12,908
    )Included in other
comprehensive income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Purchases, issuances, sales
and settlementsPurchases
    
    
    
    
    
    
    232
    
    
    
    232
    
    
    
    Issuances
    
    
    
    
    
    
    8,104
    
    
    
    8,104
    
    
    
    Sales
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Settlements
    
    
    (19,152
    )
    
    
    
    
    
    
    (19,152
    )
    
    
    (28,568
    )Ending balance
    
    $
    490,588
    
    
    $
    151,557
    
    
    $
    642,145
    
    
    $
    447,845
 ASSETS
    
    
    LIABILITIESMortgage loansheld for investment,subject to ABS
    
    
    Mortgage
    
    
    
    
    
    
    ABS non-nonrecourse debt
    
    
    servicing rights
    
    
    Total assets
    
    
    recourse debtSIX MONTHS ENDED JUNE 30, 2011Beginning balance
    
    $
    538,440
    
    
    $
    145,062
    
    
    $
    683,502
    
    
    $
    496,692Transfers into Level 3
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Transfers out of Level 3
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Total gains or lossesIncluded in earnings
    
    
    (9,469
    )
    
    
    (11,722
    )
    
    
    (21,191
    )
    
    
    (3,291
    )Included in other
comprehensive income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Purchases, issuances, sales
and settlementsPurchases
    
    
    
    
    
    
    232
    
    
    
    232
    
    
    
    Issuances
    
    
    
    
    
    
    17,985
    
    
    
    17,985
    
    
    
    Sales
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Settlements
    
    
    (38,383
    )
    
    
    
    
    
    
    (38,383
    )
    
    
    (45,556
    )Ending balance
    
    $
    490,588
    
    
    $
    151,557
    
    
    $
    642,145
    
    
    $
    447,845
 31




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##### Table of Contents



ASSETS
    
    
    LIABILITIESMortgage loansheld for investment,subject to ABS
    
    
    Mortgage
    
    
    
    
    
    
    ABS non-nonrecourse debt
    
    
    servicing rights
    
    
    Total assets
    
    
    recourse debtYEAR ENDED DECEMBER 31, 2010Beginning balance (1)
    
    $
    928,891
    
    
    $
    104,174
    
    
    $
    1,033,065
    
    
    $
    884,846Transfers into Level 3
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Transfers out of Level 3
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Total gains or lossesIncluded in earnings
    
    
    71,239
    
    
    
    (6,043
    )
    
    
    65,196
    
    
    
    16,938Included in other
comprehensive income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Purchases, issuances, sales
and settlementsPurchases
    
    
    
    
    
    
    17,812
    
    
    
    17,812
    
    
    
    Issuances
    
    
    
    
    
    
    26,253
    
    
    
    26,253
    
    
    
    Sales
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Settlements
    
    
    (461,690
    )
    
    
    2,866
    
    
    
    (458,824
    )
    
    
    (405,092
    )Ending balance
    
    $
    538,440
    
    
    $
    145,062
    
    
    $
    683,502
    
    
    $
    496,692
 
 (1)
    
    Amounts include derecognition of previously retained beneficial interests and
mortgage servicing rights upon adoption of ASC 810 related to consolidation of certain VIEs.  Total GainsNonrecurring Fair Value Measurements
    
    
    Total Estimated
    
    
    (Losses) IncludedLevel 1
    
    
    Level 2
    
    
    Level 3
    
    
    Fair Value
    
    
    in EarningsThree months ended June 30, 2011AssetsReal estate owned(1)
    
    $
    
    
    
    $
    
    
    
    $
    17,249
    
    
    $
    17,249
    
    
    $
    (2,099
    )Total assets
    
    $
    
    
    
    $
    
    
    
    $
    17,249
    
    
    $
    17,249
    
    
    $
    (2,099
    )Six months ended June 30, 2011AssetsReal estate owned(1)
    
    $
    
    
    
    $
    
    
    
    $
    17,249
    
    
    $
    17,249
    
    
    $
    (4,346
    )Total assets
    
    $
    
    
    
    $
    
    
    
    $
    17,249
    
    
    $
    17,249
    
    
    $
    (4,346
    )Year ended December 31, 2010AssetsReal estate owned(1)
    
    $
    
    
    
    $
    
    
    
    $
    27,337
    
    
    $
    27,337
    
    
    $
    Total assets
    
    $
    
    
    
    $
    
    
    
    $
    27,337
    
    
    $
    27,337
    
    
    $
    
 
 (1)
    
    Based on the nature and risks of these assets and liabilities, the Company has determined
that presenting them as a single class is appropriate. 32




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##### Table of Contents



June 30,
    
    
    December 312011
    
    
    
    
    
    
    2010Carrying
    
    
    Fair
    
    
    Carrying
    
    
    FairAmount
    
    
    Value
    
    
    Amount
    
    
    ValueFinancial assets:Cash and cash equivalents
    
    $
    2,532
    
    
    $
    2,532
    
    
    $
    21,223
    
    
    $
    21,223Restricted cash
    
    
    84,331
    
    
    
    84,331
    
    
    
    91,125
    
    
    
    91,125Mortgage loans held for sale
    
    
    262,597
    
    
    
    262,597
    
    
    
    371,160
    
    
    
    371,160Mortgage loans held for investment, subject to
nonrecourse debt  Legacy assets
    
    
    255,463
    
    
    
    237,441
    
    
    
    266,840
    
    
    
    239,035Mortgage loans held for investment, subject to ABS
nonrecourse debt
    
    
    490,588
    
    
    
    490,588
    
    
    
    538,440
    
    
    
    538,440Derivative instruments
    
    
    7,029
    
    
    
    7,029
    
    
    
    8,666
    
    
    
    8,666Financial liabilities:Notes payable
    
    
    604,770
    
    
    
    604,770
    
    
    
    709,758
    
    
    
    709,758Unsecured senior notes
    
    
    244,759
    
    
    
    259,845
    
    
    
    244,061
    
    
    
    244,375Derivative financial instruments
    
    
    8,214
    
    
    
    8,214
    
    
    
    7,801
    
    
    
    7,801Derivative instruments, subject to ABS nonrecourse debt
    
    
    14,151
    
    
    
    14,151
    
    
    
    18,781
    
    
    
    18,781Nonrecourse debt  Legacy assets
    
    
    126,026
    
    
    
    127,641
    
    
    
    138,662
    
    
    
    140,197ABS nonrecourse debt
    
    
    447,845
    
    
    
    447,845
    
    
    
    496,692
    
    
    
    496,692
 13. Capital Requirements
    14. Business Segment Reporting
   33




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##### Table of Contents



Three Months Ended June 30, 2011LegacyOperating
    
    
    PortfolioServicing
    
    
    Originations
    
    
    Segments
    
    
    and Other
    
    
    Eliminations
    
    
    ConsolidatedREVENUES:Servicing fee income
    
    $
    53,990
    
    
    $
    
    
    
    $
    53,990
    
    
    $
    670
    
    
    $
    (1,774
    )
    
    $
    52,886Other fee income
    
    
    2,141
    
    
    
    3,825
    
    
    
    5,966
    
    
    
    525
    
    
    
    
    
    
    
    6,491Total fee income
    
    
    56,131
    
    
    
    3,825
    
    
    
    59,956
    
    
    
    1,195
    
    
    
    (1,774
    )
    
    
    59,377Gain (loss) on mortgage loans
held for sale
    
    
    
    
    
    
    22,911
    
    
    
    22,911
    
    
    
    
    
    
    
    (89
    )
    
    
    22,822Total revenues
    
    
    56,131
    
    
    
    26,736
    
    
    
    82,867
    
    
    
    1,195
    
    
    
    (1,863
    )
    
    
    82,199Total expenses and impairments
    
    
    39,896
    
    
    
    23,702
    
    
    
    63,598
    
    
    
    4,893
    
    
    
    (89
    )
    
    
    68,402Other income (expense):Interest income
    
    
    655
    
    
    
    2,901
    
    
    
    3,556
    
    
    
    11,397
    
    
    
    1,774
    
    
    
    16,727Interest expense
    
    
    (13,491
    )
    
    
    (2,510
    )
    
    
    (16,001
    )
    
    
    (9,184
    )
    
    
    
    
    
    
    (25,185
    )Fair value changes in ABS
securitizations
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (3,613
    )
    
    
    
    
    
    
    (3,613
    )Total other income (expense)
    
    
    (12,836
    )
    
    
    391
    
    
    
    (12,445
    )
    
    
    (1,400
    )
    
    
    1,774
    
    
    
    (12,071
    )NET INCOME (LOSS)
    
    $
    3,399
    
    
    $
    3,425
    
    
    $
    6,824
    
    
    $
    (5,098
    )
    
    $
    
    
    
    $
    1,726Depreciation and amortization
    
    $
    396
    
    
    $
    298
    
    
    $
    694
    
    
    $
    115
    
    
    $
    
    
    
    $
    809Total assets
    
    
    702,501
    
    
    
    305,023
    
    
    
    1,007,524
    
    
    
    783,218
    
    
    
    
    
    
    
    1,790,742
 Six Months Ended June 30, 2011LegacyOperating
    
    
    PortfolioServicing
    
    
    Originations
    
    
    Segments
    
    
    and Other
    
    
    Eliminations
    
    
    ConsolidatedREVENUES:Servicing fee income
    
    $
    112,714
    
    
    $
    
    
    
    $
    112,714
    
    
    $
    1,237
    
    
    $
    (3,598
    )
    
    $
    110,353Other fee income
    
    
    4,535
    
    
    
    7,869
    
    
    
    12,404
    
    
    
    1,306
    
    
    
    
    
    
    
    13,710Total fee income
    
    
    117,249
    
    
    
    7,869
    
    
    
    125,118
    
    
    
    2,543
    
    
    
    (3,598
    )
    
    
    124,063Gain (loss) on mortgage loans
held for sale
    
    
    
    
    
    
    43,480
    
    
    
    43,480
    
    
    
    
    
    
    
    (152
    )
    
    
    43,328Total revenues
    
    
    117,249
    
    
    
    51,349
    
    
    
    168,598
    
    
    
    2,543
    
    
    
    (3,750
    )
    
    
    167,391Total expenses and impairments
    
    
    80,303
    
    
    
    45,514
    
    
    
    125,817
    
    
    
    10,858
    
    
    
    (152
    )
    
    
    136,523Other income (expense):Interest income
    
    
    1,622
    
    
    
    5,504
    
    
    
    7,126
    
    
    
    24,321
    
    
    
    3,598
    
    
    
    35,045Interest expense
    
    
    (26,948
    )
    
    
    (4,491
    )
    
    
    (31,439
    )
    
    
    (19,114
    )
    
    
    
    
    
    
    (50,553
    )Fair value changes in ABS
securitizations
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (6,265
    )
    
    
    
    
    
    
    (6,265
    )Total other income (expense)
    
    
    (25,326
    )
    
    
    1,013
    
    
    
    (24,313
    )
    
    
    (1,058
    )
    
    
    3,598
    
    
    
    (21,773
    )NET INCOME (LOSS)
    
    $
    11,620
    
    
    $
    6,848
    
    
    $
    18,468
    
    
    $
    (9,373
    )
    
    $
    
    
    
    $
    9,095Depreciation and amortization
    
    $
    768
    
    
    $
    567
    
    
    $
    1,335
    
    
    $
    225
    
    
    $
    
    
    
    $
    1,560Total assets
    
    
    702,501
    
    
    
    305,023
    
    
    
    1,007,524
    
    
    
    783,218
    
    
    
    
    
    
    
    1,790,742
 34




---



##### Table of Contents



Three Months Ended June 30, 2010LegacyOperating
    
    
    PortfolioServicing
    
    
    Originations
    
    
    Segments
    
    
    and Other
    
    
    Eliminations
    
    
    ConsolidatedREVENUES:Servicing fee income
    
    $
    42,719
    
    
    $
    
    
    
    $
    42,719
    
    
    $
    521
    
    
    $
    (2,057
    )
    
    $
    41,183Other fee income
    
    
    1,778
    
    
    
    1,568
    
    
    
    3,346
    
    
    
    349
    
    
    
    
    
    
    
    3,695Total fee income
    
    
    44,497
    
    
    
    1,568
    
    
    
    46,065
    
    
    
    870
    
    
    
    (2,057
    )
    
    
    44,878Gain (loss) on mortgage loans
held for sale
    
    
    
    
    
    
    13,543
    
    
    
    13,543
    
    
    
    
    
    
    
    (54
    )
    
    
    13,489Total revenues
    
    
    44,497
    
    
    
    15,111
    
    
    
    59,608
    
    
    
    870
    
    
    
    (2,111
    )
    
    
    58,367Total expenses and impairments
    
    
    23,120
    
    
    
    19,653
    
    
    
    42,773
    
    
    
    3,280
    
    
    
    (54
    )
    
    
    45,999Other income (expense):Interest income
    
    
    130
    
    
    
    3,461
    
    
    
    3,591
    
    
    
    22,613
    
    
    
    2,057
    
    
    
    28,261Interest expense
    
    
    (14,422
    )
    
    
    (2,399
    )
    
    
    (16,821
    )
    
    
    (15,137
    )
    
    
    
    
    
    
    (31,958
    )Loss on interest rate swaps
    
    
    (4,424
    )
    
    
    
    
    
    
    (4,424
    )
    
    
    
    
    
    
    
    
    
    
    (4,424
    )Fair value changes in ABS
Securitizations
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (6,573
    )
    
    
    
    
    
    
    (6,573
    )Total other income (expense)
    
    
    (18,716
    )
    
    
    1,062
    
    
    
    (17,654
    )
    
    
    903
    
    
    
    2,057
    
    
    
    (14,694
    )NET INCOME (LOSS)
    
    $
    2,661
    
    
    $
    (3,480
    )
    
    $
    (819
    )
    
    $
    (1,507
    )
    
    $
    
    
    
    $
    (2,326
    )Depreciation and amortization
    
    $
    233
    
    
    $
    173
    
    
    $
    406
    
    
    $
    46
    
    
    $
    
    
    
    $
    452
 Six Months Ended June 30, 2010LegacyOperating
    
    
    PortfolioServicing
    
    
    Originations
    
    
    Segments
    
    
    and Other
    
    
    Eliminations
    
    
    ConsolidatedREVENUES:Servicing fee income
    
    $
    78,485
    
    
    $
    
    
    
    $
    78,485
    
    
    $
    979
    
    
    $
    (4,191
    )
    
    $
    75,273Other fee income
    
    
    3,562
    
    
    
    3,234
    
    
    
    6,796
    
    
    
    1,559
    
    
    
    
    
    
    
    8,355Total fee income
    
    
    82,047
    
    
    
    3,234
    
    
    
    85,281
    
    
    
    2,538
    
    
    
    (4,191
    )
    
    
    83,628Gain (loss) on mortgage loans
held for sale
    
    
    
    
    
    
    25,989
    
    
    
    25,989
    
    
    
    
    
    
    
    (71
    )
    
    
    25,918Total revenues
    
    
    82,047
    
    
    
    29,223
    
    
    
    111,270
    
    
    
    2,538
    
    
    
    (4,262
    )
    
    
    109,546Total expenses and impairments
    
    
    44,402
    
    
    
    35,590
    
    
    
    79,992
    
    
    
    6,188
    
    
    
    (71
    )
    
    
    86,109Other income (expense):Interest income
    
    
    350
    
    
    
    5,090
    
    
    
    5,440
    
    
    
    49,963
    
    
    
    4,191
    
    
    
    59,594Interest expense
    
    
    (25,068
    )
    
    
    (3,707
    )
    
    
    (28,775
    )
    
    
    (32,318
    )
    
    
    
    
    
    
    (61,093
    )Loss on interest rate swaps
    
    
    (7,203
    )
    
    
    
    
    
    
    (7,203
    )
    
    
    
    
    
    
    
    
    
    
    (7,203
    )Fair value changes in ABS
Securitizations
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (16,329
    )
    
    
    
    
    
    
    (16,329
    )Total other income (expense)
    
    
    (31,921
    )
    
    
    1,383
    
    
    
    (30,538
    )
    
    
    1,316
    
    
    
    4,191
    
    
    
    (25,031
    )NET INCOME (LOSS)
    
    $
    5,724
    
    
    $
    (4,984
    )
    
    $
    740
    
    
    $
    (2,334
    )
    
    $
    
    
    
    $
    (1,594
    )Depreciation and amortization
    
    $
    447
    
    
    $
    314
    
    
    $
    761
    
    
    $
    89
    
    
    $
    
    
    
    $
    850
 15. Guarantor Financial Statement Information
  35




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##### Table of Contents



Issuer
    
    
    Guarantor
    
    
    Non-Guarantor(Parent)
    
    
    (Subsidiaries)
    
    
    (Subsidiaries)
    
    
    Eliminations
    
    
    ConsolidatedAssetsCash and cash equivalents
    
    $
    2,378
    
    
    $
    154
    
    
    $
    
    
    
    $
    
    
    
    $
    2,532Restricted cash
    
    
    48,825
    
    
    
    3
    
    
    
    35,503
    
    
    
    
    
    
    
    84,331Accounts receivable, net
    
    
    463,746
    
    
    
    
    
    
    
    4,326
    
    
    
    
    
    
    
    468,072Mortgage loans held for sale
    
    
    262,597
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    262,597Mortgage loans held for investment, subject to
nonrecourse debtLegacy Asset, net
    
    
    8,663
    
    
    
    
    
    
    
    246,800
    
    
    
    
    
    
    
    255,463Mortgage loans held for investment, subject to
ABS nonrecourse debt (at fair value)
    
    
    
    
    
    
    
    
    
    
    490,588
    
    
    
    
    
    
    
    490,588Investment in debt securitiesavailable-for-sale
    
    
    713
    
    
    
    
    
    
    
    
    
    
    
    (713
    )
    
    
    Investment in subsidiaries
    
    
    150,928
    
    
    
    
    
    
    
    
    
    
    
    (150,928
    )
    
    
    Receivables from affiliates
    
    
    
    
    
    
    65,816
    
    
    
    97,739
    
    
    
    (156,204
    )
    
    
    7,351Mortgage servicing rights
    
    
    151,557
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    151,557Property and equipment, net
    
    
    14,832
    
    
    
    835
    
    
    
    
    
    
    
    
    
    
    
    15,667Real estate owned, net
    
    
    96
    
    
    
    
    
    
    
    17,153
    
    
    
    
    
    
    
    17,249Other assets
    
    
    35,335
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    35,335Total Assets
    
    $
    1,139,670
    
    
    $
    66,808
    
    
    $
    892,109
    
    
    $
    (307,845
    )
    
    $
    1,790,742Liabilities and members equityNotes payable
    
    $
    394,066
    
    
    $
    
    
    
    $
    210,704
    
    
    $
    
    
    
    $
    604,770Unsecured senior notes
    
    
    244,759
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    244,759Payables and accrued liabilities
    
    
    77,670
    
    
    
    
    
    
    
    1,094
    
    
    
    
    
    
    
    78,764Payables to affiliates
    
    
    156,204
    
    
    
    
    
    
    
    
    
    
    
    (156,204
    )
    
    
    Derivative financial instruments
    
    
    758
    
    
    
    
    
    
    
    7,456
    
    
    
    
    
    
    
    8,214Derivative financial instruments, subject to ABS
nonrecourse debt
    
    
    
    
    
    
    
    
    
    
    14,151
    
    
    
    
    
    
    
    14,151Nonrecourse debtLegacy Assets
    
    
    
    
    
    
    
    
    
    
    126,026
    
    
    
    
    
    
    
    126,026ABS nonrecourse debt (at fair value)
    
    
    
    
    
    
    
    
    
    
    448,558
    
    
    
    (713
    )
    
    
    447,845Total liabilities
    
    
    873,457
    
    
    
    
    
    
    
    807,989
    
    
    
    (156,917
    )
    
    
    1,524,529Total members equity
    
    
    266,213
    
    
    
    66,808
    
    
    
    84,120
    
    
    
    (150,928
    )
    
    
    266,213Total liabilities and
members equity
    
    $
    1,139,670
    
    
    $
    66,808
    
    
    $
    892,109
    
    
    $
    (307,845
    )
    
    $
    1,790,742
 36




---



##### Table of Contents



Non-Issuer
    
    
    Guarantor
    
    
    Guarantor(Parent)
    
    
    (Subsidiaries)
    
    
    (Subsidiaries)
    
    
    Eliminations
    
    
    ConsolidatedRevenues:Servicing fee income
    
    $
    112,511
    
    
    $
    1,440
    
    
    $
    
    
    
    $
    (3,598
    )
    
    $
    110,353Other fee income
    
    
    7,377
    
    
    
    5,653
    
    
    
    680
    
    
    
    
    
    
    
    13,710Total fee income
    
    
    119,888
    
    
    
    7,093
    
    
    
    680
    
    
    
    (3,598
    )
    
    
    124,063Gain on mortgage loans held for sale
    
    
    43,328
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    43,328Total Revenues
    
    
    163,216
    
    
    
    7,093
    
    
    
    680
    
    
    
    (3,598
    )
    
    
    167,391Expenses and impairments:Salaries, wages, and benefits
    
    
    93,657
    
    
    
    1,638
    
    
    
    
    
    
    
    
    
    
    
    95,295General and
administrative
    
    
    29,469
    
    
    
    1,834
    
    
    
    7
    
    
    
    
    
    
    
    31,310Loss on foreclosed real estate
and other
    
    
    202
    
    
    
    
    
    
    
    4,144
    
    
    
    
    
    
    
    4,346Loan loss provision
    
    
    724
    
    
    
    
    
    
    
    404
    
    
    
    
    
    
    
    1,128Occupancy
    
    
    4,346
    
    
    
    98
    
    
    
    
    
    
    
    
    
    
    
    4,444Total expenses and impairments
    
    
    128,398
    
    
    
    3,570
    
    
    
    4,555
    
    
    
    
    
    
    
    136,523Other income (expense):Interest income
    
    
    8,199
    
    
    
    (5
    )
    
    
    23,253
    
    
    
    3,598
    
    
    
    35,045Interest expense
    
    
    (26,725
    )
    
    
    
    
    
    
    (23,828
    )
    
    
    
    
    
    
    (50,553
    )Fair value changes in ABS securitizations
    
    
    
    
    
    
    
    
    
    
    (6,382
    )
    
    
    117
    
    
    
    (6,265
    )Gain/(loss)
from subsidiaries
    
    
    (7,314
    )
    
    
    
    
    
    
    
    
    
    
    7,314
    
    
    
    Total other income
(expense)
    
    
    (25,840
    )
    
    
    (5
    )
    
    
    (6,957
    )
    
    
    11,029
    
    
    
    (21,773
    )Net income/(loss)
    
    $
    8,978
    
    
    $
    3,518
    
    
    $
    (10,832
    )
    
    $
    7,431
    
    
    $
    9,095
 37




---



##### Table of Contents



Non-Issuer
    
    
    Guarantor
    
    
    Guarantor(Parent)
    
    
    (Subsidiaries)
    
    
    (Subsidiaries)
    
    
    Eliminations
    
    
    ConsolidatedOperating activities:Net income/(loss)
    
    $
    8,978
    
    
    $
    3,518
    
    
    $
    (10,832
    )
    
    $
    7,431
    
    
    $
    9,095Adjustments to reconcile net income/(loss)
to net cash provided by (used in) operating
activities:Loss from subsidiaries
    
    
    7,314
    
    
    
    
    
    
    
    
    
    
    
    (7,314
    )
    
    
    Loss on equity method investments
    
    
    521
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    521Share-based compensation
    
    
    10,526
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    10,526Gain on mortgage loans held for sale
    
    
    (43,328
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (43,328
    )Fair value changes in ABS securitizations
    
    
    
    
    
    
    
    
    
    
    6,382
    
    
    
    (117
    )
    
    
    6,265Provision for loan losses
    
    
    724
    
    
    
    
    
    
    
    404
    
    
    
    
    
    
    
    1,128Loss on foreclosed real estate and other
    
    
    202
    
    
    
    
    
    
    
    4,144
    
    
    
    
    
    
    
    4,346Loss/(gain) on derivative financial
instruments
    
    
    
    
    
    
    
    
    
    
    (1,416
    )
    
    
    
    
    
    
    (1,416
    )Depreciation and amortization
    
    
    1,560
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,560Change in fair value of mortgage servicing
rights
    
    
    11,722
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    11,722Amortization of debt discount
    
    
    4,389
    
    
    
    
    
    
    
    2,057
    
    
    
    
    
    
    
    6,446Amortization of premiums/discounts
    
    
    
    
    
    
    
    
    
    
    (2,424
    )
    
    
    
    
    
    
    (2,424
    )Mortgage Loans originated and purchased, net
of fees
    
    
    (1,378,039
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (1,378,039
    )Cost of loans sold, net of fees
    
    
    1,490,814
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,490,814Principal Payments/Prepayments Received and
other changes in mortgage loans originated
as held for sale
    
    
    19,387
    
    
    
    
    
    
    
    5,462
    
    
    
    
    
    
    
    24,849Changes in assets and liabilities:Accounts receivable
    
    
    (28,650
    )
    
    
    
    
    
    
    (351
    )
    
    
    
    
    
    
    (29,001
    )Receivables from/(payables to) affiliates
    
    
    (29,292
    )
    
    
    (3,680
    )
    
    
    34,614
    
    
    
    
    
    
    
    1,642Other assets
    
    
    (2,319
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (2,319
    )Accounts payable and accrued liabilities
    
    
    3,885
    
    
    
    
    
    
    
    (175
    )
    
    
    
    
    
    
    3,710Net cash provided by/(used) in operating
activities
    
    
    78,394
    
    
    
    (162
    )
    
    
    37,865
    
    
    
    
    
    
    
    116,097
 38




---



##### Table of Contents



Non-Issuer
    
    
    Guarantor
    
    
    Guarantor(Parent)
    
    
    (Subsidiaries)
    
    
    (Subsidiaries)
    
    
    Eliminations
    
    
    ConsolidatedInvesting activities:Principal payments received and other changes
on mortgage loans held for
investment, subject to ABS nonrecourse debt
    
    
    
    
    
    
    
    
    
    
    14,285
    
    
    
    
    
    
    
    14,285Property and equipment additions, net of disposals
    
    
    (8,833
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (8,833
    )Acquisition of equity method investment
    
    
    (6,600
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (6,600
    )Purchase of mortgage servicing rights
    
    
    (232
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (232
    )Proceeds from sales of real estate owned
    
    
    313
    
    
    
    
    
    
    
    19,689
    
    
    
    
    
    
    
    20,002Net cash provided by/(used) in investing activities
    
    
    (15,352
    )
    
    
    
    
    
    
    33,974
    
    
    
    
    
    
    
    18,622Financing activities:Transfers to/from restricted cash
    
    
    8,754
    
    
    
    (3
    )
    
    
    (1,957
    )
    
    
    
    
    
    
    6,794Decrease in notes payable, net
    
    
    (78,884
    )
    
    
    
    
    
    
    (26,104
    )
    
    
    
    
    
    
    (104,988
    )Repayment of non-recourse debtLegacy assets
    
    
    
    
    
    
    
    
    
    
    (14,693
    )
    
    
    
    
    
    
    (14,693
    )Repayment of ABS non-recourse debt
    
    
    
    
    
    
    
    
    
    
    (29,085
    )
    
    
    
    
    
    
    (29,085
    )Distribution to parent
    
    
    (3,900
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (3,900
    )Debt financing costs
    
    
    (2,729
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (2,729
    )Tax related share-based settlement of units by members
    
    
    (4,809
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (4,809
    )Net cash used in financing activities
    
    
    (81,568
    )
    
    
    (3
    )
    
    
    (71,839
    )
    
    
    
    
    
    
    (153,410
    )Net increase (decrease) in cash
    
    
    (18,526
    )
    
    
    (165
    )
    
    
    
    
    
    
    
    
    
    
    (18,691
    )Cash and cash equivalents at beginning of period
    
    
    20,904
    
    
    
    319
    
    
    
    
    
    
    
    
    
    
    
    21,223Cash and cash equivalents at end of period
    
    $
    2,378
    
    
    $
    154
    
    
    $
    
    
    
    $
    
    
    
    $
    2,532
 39




---



##### Table of Contents



Issuer
    
    
    Guarantor
    
    
    Non-Guarantor(Parent)
    
    
    (Subsidiaries)
    
    
    (Subsidiaries)
    
    
    Eliminations
    
    
    ConsolidatedAssetsCash and cash equivalents
    
    $
    20,904
    
    
    $
    319
    
    
    $
    
    
    
    $
    
    
    
    $
    21,223Restricted cash
    
    
    57,579
    
    
    
    
    
    
    
    33,546
    
    
    
    
    
    
    
    91,125Accounts receivable, net
    
    
    435,096
    
    
    
    
    
    
    
    3,975
    
    
    
    
    
    
    
    439,071Mortgage loans held for sale
    
    
    371,160
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    371,160Mortgage loans held for investment, subject to
nonrecourse debt, Legacy Assets, net
    
    
    5,536
    
    
    
    
    
    
    
    261,304
    
    
    
    
    
    
    
    266,840Mortgage loans held for investment, subject to
ABS nonrecourse debt (at fair value)
    
    
    
    
    
    
    
    
    
    
    538,440
    
    
    
    
    
    
    
    538,440Investment in debt securitiesavailable-for-sale
    
    
    597
    
    
    
    
    
    
    
    
    
    
    
    (597
    )
    
    
    Investment in subsidiaries
    
    
    158,276
    
    
    
    
    
    
    
    
    
    
    
    (158,276
    )
    
    
    Receivables from affiliates
    
    
    
    
    
    
    62,171
    
    
    
    132,353
    
    
    
    (185,531
    )
    
    
    8,993Mortgage servicing rights
    
    
    145,062
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    145,062Property and equipment, net
    
    
    7,559
    
    
    
    835
    
    
    
    
    
    
    
    
    
    
    
    8,394Real estate owned, net
    
    
    323
    
    
    
    
    
    
    
    27,014
    
    
    
    
    
    
    
    27,337Other assets
    
    
    29,536
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    29,536Total Assets
    
    $
    1,231,628
    
    
    $
    63,325
    
    
    $
    996,632
    
    
    $
    (344,404
    )
    
    $
    1,947,181Liabilities and members equityNotes payable
    
    $
    472,950
    
    
    $
    
    
    
    $
    236,808
    
    
    $
    
    
    
    $
    709,758Unsecured senior notes
    
    
    244,061
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    244,061Payables and accrued liabilities
    
    
    73,785
    
    
    
    
    
    
    
    1,269
    
    
    
    
    
    
    
    75,054Payables to affiliates
    
    
    185,531
    
    
    
    
    
    
    
    
    
    
    
    (185,531
    )
    
    
    Derivative financial instruments
    
    
    
    
    
    
    
    
    
    
    7,801
    
    
    
    
    
    
    
    7,801Derivative financial instruments, subject to ABS
nonrecourse debt
    
    
    
    
    
    
    
    
    
    
    18,781
    
    
    
    
    
    
    
    18,781Nonrecourse debtLegacy Assets
    
    
    
    
    
    
    
    
    
    
    138,662
    
    
    
    
    
    
    
    138,662ABS nonrecourse debt (at fair value)
    
    
    
    
    
    
    
    
    
    
    497,289
    
    
    
    (597
    )
    
    
    496,692Total liabilities
    
    
    976,327
    
    
    
    
    
    
    
    900,610
    
    
    
    (186,128
    )
    
    
    1,690,809Total members equity
    
    
    255,301
    
    
    
    63,325
    
    
    
    96,022
    
    
    
    (158,276
    )
    
    
    256,372Total liabilities and
members equity
    
    $
    1,231,628
    
    
    $
    63,325
    
    
    $
    996,632
    
    
    $
    (344,404
    )
    
    $
    1,947,181
 40




---



##### Table of Contents



Non-Issuer
    
    
    Guarantor
    
    
    Guarantor(Parent)
    
    
    (Subsidiaries)
    
    
    (Subsidiaries)
    
    
    Eliminations
    
    
    ConsolidatedRevenues:Servicing fee income
    
    $
    78,582
    
    
    $
    882
    
    
    $
    
    
    
    $
    (4,191
    )
    
    $
    75,273Other fee income
    
    
    4,445
    
    
    
    3,636
    
    
    
    274
    
    
    
    
    
    
    
    8,355Total fee income
    
    
    83,027
    
    
    
    4,518
    
    
    
    274
    
    
    
    (4,191
    )
    
    
    83,628Gain on mortgage loans held for sale
    
    
    25,918
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    25,918Total Revenues
    
    
    108,945
    
    
    
    4,518
    
    
    
    274
    
    
    
    (4,191
    )
    
    
    109,546Expenses and impairments:Salaries, wages, and benefits
    
    
    61,688
    
    
    
    1,122
    
    
    
    
    
    
    
    
    
    
    
    62,810General and
administrative
    
    
    18,895
    
    
    
    674
    
    
    
    (60
    )
    
    
    
    
    
    
    19,509Occupancy
    
    
    3,718
    
    
    
    72
    
    
    
    
    
    
    
    
    
    
    
    3,790Total expenses and impairments
    
    
    84,301
    
    
    
    1,868
    
    
    
    (60
    )
    
    
    
    
    
    
    86,109Other income (expense):Interest income
    
    
    8,276
    
    
    
    
    
    
    
    47,127
    
    
    
    4,191
    
    
    
    59,594Interest expense
    
    
    (26,008
    )
    
    
    
    
    
    
    (35,085
    )
    
    
    
    
    
    
    (61,093
    )Loss on interest rate swaps and caps
    
    
    
    
    
    
    
    
    
    
    (7,203
    )
    
    
    
    
    
    
    (7,203
    )Fair value changes in ABS securitizations
    
    
    22
    
    
    
    
    
    
    
    (16,568
    )
    
    
    217
    
    
    
    (16,329
    )Gain/(loss)
from subsidiaries
    
    
    (1,904
    )
    
    
    
    
    
    
    
    
    
    
    1,904
    
    
    
    Total other income
(expense)
    
    
    (19,614
    )
    
    
    
    
    
    
    (11,729
    )
    
    
    6,312
    
    
    
    (25,031
    )Net income/(loss)
    
    $
    5,030
    
    
    $
    2,650
    
    
    $
    (11,395
    )
    
    $
    2,121
    
    
    $
    (1,594
    )
 41




---



##### Table of Contents



Issuer
    
    
    Guarantor
    
    
    Non-Guarantor(Parent)
    
    
    (Subsidiaries)
    
    
    (Subsidiaries)
    
    
    Eliminations
    
    
    ConsolidatedOperating activities:Net income/(loss)
    
    $
    (1,811
    )
    
    $
    2,650
    
    
    $
    (11,395
    )
    
    $
    8,962
    
    
    $
    (1,594
    )Adjustments to reconcile net income/(loss)
to net cash provided by (used in) operating
activities:Loss from subsidiaries
    
    
    8,745
    
    
    
    
    
    
    
    
    
    
    
    (8,745
    )
    
    
    Share-based compensation
    
    
    419
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    419Gain on mortgage loans held for sale
    
    
    (25,918
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (25,918
    )Fair value changes in ABS securitizations
    
    
    
    
    
    
    
    
    
    
    16,546
    
    
    
    (217
    )
    
    
    16,329Loss/(gain) on derivative financial
instruments
    
    
    
    
    
    
    
    
    
    
    7,203
    
    
    
    
    
    
    
    7,203Depreciation and amortization
    
    
    850
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    850Change in fair value of mortgage servicing
rights
    
    
    2,341
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2,341Amortization of debt discount
    
    
    7,099
    
    
    
    
    
    
    
    3,293
    
    
    
    
    
    
    
    10,392Amortization of premiums/discounts
    
    
    (2,455
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (2,455
    )Mortgage Loans originated and purchased,
net of fees
    
    
    (1,192,333
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (1,192,333
    )Cost of loans sold, net of fees
    
    
    1,128,200
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,128,200Principal Payments/Prepayments Received and
other changes in mortgage loans originated
as held for sale
    
    
    17,457
    
    
    
    
    
    
    
    (15,420
    )
    
    
    
    
    
    
    2,037Changes in assets and liabilities:Accounts receivable
    
    
    114,054
    
    
    
    3
    
    
    
    (44,597
    )
    
    
    
    
    
    
    69,460Receivables from/(payables to)
affiliates
    
    
    (60,982
    )
    
    
    (2,428
    )
    
    
    72,827
    
    
    
    
    
    
    
    9,417Other assets
    
    
    (1,554
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (1,554
    )Accounts payable and accrued liabilities
    
    
    24,793
    
    
    
    (23
    )
    
    
    32
    
    
    
    
    
    
    
    24,802Net cash provided by/(used) in operating
activities
    
    
    18,905
    
    
    
    202
    
    
    
    28,489
    
    
    
    
    
    
    
    47,596Investing activities:Principal payments received and other
changes on mortgage loans held for
investment, subject to ABS nonrecourse debt
    
    
    
    
    
    
    
    
    
    
    13,434
    
    
    
    
    
    
    
    13,434Property and equipment additions, net of
disposals
    
    
    (1,853
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (1,853
    )Proceeds from sales of real estate owned
    
    
    
    
    
    
    
    
    
    
    55,324
    
    
    
    
    
    
    
    55,324Net cash provided by/(used) in investing
activities
    
    
    (1,853
    )
    
    
    
    
    
    
    68,758
    
    
    
    
    
    
    
    66,905
 42




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##### Table of Contents



Issuer
    
    
    Guarantor
    
    
    Non-Guarantor(Parent)
    
    
    (Subsidiaries)
    
    
    (Subsidiaries)
    
    
    Eliminations
    
    
    ConsolidatedFinancing activitiesTransfers to/from restricted cash
    
    
    (1,859
    )
    
    
    
    
    
    
    3,619
    
    
    
    
    
    
    
    1,760Issuance of unsecured notes, net of
issue discount
    
    
    243,012
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    243,012Decrease in notes payable, net
    
    
    (255,378
    )
    
    
    
    
    
    
    (10,437
    )
    
    
    
    
    
    
    (265,815
    )Repayment of non-recourse debtLegacy
assets
    
    
    
    
    
    
    
    
    
    
    (23,516
    )
    
    
    
    
    
    
    (23,516
    )Repayment of ABS non-recourse debt
    
    
    (146
    )
    
    
    
    
    
    
    (66,913
    )
    
    
    
    
    
    
    (67,059
    )Debt financing costs
    
    
    (11,714
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (11,714
    )Net cash used in financing activities
    
    
    (26,085
    )
    
    
    
    
    
    
    (97,247
    )
    
    
    
    
    
    
    (123,332
    )Net increase (decrease) in cash
    
    
    (9,033
    )
    
    
    202
    
    
    
    
    
    
    
    
    
    
    
    (8,831
    )Cash and cash equivalents at beginning of
period
    
    
    41,243
    
    
    
    402
    
    
    
    
    
    
    
    
    
    
    
    41,645Cash and cash equivalents at end of period
    
    $
    32,210
    
    
    $
    604
    
    
    $
    
    
    
    $
    
    
    
    $
    32,814
 16. Related Party Disclosures
   17. Subsequent Events
     43




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##### Table of Contents



Item 2.
    
    Managements Discussion and Analysis of Financial Condition and Results of Operations
 General
 Our Business
     Critical Accounting Policies
  44




---



##### Table of Contents



Selected Financial Data
  June 30, 2011
    
    
    December 31, 2010(dollars in thousands)Balance Sheet Data  ConsolidatedCash and cash equivalents
    
    $
    2,532
    
    
    $
    21,223Mortgage servicing rights
    
    
    151,557
    
    
    
    145,062Total assets
    
    
    1,790,742
    
    
    
    1,947,181Notes payable
    
    
    604,770
    
    
    
    709,758Unsecured senior notes
    
    
    244,759
    
    
    
    244,061Nonrecourse debt-Legacy assets
    
    
    126,026
    
    
    
    138,662ABS nonrecourse debt
    
    
    447,845
    
    
    
    496,692Total liabilities
    
    
    1,524,529
    
    
    
    1,690,809Total members equity
    
    
    266,213
    
    
    
    256,372
 For the three months ended
    
    
    For the six months endedJune 30,
    
    
    June 30,(dollars in thousands)
    
    2011
    
    
    2010
    
    
    2011
    
    
    2010Total revenues
    
    $
    82,199
    
    
    $
    58,367
    
    
    $
    167,391
    
    
    $
    109,546Total expenses and impairments
    
    
    68,402
    
    
    
    45,999
    
    
    
    136,523
    
    
    
    86,109Total other income (expense)
    
    
    (12,071
    )
    
    
    (14,694
    )
    
    
    (21,773
    )
    
    
    (25,031
    )Net income (loss)
    
    $
    1,726
    
    
    $
    (2,326
    )
    
    $
    9,095
    
    
    $
    (1,594
    )Other Data Net cash provided by (used in):Operating activities
    
    $
    (15,490
    )
    
    $
    137,056
    
    
    $
    116,097
    
    
    $
    54,417Investing activities
    
    
    13,344
    
    
    
    29,343
    
    
    
    18,622
    
    
    
    60,084Financing activities
    
    
    (43,742
    )
    
    
    (157,136
    )
    
    
    (153,410
    )
    
    
    (123,332
    )Adjusted EBITDA (1) (non-gaap measure)
    
    
    27,712
    
    
    
    9,720
    
    
    
    55,665
    
    
    
    20,879Operating segments:Interest expense from unsecured senior notes
    
    
    7,531
    
    
    
    7,821
    
    
    
    15,079
    
    
    
    9,540Change in fair value of mortgage servicing
rights
    
    
    7,938
    
    
    
    (2,259
    )
    
    
    11,722
    
    
    
    2,341Depreciation and amortization
    
    
    694
    
    
    
    406
    
    
    
    1,335
    
    
    
    761Share-based compensation
    
    
    5,238
    
    
    
    147
    
    
    
    10,476
    
    
    
    294
 45




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##### Table of Contents



Notes
 (1)
    
    Adjusted EBITDA is a key performance measure used by management in evaluating the performance
of our segments. Adjusted EBITDA represents our Operating Segments income (loss), and
excludes income and expenses that relate to the financing of the unsecured senior notes,
depreciable (or amortizable) asset base of the business, income taxes (if any), exit costs
from our 2007 restructuring and certain non-cash items. Adjusted EBITDA excludes results from
our legacy asset portfolio and certain securitization trusts that were consolidated upon
adoption of the new accounting guidance eliminating the concept of a QSPE.
 Adjusted EBITDA provides us with a key measure of our Operating Segments performance as it
assists us in comparing our Operating Segments performance on a consistent basis. Management
believes Adjusted EBITDA is useful in assessing the profitability of our core business and uses
Adjusted EBITDA in evaluating our operating performance as follows:
 
    
    Financing arrangements for our Operating Segments are secured by assets that are
allocated to these segments. Interest expense that relate to the financing of the
unsecured senior notes is not considered in evaluating our operating performance
because this obligation is serviced by the excess earnings from our Operating
Segments after the debt obligations that are secured by their assets.
 
    
    To monitor operating costs of each Operating Segment excluding the impact from
depreciation, amortization and fair value change of the asset base, exit costs from
our 2007 restructuring and non-cash operating expense, such as share-based
compensation. Operating costs are analyzed to manage costs per our operating plan
and to assess staffing levels, implementation of technology based solutions, rent and
other general and administrative costs.
 Management does not assess the growth prospects and the profitability of our legacy asset
portfolio and certain securitization trusts that were consolidated upon adoption of the new
accounting guidance, except to the extent to assess cash flows from the assets in the legacy
asset portfolio are sufficient to service its debt obligations.
 We also use Adjusted EBITDA (with additional adjustments) to measure our compliance with
covenants such as leverage coverage ratios for our unsecured senior notes.
 Adjusted EBITDA has limitations as an analytical tool, and should not be considered in
isolation, or as a substitute for analysis of our results as reported under generally accepted
accounting principles in the United States (GAAP). Some of these limitations are:
 
    
    Adjusted EBITDA does not reflect our cash expenditures, or future requirements for
capital expenditures or contractual commitments;
 
    
    Adjusted EBITDA does not reflect changes in, or cash requirements for, our working
capital needs;
 
    
    Adjusted EBITDA does not reflect the cash requirements necessary to service principal
payments related to the financing of the business;
 
    
    Adjusted EBITDA does not reflect the interest expense, or the cash requirements
necessary to service interest or principal payments, on our corporate debt;
 
    
    although depreciation and amortization and changes in fair value of mortgage
servicing rights are non-cash charges, the assets being depreciated and amortized will
often have to be replaced in the future, and Adjusted EBITDA do not reflect any cash
requirements for such replacements; and
 
    
    other companies in our industry may calculate Adjusted EBITDA differently than we do,
limiting its usefulness as a comparative measure.
  46




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##### Table of Contents



For the three months ended
    
    
    For the six months endedJune 30,
    
    
    June 30,2011
    
    
    2010
    
    
    2011
    
    
    2010Net Income (Loss) from Operating Segments to
Adjusted EBITDA Reconciliation (dollars in
thousands):Net income (loss)
    
    $
    1,726
    
    
    $
    (2,326
    )
    
    $
    9,095
    
    
    $
    (1,594
    )Less:Net loss from Legacy Portfolio and Other
    
    
    5,098
    
    
    
    1,507
    
    
    
    9,373
    
    
    
    2,334Net income (loss) from Operating Segments
    
    
    6,824
    
    
    
    (819
    )
    
    
    18,468
    
    
    
    740Adjust for:Interest expense from unsecured senior notes
    
    
    7,531
    
    
    
    7,821
    
    
    
    15,079
    
    
    
    9,540Depreciation and amortization
    
    
    694
    
    
    
    406
    
    
    
    1,335
    
    
    
    761Change in fair value of mortgage servicing rights
    
    
    7,938
    
    
    
    (2,259
    )
    
    
    11,722
    
    
    
    2,341Share-based compensation
    
    
    5,238
    
    
    
    147
    
    
    
    10,476
    
    
    
    294Fair value
changes on interest rate swap(a)
    
    
    
    
    
    
    4,424
    
    
    
    
    
    
    
    7,203Ineffective portion of cash flow hedge
    
    
    (513
    )
    
    
    
    
    
    
    (1,415
    )
    
    
    Adjusted EBITDA
    
    $
    27,712
    
    
    $
    9,720
    
    
    $
    55,665
    
    
    $
    20,879
 
 (a)
    
    Relates to an interest rate swap agreement which was treated as an economic hedge under
ASC 815 since trade execution to September 30, 2010. 47




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##### Table of Contents



Results of Operations
  For the three months ended
    
    
    For the six months endedJune 30,
    
    
    June 30,(dollars in thousands)
    
    2011
    
    
    2010
    
    
    2011
    
    
    2010Revenues:Servicing fee income
    
    $
    52,886
    
    
    $
    41,183
    
    
    $
    110,353
    
    
    $
    75,273Other fee income
    
    
    6,491
    
    
    
    3,695
    
    
    
    13,710
    
    
    
    8,355Total fee income
    
    
    59,377
    
    
    
    44,878
    
    
    
    124,063
    
    
    
    83,628Gain on mortgage loans held for sale
    
    
    22,822
    
    
    
    13,489
    
    
    
    43,328
    
    
    
    25,918Total revenues
    
    
    82,199
    
    
    
    58,367
    
    
    
    167,391
    
    
    
    109,546Expenses and impairments:Salaries, wages, and benefits
    
    
    48,372
    
    
    
    33,321
    
    
    
    95,295
    
    
    
    62,810General and administrative
    
    
    15,746
    
    
    
    10,789
    
    
    
    31,310
    
    
    
    19,509Provision for loan losses
    
    
    
    
    
    
    
    
    
    
    1,128
    
    
    
    Loss on sale of foreclosed real estate
    
    
    2,099
    
    
    
    
    
    
    
    4,346
    
    
    
    Occupancy
    
    
    2,185
    
    
    
    1,889
    
    
    
    4,444
    
    
    
    3,790Total expenses and impairments
    
    
    68,402
    
    
    
    45,999
    
    
    
    136,523
    
    
    
    86,109Other income (expense):Interest income
    
    
    16,727
    
    
    
    28,261
    
    
    
    35,045
    
    
    
    59,594Interest expense
    
    
    (25,185
    )
    
    
    (31,958
    )
    
    
    (50,553
    )
    
    
    (61,093
    )Gain/(loss) on interest rate swaps and caps
    
    
    
    
    
    
    (4,424
    )
    
    
    
    
    
    
    (7,203
    )Fair value changes in ABS securitizations
    
    
    (3,613
    )
    
    
    (6,573
    )
    
    
    (6,265
    )
    
    
    (16,329
    )Total other income (expense)
    
    
    (12,071
    )
    
    
    (14,694
    )
    
    
    (21,773
    )
    
    
    (25,031
    )Net income/(loss)
    
    $
    1,726
    
    
    $
    (2,326
    )
    
    $
    9,095
    
    
    $
    (1,594
    )
 Note 14-
Business Segment Reporting
 Comparison of Consolidated Results for the three months ended June 30, 2011 and 2010
    48




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##### Table of Contents



Comparison of Consolidated Results for the six months ended June 30, 2011 and 2010
    Segment Results
   49




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##### Table of Contents



Servicing Segment
   For the three months ended
    
    
    For the six months endedJune 30,
    
    
    June 30,(in thousands)
    
    2011
    
    
    2010
    
    
    2011
    
    
    2010Revenues:Servicing fee income
    
    $
    53,990
    
    
    $
    42,719
    
    
    $
    112,714
    
    
    $
    78,485Other fee income
    
    
    2,141
    
    
    
    1,778
    
    
    
    4,535
    
    
    
    3,562Total fee income
    
    
    56,131
    
    
    
    44,497
    
    
    
    117,249
    
    
    
    82,047Gain on mortgage loans held for sale
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Total revenues
    
    
    56,131
    
    
    
    44,497
    
    
    
    117,249
    
    
    
    82,047Expenses and impairments:Salaries, wages, and benefits
    
    
    30,002
    
    
    
    17,844
    
    
    
    59,412
    
    
    
    34,517General and administrative
    
    
    8,617
    
    
    
    4,281
    
    
    
    18,238
    
    
    
    7,857Occupancy
    
    
    1,277
    
    
    
    995
    
    
    
    2,653
    
    
    
    2,028Total expenses and impairments
    
    
    39,896
    
    
    
    23,120
    
    
    
    80,303
    
    
    
    44,402Other income (expense):Interest income
    
    
    655
    
    
    
    130
    
    
    
    1,622
    
    
    
    350Interest expense
    
    
    (13,491
    )
    
    
    (14,422
    )
    
    
    (26,948
    )
    
    
    (25,068
    )Gain/(loss) on interest rate swaps and caps
    
    
    
    
    
    
    (4,424
    )
    
    
    
    
    
    
    (7,203
    )Total other income (expense)
    
    
    (12,836
    )
    
    
    (18,716
    )
    
    
    (25,326
    )
    
    
    (31,921
    )Net income/(loss)
    
    $
    3,399
    
    
    $
    2,661
    
    
    $
    11,620
    
    
    $
    5,724
   2011
    
    
    2010Servicing Portfolio (in millions)Unpaid principal balance (by investor):Special Servicing
    
    $
    8,298
    
    
    $
    3,500Government-sponsored enterprises
    
    
    50,675
    
    
    
    23,391ABS
    
    
    6,736
    
    
    
    7,462Total unpaid principal balance
    
    $
    65,709
    
    
    $
    34,353Average Servicing Portfolio
    
    $
    66,047
    
    
    $
    33,423
 50




---



##### Table of Contents



2011
    
    
    2010($ in millions, except for average loan amount)Loan count-servicing
    
    
    398,033
    
    
    
    233,303Ending unpaid principal balance
    
    $
    65,709
    
    
    $
    34,353Average unpaid principal balance
    
    $
    66,047
    
    
    $
    33,423Average loan amount
    
    $
    165,084
    
    
    $
    147,244Average coupon
    
    
    5.57
    %
    
    
    6.25
    %Average FICO
    
    
    649
    
    
    
    63060+ delinquent (% of loans) (1)
    
    
    16.7
    %
    
    
    15.7
    %Total prepayment speed (12 month CPR)
    
    
    12.3
    %
    
    
    13.6
    %
 
 (1)
    
     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. For the Three Months Ended June 30, 2011 and 2010
  2011
    
    
    2010Service fees
    
    $
    46,475
    
    
    $
    24,537Loss mitigation and performance-based incentive fees
    
    
    2,444
    
    
    
    6,417Modification fees
    
    
    6,070
    
    
    
    2,701Late fees and other ancillary charges
    
    
    5,711
    
    
    
    6,107MSR fair value adjustments
    
    
    (7,892
    )
    
    
    2,259Other service fee related revenues
    
    
    1,182
    
    
    
    698Total service fee income
    
    $
    53,990
    
    
    $
    42,719
  
    
    Increase of $22.0 million due to higher average unpaid principal balance of $66.4
billion in the 2011 period compared to $33.8 billion in the comparable 2010 period. The
increase in our servicing portfolio was primarily driven by an increase in average
unpaid principal balance for loans serviced for government-sponsored enterprises and
other subservicing contracts for third party investors of $51.3 billion in the 2011
period compared to $23.4 billion in the comparable 2010 period. This increase was
offset by a decrease in average unpaid principal balance for our private asset-backed
securitizations portfolio, which decreased to $6.9 billion in the 2011 period compared
to $7.5 billion in the comparable 2010 period.
 
    
    Increase of $3.4 million due to higher modification fees earned from HAMP and
non-HAMP modifications.
 
    
    Decrease of $10.2 million from change in fair value on mortgage servicing rights
which was recognized in servicing fee income. The fair value of our mortgage servicing
rights (MSRs) is based upon the present value of the expected future cash flows related
to servicing these loans. The revenue components of the cash flows are servicing fees,
interest earned on custodial accounts, and other ancillary income. The expense
components include operating costs related to servicing the loans (including delinquency
and foreclosure costs) and interest expenses on servicing advances. The expected future
cash flows are primarily impacted by prepayment estimates, delinquencies, and market
discount rates. Generally, the value of MSRs increases when interest rates
 51




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##### Table of Contents



increase and
decreases when interest rates decline due to the effect those changes in interest rates
have on prepayment estimates. Other factors affecting the MSR value includes the
estimated effects of loan modifications on expected cash flows. Such
modifications tend to positively impact cash flows by extending the expected life of the
affected MSR and potentially producing additional revenue opportunities depending on the
type of modification. In valuing the MSRs, we believe our assumptions are consistent with
the assumptions other major market participants use. These assumptions include a level of
future modification activity that we believe major market participants would use in their
valuation of MSRs. Internally, we have modification goals that exceed the assumptions
utilized in our valuation model. Nevertheless, were we to apply an assumption of a level
of future modifications consistent with our internal goals to our MSR valuation, we do not
believe the resulting increase in value would be material. Additionally, several state
Attorneys General have requested that certain mortgage servicers, including us, suspend
foreclosure proceedings pending internal review to ensure compliance with applicable law,
and we received requests from four such state Attorneys General. Although we have resumed
those previously delayed proceedings, changes in the foreclosure process that may be
required by government or regulatory bodies could increase the cost of servicing and
diminish the value of our MSRs. We utilize assumptions of servicing costs that include
delinquency and foreclosure costs that we believe major market participants would use to
value their MSRs. We periodically compare our internal MSR valuation to third party
valuation of our MSRs to help substantiate our market assumptions. We have considered the
costs related to the delayed proceedings in our assumptions and we do not believe that any
resulting decrease in the MSR was material given the expected short-term nature of the
issue.
 
    
    Decrease of $4.0 million due to decreased loss mitigation and performance-based
incentive fees earned from a government-sponsored enterprise.
      52




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For the Six Months Ended June 30, 2011 and 2010
  2011
    
    
    2010Service fees
    
    $
    93,401
    
    
    $
    49,803Loss mitigation and performance-based incentive fees
    
    
    5,152
    
    
    
    9,940Modification fees
    
    
    12,119
    
    
    
    7,766Late fees and other ancillary charges
    
    
    12,097
    
    
    
    12,289MSR fair value adjustments
    
    
    (11,919
    )
    
    
    (2,768
    )Other service fee related revenues
    
    
    1,864
    
    
    
    1,455Total service fee income
    
    $
    112,714
    
    
    $
    78,485
  
    
    Increase of $43.6 million due to higher average unpaid principal balance of $66.0
billion in the 2011 period compared to $33.4 billion in the comparable 2010 period. The
increase in our servicing portfolio was primarily driven by an increase in average
unpaid principal balance for loans serviced for government-sponsored enterprises and
other subservicing contracts for third party investors of $52.2 billion in the 2011
period compared to $23.8 billion in the comparable 2010 period. This increase was
offset by a decrease in average unpaid principal balance for our private asset-backed
securitizations portfolio, which decreased to $7.1 billion in the six month period ended
June 30, 2011 compared to $7.7 billion in the comparable 2010 period.
 
    
    Increase of $4.3 million due to higher modification fees earned from HAMP and on
non-HAMP modifications.
 
    
    Decrease of $9.1 million from change in fair value on mortgage servicing rights which
was recognized in servicing fee income. The fair value of our mortgage servicing rights
(MSRs) is based upon the present value of the expected future cash flows related to
servicing these loans. The revenue components of the cash flows are servicing fees,
interest earned on custodial accounts, and other ancillary income. The expense
components include operating costs related to servicing the loans (including delinquency
and foreclosure costs) and interest expenses on servicing advances. The expected future
cash flows are primarily impacted by prepayment estimates, delinquencies, and market
discount rates. Generally, the value of MSRs increases when interest rates increase and
decreases when interest rates decline due to the effect those changes in interest rates
have on prepayment estimates. Other factors affecting the MSR value includes the
estimated effects of loan modifications on expected cash flows. Such modifications tend
to positively impact cash flows by extending the expected life of the affected MSR and
potentially producing additional revenue opportunities depending on the type of
modification. In valuing the MSRs, we believe our assumptions are consistent with the
assumptions other major market participants use. These assumptions include a level of
future modification activity that we believe major market participants would use in
their valuation of MSRs. Internally, we have modification goals that exceed the
assumptions utilized in our valuation model. Nevertheless, were we to apply an
assumption of a level of future modifications consistent with our internal goals to our
MSR valuation, we do not believe the resulting increase in value would be material.
Additionally, several state Attorneys General have requested that certain mortgage
servicers, including us, suspend foreclosure proceedings pending internal review to
ensure compliance with applicable law, and we received requests from four such state
Attorneys General. Although we have resumed those previously delayed proceedings,
changes in the foreclosure process that may be required by government or regulatory
bodies could increase the cost of servicing and diminish the value of our MSRs. We
utilize assumptions of servicing costs that include delinquency and foreclosure costs
that we believe major market participants would use to value their MSRs. We periodically
compare our internal MSR valuation to third party valuation of our MSRs to help
substantiate our market assumptions. We have considered the costs related to the delayed
proceedings in our assumptions and we do not believe that any resulting decrease in the
MSR was material given the expected short-term nature of the issue.
 53




---



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
    
    Decrease of $4.7 million due to decreased loss mitigation and performance-based
incentive fees earned from a government-sponsored enterprise.
      54




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##### Table of Contents



Originations Segment
   For the three months ended
    
    
    For the six months endedJune 30,
    
    
    June 30,(dollars in thousands)
    
    2011
    
    
    2010
    
    
    2011
    
    
    2010Revenues:Servicing fee income
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    Other fee income
    
    
    3,825
    
    
    
    1,568
    
    
    
    7,869
    
    
    
    3,234Total fee income
    
    
    3,825
    
    
    
    1,568
    
    
    
    7,869
    
    
    
    3,234Gain on mortgage loans held for sale
    
    
    22,911
    
    
    
    13,543
    
    
    
    43,480
    
    
    
    25,989Total revenues
    
    
    26,736
    
    
    
    15,111
    
    
    
    51,349
    
    
    
    29,223Expenses and impairments:Salaries, wages, and benefits
    
    
    16,889
    
    
    
    13,187
    
    
    
    33,182
    
    
    
    23,919General and administrative
    
    
    6,139
    
    
    
    5,908
    
    
    
    11,032
    
    
    
    10,709Occupancy
    
    
    674
    
    
    
    558
    
    
    
    1,300
    
    
    
    962Total expenses and impairments
    
    
    23,702
    
    
    
    19,653
    
    
    
    45,514
    
    
    
    35,590Other income (expense):Interest income
    
    
    2,901
    
    
    
    3,461
    
    
    
    5,504
    
    
    
    5,090Interest expense
    
    
    (2,510
    )
    
    
    (2,399
    )
    
    
    (4,491
    )
    
    
    (3,707
    )Total other income (expense)
    
    
    391
    
    
    
    1,062
    
    
    
    1,013
    
    
    
    1,383Net income/(loss)
    
    $
    3,425
    
    
    $
    (3,480
    )
    
    $
    6,848
    
    
    $
    (4,984
    )
  Three months ended
    
    
    Six months endedJune 30,
    
    
    June 30,2011
    
    
    2010
    
    
    2011
    
    
    2010Origination Volume ($ in millions):Retail
    
    $
    491.0
    
    
    $
    372.6
    
    
    $
    915.6
    
    
    $
    678.5Wholesale
    
    
    232.9
    
    
    
    306.9
    
    
    
    462.5
    
    
    
    513.7Total Originations
    
    $
    723.9
    
    
    $
    679.5
    
    
    $
    1,378.1
    
    
    $
    1,192.2
 For the Three Months Ended June 30, 2011 and 2010
  55




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2011
    
    
    2010Gain on sale
    
    $
    13,276
    
    
    $
    7,788Capitalized servicing rights
    
    
    8,104
    
    
    
    6,025Fair value mark-to-market adjustments
    
    
    841
    
    
    
    5,400Mark-to-market on derivatives/hedges
    
    
    690
    
    
    
    (5,670
    )Total gain on mortgage loans held for sale
    
    $
    22,911
    
    
    $
    13,543
  
    
    Increase of $5.5 million from larger volume of originations, which increased from
$679.5 million in 2010 to $723.9 million in 2011, and higher margins earned on the sale
of residential mortgage loans during the period.
 
    
    Increase of $2.1 million from capitalized mortgage servicing rights due to the larger
volume of originations and subsequent retention of servicing rights.
 
    
    Decrease of $4.6 million resulting from the change in fair value on newly-originated
loans.
 
    
    Increase of $6.4 million from change in unrealized gains/losses on derivative
financial instruments. These include interest rate lock commitments and forward sales of
mortgage-backed securities.
  
    
    Increase of $3.7 million in salaries, wages and benefits expense from increase in
headcount of 456 in 2010 to 783 in 2011 and increases in performance-based compensation
due to increases in origination volume.
 
    
    Increase of $0.3 million in general & administrative and occupancy expense primarily
due to increase in overhead expenses from the larger volume of originations in 2011.
   For the Six Months Ended June 30, 2011 and 2010
  56




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2011
    
    2010Gain on sale
    
    $
    23,791
    
    
    $
    14,314Capitalized servicing rights
    
    
    17,985
    
    
    
    9,750Fair value mark-to-market adjustments
    
    
    3,130
    
    
    
    6,962Mark-to-market on derivatives/hedges
    
    
    (1,426
    )
    
    
    (5,037
    )Total gain on mortgage loans held for sale
    
    $
    43,480
    
    
    $
    25,989
  
    
    Increase of $9.5 million from larger volume of originations, which increased from
$1,192.2 million in 2010 to $1,378.1 million in 2011, and higher margins earned on the
sale of residential mortgage loans during the period.
 
    
    Increase of $8.2 million from capitalized mortgage servicing rights due to the larger
volume of originations and subsequent retention of servicing rights.
 
    
    Decrease of $3.8 million resulting from the change in fair value on newly-originated
loans.
 
    
    Increase of $3.6 million from change in unrealized gains/losses on derivative
financial instruments. These include interest rate lock commitments and forward sales of
mortgage-backed securities.
  
    
    Increase of $9.3 million in salaries, wages and benefits expense from increase in
headcount of 456 in 2010 to 783 in 2011 and increases in performance-based compensation
due to increases in origination volume.
 
    
    Increase of $0.7 million in general & administrative and occupancy expense primarily
due to increase in overhead expenses from the larger volume of originations in 2011.
   Legacy Portfolio and Other
   57




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For the three months ended
    
    
    For the six months endedJune 30,
    
    
    June 30,(dollars in thousands)
    
    2011
    
    
    2010
    
    
    2011
    
    
    2010Revenues:Servicing fee income
    
    $
    670
    
    
    $
    521
    
    
    $
    1,237
    
    
    $
    979Other fee income
    
    
    525
    
    
    
    349
    
    
    
    1,306
    
    
    
    1,559Total fee income
    
    
    1,195
    
    
    
    870
    
    
    
    2,543
    
    
    
    2,538Gain on mortgage loans held for sale
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Total revenues
    
    
    1,195
    
    
    
    870
    
    
    
    2,543
    
    
    
    2,538Expenses and impairments:Salaries, wages, and benefits
    
    
    1,570
    
    
    
    2,344
    
    
    
    2,853
    
    
    
    4,445General and administrative
    
    
    990
    
    
    
    600
    
    
    
    2,040
    
    
    
    943Provision for loan losses
    
    
    
    
    
    
    
    
    
    
    1,128
    
    
    
    Loss on sale of foreclosed real estate
    
    
    2,099
    
    
    
    
    
    
    
    4,346
    
    
    
    Occupancy
    
    
    234
    
    
    
    336
    
    
    
    491
    
    
    
    800Total expenses and impairments
    
    
    4,893
    
    
    
    3,280
    
    
    
    10,858
    
    
    
    6,188Other income (expense):Interest income
    
    
    11,397
    
    
    
    22,613
    
    
    
    24,321
    
    
    
    49,963Interest expense
    
    
    (9,184
    )
    
    
    (15,137
    )
    
    
    (19,114
    )
    
    
    (32,318
    )Fair value changes in ABS securitizations
    
    
    (3,613
    )
    
    
    (6,573
    )
    
    
    (6,265
    )
    
    
    (16,329
    )Total other income (expense)
    
    
    (1,400
    )
    
    
    903
    
    
    
    (1,058
    )
    
    
    1,316Net loss
    
    $
    (5,098
    )
    
    $
    (1,507
    )
    
    $
    (9,373
    )
    
    $
    (2,334
    )
  June 30, 2011
    
    
    June 30, 2010Legacy Portfolio and Other Performance:Performing  UPB
    
    $
    1,029,550
    
    
    $
    1,494,693Nonperforming (90+ Delinquency)  UPB
    
    
    308,643
    
    
    
    497,448Real Estate Owned  Estimated Fair Value
    
    
    17,249
    
    
    
    32,796Total Legacy Portfolio and Other  UPB
    
    $
    1,355,442
    
    
    $
    2,024,937
 For the Three Months Ended June 30, 2011 and 2010
    58




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For the Six Months Ended June 30, 2011 and 2010
    59




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Analysis of Items on Consolidated Balance Sheet
  June 30,
    
    
    December 31,2011
    
    
    2010(unaudited)AssetsCash and cash equivalents
    
    $
    2,532
    
    
    $
    21,223Restricted cash
    
    
    84,331
    
    
    
    91,125Accounts receivable, net
    
    
    468,072
    
    
    
    439,071Mortgage loans held for sale
    
    
    262,597
    
    
    
    371,160Mortgage loans held for investment, subject to nonrecourse debt  Legacy Assets
    
    
    255,463
    
    
    
    266,840Mortgage loans held for investment, subject to ABS nonrecourse debt
    
    
    490,588
    
    
    
    538,440Receivables from affiliates
    
    
    7,351
    
    
    
    8,993Mortgage servicing rights
    
    
    151,557
    
    
    
    145,062Property and equipment, net
    
    
    15,667
    
    
    
    8,394Real estate owned, net (includes $11,787 and $17,509, respectively, of real
estate owned, subject to ABS nonrecourse debt)
    
    
    17,249
    
    
    
    27,337Other assets
    
    
    35,335
    
    
    
    29,536Total assets
    
    $
    1,790,742
    
    
    $
    1,947,181Liabilities and members equityNotes payable
    
    $
    604,770
    
    
    $
    709,758Unsecured senior notes
    
    
    244,759
    
    
    
    244,061Payables and accrued liabilities
    
    
    78,764
    
    
    
    75,054Derivative financial instruments
    
    
    8,214
    
    
    
    7,801Derivative financial instruments, subject to ABS nonrecourse debt
    
    
    14,151
    
    
    
    18,781Nonrecourse debt  Legacy Assets
    
    
    126,026
    
    
    
    138,662ABS nonrecourse debt
    
    
    447,845
    
    
    
    496,692Total liabilities
    
    
    1,524,529
    
    
    
    1,690,809Total members equity
    
    
    266,213
    
    
    
    256,372Total liabilities and members equity
    
    $
    1,790,742
    
    
    $
    1,947,181
 60




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Assets
   Financial Instruments
        61




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##### Table of Contents



Liabilities and Members Equity
    Six Months Ended
    
    
    Year EndedJune 30,
    
    
    December 31,2011
    
    
    2010Repurchase reserves, beginning of period
    
    $
    7,321
    
    
    $
    3,648Additions
    
    
    2,200
    
    
    
    4,649Charge-offs
    
    
    (2,073
    )
    
    
    (976
    )Repurchase reserves, end of period
    
    $
    7,448
    
    
    $
    7,321
  Six Months Ended
    
    
    Year EndedJune 30,
    
    
    December 31,2011
    
    
    2010Beginning balance
    
    $
    4.3
    
    
    $
    1.3Repurchases & indemnifications
    
    
    (3.1
    )
    
    
    (1.9
    )Claims initiated
    
    
    15.6
    
    
    
    10.8Rescinded
    
    
    (6.3
    )
    
    
    (5.9
    )Ending balance
    
    $
    10.5
    
    
    $
    4.3
  Six months Ended
    
    
    Year EndedJune 30, 2011
    
    
    December 31, 2010Count
    
    
    $
    
    
    Count
    
    
    $($ amounts in billions)Loan sales
    
    
    7,578
    
    
    $
    1.5
    
    
    
    13,090
    
    
    $
    2.6
 62




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##### Table of Contents



Recent Accounting Developments
 A Creditors Determination of Whether a Restructuring
is a Troubled Debt Restructuring
 Reconsideration of Effective Control for Repurchase
Agreements
 Amendments to Achieve Common Fair Value Measurement
and Disclosure Requirements in U.S. GAAP and IFRS
 Presentation of Comprehensive Income
 63




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##### Table of Contents



Liquidity and Capital Resources
          Operating Activities
  
    
    $362.6 million improvement in proceeds received from sale of originated loans, which
provided $1,490.8 million and $1,128.2 million for the six month periods ending June 30,
2011 and 2010, respectively, partially offset by $185.7 million increase in cash
 64




---



##### Table of Contents



used to originate loans. Mortgage loans originated and purchased, net of fees, used
$1,378.0 million and $1,192.3 million in the six month period ending June 30, 2011 and
2010, respectively.
 
    
    $128.9 million higher cash outflows from working capital, which used $26.8 million
cash for the six months ended June 30, 2011 and provided $108.7 million during the same
period in the prior year.
 Investing Activities
  Financing Activities
  Contractual Obligations
  Variable Interest Entities
    65




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##### Table of Contents



TransfersAccounted for asSecuritization
    
    
    SecuredJune 30, 2011
    
    Trusts
    
    
    Borrowings
    
    
    TotalASSETSRestricted cash
    
    $
    1,417
    
    
    $
    34,086
    
    
    $
    35,503Accounts receivable
    
    
    2,901
    
    
    
    255,563
    
    
    
    258,464Mortgage loans held for investment, subject to nonrecourse debt
    
    
    
    
    
    
    246,800
    
    
    
    246,800Mortgage loans held for investment, subject to ABS nonrecourse
debt
    
    
    490,588
    
    
    
    
    
    
    
    490,588Real estate owned
    
    
    11,787
    
    
    
    5,366
    
    
    
    17,153Total Assets
    
    $
    506,693
    
    
    $
    541,815
    
    
    $
    1,048,508LIABILITIESNotes payable
    
    $
    
    
    
    $
    210,704
    
    
    $
    210,704Payables and accrued liabilities
    
    
    59
    
    
    
    1,035
    
    
    
    1,094Outstanding servicer advances(1)
    
    
    31,662
    
    
    
    
    
    
    
    31,662Derivative financial instruments
    
    
    
    
    
    
    7,456
    
    
    
    7,456Derivative financial instruments, subject to ABS nonrecourse debt
    
    
    14,151
    
    
    
    
    
    
    
    14,151Nonrecourse debtLegacy Assets
    
    
    
    
    
    
    126,026
    
    
    
    126,026ABS nonrecourse debt
    
    
    447,845
    
    
    
    
    
    
    
    447,845Total Liabilities
    
    $
    493,717
    
    
    $
    345,221
    
    
    $
    838,938
 
 (1)
    
    Outstanding servicer advances consists of principal and interest advances paid by
Nationstar to cover scheduled payments and interest that have not been timely paid by borrowers,
which excludes outstanding pool level advances of approximately $4.3 million. These outstanding
servicer advances are eliminated upon the consolidation of the securitization trusts. 66




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##### Table of Contents



Off Balance Sheet Arrangements
  June 30, 2011(1)
    
    
    December 31, 2010Total collateral balance
    
    $
    3,848,722
    
    
    $
    4,038,978Total certificate balance
    
    
    3,876,273
    
    
    
    4,026,844Total mortgage servicing
rights at fair value
    
    
    26,319
    
    
    
    26,419
 
 (1)
    
    Unconsolidated securitization trusts consist of VIEs where we have neither the power to
direct the activities that most significantly impact the VIEs economic performance or the
obligation to absorb losses or the right to receive benefits that could potentially be
significant to the VIE. Derivatives
      
 Item 3. Quantitative and Qualitative Disclosures about Market Risk
   67




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##### Table of Contents



Item 4. Controls and Procedures
 Evaluation of Disclosure Controls and Procedures
   Changes in Internal Control Over Financial Reporting
  Limitations on Effectiveness of Controls and Procedures
  68




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##### Table of Contents



PART II. OTHER INFORMATION
 
 Item 1. Legal Proceedings
  
 Item 1A. Risk Factors
  
 Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.
  
 Item 3. Defaults Upon Senior Securities
  
 Item 4. ( Removed and Reserved)
  
 Item 5. Other Information
  
 Item 6. Exhibits
 31.1
    
    Certification by Chief Executive Officer pursuant to Rules 13a 14(a)
and 15d 14(a) under the Securities Exchange Act of 1934 and Section
302 of the Sarbanes-Oxley Act of 2002.*31.2
    
    Certification by Chief Financial Officer pursuant to Rules 13a 14(a)
and 15d 14(a) under the Securities Exchange Act of 1934 and Section
302 of the Sarbanes-Oxley Act of 2002.*32.1
    
    Certification by Chief Executive Officer pursuant to 18 USC. Section
1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of
2002.*32.2
    
    Certification by Chief Financial Officer pursuant to 18 USC. Section
1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of
2002.*
 
 *
    
    Filed electronically herewith. 69




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##### Table of Contents



SIGNATURES
  NATIONSTAR MORTGAGE LLC./s/ Anthony H. BaroneAnthony H. BaroneChief Executive Officer and Director/s/ Jay BrayJay BrayPresident and Chief Financial Officer 70




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##### Table of Contents



EXHIBIT INDEX
 Exhibit No.
    
    Description31.1
    
    Certification by Chief Executive Officer pursuant to Rules 13a
14(a) and 15d 14(a) under the Securities Exchange Act of 1934
and Section 302 of the Sarbanes-Oxley Act of 2002.*31.2
    
    Certification by Chief Financial Officer pursuant to Rules 13a
14(a) and 15d 14(a) under the Securities Exchange Act of 1934
and Section 302 of the Sarbanes-Oxley Act of 2002.*32.1
    
    Certification by Chief Executive Officer pursuant to 18 USC.
Section 1350, as Adopted Pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002.*32.2
    
    Certification by Chief Financial Officer pursuant to 18 USC.
Section 1350, as Adopted Pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002.*
 
 *
    
    Filed electronically herewith. 71