ONIT 10-K & 10-Q changes, risk factors and insider trading

•Inability to appropriately manage liquidity, interest rate and foreign currency exchange risks, including ineffective hedging strategies

•Heightened reputational risk due to media and regulatory scrutiny of companies that originate andoriginate, securitize or service reverse mortgages

•Certain provisions in our organizational documents and regulatory restrictions that may make takeovers more difficult, and significant investments in our common stock may be restricted

Our business is subject to extensive regulation by federal, state, local and foreign governmental authorities, including the CFPB, HUD, the SEC and various state agencies that license and conduct examinations of our servicing and lending activities. In addition, we operate under a number of regulatory settlements that subject us to ongoing reporting and other obligations. See the next risk factor below for additional detail concerning these regulatory settlements. From time to time, we also receive requests (including requests in the form of subpoenas and civil investigative demands) from federal, state and local agencies for records, documents and information relating to our servicing and lending activities. The GSEs (and their conservator, the FHFA),GSEs, Ginnie Mae, the United States Treasury Department, various investors, non-Agency securitization trustees and others also subject us to periodic reviews and audits.

In the current regulatory environment, we have faced and expect to continue to face heightened regulatory and public scrutiny as an organization as well as stricter and more comprehensive regulation of the entire mortgage sector. We must devote substantial resources to regulatory compliance, and we incurred, and expect to continue to incur, significant ongoing costs to comply with new and existing laws and governmental regulation of our business. If we fail to effectively manage our regulatory and contractual compliance, the resources we are required to devote and our compliance expenses would likely increase. Any significant delay or complication in fulfilling our regulatory commitments and resolving remaining legacy matters may jeopardize our ability to return to sustainable profitability.

We must comply with a large number of federal, state and local consumer protection and other laws and regulations including, among others, the CARES Act, the Dodd-Frank Act, the TCPA, the Gramm-Leach-Bliley Act, the FDCPA, RESPA, TILA, the Fair Credit Reporting Act, the Servicemembers Civil Relief Act, the Homeowners Protection Act, the Federal Trade Commission Act, the Fair Credit Reporting Act, the Federal Acquisition Regulation, the Equal Credit Opportunity Act, as well as individual state laws pertaining to licensing, general mortgage origination and servicing practices and foreclosure and federal and local bankruptcy rules. These laws and regulations apply to all facets of our business, including, but not limited to, licensing, loan originations, consumer disclosures, default servicing and collections, foreclosure, filing of claims, registration of vacant or foreclosed properties, handling of escrow accounts, payment application, interest rate adjustments, assessment of fees, loss mitigation, use of credit reports, handling of unclaimed property, safeguarding of non-public personally identifiable information about our customers, and the ability of our employees to work remotely. These complex requirements can and do change as laws and regulations are enacted, promulgated, amended, interpreted and enforced. In addition, we must maintain an effective corporate governance and compliance management system. See “Business - Regulation” for additional information regarding our regulators and the laws that apply to us.

We must structure and operate our business to comply with applicable laws and regulations and the terms of our remaining regulatory settlements. This can require judgment with respect to the requirements of such laws and regulations and such settlements. While we endeavor to engage proactively with our regulators in an effort to ensure we do so correctly, if we fail to interpret correctly the requirements of such laws and regulations or the terms of our regulatory settlements, we could be found to be in breach of such laws, regulations or settlements.

Failure or alleged failure to comply with the terms of our remaining regulatory settlements or applicable federal, state and local consumer protection laws, regulations and licensing requirements could lead to any of the following:

In recent years, the general trend among federal, state and local legislative bodies and regulatory agencies as well as state attorneys general has been toward increasing laws, regulations, investigative proceedings and enforcement actions with regard to residential mortgage lenders and servicers. The CFPB continueshistorically tohas taketaken a very active role in the mortgage industry, and its rule-making and regulatory agenda relating to loan servicing and origination continues to evolve. Individual states have also been active, as have other regulatory organizations such as the MMC, a multistate coalition of various mortgage banking regulators. In addition to their traditional focus on licensing and examination matters, certain regulators make observations, recommendations or demands with respect to areas such as corporate governance, safety and soundness, and risk and compliance management. We must endeavor to work cooperatively with our regulators to understand all their concerns if we are to be successful in our business.

The CFPB and state regulators have also increasinglyhistorically focused on the use, and adequacy, of technology in the mortgage servicing industry, privacy concerns and other topical issues, such as communications from debt collectors and the ability of borrowers to repay mortgage loans, including in relation to COVID-19.the government shutdown. See below as well as Business - Regulation for additional information regarding the rules, regulations and legislative developments most pertinent to our operations.

We are subject to supervision by the CFPB.CFPB, In April 2017, the CFPB filed a lawsuit in the federal district court for the Southern District of Florida against Onity, OMS and OLS alleging violations of federal consumer financial laws relating to our servicing business dating back to 2014. This lawsuit was resolved in Onity’s favor in 2023 following years of litigation that generated significant legal expense and adversely impacted our reputation and business. The CFPBwhich has resumed normal coursenormal-course supervisory activities with respect to our business and operations.operations following the 2023 resolution, in our favor, of a lawsuit the CFPB filed in 2017. If the CFPB asserts any alleged deficiencies in Onity’s practices that we are unable to refute or defend, the CFPB could potentially commence an enforcement action involving monetary fines, penalties or restrictions on our business, which could have a material adverse impact on our business, reputation, financial condition, liquidity and results of operations.

Our licensed entities are required to renew their licenses, typically on an annual basis, and to do so they must satisfy the license renewal requirements of each jurisdiction, which generally include financial requirements such as providing audited financial statements or satisfying minimum net worth requirements and non-financial requirements such as satisfactorily completing examinations as to the licensee’s compliance with applicable laws and regulations. The minimum net worth requirements to which our licensed entities are subject are unique to each state and type of license. We believe our licensed entities were in compliance with all of their minimum net worth requirements at December 31, 2024.2025. However, it is possible that regulators could disagree with our calculations, and one state regulator has disagreed with our calculation for a prior year period; we have discussed the matter with the regulator, including why we believe we were in compliance with the applicable net worth requirements.calculations. Failure to satisfy any of the requirements to which our licensed entities are subject could result in a variety of regulatory actions ranging from a fine, a directive requiring a certain step to be taken, a suspension or, ultimately, a revocation of a license, any of which could have a material adverse impact on our results of operations and financial condition.

On occasion, we engage with agencies of the federal government on various matters, including the Department of Justice, the Office of Inspector General of HUD, Special Inspector General for the Troubled Asset Relief Program (SIGTARP) and the VA Office of the Inspector General. In addition to the expense of responding to subpoenassubpoenas, civil investigative demands, and other requests for information from such agencies, in the event that any of these engagements result in allegations of wrongdoing by us, we may incur fines or penalties or significant legal expenses defending ourselves against such allegations.

In the past, we have entered into significantsettlements, settlementsincluding with the NY DFS,DFS and the CA DFPI, and the 2013 Onity National Mortgage SettlementDFPI which involved payments of significant monetary amounts, monitoring by third-party firms for which we were financially responsibleamounts and other restrictions on our business. While we are not currently subject to active monitorships under these settlements, weWe remain obligated to comply with the commitments made to our regulators and if we violate those commitments one or more of these entities could take regulatory action against us. Any future settlements or other regulatory actions against us could have a material adverse impact on our business, reputation, operating results, liquidity and financial condition.

Our regulatoryRegulatory settlements and public allegations regarding our business practices by regulators and other third parties may affect other regulators’, rating agencies’, and creditors’ perceptions, which could adversely impact our financial results and ongoing operations.

Our regulatoryRegulatory settlements and public allegations regarding our business practices by regulators and other third parties may affect other regulators’, rating agencies’ and creditors’ perceptions of us. As a result, our ordinary course interactions with regulators may be adversely affected. We may incur additional compliance costs and management time may be diverted from other aspects of our business to address regulatory issues. It is possible that we may incur additional fines or penalties or even that we could lose the licenses and approvals necessary to engage in our servicing and lending businesses. In addition, certain regulators make observations, recommendations or demands with respect to areas such as corporate governance, safety and soundness and risk and compliance management, which could require us to incur additional expense or which could result in the imposition of additional requirements such as liquidity and capital requirements or restrictions on business conduct such as engaging in stock repurchases. To the extent that rating agencies or creditors perceive us negatively, our servicer or credit ratings could be adversely impacted and our access to funding could be limited.

If regulators allege that we do not comply with the terms of our prior regulatory settlements, or if we enter into future regulatory settlements, it could significantly impact our ability to maintain and grow our servicing portfolio.

Historically, our regulatory settlements significantly impacted our ability to maintain or grow our servicing portfolio because we agreed to certain restrictions that effectively prohibited future bulk acquisitions of residential servicing. While certainthe majority of these restrictions have been eased in connection with our resolution of state regulatory matters and acquisition of PHH Corporation, we are still restricted in our ability to grow our portfolio under the terms of our agreements with the NY DFS. If we are unable to satisfy the conditions of the regulatory commitments we made to these and other regulators, or if a future regulatory settlement restricts our ability to acquire MSRs, we will be unable to grow or even maintain the size of our servicing portfolio through acquisitions and our business could be materially and adversely affected. Moreover, even when regulatory restrictions are lifted, the reputational damage done by these actions may inhibit our ability to acquire new business.

If we are unable to obtain sufficient capital to meet the financing requirements of our business, or if we fail to comply with our debt agreements, our business, financing activities, liquidity, financial condition and results of operations will be adversely affected.

Our business requires substantial amounts of capital and our financing strategy includes the use of leverage. Accordingly, our ability to finance our operations and repay maturing obligations rests in large part on our ability to continue to borrow money at reasonable rates. If we are unable to maintain adequate financing, or other sources of capital are not available, we could be forced to suspend, curtail or reduce our revenue generating objectives,activities, which could harm our results of operations, liquidity, financial condition and business prospects. Our ability to borrow money is affected by a variety of factors including:

Our advance facilities are revolving facilities that generally have a revolving period up to 24 months. We typically require significantly more liquidity to meet our advance funding obligations than our available cash on hand. In a typical monthly cycle, we repay a portion of the borrowings under these facilities from collections.collections, Duringliquidations, or other servicing-related activities. Especially during the peak remittance cycle, which typically starts in the middle of each month, we depend on our lenders to provide us with a significant portion of the cash necessary to make the advances that we are required to make as servicer. If one or more of these lenders were to restrict our ability to access these revolving facilities or were to fail, we may not have sufficient funds to meet our obligations. We typically require significantly more liquidity to meet our advance funding obligations than our available cash on hand.

In addition, we use mortgage loan warehouse facilities to fund newly originated loans, HECM tails, buyouts and a number of other assets on a short-term basis until they are sold to secondary market investors, including GSEsGSEs, Ginnie Mae or other third-party investors. Currently, our master repurchase and participation agreements for financing new loan originations generally have maximum terms of 364 days, and they are typically renewed, replaced or extended annually. We issued asset-backed securitization notes in 20232023, 2024 and 20242025 to diversify our financing of reverse mortgage buyouts and REO propertiesproperties. Thus far, these securitizations have been structured with a three-year anniversary mandatory call dates.

We have diversified sources of funding for our GSE, Ginnie Mae and PLS MSR portfolios. GSE MSR financing is provided through two bank financing facilities whose total capacity was $500.0$750.0 million and $400.0$250.0 million, respectively, at December 31, 2024.2025. The $500.0$750.0 million GSE MSR facility, which is available for both PMC and PHH Asset Services LLC (PAS), matures in May 2026 and the $250.0 million GSE MSR facility terminatesmatures in SeptemberMay 2025 and the $400.0 million GSE MSR facility converts into a term loan in February 2025 with a final maturity date in December 2026.2027. The Ginnie Mae facility, provided through a private investor arrangement, carried total capacity of $300.0$400.0 million at December 31, 2024.2025. The PLS MSR financing which was issuedinitially to capital markets investorsstructured as an amortizing note structure.issue Theto capital markets investors, was restructured into a revolving credit facility. In January 2026, the maturity date of the Ginnie Mae facility was extended to January 2027 and the total capacity was increased to $450.0 million. The PLS financing arrangementsarrangement terminatematures in February 20252026 and areis expected to be extended for another 364-day period.

Our MSR financing facilities provide funding based on an advance rate against MSR value that is subject to periodic mark-to-market valuation adjustments (MSR valuation is expected to decline if market interest rates decline). In the normal course, and without any additions to our MSR portfolio from production or acquisition activities, MSR value is expected to decline over time due to run offrunoff of the loan balances in our servicing portfolio.portfolio, with runoff offset to varying degrees by additions to our MSR portfolio from production or acquisition activities. As a result, we anticipate having to repay a portion of our MSR debt over a given time period. The requirements to repay MSR debt including those due to unfavorable fair value adjustment attributable to interest rates or other factors may require us to allocate a substantial amount of our available liquidity or future cash flows to meet these requirements. To the extent we are unable to fully replenish runoff or to generate sufficient cash flows from operations to meet these requirements, we may be more constrained to invest in our business and fund other obligations, and our business, financing activities, liquidity, financial condition and results of operations will be adversely affected.

On November 6, 2024, we successfully completed our corporate debt restructuring.refinancing. PHH Corporation issued $500.0$500 million aggregate principal amount of 9.875% Senior Notes due November 1, 2029 (Senior Notes Due 2029) in a syndicated private placement. Interest on the Senior Notes Due 2029 is payable semi-annually and principal is due at maturity. The Senior Notes Due 2029 are guaranteed by Onity and certain wholly-owned subsidiaries including PMC (collectively “restrictedRestricted subsidiariesSubsidiaries”). The Senior Notes are secured by the equity interests of the restrictedRestricted subsidiariesSubsidiaries and any available cash in excess of regulatory requirements, as defined. On January 30, 2026, Onity issued $200 million aggregate principal amount of 9.875% Senior Notes due 2029 at a price to investors of 103.25%. The proceedsoffered fromSenior theNotes are an additional issuance of theOnity’s 9.875% Senior Notes Duedue 2029 describedand above,form togethera single series of debt securities with proceeds from the sale$500 million aggregate principal amount of MAVsuch Canopynotes and available cash,that were usedoriginally toissued redeem inon November 20246, all of the outstanding $289.1 million 7.875% PMC Senior Secured Notes due in 2026 and $285.0 million 12% Onity Senior Secured Notes due in 2027.2024.

Our debt agreements contain various qualitative and quantitative covenants, including financial covenants, covenants to operate in material compliance with applicable laws and regulations, monitoring and reporting obligations and restrictions on our ability to engage in various activities, including but not limited to incurring or guarantyingguaranteeing additional debt, paying dividends or making distributions on or purchasing equity interests of Onity and its subsidiaries, repurchasing or redeeming capital stock or junior capital, repurchasing or redeeming subordinated debt prior to maturity, issuing certain types of preferred stock, selling or transferring assets or making loans or investments or other restricted payments, entering into mergers or consolidations or sales of all or substantially all of the assets of Onity and its subsidiaries, creating liens on assets to secure debt, and entering into transactions with affiliates. As a result of the covenants to which we are subject, we may be limited in the manner in which we conduct our business and may be limited in our ability to engage in favorable business activities or raise additional capital to finance future operations or satisfy future liquidity needs. In addition, breaches or events that may result in a default under our debt agreements include, among other things, noncompliance with our covenants, nonpayment of principal or interest, material misrepresentations, the occurrence of a material adverse effect or material adverse change, insolvency, bankruptcy, certain material judgments and changes of control. Covenants and defaults of this type are commonly found in debt agreements such as ours. Certain of these covenants and defaults are open to subjective interpretation and, if our interpretation were contested by a lender, a court may ultimately be required to determine compliance or lack thereof. In addition, our debt agreements generally include cross default provisions such that a default under one agreement could trigger defaults under other agreements. If we fail to comply with our debt agreements and are unable to avoid, remedy or secure a waiver of any resulting default, we may be subject to adverse action by our lenders, including termination of further funding, acceleration of outstanding obligations, enforcement of liens against the assets securing or otherwise supporting our obligations and other legal remedies. In addition to these covenants, certain agreements also include trigger events which may lead to adverse actions such as acceleration of outstanding obligations, step down in advance rates and termination of further funding.

If we fail to satisfy minimum net worthworth, capital and liquidity requirements established by regulators, GSEs, Ginnie Mae, lenders, or other counterparties, our business, reputation, financing activities, financial condition or results of operations could be materially and adversely affected.

As a result of our servicing and loan origination activities, we are subject to minimum net worthworth, capital and liquidity requirements established by state regulators, GSEs, Ginnie Mae, lenders, and other counterparties. Losses incurred in prior years and in 2023 have eroded our net worth.worth in those years. In addition, we must structure our business so that each licensed entity satisfies the net worth and liquidity requirements applicable to it, which can be challenging.

The minimum net worth and liquidity requirements to which our licensed entities are subject vary by state and type of license. We must also satisfy the minimum net worthworth, capital and liquidity requirements of the GSEs and Ginnie Mae in order to maintain our approved status with such agencies and the minimum net worth and liquidity requirements set forth in our agreements with our lenders.

Minimum net worth requirements and liquidity are generally calculated using specific adjustments that may require interpretation or judgment. Changes to these adjustments have the potential to significantly affect net worth and liquidity calculations and imperil our ability to satisfy future minimum net worth and liquidity requirements. We believe our licensed entities were in compliance with all of their minimum net worthworth, capital and liquidity requirements at December 31, 2024.2025. However, it is possible that regulators could disagree with our calculations. If we fail to satisfy minimum net worth or liquidity requirements, absent a waiver or other accommodation, we could lose our licenses or have other regulatory action taken against us, we could lose our ability to sell and service loans to or on behalf of the GSEs or Ginnie Mae, or it could trigger a default under our debt agreements. Any of these occurrences could have a material adverse effect on our business, reputation, financing activities, liquidity, financial condition or results of operations.

In 2022, Ginnie Mae announced updated minimum financial eligibility requirements for Ginnie Mae issuers and included a new risk-based capital ratio (RBCR) effective December 31, 2024. Ginnie Mae issued a waiver extending the deadline by which PHH must meet the RBCR requirements to October 1, 2025. PHH will beis required to maintain a minimum of 6% ratio of Adjusted Net Worth less Excess MSRs, as defined, to risk weighted assets.assets Weof are6%. currentlyIn implementingthe certainsecond actionsquarter intendedof 2025, in order to achieve and maintain compliance with the requirements.Ginnie Mae RBCR requirements, PHH transferred certain GSE MSR investment activities previously conducted by PHH to a dedicated licensed entity PAS, a wholly owned subsidiary of PHH Corporation and Onity, with PHH retaining the subservicing. We intend to continue to operate our Ginnie Mae issuer activities through PHH which would beis subject to the risk-based capital rules, and separately operate our GSE MSR investment activities through PHH Asset Services LLC (PAS), a wholly owned subsidiary of PHH Corporation and Onity. We have received all necessary licensing and regulatory approvals to operate PAS except for one state with whom discussions are ongoing.rules.

Most of our consolidated total assets and liabilities are measured at fair value on a recurring and nonrecurring basis, most of which are considered Level 3 valuations, including our MSR portfolio. Our largest Level 3 asset and liability carried at fair value on a recurring basis is Home Equity Conversion Mortgage (HECM) loans held for sale pooled into HECM-Backed Securities (HMBS), previously Loans held for investment - reverse mortgagesinvestment, and the relatedHMBS-related secured financing. We pool home equity conversion mortgages (reverse mortgages) into Ginnie Mae Home Equity Conversion Mortgage-Backed Securities (HMBS).borrowings. Because the securitization of reverse mortgageHECM loans into HMBS does not qualify for sale accounting, we account for these transfers as secured financings and classify the transferred reverse mortgages as Loans held for investment - reverse mortgages and recognize the related Financing liabilities.financings. Holders of HMBS have no recourse against our assets, except for standard representations and warranties and our contractual obligations to service the reverse mortgages and HMBS.

We estimate the fair value of our assets and liabilities utilizing assumptions that we believe are appropriate and are used by market participants. We generally engage third-party valuation experts to support and benchmark our fair value determination for Level 3 assets and liabilities. The methodology used to estimate these values is complex and uses asset- and liability-specific data and market inputs for assumptions including interest and discount rates, collateral status and expected future performance. If these assumptions prove to be inaccurate, if market conditions change or if errors are found in our models, the value of certain of our assets may decrease, which could adversely affect our business, financial condition and results of operations, including through negative impacts on our ability to satisfy minimum net worth and liquidity covenants.

We are exposed to liquidity, interest rate and foreign currency exchange risks.

We are exposed to interest rate risk to the degree that our interest-bearing liabilities mature or reprice at different speeds, or on different bases, than our interest earning assets or when financed assets are not interest-bearing. Our servicing business is generally characterized by non-interest earning assets financed by interest-bearing liabilities. Servicing advances are among our more significant non-interest earning assets. We are also exposed to interest rate risk because a portion of our advance financing and other outstanding debt is at variable rates. Rising interest rates may increase our interest expense. Earnings on float balances may partially offset these higher funding costs.

Our MSRs, which we carry at fair value, are subject to substantial interest rate risk, primarily because the mortgage loans underlying the servicing rights permit the borrowers to prepay the loans. A decrease in interest rates generally increases prepayment speeds and vice versa. An interest rate decrease could result in an array of fair value changes, the severity of which would depend on several factors, including the magnitude of the change, whether the decrease is across specific rate tenors or a parallel change across the entire yield curve, and impact from market-side adjustments, among others. The objective of our MSR hedging policy is to provide a targetedtargeted, high level of hedge coverage on our interest-rate sensitive MSR portfolio exposure. The targeted hedge coverage ratio increased in the second quarter of 2023 from 25% to 60%. Effective December 2023, we established a targeted hedge coverage ratio range between 95% and 105%. In April 2024, we changed the risk measure to an interest rate sensitivity measure (dollar DV01) that resulted in an equivalent range of approximately 90% to 110%. However, as discussed below, there can be no assurance that our hedging strategy will be effective in partially mitigating our exposure to changes in fair value of our MSRs due to interest rate changes. Also refer to Item 7A. Quantitative and Qualitative Disclosures about Market Risk.

We are a leading non-bank mortgage servicer and originator providing solutions through our primary brands, PHH Mortgage and Liberty Reverse Mortgage. PHH is one of the largest non-bank servicers in the country based on UPB, focused on delivering a variety of servicing and lending programs. PHH is also one of the largest correspondent lenders in the U.S. based on origination UPB. Liberty is one of the nation’s largest reverse mortgage lenders and servicers based on origination and securitization UPB, dedicated to education and providing loans that help customers meet their personal and financial needs by drawing upon their home equity. We serviced or subserviced 1.4 million loans with a total UPB of $301.7$328.3 billion on behalf of more than 4,0003,900 investors and 125119 subservicing clients as of December 31, 2024.2025. We service all mortgage loan classes, including conventional, government-insured, non-Agency, small-balance commercial and multi-family loans. Our Originations business is part of our balanced business model to generate gains on loan sales and profitable returns, and to support the replenishment and the growth of our servicing portfolio. Through our retail, correspondent and wholesale channels, we originate and purchase conventional and government-insured forward and reverse mortgage loans that we sell or securitize on a servicing retained basis. In addition, we grow our mortgage servicing volume through MSR flow purchase agreements, Agency Cash Window and co-issue programs, bulk MSR purchase transactions, and subservicing agreements. On June 10, 2024, Ocwen Financial Corporation changed its name to Onity Group Inc.

The table below summarizes the new volume of Originations by channel during 2024,2025, compared with the volume of the two preceding years. The volume of Originations is a key driver of the profitability of our Originations segment, along with margins, and also a key driver of the replenishment and growth of our Servicing segment. In 2024,2025, we added $85.6$84.8 billion of new volume, with $44.9$33.3 billion of newsubservicing subservicing,additions, $29.7$42.7 billion of new Originations production,production and $10.9$8.8 billion in bulk acquisitions, as further detailed in the below table.

The following table summarizes the average volume of our Servicing segment in 2024,2025, compared with the two preceding years. The average servicing volume is a key driver of the profitability of our Servicing segment. The relative weight of performing and delinquent loans or servicing and subservicing also drive the amount and timing of gross revenue and expenses. In 2024,2025, our average total average servicing and subservicing portfolioUPB increased $7.1$12.2 billion, or 2%,4.1%, net of runoff and sales, primarily driven by $8.1an $19.2 billion ofincrease subservicingin additions.our OurOwned averageMSR, ownedpartly MSRoffset servicingby portfolioa stayed$6.0 relativelybillion flatdecline in subservicing. For comparison purposes, the total estimated industry mortgage debt outstanding increased 2.2% in 2025 as compared to the prior year over(source: year,Mortgage withBankers aAssociation $0.8(MBA) billion,Mortgage orFinance 1%Forecast decrease.as of January 21, 2026).

The following table presents key market interest rates which are important drivers of our businesses. As further discussed, the 30-year fixed rate mortgage is a key driver of Originations volume,volume and prepayments in Servicing, the 10-year Treasury rate is a key benchmark for MSR valuation and hedging activities, and the 1-month SOFR is a key benchmark for the profitability of our Servicing segment (including float earnings and asset-backed financing cost).

(1)Source: Freddie Mac PMMS - Primary Mortgage Market Survey In 2024, the average 30-year fixed rate mortgage rate remained mostly flat (down 8 basis points vs. 2023) resulting in a continued depressed origination market due to borrower affordability. The Federal Reserve reduced its federal funds target rate a total of 1 percentage point between September and December 2024 (50-basis point reduction in September and two consecutive 25-basis point reductions in November and December). Despite the Federal Reserve actions the 10-year Treasury rate increased by 70 basis points year over year, driving MSR fair values up. The average 1-month term SOFR remained flat (up 4 basis points vs. 2023) following the Federal Reserve respective actions in 2023 and 2024, as illustrated in the below graph.

•Net income attributable to common stockholders of $33$185 million, or $4.28 income$23.07 per share basic and $4.13$21.46 diluted

•MSRServicing investmentand subservicing fee revenue of $2.5$857 billion,million, andwith $301.7$328 billion total servicing and subservicing UPB

•CashOriginations positiongain on sale of $185$97 million

•TotalMSR assetsinvestment of $16.4$2.8 billion

We established the following strategy to return todeliver sustainable profitability and create long-term value for shareholdersall stakeholders:

•Prudent capital-light growth: Emphasize on capital-light subservicing to drive servicing portfolio UPB growth and expand higher margin products and origination channels to drive accretive MSR investments;

The following discussion and analysis of our results of operations and financial condition should be read in conjunction with our audited consolidated financial statements and the related notes thereto appearing elsewhere in this Annual Report on Form 10-K. The segment information presented below is prepared under GAAP, consistent with the amounts included in our consolidated financial statements.

The below table presents total revenue by segmenttype for the years presented:

Total segment revenue for 20242025 was $90.7 million, or 9%, lowerhigher as compared to 2023 predominantly2024 due to thea accounting$42.9 derecognitionmillion, ofor Rithm5% servicing fees described above ($124.9 million servicing fees presented grossincrease in 2023),Servicing partiallyrevenue offset byand a $37.1$47.8 millionmillion, or 44% increase in Originations revenuerevenue, drivenlargely byconsistent higherwith volume.the growth of the respective businesses.

The table below presents the key components of MSR valuation adjustments, net which include MSRs, MSR pledged liabilities and ESS financing liabilities at fair value, alongtogether with MSR hedging derivatives:

(1)Excludes fair value changes of reverse mortgage loans held-for-investment and HMBS related borrowing due to rates and assumptions that are part of the MSR hedging strategy.strategy through September 2025. Refer to the MSR Hedging Strategy section of Item 7A. Quantitative and Qualitative Disclosures aboutAbout Market RisksRisk for further detail and the discussion below within Servicing.

The $96.2$169.8 million loss on MSR valuation adjustments, net in 20242025 is comprised of $156.6$183.2 million runoff, $173.3$1.2 million fair value gain attributed to ratesinput and assumption changes and $112.9$12.2 million lossgain on MSR hedging derivatives. MSR valuation adjustments, net decreasedincreased by $136.1$73.7 million (lowerhigher loss) in 20242025 compared to 20232024 with $26.6 million higher runoff due to portfolio growth and $47.1 million unfavorable change in input and assumption updates, net of hedges, largely driven by interestprepayment rates, favorable assumption updates and changes in our hedge coverage ratio,speeds, as discussed below.

An investment in our common stock involves significant risk. We describe the most significant risks that management believes affect or could affect us under Part I, Item 1.A. of our Annual Report on Form 10-K for the year ended December 31, 2025. Understanding these risks is important to understanding any statement in such reports and in our subsequent SEC filings (including this Form 10-Q) and to evaluating an investment in our common stock. You should carefully read and consider the risks and uncertainties described therein together with all the other information included or incorporated by reference in such Annual Report and in our subsequent SEC filings before you make any decision regarding an investment in our common stock. You should also consider the information set forth under “Forward-Looking Statements.” If any of the risks actually occur, our business, financial condition, liquidity and results of operations could be materially and adversely affected. If this were to happen, the value of our common stock could significantly decline, and you could lose some or all of your investment.

We are a leading non-bank mortgage servicer and originator providing solutions through our primary brand, Onity Mortgage (formerly PHH Mortgage). On March 23, 2026, PHH Mortgage Corporation changed its name to Onity Mortgage Corporation (OMC). Our reverse mortgage product brand, Liberty Reverse Mortgage, has also been rebranded under the Onity Mortgage name. Onity is one of the largest non-bank servicers in the country based on UPB, focused on delivering a variety of servicing and lending programs. Onity is also one of the largest correspondent lenders in the U.S. based on origination UPB. Prior to the sale to FAR as disclosed in Note 5 - Reverse Mortgages and below under “Business Strategy”, Onity Mortgage (formerly Liberty Reverse Mortgage) ishas been one of the nation’s largest reverse mortgage lenders and servicers based on origination and securitization UPB,UPB. dedicatedOn April 30, 2026, OMC and FAR entered into an amendment of the November 2025 sale agreements whereby OMC agreed to educationsell a portion of its reverse MSRs comprised of approximately 20,000 Ginnie Mae HECM loans and providingsubservice the sold portfolio and additional loans thatfrom helpFAR customersfor meetan theirinitial personalthree-year term. FAR agreed to acquire OMC’s originations pipeline of reverse mortgage loans, and financialfor needsa byperiod drawingof five years, OMC will no longer originate reverse mortgages upon theirclosing home equity. Acrosswith the forward and reverse portfolio we serviced or subserviced 1.4 million loans with a total UPBexception of $338.4activities billionrelating to the recapture of existing HECM borrowers for HECM MSRs not sold to FAR. We received Ginnie Mae’s approval of the sale on behalfMay of28, more than 3,900 investors and 113 subservicing clients as of March 31, 2026. We service all mortgage loan classes, including conventional, government-insured, non-Agency, small-balance commercial and multi-family loans. Our Originations business is part of our balanced business model to generate gains on loan sales and profitable returns, and to support the replenishment2026 and the growthtransaction of our servicing portfolio. Through our retail, correspondent and wholesale channels, we originate and purchase conventional and government-insured forward and reverse mortgage loans that we sell or securitizeclosed on aJune servicing30, retained basis. In addition, we grow our mortgage servicing volume through MSR flow purchase agreements, Agency Cash Window and co-issue programs, bulk MSR purchase transactions, and subservicing agreements.2026.

The table below summarizes the new volume of Originations by channel on a current and comparative basis. The volume of Originations is a key driver of the profitability of our Originations segment, along with margins, and also a key driver of the replenishment and growth of our Servicing segment. In the firstsecond quarter of 2026, we added $28.5$42.2 billion of new volume, with $14.3$15.5 billion of new Originations production, $8.5$23.7 billion of subservicing additions, and $5.7$3.0 billion bulk acquisitions, as further detailed in the below table.

The following table summarizes the average volume of our Servicing segment, on a current and comparative basis. The average servicing volume is a key driver of the profitability of our Servicing segment. The relative weight of performing and delinquent loans or servicing and subservicing also drive the amount and timing of gross revenue and expenses. Our average total servicing and subservicing UPB increased by $11.5$7.4 billion or 3.6%2.2% during the firstsecond quarter of 2026 compared to the preceding quarter (14.2%8.9% annualized), net of runoff and sales, mostly driven by an increase in owned MSRs. For the six months, our average total servicing and subservicing UPB increased by $29.5$31.6 billion or 9.7%10.3% as compared to the prior year threesix months, net of runoff and sales, primarily driven by increases in our owned MSRMSRs and in subservicing. For comparison purposes, the total estimated industry mortgage debt outstanding increased 3.1%2.7% quarter over quarter (annualized) and 3.3%3.1% year over year (source: Mortgage Bankers Association (MBA) Mortgage Finance Forecast as of AprilJuly 20,22, 2026).

As of June 30, 2026 and March 31, 2026 and December 31, 2025,2026, the total servicing and subservicing UPB amounted to $338.4$341.4 billion and $328.3$338.4 billion, respectively, a net increase of $10.1$3.0 billion or 3.1%0.9% (12.3%3.6% annualized).

Our three benchmark rates above followed the decline in the federal funds rate in 2025, as displayed in the graph below. The Federal Reserve reduced its federal funds target rate a total of 50 basis points in the later part of 2025 (25 basis points in September and 25 basis points in December) resulting in increased activity in the origination market. In the firstsecond quarter of 2026, the Federal Reserve kept the federal funds rate unchanged. The 1-month SOFR largely followed the federal funds rate, as illustrated in the graph below, resulting in a 21 basis point decline (end of period) in the firstsecond quarter of 2026 as compared to a 442 basis pointpoints decline in the fourthfirst quarter of 2025.2026. The average 1-month SOFR declined 243 basis points quarter over quarter and declined 6567 basis points year over year.

As further illustrated in the below graph, the 10-year Treasury rate increased (1214 basis points) in the firstsecond quarter of 2026 compared to an increase of 212 basis points in the fourthfirst quarter of 2025,2026, and increased 26 basis points for the six months ended June 30, 2026 compared to a decrease of 3534 basis points during the firstsame quarterperiod of 2025. The 30-year fixed rate mortgage rate and the 10-year Treasury rate do not necessarily move in parallel. If the 10-year Treasury rate remains flat and the 30-year fixed mortgage rates decline this is referred to as mortgage spread tightening,tightening and may stimulate mortgage activity beyond the 10-year Treasury rate.

Another key driver of our Originations business is the overall mortgage origination market volume, that, in addition to interest rates, is sensitive to home sales and home prices and other macroeconomic conditions, such as gross domestic product and unemployment. We source a large part of our Originations volume from Correspondent lenderslenders, and the industry volume is a relevant benchmark. The following graphs present the industry origination volumes (in $ billions, average of the MBA and Fannie Mae data) in the current and comparative periods.

Source: MBA Mortgage Finance Forecast as of AprilJuly 20,22, 2026 and Fannie Mae Housing Forecast as of AprilJuly 13,10, 2026. In $ billions.

The average industry volume declinedgrew 7%4% quarter over quarter (Q1Q2 2026 vs Q4Q1 20252026), led by an increase in purchase activity offset by a reduction in purchase activity (vs. flat refinance activity),activity, and grew 44%12% year over year (Q1Q2 2026 vs Q1Q2 2025) driven by higher refinance originations as borrowers responded to a favorable interest ratesrate movements.environment. On a year-to-date basis (YTD), the average industry volume grew 26% in the six months ended June 30, 2026 as compared to the same period of 2025. Comparatively, our Originations volume growth (funded volume of Correspondent and Consumer Direct) outpaced the industry yearfor overall year,periods presented, as summarized below:

Results of operations for the firstsecond quarter of 2026

•Net incomeloss attributable to common stockholders of $7$13 million, or $0.78$1.53 per share basic and $0.74 diluted

Financial condition at MarchJune 31,30, 2026

In November 2025, OMC agreed to sell at book value its entire HECM loan portfolio and HMBS related borrowings to FAR and subservice the sold portfolio and additional loans from FAR for an initial three-year term. FAR agreed to acquire OMC’s originations pipeline of reverse mortgage loansloans, and assumefor somea period of OMC’sfive U.S.years, basedOMC will no longer originate reverse originationsmortgages employees.upon OMCclosing agreedwith the exception of activities relating to discontinuethe itsrecapture reverseof originationsexisting businessHECM uponborrowers closing.for HECM MSRs not sold to FAR. On April 30, 2026, OMC and FAR entered into an amendment of the November 2025 sale agreements whereby OMC has agreed to sell a portion of its reverse MSRs comprised of approximately 20,000 Ginnie Mae HECM loansloans. with UPB of $5.1 billion ($5.5 billion fair value) as of March 31, 2026. Under theThe amended agreements,transaction OMCwas willapproved discontinueby itsGinnie reverseMae originations business upon closing with the exception of activities relating to the recapture of existing HECM borrowers for any HECM MSRs not transferred to FAR. FAR expects to assume certain of OMC’s US-based reverse originations employees inon May 28, 2026 and additionalclosed employeeson inJune July30, 2026. The closingAs of the amendedclosing transaction is expected to occur indate, the thirdsold quarterbalances ofincluded 2026,$5.6 billion securitized assets ($5.2 billion UPB), the associated $5.5 billion HMBS-related borrowings (or net $70 million reverse MSR), and approximately $57 million newly originated reverse loans and tails pending securitization. The final purchase price is subject to Ginniea Mae's60-day approvaladjustment andperiod, customaryfollowing the closing conditions.date of the transaction. See Note 5 - Reverse Mortgages and Note 23 – Subsequent Events for additional information.

Onity reported $7.6an $11.9 million of net incomeloss in the firstsecond quarter of 2026, compared to net income of $127.2$7.6 million in the fourthfirst quarter of 2025,2026, reflecting a steady$23.0 million decline in income before income taxes and a $119.8$3.5 million declineincrease in income tax benefit quarter over quarter. The following discusses certain notable changes:

•$10.3$1.5 million higher loss on MSR valuation adjustments, net with a $6.8$1.2 million unfavorable change in input and assumption updates, net of hedges, largelyprimarily driven by higherthe prepaymentunfavorable speedsimpact caused by significant intra-quarter marketfrom interest rate decline,changes, net of hedging, largely offset by less unfavorable valuation input and $3.6assumption millionupdates higher runoff dueattributed to portfolioreflect growth.slower prepayment speeds.

Total revenue for the three months ended June 30, 2026 decreased $11.4 million, or 4% compared to the three months ended March 31, 2026 increasedmostly $4.3due to the $4.6 million, or 1%9% compared to the three months ended December 31, 2025 due to a $2.2 million, or 1% increasedecrease in ServicingOriginations revenue and a $2.0$6.7 million, or 4%3% increasedecrease in OriginationsServicing revenue.

•The $2.2$6.7 million increasedecrease in Servicing revenue is mostlyprimarily due toa largely$12.0 offsettingmillion factors.decrease in Gain on reverse loans and HMBS-related borrowings, net increased $9.1 millionnet, mostly driven by less favorable yield spread tightening.tightening Offsettingand unfavorable input and assumption changes, including related to the FAR transaction. Partly offsetting this increase, Gain on loans held for sale, net declined $4.0 million largely due to losses on reverse mortgage buyouts, anddecrease, Servicing and subservicing fees decreasedincreased $2.7$6.9 million driven by lowerincreased float earnings partly offset byand higher servicing fees due to MSR growth (4% increase in average servicing UPB).

Compared to the threesix months ended MarchJune 31,30, 2025, total revenue for the threesix months ended MarchJune 31,30, 2026 was $44.5$80.8 million, or 18%16% higher, due to a $25.3$45.0 million, or a 88%77% increase in Originations revenue, and a $19.2$35.8 million, or 9%8% increase in Servicing revenue.

The $69.0$70.5 million loss on MSR valuation adjustments, net for the three months ended MarchJune 31,30, 2026 is comprised of $53.4$53.7 million runoff, $12.5$17.2 million fair value gain attributable to input and assumption changes and $28.1$34.0 million loss on MSR hedging derivatives. The $10.3$1.5 million higher loss in MSR valuation adjustments, net as compared to the three months ended DecemberMarch 31, 20252026 is primarily due to an$10.1 million from the unfavorable changeimpact of interest rate changes, net of hedge activity, compared to a favorable impact in the first quarter of 2026, largely offset by less unfavorable valuation input and assumption updates,updates netto ofreflect hedges, largely driven by higherslower prepayment speeds causedin bythe significantcurrent intra-quarter market interest rate decline, and higher runoff due to portfolio growth.quarter.

•MSRs are subject to runoff, a fair value decline due to the realization of expected cash flows and yield based on projected borrower behavior, including scheduled amortization of the loan UPB together with projected voluntary and involuntary prepayments. TheRunoff unfavorablewas $3.6mostly flat as compared to the preceding quarter ($0.2 million higher) runoff quarter-over-quarter is mostly due toas the impact of owned MSR portfolio growth.growth was offset by the favorable impact of market rates.

•The $12.5$17.2 million fair value gain due to input and assumption changes is mostly attributed to a favorable change in market rates as the 10-year Treasury rate increased 1214 basis points in the firstsecond quarter of 2026 and assumptionrevaluation updatesgains toin reflectour marketOriginations trade pricing levels,segment, partially offset by certain unfavorable assumption updates to reflect continued increased prepayment speeds in the current quarter caused by significant intra-quarter market rate decline. The increase from a $4.9 million fair value gaindecline in the fourthfirst quarterand second quarters of 2025the tocurrent ayear. $12.5The $4.7 million fairincrease valuein the gain inas compared to the first quarter of 2026 is mainly driven by a more favorable change in market rates and a less unfavorable impact of change in delinquency, partially offset by more unfavorable input and assumption updates recognized in the first quarter of 2026attributed to reflect increasedmarket prepaymenttrade speeds.pricing levels.

•MSR hedging derivative fair value gains or losses are designed to partially offset the expected fair value changes of the net MSR, MSR pledged liabilities and ESS exposure, commensurate with our target hedge coverage ratio. The $28.1$34.0 million derivative loss recognized in the three months ended MarchJune 31,30, 2026 and the variance from the prior quarter are driven by interest rate changes as we maintained a high hedge coverage ratio in both quarters. Also refer to Item 3. Quantitative and Qualitative Disclosures About Market Risk for further detail on our hedging strategy and its effectiveness.

The $30.1$139.5 million loss on MSR valuation adjustments, net for the six months ended June 30, 2026 is comprised of $107.1 million runoff, $29.6 million fair value gain attributable to input and assumption changes and $62.0 million loss on MSR hedging derivatives. The $73.3 million higher loss in MSR valuation adjustments, net in the three months ended March 31, 2026 as compared to the threesix months ended MarchJune 31,30, 2025 is primarily driven by unfavorable assumption updates recognized in the first quarterhalf of 2026 to(vs. reflectfavorable increasedupdates prepaymentin speedsthe same period of 2025) and higher realization of cash flows mostly due to MSR portfolio growth,flows, partly offset by the$28.2 million in favorable impact of interest rate changes, net of hedge activity,activity in the first half of 2026 as compared to anthe unfavorablesame impactperiod infor the threeprior months ended March 31, 2025.year.

•The change from a $20.8$15.3 million gain from derivatives in the threesix months ended MarchJune 31,30, 2025 to a $28.1$62.0 million loss in the threesix months ended MarchJune 31,30, 2026 is mainly due to the market interest rate changes noted above. During the threesix months ended MarchJune 31,30, 2025, our HECM MSR was part of the overall interest-rate sensitive MSR portfolio. Effective in the fourth quarter of 2025, our HECM MSR is hedged with dedicated third-party derivative instruments, and the related gain/loss is reported in Gain on reverse loans and HMBS-related borrowings, net.

Compensation and benefits expense for the three months ended MarchJune 31,30, 2026 decreasedwas $1.2flat million, or 2%as compared to the three months ended DecemberMarch 31, 2025,2026, due to a $5.3$2.5 million decreaseincrease in incentive compensation expenseexpense, (mostly adriven decreaseby an increase in the fair value of cash-settled share-based awards driven by our stock price (1% increase in our stock price during the three months ended June 30, 2026 vs. a 14% decrease in the comparative period)., as well as an increase in equity-settled awards expense. The decreaseincrease in incentive compensation was partlylargely offset by a $2.7$1.9 million increasedecrease in severance,severance includingand $1.0 million decrease in salaries and benefits, mostly in our Servicing segment in connection with Rithm’s decision to not renew its subservicing agreements effective January 31, 2026, and higher commissions in our Originations segment mostly due to higher Consumer Direct production volume.2026.

Compared to the threesix months ended MarchJune 31,30, 2025, Compensation and benefits expense for the threesix months ended MarchJune 31,30, 2026 increased $12.2$21.1 million, or 21%,18%, largely due to aan $5.2$8.6 million increase in commissions due to higher Originations production volume in both channels, and an $8.2 million increase in salaries and benefits with an increase in headcount withinin the Originations and Corporate segments to support and accelerate business growth, partly offset by a decrease in the Servicing segment attributable to anthe effectiveRithm costsubservicing discipline,agreements termination, runoff of our reverse subservicing portfolio, lower delinquencies, and afurther $4.4efficiency milliongains increasewithin inforward commissions due to higher Originations production volume in both the Consumer Direct and Correspondent channels.servicing. In addition, severance expense increased $2.7$3.7 millionmillion, including related to the termination of our subservicing agreements with Rithm as discussed above.above and the FAR transaction. While our total average headcount declined 2%,3%, driven by a 4%5% decrease in offshore average headcount, our U.S. average headcount increased 5%.4%.

Compared to the threesix months ended MarchJune 31,30, 2025, Servicing and origination expense for the threesix months ended MarchJune 31,30, 2026 increased $5.5$15.6 million or 42%60% due to a $3.5$10.8 million increase in Servicing expense and $2.2$4.9 million higher Originations expense. The increase in Servicing expense is primarily driven by a $3.3$6.8 million increase in satisfaction and interest on payoff expense due to higher payoff volume.volume, and increased indemnification provision expense as discussed above. The $2.2 million increase in Originations expense is primarily due to higher production volume.volume and unfavorable demand and resolution activities compared to six months ended June 30, 2025.

Technology and communication expense for the three months ended MarchJune 31,30, 2026 was flat as compared to the three months ended DecemberMarch 31, 2025.2026. Compared to the threesix months ended MarchJune 31,30, 2025, Technology and communication expenses for the threesix months ended MarchJune 31,30, 2026 increased $2.5$4.9 million or 17%16% primarily driven by higher Servicing and Originations volume and our technology initiatives (including robotic process automation, digitization and machine learning / artificial intelligence).

Professional services expense for the three months ended MarchJune 31,30, 2026 decreasedincreased $3.6$1.9 million compared to the three months ended DecemberMarch 31, 2025 with a $2.8 million decline in legal expenses2026 primarily attributed to ourcertain accrualcorporate fordevelopment probable losses in connection with the settlement of a legacy litigation matter in the fourth quarter of 2025.initiatives.

Compared to the threesix months ended MarchJune 31,30, 2025, Professional services expense for the threesix months ended MarchJune 31,30, 2026 decreasedwas $7.9 million, mostlyflat driven by a $10.7$4.3 million increase in other professional services primarily driven by an increase in call center volume in connection with the Rithm servicing transfer largely offset by a $3.9 million decline in legal expenses,expenses. The decline in legal expenses is primarily attributed to our accrual for probable losses in connection with the settlement of a legacy litigation matter in the first quarter of 2025.2025, offset in part by lower recoveries of prior years’ legal expenses in the first half of 2026.

We conduct periodic evaluations of positive and negative evidence to determine whether it is more likely than not that the deferred tax asset can be realized in future periods. In these evaluations, we give more significant weight to objective evidence, such as our actual financial condition and historical results of operations, as compared to subjective evidence, such as projections of future taxable income or losses. As of MarchJune 31,30, 2026, we believe that the weight of the positive evidence outweighs the negative evidence regarding the realization of our U.S. federal and certain state deferred tax assets. The release of a significant portion of the valuation allowance against our U.S jurisdiction deferred tax assets at December 31, 2025 resulted in a $120.1 million income tax benefit in the fourth quarter of 2025. As of MarchJune 31,30, 2026, for certain U.S. state net operating losses and interest expense disallowance carryforwards, we believe the weight of the negative evidence continues to outweigh the positive evidence regarding the realization of these state deferred tax assets and as a result are not considered to be more likely than not realizable; therefore, we have maintained a valuation allowance against these assets.

Our income tax expenseprovision or benefit for the threeinterim period is determined based on an estimated annual effective tax rate, adjusted for discrete items. Our income tax benefit for the six months ended MarchJune 31,30, 2026 is primarily driven by the jurisdictional mix of our earnings,earnings and includes a full quarter of income tax expense attributed to the U.S. jurisdiction whereas in the priorsix yearmonths firstended quarterJune 30, 2025 no such U.S. jurisdiction income tax expense was recognized due to a full valuation allowance against U.S. federal deferred tax assets. The income tax benefit of $119.5 million for the three months ended December 31, 2025 primarily resulted from the $120.1 million release of valuation allowances against U.S. federal and certain state deferred tax assets. The increase in the effective tax rate for the threesix months ended MarchJune 31,30, 2026 compared to the same period of 2025 is primarily due to recognizingthe accrual of taxes in 2026 in the U.S. jurisdiction due to the removal of a significant portion of our U.S. valuation allowance at December 31, 2025 as well as the $13.3 million of income tax benefit ofrecognized $13.3 million related toduring the reversalsix months ended June 30, 2025 from the favorable resolution of thean uncertain tax liability during the first quarter of 2025.position.

Total assets increaseddecreased $1,565$3,820 million, or 10%,24%, between December 31, 2025 and MarchJune 31,30, 2026 primarily due to the decline in Reverse loans, pooled into HMBS, partly offset by the growth in Loans held for sale and MSRs,MSRs. partlyTotal offsetReverse byloans, pooled into HMBS declined $6,167 million mostly in connection with the declinesale of reverse MSRs comprised of approximately 20,000 Ginnie Mae HECM loans and the HMBS related borrowings to FAR in a transaction which closed on June 30, 2026. The sold loans, which had a carrying value of $5,630 million were classified as Reverse loans held for sale, pooled into HMBS. OurThe portfolioreverse ofloans Loansnot sold in the amended FAR transaction were reclassified as Reverse loans held for saleinvestment, increasedpooled $1,258into millionHMBS. mostlyIn drivenaddition byto the growth of our Originations pipeline, and our MSR portfolio increased $201 million mostly due to $298 million MSR additions and partly offset by $72 million runoff. The $211 million decline insale, reverse loans wasdeclined drivendue byto the runoff of the portfolio exceeding fair value gains and originations since the acquisition of the $2.9 billion portfolio of reverse mortgage loans from Waterfall in November 2024 that is relatively more aged (faster runoff). See Note 5 - Reverse Mortgages for additional information. In addition, servicing advances declined $52$114 million largely driven by seasonal reduction of taxes and insurance (T&I) balances and lower delinquencies. Receivables,Our netportfolio of Loans held for sale increased $175$1,710 million mostly driven by the growth of our Originations pipeline and the acquisition of reverse mortgage buyouts. Our MSR portfolio increased $383 million mostly due to $598 million MSR additions, partly offset by $144 million runoff and the derecognition of $106 million of MSRs and the related Pledged MSR liability associated with other MSR capital partners with a temporaryUPB increaseof in$5.9 government-insuredbillion loanas claimsMSR (reversesale mortgages)accounting criteria were met on June 30, 2026. Restricted cash increased $112 million primarily attributed to facilitatedebt aservice changeaccounts inrelated ourto financingOLIT strategy, andNotes. Contingent loan repurchase asset increased $106$103 million due to higher Ginnie Mae delinquencies driven by changes to the FHA modifications program and by the government shutdown in 2025.2025, and Other assets increased $91 million mostly due to an increase in REO in connection with reverse mortgage buyouts.

Total stockholders’ equity increaseddecreased $1.3$18.1 million during the threesix months ended MarchJune 31,30, 2026 mostly due to $7.6 million net income for the period and $0.8 million compensation related to equity-classified awards, largely offset by $6.1$12.0 million repurchases of our common stockstock, $4.2 million net loss, and $1.0$2.1 million dividends on preferred stock.

(1) Loan acquisitions are generally servicing released, meaning cash outflows include the servicing rights component of the acquired loans. Most of our loan sales, however, are servicing retained, meaning the cash proceeds we receive exclude the value of the servicing rights we retain. As a result, originated MSRs (OMSRs) generated operating cash outflows of $105$261 million and $61$143 million in the threesix months ended MarchJune 31,30, 2026 and 2025, respectively. We generally finance these new OMSRs along with purchased MSRs (those reflected as investing cashflows) with MSR financing facilities at advance rates up to 70%.

Cash flows for the threesix months ended MarchJune 31,30, 2026

Our operating activities used $1,590$2,106 million of cash during the period, with $1,561$2,265 million net cash paid on loans held for sale and $51$157 million interest paid, partly offset by $133 million net collections of servicing advances and $184 million other net operating cash outflows, partly offset by $78 million net collections of servicing advances.inflows. The $1,561$2,265 million net cash paid on loans held for sale is attributed to the growth of the pipeline with loan production volume exceeding sales, $173$277 million net HECM reverse mortgages originations during the threesix months ended MarchJune 31,30, 2026 (previously reported within investing activities section), $105$261 million originated MSRs, and the acquisition of $290$839 million reverse buyouts (securitized with our OLIT program). The period over period increase is mostly driven by higher originated MSRs and loan production volume, net HECM reverse mortgages originations (previously reported within investing activities), as well as the acquisition of reverse buyouts during the threesix months ended MarchJune 31,30, 2026. The $78$133 million net collections of servicing advances waswere mostly driven by seasonality and lower delinquencies.