RITM 10-K & 10-Q changes, risk factors and insider trading
Rithm Capital Corp. (also RITM-PA, RITM-PB, RITM-PC, RITM-PD, RITM-PE, RITM-PF) · NYSE · Real Estate Investment Trusts · CIK 1556593 · All filings on SEC.gov
At a glance
What changed in the latest 10-K
Risk Factors
New heading “Our business model exposes us to complex operational risks across multiple businesses and asset classes.”
New heading “The valuation of certain of our assets and investments requires significant judgment and is based on various assumptions, and changes in, or the use of incorrect, valuation assumptions could materially adversely affect our business, financial condition, cash flows, results of operations and/or fee revenues.”
New heading “Government intervention in the mortgage and credit markets may create uncertainty, lead to increased volatility and impact liquidity of certain mortgage products and could adversely affect our business, financial condition and/or results of operations.”
New heading “The geographic distribution of the loans underlying, and collateral securing, certain of our investments subjects us to geographic real estate market risks, including environmental risks, which could adversely affect the performance of our investments, our results of operations and financial condition.”
New heading “Market and political conditions could negatively impact our business, results of operations, cash flows and/or financial condition.”
New heading “The residential mortgage loans underlying the securities we invest in and the loans we originate and/or directly invest in are subject to delinquency, foreclosure and loss, which could result in losses to us.”
New heading “Certain vendors we engage have operations in foreign jurisdictions that could be adversely affected by political, economic, regulatory or other conditions.”
New heading “Risks Related to Origination and Servicing”
New heading “The servicing of residential mortgage loans subjects certain of our subsidiaries to various operational risks that could have a negative impact on our financial results.”
New heading “A substantial portion of our loan originations is sourced through correspondent sellers and disruptions in this channel could adversely affect our business.”
New heading “A failure to maintain minimum servicer ratings could have an adverse effect on our business, financing activities, financial condition and/or results of operations.”
New heading “Our introduction of new underwriting programs involving digital assets could subject us to increased regulatory, market and operational risks.”
New heading “Our servicing operations will become dependent on a single third-party SaaS provider, which exposes us to operational, technological and vendor concentration risks.”
New heading “Risks Related to Our Residential Transitional Lending Business”
New heading “The RTLs in which we may invest may be subject to a greater risk of loss than conventional mortgage loans.”
New heading “Risks Related to Our Asset Management Business”
New heading “Our asset management business involves certain risks, which could adversely affect our business, financial condition and/or results of operations.”
New heading “We may be unable to successfully integrate either the Paramount or Crestline businesses and realize the anticipated benefits of either or both the Paramount Acquisition and the Crestline Acquisition.”
New heading “The Paramount Acquisition provides greater exposure to risks in the commercial real estate industry.”
New heading “We may not have discovered undisclosed liabilities of each of Paramount or Crestline during our due diligence processes.”
New heading “All of the assets acquired in the Paramount Acquisition (the “Paramount Assets”) are located in New York City and San Francisco, and adverse economic or regulatory developments in these areas could negatively affect our results of operations and/or our financial condition.”
New heading “Rithm may be unable to renew leases, lease currently vacant space or vacating space on favorable terms or at all as leases expire, which could adversely affect its value and negatively affects our results of operations and/or financial condition.”
New heading “Joint venture partners in 712 Fifth Avenue, One Market Plaza and 300 Mission Street have forced sale rights as a result of which we may be forced to sell these assets to third parties at times or prices that may not be favorable to us.”
New heading “The Paramount Assets are exposed to risks associated with property redevelopment and repositioning that could adversely affect it.”
New heading “Our sponsorship of and investment in Rithm Acquisition Corp. may expose us to increased risks and liabilities.”
New heading “Risks Related to Our Investment Portfolio”
New heading “A failure by any or all of the members of Advance Purchaser LLC (“Advance Purchaser”) to make capital contributions for amounts required to fund servicer advances could result in an event of default under our advance facilities and a complete loss of our investment.”
New heading “Increased focus on sustainability, including environmental, social and governance (ESG) issues and climate change and related regulations, may adversely affect our business and financial results and damage our reputation.”
Removed heading “We may not be able to successfully operate our business strategy or generate sufficient revenue to make or sustain distributions to our stockholders.”
Removed heading “The value of our investments, including the valuation methodologies used for certain assets in our funds, is based on various assumptions that could prove to be incorrect and could have a negative impact on our financial results.”
Removed heading “Prepayment and Delinquency Exposure”
Removed heading “Recapture Agreement Limitations”
Removed heading “Illiquid Asset Valuation Uncertainties”
Removed heading “The servicing of residential mortgage loans subjects certain of our subsidiaries and our Servicing Partners to various operational risks that could have a negative impact on our financial results.”
Removed heading “A bankruptcy of any of our Servicing Partners could materially and adversely affect us.”
Removed heading “A sale of MSRs or interests in MSRs and servicer advances or other assets, including loans, could be re-characterized as a pledge of such assets in a bankruptcy proceeding.”
Removed heading “If such a recharacterization occurs, the validity or priority of our security interest in the MSRs or interests in MSRs and servicer advances or other assets could be challenged in a bankruptcy proceeding of such servicer.”
Removed heading “Payments made by a servicer to us could be voided by a court under federal or state preference laws.”
Removed heading “Payments made to us by such servicer, or obligations incurred by it, could be voided by a court under federal or state fraudulent conveyance laws.”
Removed heading “Additionally, any bankruptcy proceeding of one of our Servicing Partners could create the following risks:”
Removed heading “We may not be able to successfully execute on our strategy, and any acquisitions or dispositions of assets or financing or other transactions that we pursue may not be successfully consummated or consummated on favorable terms.”
Removed heading “Increased focus on environmental, social and governance (ESG) issues, including climate change and related regulations, may adversely affect our business and financial results and damage our reputation.”
Removed heading “A failure to maintain minimum servicer ratings could have an adverse effect on our business, financing activities, financial condition or results of operations.”
Removed heading “The geographic distribution of the loans underlying, and collateral securing, certain of our investments subjects us to geographic real estate market risks, which could adversely affect the performance of our investments, our results of operations and financial condition.”
Removed heading “The value of our interests in MSRs, servicer advances, residential mortgage loans, business purpose loans, and RMBS may be adversely affected by deficiencies in servicing and foreclosure practices, as well as related delays in the foreclosure process.”
Removed heading “A failure by any or all of the members of Advance Purchaser LLC to make capital contributions for amounts required to fund servicer advances could result in an event of default under our advance facilities and a complete loss of our investment.”
Removed heading “The residential mortgage loans underlying the securities we invest in and the loans we directly invest in are subject to delinquency, foreclosure and loss, which could result in losses to us.”
Removed heading “Market conditions could negatively impact our business, results of operations, cash flows and financial condition.”
Removed heading “Certain vendors have operations in India that could be adversely affected by changes in political or economic stability or by government policies.”
Removed heading “The exercise of cleanup calls could negatively impact our interests in MSRs.”
Removed heading “We face significant competition in the leasing market for quality residents, which may limit our ability to lease our SFR homes on favorable terms.”
Removed heading “Joint venture investments could be adversely affected by our lack of sole decision-making authority, our reliance on co-venturers' financial condition, and disputes between us and our co-venturers and could expose us to potential liabilities and losses.”
Removed heading “A significant portion of our SFR costs and expenses are fixed, and we may not be able to adapt our cost structure to offset declines in our revenue.”
Largest changes
“Changes in market conditions, borrower behavior, asset performance or the availability of market data, as well as differences between our assumptions and actual outcomes, could result in material changes to asset valuations, earnings volatility, reduced fee income, impairment charges or adverse impacts on liquidity, leverage ratios and regulatory or contractual compliance. …”see in full comparison
“•declines in the financial condition of Paramount’s tenants, many of which are financial, legal and other professional firms, which may result in tenant defaults under leases due to bankruptcy, lack of liquidity, operational failures or other reasons;”see in full comparison
“Additionally, loss mitigation techniques are an obligation of the servicer and intended to reduce the probability that borrowers will default on their loans and to minimize losses when defaults occur, and they may include the modification of mortgage loan rates, principal balances and maturities. …”see in full comparison
“Additionally, loss mitigation techniques are an obligation of the servicer and intended to reduce the probability that borrowers will default on their loans and to minimize losses when defaults occur, and they may include the modification of mortgage loan rates, principal balances and maturities. If the servicer fails to adequately perform its loss mitigation obligations, we could be required to make or purchase, as applicable, servicer advances in excess of those that we might otherwise have had to make or purchase and the time period for collecting servicer advances may extend. …”see in full comparison
“In the ordinary course of business, servicers, including Newrez and our Servicing Partners, MSRs and servicer advances are each subject to numerous legal proceedings, federal, state or local governmental examinations, investigations or enforcement actions which could adversely affect their reputation and their liquidity, financial position and results of operations. …”see in full comparison
“Servicers, including our Servicing Partners, have faced, and may continue to face, increased delays and costs in the foreclosure process. For example, the current legislative and regulatory climate could lead borrowers to contest foreclosures that they would not otherwise have contested under ordinary circumstances, and servicers may incur increased litigation costs if the validity of a foreclosure action is challenged by a borrower. …”see in full comparison
Full comparison: every changed paragraph (361)
Investing in our stocksecurities involves a high degree of risk. You should carefully read and consider the following risk factorsfactors, andtogether allwith the other information contained in this report.Annual IfReport. anyAny of the following risks, as well as additional risks and uncertainties not currently known to us or that we currently deem immaterial, occur,could materially and adversely affect our business, financial conditioncondition, cash flows or results of operations could be materially and adversely affected. The risk factors summarized below are categorized as follows: (i) Risks Related to Our Business, (ii) Risks Related to the Financial Markets and Our Regulatory Environment, (iii) Risks Related to Our Financing Arrangements, (iv) Risks Related to Our Taxation as a REIT, (v) Risks Related to Our Stock and (vi) General Risks. However, these categories do overlap and should not be considered exclusive.operations.
We may not be able to successfully operate our business strategy or generate sufficient revenue to make or sustain distributions to our stockholders.
We cannot assure you that we will be able to successfully operate our business or implement our operating policies and strategies. There can be no assurance that we will be able to generate sufficient returns to pay our operating expenses, satisfy our debt obligations and pay dividends to our stockholders. Additionally, we may initiate new business activities or expand existing business activities, which could expose us to new risks and regulatory compliance requirements. Our results of operations and our ability to make or sustain distributions to our stockholders depend on several factors, including the availability of opportunities to acquire attractive assets or make attractive investments, the performance of our funds, our ability to integrate acquired businesses, the level and volatility of interest rates, the performance of our origination and servicing businesses, the availability of adequate short- and long-term financing and conditions in the real estate market, the financial markets and economic conditions.
The value of our investments, including the valuation methodologies used for certain assets in our funds, is based on various assumptions that could prove to be incorrect and could have a negative impact on our financial results.
When we make investments, we base the price we pay on, among other things, our projection of the cash flows from the investments. We generally record such investments on our balance sheet at fair value and measure their fair value on a recurring basis. Our projections of the cash flows from our investments, and the determination of the fair value thereof, are based on assumptions about various factors, including, but not limited to:
•expected and historical trends;
•rates of prepayment and repayment of the underlying loans;
•potential fluctuations in prevailing interest rates and credit spreads;
•rates of delinquencies and defaults, and related loss severities;
•costs of engaging a subservicer to service MSRs;
•market discount rates;
•recapture rates (for Excess and Full MSRs); and/or
•amount and timing of servicer advance and recoveries (for servicer advance investments and servicer advance receivables).
Our assumptions could differ materially from actual results. The use of different estimates or assumptions in connection with the valuation of these investments could produce materially different fair values, which could have a material adverse effect on our consolidated financial position and results of operations. A valuation is only an estimate of value and is not a precise measure of realizable value. Ultimate realization of the market value of a private asset depends to a great extent on economic and other conditions beyond our control. Valuations do not necessarily represent the price at which a private investment would sell, as market prices of private investments can only be determined by negotiation between a willing buyer and seller. The ultimate realization of the value of our investments may be materially different than the fair values reflected in our consolidated financial statements.
Significant and widespread decreases in the fair values of our assets could result in:
•impairment of goodwill or indefinite-lived intangible assets;
•breaches of financial covenants under borrowing facilities (related to liquidity, net worth, or leverage);
•immediate repayment obligations under these facilities and other credit agreements ;
•cross-defaults under other debt agreements or facilities
•constrain dividend distributions;
•limit capital-raising initiatives; and/or
•require financial restatements, eroding investor confidence.
While we may engage in discussions with financing counterparties regarding covenant breaches, there is no assurance they would negotiate terms or agree to amendments. A sustained reduction in cash flows could materially impair our ability to pay dividends to stockholders at expected levels or at all. Significant decrease in fair value could cause regulatory inquiries into financial reporting practices.
Prepayment and Delinquency Exposure
Our expectation of prepayment rates is a significant assumption underlying our cash flow projections. Prepayment rate is the measurement of how quickly borrowers pay down the UPB of their loans or how quickly loans are otherwise brought current, modified, liquidated or charged off. A significant increase in prepayment rate may materially reduce ultimate cash flows and/or interest income, potentially resulting in fair value write-downs. This decrease in fair value of investments could exceed acquisition costs or require non-cash charges that negatively impact financial results.
Delinquency rates also have a significant impact on the value of our investments. Increases in borrower delinquencies defer MSR revenue since it limits current collections to performing loans, strain servicer advance financing capacity (necessitating additional financing on unfavorable terms), and accelerate loss severities in RMBS or loan portfolios. Sustained delinquency spikes diminish portfolio fair values, reduce recoveries on servicer advances, and may trigger foreclosure-related decreases in interest income.
Recapture Agreement Limitations
We are party to several “recapture agreements” with Servicing Partners whereby our MSR or Excess MSR is retained if the applicable Servicing Partner originates a new loan using proceeds to repay a loan underlying an existing MSR/Excess MSR in our portfolio. While these agreements aim to mitigate prepayment impacts from rising voluntary prepayment rates, there are no assurances counterparties will meet contractual recapture targets or that such arrangements will apply to future MSR/Excess MSR investments.
Failure to meet anticipated recapture targets could significantly reduce servicing cash flows on affected pools, materially adversely impacting the value of our MSR/Excess MSR investments and, consequently, our business, financial condition, results of operations, and cash flows. These agreements apply exclusively to MSRs and Excess MSRs, with no comparable arrangements for other portfolio assets.
Current recapture targets for active agreements are disclosed in Note 19 to our consolidated financial statements . There are no guarantees counterparties will enter into similar arrangements for future investments in MSRs or Excess MSRs.
Illiquid Asset Valuation Uncertainties
We, and our funds, invest in various assets for which there is no active market. In addition to the assumptions detailed above, our valuations for non-market-traded assets could incorporate:
•third-party bid/ask price evaluations (including executable quotes from market participants);
•stress-tested cash flow projections under multiple economic scenarios;
•sector-specific risk assessments accounting for industry distress;
•trading prices of comparable publicly traded financial instruments; and/or
•restrictions on transferability and marketability discounts.
The absence of active secondary markets creates challenges, particularly for investments in distressed sectors subject to rapid value deterioration from company-specific or industry developments. Realizations at values significantly lower than carrying amounts could result in:
•losses for applicable funds;
•declines in management fees and loss of potential incentive income;
•investor redemptions and litigation risks; and/or
•regulatory scrutiny of valuation methodologies, policies, and disclosures.
The servicing of residential mortgage loans subjects certain of our subsidiaries and our Servicing Partners to various operational risks that could have a negative impact on our financial results.
Certain subsidiaries of Rithm Capital perform various mortgage and real estate related services and have origination and servicing operations, which entail borrower-facing activities and employing personnel. Additionally, Rithm Capital engages various Servicing Partners, which are subject to many of the same risks.
The value of certain of our investments, including our interests in MSRs, is dependent on the satisfactory performance of servicing obligations by the related mortgage servicer or subservicer, as applicable. Our interests in MSRs relate to loans serviced or subserviced, as applicable, by us or by our Servicing Partners. As disclosed in Notes 5, 13 and 14 to our consolidated financial statements, certain of our Servicing Partners service and/or subservice a portion of our interests in MSRs. If any of these Servicing Partners is the named servicer of the related MSR, or if Newrez is the servicer, and is terminated, its servicing performance deteriorates, or in the event that any of them files for bankruptcy, our expected returns on these investments could be severely impacted.
The duties and obligations of mortgage servicers are defined through contractual agreements, generally referred to as Servicing Guides in the case of GSEs, the MBS Guide in the case of Ginnie Mae or pooling agreements, securitization servicing agreements, pooling and servicing agreements or other similar agreements (collectively, “PSAs”) in the case of Non-Agency RMBS (collectively, the “Servicing Guidelines”). The duties of the subservicers we engage, or, if we are engaged as subservicer, our duties, to service the loans underlying our MSRs are contained in subservicing agreements and may not be identical to the obligations of the servicer under Servicing Guidelines. Our interests in MSRs are subject to all of the terms and conditions of the applicable Servicing Guidelines. Servicing Guidelines generally provide for the possibility of termination of the contractual rights of the servicer in the absolute discretion of the owner of the mortgages being serviced (or the required bondholders in the case of Non-Agency RMBS). Under the Agency Servicing Guidelines, the servicer may be terminated by the applicable Agency for any reason, “with” or “without” cause, for all or any portion of the loans being serviced for such Agency. In the event mortgage owners (or bondholders) or an Agency terminate the servicer (regardless of whether such servicer is a subsidiary of Rithm Capital or one of its subservicers), the servicer’s right to service the related mortgage loans will be extinguished and the related interests in MSRs would under most circumstances lose all value on a go forward basis. Any recovery in such circumstances, in the case of Non-Agency RMBS, will be highly conditioned and may require, among other things, a new servicer willing to pay for the right to service the applicable residential mortgage loans while assuming responsibility for the origination and prior servicing of the residential mortgage loans. In the case of Agency MSRs, any payment received from a successor servicer will be applied first to pay the applicable Agency for all of its claims and costs, including claims and costs against the servicer that do not relate to the residential mortgage loans for which we own interests in the MSRs. A termination could also result in an event of default under our related financings. It is expected that any termination of a servicer by mortgage owners (or bondholders) would take effect across all mortgages of such mortgage owners (or bondholders) and would not be limited to a particular vintage or other subset of mortgages. Therefore, it is possible that all investments with a given servicer would lose all their value in the event mortgage owners (or bondholders) terminate such servicer. See “—We are not restricted from dealing with any particular counterparty or from concentrating any or all of our transactions with a few counterparties. We have significant counterparty concentration risk in certain of our Servicing Partners, and we rely on our Servicing Partners to achieve our investment objective for certain investments and have no direct ability to influence their performance.”
Additionally, loss mitigation techniques are an obligation of the servicer and intended to reduce the probability that borrowers will default on their loans and to minimize losses when defaults occur, and they may include the modification of mortgage loan rates, principal balances and maturities. If we or any of our Servicing Partners fail to adequately perform their loss mitigation obligations, we could be required to make or purchase, as applicable, servicer advances in excess of those that we might otherwise have had to make or purchase and the time period for collecting servicer advances may extend. Any increase in servicer advances or material increase in the time to resolution of a defaulted loan could result in increased capital requirements and financing costs for us and our co-investors and could adversely affect our liquidity and net income. In the event that one of our servicers from which we are obligated to purchase servicer advances is required by the applicable Servicing Guidelines to make advances in excess of amounts that we or, in the case of Mr. Cooper, the co-investors, are willing or able to fund, such servicer may not be able to fund these advance requests, which could result in a termination event under the applicable Servicing Guidelines, an event of default under our advance facilities and a breach of our purchase agreement with such servicer. As a result, we could experience a partial or total loss of the value of our servicer advance investments.
Favorable servicer ratings from third-party rating agencies, such as S&P Global Ratings (“S&P”), Moody’s Investors Service (“Moody’s”) and Fitch Ratings (“Fitch”), are important to the conduct of a mortgage servicer’s loan servicing business, and a downgrade in Newrez’s servicer rating, NRM’s servicer rating or a Servicing Partner’s servicer ratings could have an adverse effect on the value of our interests in MSRs and result in an event of default under our financings. Downgrades in servicer ratings could adversely affect our ability to finance our assets and maintain their status as an approved servicer by Fannie Mae and Freddie Mac. Downgrades in servicer ratings could also lead to the early termination of existing advance facilities and affect the terms and availability of financing that a Servicing Partner or we may seek in the future. Our or a Servicing Partner’s failure to maintain favorable or specified ratings may cause their termination as a servicer and may impair their ability to consummate future servicing transactions, which could result in an event of default under our financing for servicer advances and have an adverse effect on the value of our investments.
In the ordinary course of business, servicers, including Newrez and our Servicing Partners, MSRs and servicer advances are each subject to numerous legal proceedings, federal, state or local governmental examinations, investigations or enforcement actions which could adversely affect their reputation and their liquidity, financial position and results of operations. Mortgage servicers, including certain of our Servicing Partners, have experienced heightened regulatory scrutiny and enforcement actions, and our Servicing Partners could be adversely affected by the market’s perception that they could experience, or continue to experience, regulatory issues. If the Servicing Partner actually or allegedly failed to comply with applicable laws, rules or regulations, it could be terminated as the servicer, and could lead to civil and criminal liability, loss of licensing, damage to our reputation and litigation, which could have a material adverse effect on our business, financial condition, results of operations or cash flows. See “Risks Related to the Financial Markets and Our Regulatory Environment—Certain of our subsidiaries and Servicing Partners have been and are subject to federal and state regulatory matters and other litigation, which may adversely impact us.”
Additionally, servicers are subject to as various other risks, including, but not limited to those pertaining to:
AnyWe ofmay thenot foregoingbe risks,able amongto others,successfully execute our business strategy, which could haveadversely a material adverse effect onaffect our business, financial condition, cash flows and/or results of operations and liquidity.operations.
We cannot assure you that we will be able to successfully operate our business, including executing on our strategy to operate as a diversified investment and asset management platform focused on real estate, credit and financial services. This strategy depends on our ability to allocate capital effectively across operating businesses, balance sheet investments and fee-based asset management activities, integrate operating capabilities within our asset management businesses and adapt to changing market and regulatory conditions. Additionally, our results of operations depend on several factors in addition to our business strategy, including, but not limited to, the availability of opportunities to acquire attractive assets or make attractive investments, the efficient management and financing of those assets, the integration of acquired businesses, including Crestline and Paramount, our ability to attract and retain talent, our ability to respond to changes in interest rates and our ability to comply with complex regulatory requirements. There can be no assurance that our business strategy will be successful or that we will be able to generate sustainable or sufficient returns. Additionally, we are always evaluating strategic opportunities and, in connection, may initiate new business activities or expand existing business activities, which could expose us to new risks and regulatory compliance requirements. Any failure to execute on, or any impact of the foregoing on, our business strategy could materially and adversely affect our business, financial condition, cash flows or results of operations.
Our business model exposes us to complex operational risks across multiple businesses and asset classes.
We operate through multiple business segments, including (i) Origination and Servicing, (ii) Residential Transitional Lending, (iii) Asset Management and (iv) Investment Portfolio, and have increasingly undertaken business initiatives to expand the breadth of our operations and product offerings. Each of our business segments has distinct operational, market and regulatory risks, as further described in these risk factors. See “—Risks Related to Origination and Servicing; —Risks Related to Our Residential Transitional Lending Business; —Risks Related to Our Asset Management Business; and —Risks Related to Our Investment Portfolio.” Effectively and efficiently managing our business activities within an integrated platform increases operational complexity and execution risk in each segment and for the business as a whole. Failures in risk management, controls, systems, personnel or oversight for any reason in any segment could adversely affect other parts of our platform and result in operational disruptions, reputational harm, including the reduced ability to raise capital or grow AUM, financial losses or regulatory scrutiny. Any of these outcomes individually, or a combination of these outcomes, could materially and adversely affect our ability to execute our strategy and could have a material adverse effect on our, business, financial condition or results of operations.
The valuation of certain of our assets and investments requires significant judgment and is based on various assumptions, and changes in, or the use of incorrect, valuation assumptions could materially adversely affect our business, financial condition, cash flows, results of operations and/or fee revenues.
A significant portion of our assets and activities involve valuations that are not based on readily observable market prices and instead rely on models, estimates and assumptions in order to project the cash flows from our investments and determine the fair value thereof. Importantly, a valuation is only an estimate of value and is not a precise measure of realizable value. Such models, estimates and assumptions include, but are not limited to, assumptions about interest rates, discount rates, prepayment speeds, recapture rates, credit performance, liquidity, market spreads, historical and expected trends, operating costs and asset-level cash flows. Further, we and our funds invest in various assets for which there is no active market, and valuations for such non-market-traded assets could incorporate the use of third-party price evaluations, stress-tested cash flow projections, sector-specific risk assessment accounting, trading prices of comparable publicly traded instructions and/or restrictions on transferability and marketability discounts. Each of these inputs involve significant judgment and may not reflect the prices we could realize in an actual transaction, which could result in material valuation adjustments and adversely affect our financial results and fee revenues.
These valuation judgments affect assets and activities across each of our segments, including MSRs and servicer advance assets within Origination and Servicing; residential transition loans and related financing structures within Residential Transitional Lending; assets under management and performance-based fees within Asset Management; and residential mortgage loans, non-Agency RMBS, consumer loans, Excess MSRs, commercial real estate (“CRE”) investments and SFR properties within Investment Portfolio.
Our assumptions used in our valuations could differ materially from actual results. In some cases, the use of different estimates or assumptions could instead produce materially different fair values, which could have a material adverse effect on our consolidated financial position and/or results of operations.
Changes in market conditions, borrower behavior, asset performance or the availability of market data, as well as differences between our assumptions and actual outcomes, could result in material changes to asset valuations, earnings volatility, reduced fee income, impairment charges or adverse impacts on liquidity, leverage ratios and regulatory or contractual compliance. Such material changes could additionally impact our ability to distribute dividends, limit our capital-raising initiatives, result in cross-defaults under financing facilities and/or require financial restatements, eroding investor confidence. Ultimately, changes in valuations or incorrect valuations could have a material adverse effect on our business, financial condition, cash flows and/or results of operations.
Interests in MSRs are highly illiquid and may be subject to numerous restrictions on transfers, including, without limitation, the receipt of third-party consents. For example, the Servicing Guidelines (as defined below) of a mortgage owner may require that holders of Excess MSRs obtain the mortgage owner’s prior approval of any change of direct ownership of such Excess MSRs, and such approval may be withheld for any reason or no reason in the discretion of the mortgage owner. Moreover, we have not received and do not expect to receive any assurances from any GSEs that their conditions for the sale by us of any interests in MSRs will not change. Therefore, the potential costs, issues or restrictions associated with receiving such GSEs’ consent for any such dispositions by us cannot be determined with any certainty. Additionally, interests in MSRs may entail complex transaction structures and the risks associated with the transactions and structures are not fully known to buyers or sellers. As a result of the foregoing, we may be unable to locate a buyer at the time we wish to sell interests in MSRs. There is some risk that we would be required to dispose of interests in MSRs either through an in-kind distribution or other liquidation vehicle, which would, in either case, provide little or no economic benefit to us, or a sale to a co-investor in the interests in MSRs, which may be an affiliate. Accordingly, we cannot provide any assurance that we will obtain any return or any benefit of any kind from any disposition of interests in MSRs. We may not benefit from the full term of the assets and for the aforementioned reasons may not receive any benefits from the disposition, if any, of such assets.
Management's Discussion & Analysis (MD&A)
New heading “Market Conditions & Sector Performance”
New heading “Capital Markets & Investment Trends”
New heading “Ancillary Mortgage Services”
New heading “Operating Results”
New heading “Strategic Developments”
New heading “Assets Under Management”
New heading “Key Operating Metrics”
New heading “Private Credit and Commercial Mortgage Loans (Insurance Company Investments)”
New heading “Real Estate Impairment”
Removed heading “Investment Portfolio”
Removed heading “Residential Transitional Lending”
Removed heading “Asset Management”
Largest changes
“The evaluation of economic trends continues to be clouded due to the impact of the 43-day government shutdown in the fourth quarter of 2025 that led to some reports being cancelled or delayed. For the first three quarters of 2025, real gross domestic product (“GDP”) growth was approximately 2.5%, which was slightly ahead of the pace seen in 2024, and estimates for the fourth quarter of 2025 suggest another strong growth quarter. The unemployment rate was 4.4% in December 2025, which was unchanged from September 2025, but above the 4.1% reading for December 2024. …”see in full comparison
“The U.S. economy expanded at a solid rate during the fourth quarter of 2024 as real gross domestic product (“GDP”) rose an annualized 2.3%, which put real growth at 2.5% in 2024 versus 3.2% in 2023. Longer-term Treasury yields rose during both the fourth quarter and in 2024 with most of the increase due to higher real yields from Treasury Inflation Protected Securities (“TIPS”). …”see in full comparison
“Office: Office remains the clearest example of divergence. Trophy/amenitized product with strong location, liquidity and tenant quality is increasingly financeable, while commodity stock continues to face elevated vacancy, rollover risk and punitive refinancing terms. Distress is still working through the system, but the conversation has shifted from generalized capitulation to segmented outcomes—where building quality, capital plan and tenant mix determine whether a refinance is viable or a restructuring is inevitable. …”see in full comparison
“The U.S. CRE market ended 2025 in a more functional (if still bifurcated) state than it began. Price discovery advanced through the year as the refinancing cycle forced transactions, recapitalizations and extensions into the open—tightening bid-ask spreads in many property types even as stress remained concentrated in assets with structural demand impairment or near-term capital needs. …”see in full comparison
“We receive loan origination fees, or “points,” and we earned an average of 1.1% of the total commitment at origination as of December 31, 2024. These origination fees factor in the term of the loan, the quality of the borrower and the underlying collateral. In addition, we charge fees on past due receivables and receive reimbursements from borrowers for costs associated with services provided by us, such as closing costs, collection costs on defaulted loans and inspection fees. …”see in full comparison
Full comparison: every changed paragraph (284)
Management’s discussionDiscussion and analysisAnalysis of financialFinancial conditionCondition and resultsResults of operationsOperations (the “MD&A”) should be read in conjunction with the Consolidatedconsolidated Financialfinancial Statementsstatements and related notes thereto,included in this Annual Report on Form 10-K, as well as Part I, Item 1. “Business and with Part I, Item 1A. “Risk Factors.”
Management’sThe discussion and analysis of financial condition and results of operationsMD&A is intended to allow readers to view our business from management’s perspective by (i) providing materialprovide information relevant to an assessment of our financial condition and results of operations, including anthe evaluationquality and variability of theour amountearnings and certainty of cash flows; from operations and from outside sources, (ii) focusing the discussion ondiscuss material eventsevents, trends and uncertainties known to management that are reasonably likely to cause reported financial information not to be indicative ofaffect future operating results or future financial condition, including descriptionscondition; and amountsprovide ofcontext matters that are reasonably likely, based on management’s assessment, to have a material impact on future operations and (iii) discussingfor the financial statements and other statisticaldata datathat management believes willare enhancehelpful theto reader’san understanding of our financialbusiness condition,from changesmanagement’s in financial condition, cash flows and results of operations.perspective.
This section generally discusses 2025 and 2024 items and year-to-year comparisons between 2025 and 2024. Discussions of 2023 items and year-to-year comparisons between 2024 and 2023. Discussions of 2022 items and year-to-year comparisons between 2023 and 2022 that are not included in this Form 10-K can be found in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in Part II, Item 7. of our Amendment No. 1 on Form 10-K/A (the “Amended 2023 Form 10-K/A”) to our Annual Report on Form 10-K for the fiscal year ended December 31, 2023.2024.
Rithm Capital is a global asset manager focused on real estate, credit and financial services. RithmWe Capital isare a Delaware corporation thatand was formed as a limited liability company in September 2011 (commenced operations in December 2011) and, became a publicly traded entity on May 15, 2013. Since June 17, 2022, Rithm Capital has been structuredoperate as an internally managed REIT for U.S. federal income tax purposes.REIT.
We seek to generate long-term value for our investors by usingleveraging our investment expertise and operating capabilities to identify, acquire, manage and investseek into enhance the value of real estate relatedestate-related and other financial assets,assets. asOur wellplatform asintegrates offeringoperating broadercompanies, investment portfolios and asset management capabilities,activities inacross orderthe toresidential provide investors with attractive risk-adjusted returns. Our investment team is made up of individuals with deep experience in financial services andmortgage, real estate investing at both the institutional and operatingcredit company level.markets. Headquartered in New York City, Rithm Capital has a global presence with offices in London, Hong Kong, ShanghaiTokyo, Toronto and Tokyo.Abu Dhabi.
Our investments in residential real estate relatedestate-related assets include our equity interestinterests in operating companies,companies includingand leadinginvestments across the residential mortgage and real estate lifecycle. These include origination and servicing platforms heldoperated through wholly-ownedour subsidiaries,wholly owned subsidiaries Newrez and Genesis, as well as investments in SFR,SFR properties. We also own businesses providing, title, appraisal andappraisal, property preservation and maintenance businesses. Our real estate related strategy involves opportunistically pursuing acquisitions and seeking to establish strategic partnerships that we believe enable us to maximize the value of our investments by offering products and services related to the lifecycle of transactions that affect each mortgage loan and underlying residential property or collateral.services.
Our real estate-related strategy involves selectively pursuing acquisitions and strategic partnerships that we believe enhance the value of our investments by supporting products and services across the lifecycle of residential mortgage loans and the underlying residential properties or collateral.
The Asset Management segment includes our fee-based investment management activities conducted primarily through RAM. RAM operates its asset management activities through its wholly owned subsidiaries, including Sculptor, Crestline and the Rithm Advisers, which serve as investment advisers to a range of investment vehicles and managed accounts, including Rithm Property Trust and R-HOME, and generate primarily fee-based revenues. In addition, following our Paramount Acquisition, we own and operate a portfolio of Class A office properties in New York City and San Francisco, which are managed as part of our broader real estate platform. As of December 31, 2025, we had approximately $63 billion in assets under management (“AUM”).
For additional information regarding our investment guidelines, see Part I, Item 1. Business—“Investment Guidelines.”
In executing our strategy, from time to time, we explore, and will continue to explore, various opportunities to create value for our shareholders, which may include acquisitions and dispositions of assets, financing transactions (including equity or debt offerings by one or more of our subsidiaries), business combinations, a change in our tax status, spin-off transactions or other similar transactions. Among other opportunities, we believe there are additional growth opportunities in the direct lending, insurance, private equity and infrastructure spaces. Each of the potential transactions described above is subject to market conditions, regulatory considerations and other factors. There can be no assurances as to the timing of any such transaction or that a transaction will be completed at all.
Our Asset Management business primarily operates through our wholly-owned subsidiary, Sculptor, as well as through RCM Manager, which manages Rithm Property Trust pursuant to the Rithm Property Trust Management Agreement. Sculptor is a leading global alternative asset manager and provides asset management services and investment products across credit, real estate and multi-strategy platforms through commingled funds, separate accounts and other alternative investment vehicles. For more information about our investment guidelines, see Part I, Item 1. Business, “Investment Guidelines”.
As of December 31, 2024, we had approximately $46.0 billion in total assets and approximately $34.0 billion in AUM. We conduct our business through the following segments: Origination and Servicing, Investment Portfolio, Residential Transitional LendingLending, Asset Management and AssetInvestment Management.Portfolio.
Refer to Item 7A. “Quantitative and Qualitative Disclosures About Market Risk” for a discussion of interest rate risk and its impact on fair value.
The evaluation of economic trends continues to be clouded due to the impact of the 43-day government shutdown in the fourth quarter of 2025 that led to some reports being cancelled or delayed. For the first three quarters of 2025, real gross domestic product (“GDP”) growth was approximately 2.5%, which was slightly ahead of the pace seen in 2024, and estimates for the fourth quarter of 2025 suggest another strong growth quarter. The unemployment rate was 4.4% in December 2025, which was unchanged from September 2025, but above the 4.1% reading for December 2024. The Federal Reserve’s preferred inflation gauge, the Personal Consumption Expenditure price index (“core PCE”), was also unchanged from September 2025 to November 2025, at 2.8%, but down from 2024’s rate of 3.0% despite the imposition of tariffs on a wide range of goods and countries. The Federal Open Market Committee (“FOMC”) cut interest rates twice during the fourth quarter, lowering the target range from 4%-4¼% at the start of the quarter to 3½%-3¾% by the end of the fourth quarter of 2025 and for the year as a whole, the FOMC cut rates by 75 bps. Longer-term Treasury yields were little changed during the fourth quarter of 2025 and despite continued uncertainty over the outlook for tariffs, equity prices continued to rise with the S&P 500 advancing by 2.3% during the quarter and by 16.4% for the year.
The U.S. economy expanded at a solid rate during the fourth quarter of 2024 as real gross domestic product (“GDP”) rose an annualized 2.3%, which put real growth at 2.5% in 2024 versus 3.2% in 2023. Longer-term Treasury yields rose during both the fourth quarter and in 2024 with most of the increase due to higher real yields from Treasury Inflation Protected Securities (“TIPS”). Interest rates remained elevated in 2024, despite the Federal Reserve initiating its first federal funds target rate cut in more than four years in September 2024, followed by additional cuts in the fourth quarter of 2024. The unemployment rate was 4.1% in December 2024, identical to the unemployment rate report for September 2024, but higher than the rate reported for year-end 2023. In addition to the steady unemployment rate, other signs of a solid labor market during the fourth quarter included a strengthening in payroll growth, continued low levels of claims for unemployment benefits, and a rising ratio of job openings to unemployed job seekers.
Although inflation slowed during 2024,2025, progress towardstoward lower inflation stalled in the second half of the year.year as measured by the Federal Reserve’s preferred measure of core PCE. The 12-month increase in the overall Consumer Price Index (“CPI”) was 2.7% in December 2025 versus 3.0% in September 2025 and 2.9% in December 2024 versus 2.4% in September 2024 and 3.4% in December 2023,2024, while core CPI price inflation (i.e., excluding food and energy prices) for December 20242025 stood at 3.2%, only slightly2.6%, lower than the 3.3%3.0% core CPI inflation rate reported for September 2024,2025, butand down from 3.9%3.2% for December 2023.2024. The Federal Reserve’s preferred measure of core PCE prices stood at 2.8% in November 2025, down only slightly from 2.9% in September 2025 and 3.0% in December 2024.
The nominal 10-year yield rose by two bps during the quarter to 4.17% from 4.15% but fell from 4.58% at the end of December 2024. Much of the decline during 2025 was a result of lower real yields, as the yield on 10-year Treasury Inflation Protected Securities declined from 2.24% at the end of December 2024 to 1.93% at the end of December 2025.
The nominal 10-year Treasury yield rose to 4.57% at the end of 2024 from 3.78% in September 2024 and 3.88% at the end of 2023. Most of this increase was due to higher real yields from TIPS, which rose to 2.23% in December 2024 from 1.59% in September 2024 and 1.71% at the end of 2023. The 10-year breakeven inflation rate was 2.34% in December 2024 versus 2.19% in September 2024 and 2.17% at the end of 2023.
Job creation slowed during 2025, and the unemployment rate rose. However, the labor market showed some signs of stabilization during the fourth quarter of 2025. Average private sector payroll growth slowed from 57,000 per month during the third quarter to 29,000 jobs per month during the fourth quarter. For the year as a whole, payroll growth slowed to 61,000 jobs per month during 2025 from 130,000 per month in 2024 (although the Labor Department has indicated that job growth over the 12-month period ended March 2025 is expected to be revised down sharply). The unemployment rate increased from 4.1% at the end of 2024 to 4.4% at the end of 2025, but the rate in December 2025 was unchanged from September 2025. Slowing job creation appears to be a result of a reluctance to hire rather than due to an increase in layoffs as the layoff rate for 2025, at 1.1%, was unchanged from the average layoff rate in 2024.
Average payroll growth picked up to 170,000 jobs per month in the fourth quarter versus an average of 159,000 jobs per month in the third quarter. For 2024, payroll rose an average of 186,000 per month versus 251,000 per month in 2023. The unemployment rate was unchanged at 4.1% in December 2024 compared to September 2024, however, 0.3% higher from December 2023. Judged by the ratio of job openings to unemployed job seekers, which rose to 1.18 in December 2024 from 1.06 in September 2024, the labor market tightened during the fourth quarter; however, improved overall over the course of 2024 when compared to December 2023 ratio of 1.45. Also, year-over-year growth in average hourly earnings was 3.9% in December 2024, the same wage rate as for September 2024, but slower than the 4.3% wage growth reported for December 2023.
Home sales remained at low levels in 2025. On a seasonally adjusted annual rate basis, existing home sales averaged 4.08 million in 2025, broadly in line with the 4.07 million pace observed in 2024. Levels of home sales showed signs of picking up during the fourth quarter of 2025 as mortgage rates declined, with existing home sales averaging 4.20 million in the fourth quarter (new home sales data for November and December remain delayed). However, home price growth slowed with the 12-month increase in the median resale price of an existing home at 0.4% in December 2025 compared to 5.8% in December 2024.
Home sales remained at low levels in 2024 as total home sales (new and existing) averaged 4.75 million, which is relatively unchanged from the average of 4.77 million for 2023. However, home price growth picked up with the 12-month increase in the median resale price of an existing home at 6.0% in December 2024 compared to 4.1% in December 2023.
The economic conditions discussed above influence our investment strategy and results. The Federal Open Market Committee (“FOMC”) lowered the federal funds rate target range by 25 basis pointsbps on December 18,10, 20242025 butand projected fewertwo 2025further rate cuts comparedfor to2026, which was unchanged from its projections made in September 2024. Additionally, Federal Reserve Chairman Jerome Powell signaled that the recalibration phase of lowering themonetary policy rate is over and the FOMC has entered a phase where further reductionsnow in the policyneutral raterange willand requirethat furtherrates progressare likely to be on hold for several months unless there is a change in loweringlabor inflationmarket toward the 2% target.fundamentals. The 30-year fixed mortgage rate rosefell to 6.85%6.27% at the end of the fourth quarter from 6.08%6.39% at the end of the third quarter of 2024,2025 upand from 6.6%6.85% at the end of 2023.2024.
The U.S. CRE market ended 2025 in a more functional (if still bifurcated) state than it began. Price discovery advanced through the year as the refinancing cycle forced transactions, recapitalizations and extensions into the open—tightening bid-ask spreads in many property types even as stress remained concentrated in assets with structural demand impairment or near-term capital needs. Three Federal Reserve cuts in 2025 and a policy rate now closer to neutral helped reduce “tail risk” in underwriting, but the market is still operating with higher-for-longer financing discipline: lower leverage, wider debt yields and a sharper penalty for cash-flow volatility.
Importantly, equity markets also became more actionable in late 2025 as valuations stabilized and underwriting confidence improved. While capitalization rates remain elevated relative to the prior cycle, the combination of maturing debt, reduced rate volatility, and selective improvements in fundamentals has reopened pathways for equity deployment—particularly in situations where basis resets, discounted entry points, or recapitalization structures create a margin of safety. That said, equity outcomes remain highly dispersed and increasingly driven by asset quality, sponsorship strength, and the ability to execute business plans in a higher-cost operating and capital environment.
Market Conditions & Sector Performance
Industrial & Retail: Industrial finished the year steady but more normalized. Leasing and rent growth are generally durable where demand is tied to logistics, manufacturing re-shoring and supply-chain resilience, while development is increasingly constrained by capital costs—supporting medium-term balance. Retail remains one of the clearer fundamental stories: necessity-based and well-located centers continue to benefit from limited new supply and improved tenant health, while discretionary formats are more sensitive to consumer trade-down and occupancy cost pressures. Broadly, investor attention continues to skew toward “bond-like” retail cash flow and infill industrial assets with long-duration demand support, with equity investors increasingly focused on assets that can sustain distributions and deliver predictable cash flows in a higher-rate environment.
Multifamily: Multifamily remains fundamentally supported by affordability constraints and household formation, but performance is uneven by market and vintage. Supply deliveries in select Sun Belt and high-growth metros are still pressuring rent growth and concessions, while insurance, taxes and operating expenses remain key net operating income swing factors. The market is increasingly underwriting “operations first”: durable occupancy and expense control matter more than rent growth assumptions. Equity investors are placing greater emphasis on in-place cash flow and operational execution, particularly in markets where supply-driven pressure may persist into 2026.
Office: Office remains the clearest example of divergence. Trophy/amenitized product with strong location, liquidity and tenant quality is increasingly financeable, while commodity stock continues to face elevated vacancy, rollover risk and punitive refinancing terms. Distress is still working through the system, but the conversation has shifted from generalized capitulation to segmented outcomes—where building quality, capital plan and tenant mix determine whether a refinance is viable or a restructuring is inevitable. Office performance varies greatly based on market and location within specific markets, with cities like New York leading the way. Equity capital, where it participates, is increasingly concentrated in recapitalizations, repositionings and select discounted acquisitions where new basis and capital structure resets can improve long-term viability.
Capital Markets & Investment Trends
Credit is available, but it is selective and structurally different than the pre-2022 market. Banks remain cautious in new origination, particularly for office and transitional business plans, which continues to create a funding gap for refinancing and recapitalization capital. At the same time, securitized and institutional channels are increasingly active where collateral and sponsorship meet current standards. Private-label CMBS issuance strengthened meaningfully through 2025, and outlook commentary heading into 2026 points to continued issuance momentum even as distress remains elevated—especially in challenged property types and legacy vintages.
Equity capital markets have also begun to thaw, but remain more selective and return-driven than in the prior cycle. Public and private market valuation gaps narrowed modestly as capitalization rates stabilized and forward rate expectations improved, but transaction activity remains influenced by constrained seller willingness and elevated required returns. Limited partner liquidity needs, fund lifecycle dynamics and debt maturities continue to catalyze recapitalizations and secondary activity, supporting a pipeline of equity opportunities across preferred equity, structured joint ventures and control acquisitions.
The next phase of the cycle is still defined by maturities and refinancing math. A substantial volume of commercial mortgages remains scheduled to mature through 2025 and beyond, reinforcing the market’s focus on extensions, paydowns and creative capital solutions (preferred equity, mezzanine, rescue capital and structured senior loans). In this environment, “transaction volume” is increasingly synonymous with liability management—recapitalizations and refinancings—rather than purely discretionary sales, and equity investment opportunities are increasingly linked to capital structure complexity rather than traditional stabilized acquisitions.
Outlook
We expect 2026 to be a year of continued normalization in the CRE market with both a market and asset-type specific rebound occurring. The most likely path is (i) gradually improving liquidity for “financeable” assets, (ii) ongoing pressure and resolution activity in structurally challenged segments and (iii) widening dispersion in outcomes driven by asset quality and capital structure. Research outlooks entering 2026 anticipate improved investment activity alongside continued volatility tied to policy, rates and sector-specific fundamentals. CMBS delinquency data still signals elevated stress overall, even as some categories can improve month-to-month—reinforcing that recovery will be uneven and credit work will remain active.
For a diversified real estate investment manager such as Rithm Capital, we believe this setup is constructive because the market continues to produce both structured-credit and equity opportunities with attractive risk-adjusted return potential. Dislocation and refinancing-driven activity should continue to create entry points across the capital stack—particularly where traditional lenders are constrained and where sponsors need speed, certainty and flexibility. Consistent with the Company’s flexible commercial real estate strategy—including originating and/or acquiring senior loans, subordinated debt, mezzanine loans, preferred equity, CMBS and other CRE-related investments, as well as making and managing equity investments—2026 should continue to present attractive opportunities to provide liquidity against real estate with durable cash flows, while selectively pursuing equity and hybrid situations where basis resets, improved documentation terms and capital structure simplification can enhance downside protection and long-term total returns.
The economic conditions discussed above influence our investment strategy and results.
(A)Real GDP data as of December 31, 2025 was not released as of the filing date.
We believe the estimates and assumptions underlying our consolidated financial statements are reasonable and supportable based on the information available as of December 31, 20242025; however, uncertainty related to market volatility, the path of the federal funds rate, various regional conflicts and global trade and fiscal policies makes any estimates and assumptions as of December 31, 2024,2025, inherently less certain than they would be absent the current environment. Actual results may materially differ from those estimates. Market volatility, inflationary pressures and government policies (monetary, fiscal, trade and immigration) and their impact on the current financial, economic and capital markets environment,environment and future developments in these and other areas present uncertainty and risk with respect to our financial condition, results of operations, liquidity and ability to pay distributions.
Our portfolio, as of December 31, 20242025 and 2023,2024, is separated into the Origination and Servicing, our Investment Portfolio, Residential Transitional Lending andLending, Asset Management and Investment Portfolio segments, as described in more detail below (dollars in thousands).
(A)IncludesThe Company's consolidated balance sheets include assets and liabilities of certainconsolidated VIEs, including funds and collateralized financing entities (“CFEs”) that are presented separately within assets and liabilities of consolidated VIEsentities. thatVIE meetassets thecan definitiononly ofbe CFEs.used Theto settle obligations and liabilities of CFEs may only be satisfied with the assetsVIEs. of the respective consolidated CFEs, andVIE creditors of the CFE do not have recourse to Rithm Capital Corp.
The Origination and Servicing segment operates through our wholly owned subsidiaries Newrez and NRM. Through these entities, we originate and service residential mortgage loans across multiple distribution channels and product types. As of December 31, 2025, Newrez ranked among the top five of both lenders (based on the total funded volume of originations) and servicers (based on the total UPB serviced) in the U.S., each according to Inside Mortgage Finance.
We operate a multi-channel residential mortgage origination platform that offers both purchase and refinance loan products. Our origination activities are conducted through several channels, including: (i) a Retail channel, which originates loans through loan officers and joint venture relationships; (ii) a Direct-to-Consumer channel, which offers purchase, refinance and closed-end second lien loans to eligible new and existing servicing customers; and (iii) Wholesale and Correspondent channels, through which we purchase loans originated by mortgage brokers, community banks, credit unions and other third-party originators that meet our underwriting and eligibility standards.
Our loan offerings include residential mortgage loans that conform to the underwriting standards of the GSEs and Ginnie Mae, government-insured residential mortgage loans insured by the FHA, the VA and the USDA, Non-QM loans originated through our SMART Loan Series, and certain non-Agency loan products. Our Non-QM loan offerings are designed for borrowers who do not meet the underwriting criteria applicable to Agency loans but satisfy our credit and risk standards. We also originate closed-end second lien home equity loans for existing customers, which allow borrowers to access home equity without refinancing their existing first-lien mortgage.
As of December 31, 2025, Newrez serviced approximately 3.7 million customers. The aggregate UPB of loans serviced by Newrez was approximately $797.6 billion and $778.4 billion as of December 31, 2025 and 2024, respectively. Our origination platform funded approximately $63.3 billion and $58.6 billion of residential mortgage loans during the years ended December 31, 2025 and 2024, respectively.
We generally service the residential mortgage loans that we originate, which provides ongoing borrower engagement throughout the life of the loan. Our servicing operations are organized into performing and special servicing divisions. The performing servicing division services performing Agency and government-insured loans, while the special servicing division services delinquent Agency, government-insured and non-Agency loans on behalf of loan owners. The special servicing division also provides servicing for third-party portfolios owned by unaffiliated investors.
As of December 31, 2025, our performing servicing division serviced approximately $529.1 billion UPB of loans, our special servicing division serviced approximately $268.5 billion UPB of loans and third-party servicers serviced approximately $54.1 billion UPB of loans, for a total servicing portfolio of approximately $851.7 billion UPB. This represented an increase of approximately $7.9 billion as compared to December 31, 2024, primarily reflecting new client acquisitions and loan production activity, partially offset by scheduled and voluntary loan prepayments.
Revenue in the Origination and Servicing segment is generated primarily from residential mortgage loan originations and servicing. Origination revenues include gains on the sale of residential mortgage loans and the value of MSRs retained upon loan transfer. Servicing revenues consist primarily of contractual servicing fees and ancillary servicing income. Profitability varies by origination channel, with Direct-to-Consumer originations generally generating higher margins and Correspondent originations generally generating lower margins.
We sell conforming loans to the GSEs and Ginnie Mae and securitize Non-QM residential mortgage loans. Loans are typically funded at origination using warehouse financing facilities, which are repaid upon loan sale or securitization.
Our Origination and Servicing businesses operate through our wholly-owned subsidiaries Newrez and NRM. Newrez ranks in the top five of lenders and servicers in the U.S.
We have a multi-channel residential lending platform, offering purchase and refinance loan products. We believe that our multi-channel origination mortgage platform provides us with a competitive advantage and enables us to provide borrowers with various products to ultimately originate both purchase and refinance loans across different market conditions. As further described below, we originate loans through our Retail channel, offer purchase, refinance and closed-end second opportunities to eligible new and existing servicing customers through our Direct to Consumer channel and purchase originated loans through our Wholesale and Correspondent channels. Our loan offerings include residential mortgage loans conforming to the underwriting standards of the GSEs and Ginnie Mae, government-insured residential mortgage loans which are insured by the FHA, VA and USDA, Non-Agency securities and Non-QM loans through our SMART Loan Series. Our Non-QM loan products provide a variety of options for highly qualified borrowers who fall outside the specific requirements of Agency residential mortgage loans. We additionally originate closed-end second lien home equity loans to our existing consumers to access the equity in their home without the need to pay off their existing first lien mortgage. Newrez serviced over 3.7 million customers with an aggregated UPB of approximately $778.4 billion and $568.0 billion for the years ended December 31, 2024 and 2023, respectively. Our origination business funded $58.6 billion and $36.9 billion of mortgages for the years ended December 31, 2024 and 2023, respectively.
We generally service all of the loans that we originate, which provides us connectivity with our borrowers throughout the lifecycle of their loan. Our servicing business operates through our performing and special servicing divisions. The performing loan servicing division services performing Agency and government-insured loans. Our special servicer, services delinquent government-insured, Agency and Non-Agency loans on behalf of the owners of the underlying mortgage loans. The special servicing division also includes third-party serviced loans on behalf of unaffiliated investors. We are highly experienced in loan servicing, including loan modifications, and seek to help borrowers avoid foreclosure. As of December 31, 2024, the performing loan servicing division serviced $514.0 billion UPB of loans, and Shellpoint Mortgage Servicing serviced $264.4 billion UPB of loans, and serviced by third-parties was $65.4 billion UPB of loans, for a total servicing portfolio of $843.8 billion UPB, an increase of $204.4 billion from December 31, 2023. The increase was primarily attributable to the Computershare Acquisition, as well as, new client acquisition and loan production, partially offset by scheduled and voluntary prepayment loan activity.
We generate revenue through servicing and sales of residential mortgage loans, including, but not limited to, gain on residential loans originated and sold and the value of MSRs retained on transfer of the loans. Profit margins per loan vary by channel, with Correspondent typically being the lowest and Direct to Consumer being the highest. We sell conforming loans to the GSEs and Ginnie Mae and securitize Non-QM residential loans. We utilize warehouse financing to fund loans at origination through the sale date.
Total gain on originated residential mortgage loans, HFS, net increased $205.3$5.6 million to $688.8$694.4 million for the year ended December 31, 20242025 compared to the year ended December 31, 2023.2024. The increase is attributable to an increase in pull through adjusted lock volume primarily driven by increased production volume in the CorrespondentDirect channelto asConsumer welland asWholesale increasedchannels, marginspartially acrossoffset mostby channels.lower gain on sale margins. Refinance originations comprised 20.0%31% of funded loans for the year ended December 31, 2025, higher than 20% of funded loans for the year ended December 31, 2024, higher than 13% for the year ended December 31, 2023, due to higher refinance activity as interest rates moved lower primarily during the third quarter of 2024.year-over-year.
For the year ended December 31, 2024,2025, funded loan origination volume was $58.6$63.3 billion, up from $36.9$58.6 billion in the prioryear year.ended December 31, 2024. Gain on sale margin for the year ended December 31, 20242025 was 1.16%,1.08%, 158 bps lower than 1.31%1.16% for the prioryear year.ended December 31, 2024. The lower gain on sale margin for 2024the year ended December 31, 2025 was primarily due to annarrower increasemargins in Correspondentthe production relativeDirect to totalConsumer productionand Wholesale channels (refer to the tables above) partially offset by higher margins in most channels..
The table below provides the mix of NewrezNewrez’s serviced assets portfolio between subserviced performing servicing (labeled as “Performing Servicing”) and subserviced non-performing,non-performing or special servicing (labeled as “Special Servicing”). Third-party servicing includes loan portfolios serviced on behalf of Rithm Capital or its subsidiaries and non-affiliated third parties for the periods presented.
Our servicing business includes owned MSRs primarily serviced by Newrez. As of December 31, 2024,2025, 88.9%approximately 90.9% of the underlying UPB of mortgagesresidential relatedmortgage toloans underlying our owned MSRs iswas serviced by Newrez. In addition to MSRs serviced by Newrez, we contractengage withthird-party subservicers, including PHH and ValonValon, to perform the related servicing dutiesactivities onwith respect to a portion of the residential mortgage loans underlying a certain portion of our MSRs and MSR financing receivablesreceivables. withAs of December 31, 2025, loans serviced by these third-party subservicers had an aggregate UPB of $65.4approximately $54.1 billion, representing 11.1%approximately 9.1% of our total servicing portfolio as of December 31, 2024.portfolio.
Our servicing businessoperations also includesinclude subservicing activities performed for third-party clients,clients. includingThese services include performing loan servicing, special servicing (high touch customer service requires more frequent customer outreach than performing loan servicing and involves higher staffing levels and sub-servicing fees to support such higher staffing levels) and recovery optionsservices for deeply delinquent loans. WeSpecial servicing generally earnsinvolves higher-touch borrower engagement, more frequent borrower outreach and higher staffing requirements than performing loan servicing, and accordingly results in higher subservicing fees. Subservicing revenues generally consist of tiered subservicingservicing fees based on loan delinquency status and performance requirements,metrics, as well as ancillary incomeservicing on each loan serviced. Because of our specialty in “high-touch servicing,” we believe we are favorably positioned to navigate through various economic and credit cycles.income.
An MSR provides a mortgage servicer withrepresents the right to service a pool of residential mortgage loans in exchange for a portion of the interest payments made by borrowers on the underlying residential mortgage loans, plustogether with ancillary servicing income and custodial interest. An MSR isgenerally made upconsists of two components: a base feeservicing fee, which compensates the servicer for performing contractual servicing obligations (including servicing advance obligations), and an Excess MSR.MSR, Thewhich baserepresents the portion of the servicing fee isin the amountexcess of compensation for the performance of servicing duties (including advance obligations) and the Excess MSR is the amount that exceeds the base fee.
See Note 5 to our consolidated financial statements for additional information including a summary of activity related to MSRs and MSR financing receivables from December 31, 2023 to December 31, 2024.
What changed in the latest 10-Q
Risk Factors
For the quarter ended June 30, 2026, there were no material changes to the risk factors disclosed under Part I, Item 1A. “Risk Factors” of our 2025 Form 10-K.
Full comparison: every changed paragraph (1)
For the three monthsquarter ended MarchJune 31,30, 2026, there were no material changes to the risk factors disclosed under Part I, Item 1A. “Risk Factors” of our 2025 Form 10-K.
Management's Discussion & Analysis (MD&A)
New heading “Other Residential-Related Revenue”
New heading “Other Income (Loss)”
Largest changes
“The U.S. CRE market entered 2026 in a more functional (if still bifurcated) state than in prior periods. Price discovery has continued to advance as the refinancing cycle drives transactions, recapitalizations and extensions—tightening bid-ask spreads in certain property types even as stress remains concentrated in assets with structural demand impairment or near-term capital needs. …”see in full comparison
“For Rithm Capital, we believe this environment remains constructive because the market continues to produce both structured-credit and equity opportunities with attractive risk-adjusted return potential. Dislocation and refinancing-driven activity should continue to create entry points across the capital stack—particularly where traditional lenders remain constrained and where sponsors require speed, certainty and flexibility. …”see in full comparison
“We expect 2026 to continue to reflect a period of normalization in the CRE market, with outcomes increasingly differentiated by asset quality, sector fundamentals and capital structure. The gap between short-term and long-term Treasury rates narrowed from about 0.71% at year-end to about 0.50% by mid-April due to investors expecting fewer future rate cuts, especially as higher energy prices brought inflation concerns back into focus. …”see in full comparison
“The U.S. CRE market moved through the second quarter of 2026 with improving fundamentals in several sectors, even as the interest rate backdrop grew more uncertain. …”see in full comparison
“Office: Office continues to reflect significant divergence across assets. Trophy and well-amenitized properties in strong locations with high-quality tenancy remain comparatively more financeable, while commodity assets continue to face elevated vacancy, lease rollover risk and constrained refinancing options. Distress continues to work through the system, with outcomes increasingly dependent on asset quality, capital structure and tenant composition. …”see in full comparison
“The current phase of the cycle continues to be defined by maturities and refinancing dynamics. A substantial volume of commercial mortgages remains scheduled to mature in 2026 and beyond, reinforcing the market’s focus on extensions, paydowns and creative capital solutions, including preferred equity, mezzanine financing, rescue capital and structured senior loans. …”see in full comparison
Full comparison: every changed paragraph (171)
We seek to generate long-term value for our investors by leveraging our investment expertise and operating capabilities to identify, acquire, manage and enhance the value of real estate-related and other financial assets. We operate an integrated platform, spanning asset-based finance, residential and commercial real estateCRE lending, commercial real estateCRE ownership and investment, MSRs,MSRs and structured credit, that combines operating companies, investment portfolios and asset management capabilities across the residential mortgage, real estate and credit markets. Headquartered in New York City, Rithm Capital has a global presence with offices in London, Hong Kong, Tokyo, Toronto and Abu Dhabi.
WeAs conductof June 30, 2026, we conducted our business through the following segments: (i) Origination and Servicing, (ii) Residential Transitional Lending, (iii) Asset Management, (iv) Investment Portfolio and (v) Commercial Real Estate. During the first quarter of 2026, the Company revised the composition of its reportable segments to include a new Commercial Real Estate segment, and prior-period segment information has been recast to conform to the current-period presentation.
Newrez sells substantially all of the mortgage loans it originates into the secondary market. Newrez securitizes loans into RMBS through the Agencies. Loans that do not conform to the guidelines of the Agencies, the Federal Housing Administration (“FHA”), the U.S. Department of Agriculture (the “USDA”) or the Department of Veterans Affairs (the “VA”) (for loans securitized with Ginnie Mae mortgage-backed securitizations) are sold to private investors and mortgage conduits. Newrez generally retains the right to service the underlying residential mortgage loans sold and/or securitized by Newrez. NRM and Newrez are required to conduct aspects of their operations in accordance with applicable policies and guidelines of such Agencies. In addition, to origination and servicing activities, this segment includes operations conducted through wholly owned subsidiaries that provide mortgage- and real estate-related services, including Guardian Asset Management (“Guardian”), a provider of field services and property management services, eStreet Appraisal Management LLC (“eStreet”), a provider of appraisal services, and Avenue 365 Lender Services, LLC (“Avenue 365”), a provider of title and settlement services.
Our Residential Transitional Lending segment primarily operates through our wholly owned subsidiary, Genesis, a residential transitional lender.lender and servicer. Genesis originates and manages a portfolio of short-term, business-purpose mortgage loans used by experienced developers of and investors in residential real estate, including multifamily residential properties, to finance transitional projects, including construction, renovation and bridge financings.
Our Asset Management segment conducts its activities primarily through Rithm Asset Management LLC (“RAM”) and its wholly owned subsidiaries, including Sculptor,Sculptor Capital Management, Inc. (“Sculptor”), Crestline and Rithm Capital Advisors LLC (“RCA”). RCM GA Manager LLC (“RCM Manager” and, together with RCA, the “Rithm Advisers”) manages Rithm Property Trust and R-HOME pursuant to management and/or advisory agreements. Through Sculptor, Crestline and the Rithm Advisers, we provide asset management services and investment products through commingled funds, separate accounts and other alternative investment vehicles, generating primarily fee-based revenues. As of MarchJune 31,30, 2026, we had approximately $59$61 billion in AUM.assets under management (“AUM”).
Our Commercial Real Estate segment includes the ownership, operation and management of a portfolio of CRE assets, primarily Class A office properties located in New York City and San Francisco. TheThis segment reflects our expansion into CRE equity ownership and operations, including the acquisition of Elecor in December 2025. We manage these assets as part of our broader CRE platform, generating revenues primarily from rental revenue and other property-related revenues. In April 2026, the Company announced the rebranding of the Paramount Group platform to Elecor Properties.
During the firstsecond quarter of 2026, macroeconomic conditions reflected a combination of stable underlyingpersistent inflation, modestan improvementeasing in labor marketforce conditionsparticipation and increasedcontinued volatility in energy prices and interest rates,rates including uncertainty resulting fromamid the ongoing conflict with Iran that began at the end of February 2026.Iran. The Federal Reserve maintained the federal funds target range at 3.50%–3.75% during its JanuaryApril and MarchJune 2026 meetingsmeetings, followingwith the June meeting marking the first under new Federal Reserve Chair Kevin Warsh, whose accompanying Summary of Economic Projections signaled a more hawkish policy stance and the potential for a rate cutsincrease later in late2026, 2025.a reversal from the cutting-cycle expectations that had prevailed as recently as the first quarter; however, in its July meeting, the Federal Reserve continued to maintain the current target range.
Headline inflation increased further during the quarter, primarily reflecting higher energy prices, even as West Texas Intermediate crude oil pricesprices, increasedwhich 76.6%had duringbeen theup quarteras much as 101% following the outbreak of the conflict with Iran, whileeased to a gain of approximately 70% by the end of the second quarter as ceasefire efforts progressed, though that truce showed signs of strain by quarter-end. Core inflation measures ofwere core inflation remainedroughly stable. The unemployment rate declined modestly from 4.4% in December 2025 to 4.3% in March 2026 to 4.2% in June 2026, indicatingthough continuedthe stabilizationimprovement was driven in part by a decline in labor marketforce conditions.participation.
Market interest rates increased further during the quarter, with the 10-year Treasury yield rising 1514 basis points to 4.32%,4.44%, while market expectations forshifted to reflect the possibility of a rate cutsincrease later in 2026 declined significantly.2026. Equity markets experienced volatilityrallied during the quarter, with the S&P 500 declininggaining 4.6%14.9% before partiallyand recovering infrom Aprilthe 2026.prior quarter's decline, driven substantially by technology and AI-related strength.
Inflation increased further during the firstsecond quarter of 2026, primarily reflecting higher energy prices followingamid the outbreak of theongoing conflict with Iran. Consumer Price Index (“CPI”) inflation rose from 2.7% in December 2025 to 3.3% in March 2026 to 3.5% in June 2026, driven in part by an increase in energy prices from 2.1% in December 2025 to 12.6%12.5% in March 2026 to 15.7% in June 2026 on a year-over-year basis.
Core CPI, which excludes food and energy, remained stableessentially flat at 2.6%; however,in June 2026. Core Personal Consumption Expenditures, the Federal Reserve’s preferred measure of underlying inflation, core Personal Consumption Expenditures, increased from 3.0%3.3% in DecemberJune 20252026 compared to 3.2%the inprior-year March 2026.period. Other inflation indicators showed modestfurther increases, with producer price inflation rising to 4.0%5.5% in June 2026 from 4.3% in March 2026 from 3.2% in December 2025,2026, and import prices increasing 2.1%7.1% over the 12 months endedending June 30, 2026, compared to 2.3% over the 12 months ending March 31, 2026 after being flat in December 2025.2026.
Treasury yields increased further during the firstsecond quarter of 2026. The ten-year10-year Treasury yield rose 1514 basis points to 4.32%4.44% from 4.17%4.30% at the end of DecemberMarch 2025.2026. Shorter-term yields increased more significantly, with the two-year2-year Treasury yield rising 3235 basis points to 3.79%.4.14%. As a result, the yield curve flattened,flattened further, with the spread between two-year2-year and ten-year10-year Treasury yields narrowing from 6951 basis points to 5230 basis points over the quarter. This shift reflects reducedthe marketmore expectationshawkish forpolicy interestoutlook ratecommunicated cutsby the Federal Reserve following the change in 2026.its leadership.
Labor market conditions improvedcontinued modestlyto stabilize during the firstsecond quarter of 2026.2026, though signals were mixed. The unemployment rate declined by 0.1 percentage points from 4.4% in December 2025 to 4.3% in March 2026.2026 to 4.2% in June 2026, aided in part by a decline in labor force participation. Job growth strengthenedaccelerated during the quarter, with nonfarmnon-farm payrolls increasing by an average of 68,000111,000 per month, compared to an average monthly decline of 39,000 during the fourth quarter of 2025. Initial unemployment insurance claims also declined, averaging 212,00073,000 per weekmonth during the first quarter of 2026. However, initial unemployment insurance claims increased, averaging 222,000 per week during the second quarter of 2026, compared to 222,000209,000 per week in the prior quarter.
Housing market activity softenedwas mixed during the second quarter of 2026. Existing home sales rose modestly to an annualized rate of 4.09 million, compared to 4.01 million in the first quarter of 2026, reflectingthough highersales remained rangebound amid still-elevated mortgage rates. ExistingNew home sales declined to an annualized rate of 4.04approximately million,628,000 in the second quarter of 2026, compared to 4.16approximately million659,000 in the fourthfirst quarter of 2025. New home sales data remains limited due to publication delays, with January 2026 representing the most recent available data. Sales were approximately 587,000 at an annual rate, compared to an average of approximately 709,000 during the fourth quarter of 2025.2026. Home price growth increased modestly, with the median resale price rising 1.4%1.8% year-over-year in MarchJune 2026, compared to 0.3%1.5% in DecemberMarch 2025.2026. Mortgage rates increased further during the quarter, with the 30-year fixed rate rising to 6.38%6.29% from 6.15%6.07% at year-end.the end of March 2026.
A policy development affecting certain housing-related sectors was also resolved during the quarter. The 21st Century ROAD to Housing Act, which restricts large institutional investors from purchasing existing single-family homes, was enacted into law on July 11, 2026. The final legislation removed the seven-year forced-disposition requirement for build-to-rent properties that had been included in earlier drafts and instead provides an unconditional exception for build-to-rent and other newly constructed rental programs.
Policy developments also contributed to uncertainty in certain housing-related sectors. The Senate’s 21st Century ROAD to Housing Act includes provisions that, if enacted, would require certain large institutional investors to sell newly constructed build-to-rent properties to individual homebuyers within seven years, which could impact construction activity and investment in the build-to-rent sector.
The U.S. CRE market moved through the second quarter of 2026 with improving fundamentals in several sectors, even as the interest rate backdrop grew more uncertain. Following the change in Federal Reserve leadership, the Federal Open Market Committee shifted from signaling further rate cuts to a notably more hawkish posture, and recent commentary from officials, combined with inflation running above target, has introduced the possibility of a rate increase later this year—a reversal from the cutting-cycle expectations that prevailed as recently as the first quarter; however, in its July meeting, the Federal Reserve continued to maintain the current target range. Longer-term rates moved higher as geopolitical developments affecting energy prices added further inflation risk. Despite this, capital has continued to flow into the sector, with underwriting simply reflecting a more disciplined, higher-for-longer rate environment rather than a retreat from CRE broadly.
The U.S. CRE market entered 2026 in a more functional (if still bifurcated) state than in prior periods. Price discovery has continued to advance as the refinancing cycle drives transactions, recapitalizations and extensions—tightening bid-ask spreads in certain property types even as stress remains concentrated in assets with structural demand impairment or near-term capital needs. While the Federal Reserve maintained its policy rate (3.50–3.75%) during the first quarter of 2026, many CRE participants continue to operate with higher-for-longer financing discipline: lower leverage, wider debt yields and a sharper penalty for cash-flow volatility.
Equity markets have also remained selectively actionable in early 2026 as valuations have continued to stabilize and underwriting confidence has improved relative to prior periods. While capitalization rates remain elevated relative to the prior cycle, the combination of maturing debt, reduced rate volatility and selective improvements in fundamentals continues to support pathways for equity deployment—particularly in situations where basis resets, discounted entry points or recapitalization structures create a margin of safety. That said, equity outcomes remain highly dispersed and increasingly driven by asset quality, sponsorship strength and the ability to execute business plans in a higher-cost operating and capital environment.
Market Conditions & Sector Performance
Industrial & Retail: Industrial fundamentals remain generally stable but more normalized. Leasing and rent growth continue to be supported where demand is tied to logistics, manufacturing re-shoring and supply-chain resilience, while new development remains constrained by capital costs—supporting medium-term balance. Retail continues to demonstrate relatively durable fundamentals: necessity-based and well-located centers benefit from limited new supply and improved tenant health, while discretionary formats remain more sensitive to consumer trade-down and occupancy cost pressures. Broadly, investor attention continues to skew toward “bond-like” retail cash flows and infill industrial assets with long-duration demand support, with equity investors increasingly focused on assets that can sustain distributions and deliver predictable cash flows in a higher-rate environment.
Multifamily: Multifamily remains supported by affordability constraints and household formation, though performance continues to vary by market and vintage. Supply deliveries in select Sun Belt and high-growth markets continue to pressure rent growth and concessions, while insurance, taxes and operating expenses remain key drivers of net operating income variability. The market continues to emphasize operating performance—durable occupancy and expense control remain primary underwriting considerations—and equity investors are placing continued emphasis on in-place cash flow and operational execution, particularly in markets where supply-driven pressure may persist through 2026.
Office: Office continues to reflect significant divergence across assets. Trophy and well-amenitized properties in strong locations with high-quality tenancy remain comparatively more financeable, while commodity assets continue to face elevated vacancy, lease rollover risk and constrained refinancing options. Distress continues to work through the system, with outcomes increasingly dependent on asset quality, capital structure and tenant composition. Performance remains highly market-specific, with certain gateway markets—including New York City and San Francisco—demonstrating relatively stronger leasing and liquidity dynamics. Equity capital, where it participates, remains concentrated in recapitalizations, repositionings and select discounted acquisitions where new basis and capital structure resets can improve long-term viability.
Capital Markets & Investment Trends
Credit remains available but selective and structurally different than the pre-2022 market. Banks continue to demonstrate caution in new origination, particularly for office and transitional business plans, contributing to an ongoing funding gap for refinancing and recapitalization capital. At the same time, securitized and institutional capital sources remain active where collateral and sponsorship meet current underwriting standards. Private-label commercial mortgage-backed securities (“CMBS”) issuance has remained active in early 2026, reflecting continued demand for stabilized, high-quality collateral, even as stress persists in certain property types and legacy loan vintages.
Equity capital markets remain selectively open but return-driven and more disciplined than in the prior cycle. Public and private market valuation gaps have continued to narrow modestly as capitalization rates have stabilized and forward rate expectations have improved, though transaction activity remains influenced by constrained seller willingness and elevated required returns. Limited partner liquidity needs, fund lifecycle dynamics and debt maturities continue to catalyze recapitalizations and secondary activity, supporting a pipeline of equity opportunities across preferred equity, structured joint ventures and control acquisitions.
The current phase of the cycle continues to be defined by maturities and refinancing dynamics. A substantial volume of commercial mortgages remains scheduled to mature in 2026 and beyond, reinforcing the market’s focus on extensions, paydowns and creative capital solutions, including preferred equity, mezzanine financing, rescue capital and structured senior loans. In this environment, transaction activity continues to be driven largely by liability management—recapitalizations and refinancings—rather than discretionary investment sales, and equity investment opportunities remain increasingly linked to capital structure complexity rather than traditional stabilized acquisitions.
Outlook
We expect 2026 to continue to reflect a period of normalization in the CRE market, with outcomes increasingly differentiated by asset quality, sector fundamentals and capital structure. The gap between short-term and long-term Treasury rates narrowed from about 0.71% at year-end to about 0.50% by mid-April due to investors expecting fewer future rate cuts, especially as higher energy prices brought inflation concerns back into focus. The most likely path remains (i) gradually improving liquidity for “financeable” assets, (ii) continued pressure and resolution activity in structurally challenged segments and (iii) sustained dispersion in performance across property types and markets. While capital markets activity, including CMBS issuance, has remained active, delinquency trends and refinancing activity continue to indicate elevated levels of stress in certain segments, and overall market recovery is expected to remain uneven.
For Rithm Capital, we believe this environment remains constructive because the market continues to produce both structured-credit and equity opportunities with attractive risk-adjusted return potential. Dislocation and refinancing-driven activity should continue to create entry points across the capital stack—particularly where traditional lenders remain constrained and where sponsors require speed, certainty and flexibility. The flatter curve does compress net interest margins for leveraged strategies that borrow short and lend long, placing a premium on credit selection and structural protections over duration positioning—a dynamic that favors the Company’s flexible, multi-strategy approach over spread-dependent book-value strategies. 2026 should continue to present attractive opportunities to provide liquidity against real estate with durable cash flows, while selectively pursuing equity and hybrid situations where basis resets, improved documentation terms and capital structure simplification can enhance downside protection and long-term total returns. However, the Company’s ability to execute on these opportunities remains subject to market conditions, borrower performance, interest rate volatility and broader economic factors.
The following table summarizes the change in U.S. gross domestic product (“GDP”) estimates (annualized rate) according to the U.S. Bureau of Economic Analysis:
We believe the estimates and assumptions underlying our consolidated financial statements are reasonable and supportable based on the information available as of MarchJune 31,30, 2026; however, uncertainty related to market volatility, the path of the federal funds rate, various regional conflicts and global trade and fiscal policies makes any estimates and assumptions as of MarchJune 31,30, 2026, inherently less certain than they would be absent the current environment. Actual results may materially differ from those estimates. Market volatility, inflationary pressures and government policies (monetary, fiscal, trade and immigration) and their impact on the current financial, economic and capital markets environment and future developments in these and other areas present uncertainty and risk with respect to our financial condition, results of operations, liquidity and ability to pay distributions.
Our portfolio, as of MarchJune 31,30, 2026 and December 31, 2025, is separated into the Origination and Servicing, Residential Transitional Lending, Asset Management, Investment Portfolio and Commercial Real Estate segments, as described in more detail below (dollars in thousands).
(A)The Company's consolidated balance sheets include assets and liabilities of consolidated VIEs,variable interest entities (“VIEs” and each, a “VIE”), including funds and collateralized financing entities (“CFEs” and each, a “CFE”) that are presented separately within assets and liabilities of consolidated entities. VIE assets can only be used to settle obligations and liabilities of the VIEs. VIE creditors do not have recourse to Rithm Capital Corp.
The Origination and Servicing segment is Rithm Capital’s largest business by assets, equity and earnings contribution. The segment operates through our wholly owned subsidiaries Newrez and NRM, through which, we originate and service residential mortgage loans across multiple distribution channels and product types. As of March 31, 2026, the latest period for which servicing rankings are available, Newrez ranked among the top five lenders in the U.S. based on total funded volume of originations,originations according to Inside Mortgage Finance. As of December 31, 2025, the latest period for which servicing rankings are available, Newrez also ranked amongand the top five servicers in the U.S. based on total unpaid principal balance (“UPB”) serviced, according to Inside Mortgage Finance.
Revenue in the Origination and Servicing segment is generated primarily from residential mortgage loan originations and servicing. Origination revenues include gains on the sale of residential mortgage loans and the value of MSRs retained upon loan transfer. Servicing revenues consist primarily of contractual servicing fees and ancillary servicing income. Profitability varies by origination channel, with Direct-to-ConsumerDirect to Consumer originations generally generating higher margins and Correspondent originations generally generating lower margins.
We sell conforming loans to the Agencies and securitize Non-QMnon-qualified residential mortgage (“Non-QM”) loans. Loans are typically funded at origination using warehouse financing facilities, which are repaid upon loan sale or securitization.
We operate a multi-channel residential mortgage origination platform that offers both purchase and refinance loan products. Our origination activities are conducted through several channels, including: (i) a Retail channel, which originates loans through loan officers and joint venture relationships; (ii) a Direct-to-ConsumerDirect to Consumer channel, which offers purchase, refinance and closed-end second lien loans to eligible new and existing servicing customers; and (iii) Wholesale and Correspondent channels, through which we purchase loans originated by mortgage brokers, community banks, credit unions and other third-party originators that meet our underwriting and eligibility standards.
Our loan offerings include residential mortgage loans that conform to the underwriting standards of the GSEs and Ginnie Mae, government-insured residential mortgage loans insured by the FHA, the VA and the USDA, non-qualified residential mortgage (“Non-QM”) loans originated through our SMART Loan Series and certain non-Agency loan products. Our Non-QM loan offerings are designed for borrowers who do not meet the underwriting criteria applicable to Agency loans but satisfy our credit and risk standards. We also originate closed-end second lien home equity loans for existing customers, which allow borrowers to access home equity without refinancing their existing first-lien mortgage.
Our origination platform funded approximately $15.5$15.9 billion and $18.8$15.5 billion of residential mortgage loans during the three months ended MarchJune 31,30, 2026 and DecemberMarch 31, 2025,2026, respectively, and $15.5$31.4 billion and $11.8$28.1 billion during the threesix months ended MarchJune 31,30, 2026 and 2025, respectively. The table below provides selected operating statistics by channel and product for our Origination and Servicing segment:
As of MarchJune 31,30, 2026, our performing servicing division serviced approximately $529.7$551.2 billion UPB of loans, our special servicing division serviced approximately $269.6$285.2 billion UPB of loans and third-party servicers serviced approximately $51.1$28.8 billion UPB of loans, for a total servicing portfolio of approximately $850.4$865.2 billion UPB. This represented aan decreaseincrease of approximately $1.4$14.8 billion as compared to DecemberMarch 31, 2025,2026, primarily reflecting scheduled and voluntary loan prepayments, partially offset by new client acquisitions and loan production activity, partially offset by scheduled and voluntary loan prepayments, and an increase of $5.5$1.0 billion as compared to MarchJune 31,30, 2025, primarily driven by new client acquisitions and loan production activity, partially offset by loan paydowns.
As of MarchJune 31,30, 2026, Newrez serviced approximately 3.74.0 million customers. The aggregate UPB of loans serviced by Newrez was approximately $799.3$836.4 billion, $797.6$799.3 billion and $786.6$807.3 billion as of MarchJune 31,30, 2026, December 31, 2025 and March 31, 2026 and June 30, 2025, respectively.
As of MarchJune 31,30, 2026, approximately 91.4%95.2% of the UPB of residential mortgage loans underlying our owned MSRs was serviced by Newrez. In addition to MSRs serviced by Newrez, we engage third-party subservicers, including PHH and Valon, to perform servicing activities with respect to a portion of the residential mortgage loans underlying our MSRs and MSR financing receivables. As of MarchJune 31,30, 2026, loans serviced by these third-party subservicers had an aggregate UPB of approximately $51.1$28.8 billion, representing approximately 8.6%4.8% of our total servicing portfolio.
The table below summarizes our MSRs and MSR financing receivables as of MarchJune 31,30, 2026:
The following tables summarize the collateral characteristics of the residential mortgage loans underlying our MSRs and MSR financing receivables as of MarchJune 31,30, 2026 (dollars in thousands):
The following table summarizes our Agency RMBS and U.S. Treasury securities portfolio as of and for the threesix months ended MarchJune 31,30, 2026 (dollars in thousands):
The following table summarizes the net interest spread of our government and government-backed securities portfolio as of MarchJune 31,30, 2026:
The Residential Transitional Lending segment operates through Genesis, a wholly owned Rithm subsidiary that originates and manages short-term, business-purpose mortgage loans secured by residential and multifamily real estate. Genesis is the second-largest U.S. residential transitional lender based on market data and management's estimates of total origination volume.
Loan economics and terms. Commitments are generally interest-only and bear a variable rate based on SOFR plus a spread (generallycurrently ranging from 4% to 17%15%), with initial terms typically ranging from 6 to 120 months, depending on project size and expected completion timeline. We may extend loans based on our assessment of project status and other underwriting considerations. As of MarchJune 31,30, 2026, the average commitment size was $5.2$5.0 million, and the weighted average remaining term to contractual maturity was 13.8 months.
We earn loan origination fees (“points”), which are generally based on the loan term, borrower profile and collateral characteristics. As of MarchJune 31,30, 2026, we earned an average of 1.2% of total commitment at origination. We also may earn past-due fees, cost reimbursements (including for closing, collection and inspection-related expenses), extension fees for renewals or extensions, and amendment fees for loan modifications. Renewals and extensions are generally evaluated under our then-current underwriting criteria, including applicable LTV limitations based on the origination appraisal or an updated appraisal when required. Origination and renewal fees are recognized as income at origination as residential transition loans (“RTLs” and each, an “RTL”) are measured at fair value.
(B)Includes carrying value and UPB of residential transition loans of consolidated entities of approximately $1.2 billion as of MarchJune 31,30, 2026 and December 31, 2025.
See Note 10 to our consolidated financial statements for additional information, including a summary of activity related to residential transition loans from December 31, 2025 to MarchJune 31,30, 2026.
As of MarchJune 31,30, 2026, the Asset Management segment managed approximately $59$61 billion in assets under management (“AUM”),AUM, of which $37approximately $39 billion and $19$20 billion was managed by Sculptor and Crestline, respectively.
Revenues in the Asset Management segment consist primarily of management fees and incentive income.fees.
Incentive incomefees isare performance-based and isare generally calculated as a percentage of investment profits attributable to fund investors, net of management fees. Incentive incomefee arrangements may be subject to contractual provisions such as hurdle rates, high-water marks and catch-up mechanisms, and incentive incomefees isare typically recognized later in the life cycle of an investment vehicle or upon crystallization events. As a result, incentive incomefees may be uneven across reporting periods.
Period-to-period changes in Asset Management revenues are driven primarily by changes in AUM resulting from capital inflows and redemptions, investment performance, market conditions and the timing and realization of incentive income.fees.
Operating results for the Asset Management segment are driven by the relationship between revenue growth and expense levels, as well as the mix of management fees and incentive incomefees recognized during the period. Market conditions, investor sentiment and asset valuations may affect both revenues and profitability. In addition, the timing of incentive incomefee recognition and acquisition-related amortization and integration costs may result in variability in operating results between periods.
AUM representsis estimated and refers to the value of assets for which weRithm Capital and its affiliates provide discretionary investment management, advisorymanagement or certain other investment-relatedadvisory services. AUM is generally includescalculated as the sum of: (i) the net asset value of managed accounts, open-endedaccounts and closed-endopen-ended funds or the gross asset value of direct lending, real estate and real estate funds, (ii) uncalled capital commitments and (iii) par value of structured credit vehicles (e.g., collateralized loan obligations). AUM includes amounts that are not subject to management fees, incentive income or other amounts earned on AUM. AUM also includes amounts that are invested in other affiliated funds/vehicles. Rithm Capital's calculation of AUM is intended to provide a consistent and comparable measure of managed assets across its businesses; however,however it is not based on any specific regulatory definition and may differ from similarly titled measures presented by other asset managers and, as a result, may not be comparable.
Management monitors the performance of the Asset Management segment using AUM, net capital inflows and redemptions, management fee rates, incentive incomefee realization and operating margins.
Investments in Excess MSRs represent the portion of the mortgage servicing compensation that exceeds the base servicing fee. Our Excess MSR assets include our ownership interests in Excess MSRs and related recapture agreements that were acquired from, and are serviced by, Rocket,Rocket Companies, Inc., as successor by merger to Mr. Cooper.Cooper Group Inc.
RITM insider buying and selling (Form 4)
Since 2026-04-11, insiders reported open-market purchases in 0 Form 4 filings and open-market sales in 2 filings (2 insiders, 2 trade dates, 95,442 shares, about $896.2K). Net open-market shares: -95,442 (purchases minus sales); net value about -$896.2K.Totals add up every open-market (code P and S) line in those filings, using the prices reported in the filings. Awards, option exercises, tax withholding and gifts are listed below but not counted.
| Trade date | Insider | Transaction | Shares | Price | Value |
|---|---|---|---|---|---|
| 2026-08-20 | Hebard Peggy Hwan |
Open-market sale | 14,520 | $10.18 | $147.8K |
| 2026-05-26 | Addas William Dean |
Grant/award | 16,199 | — | — |
| 2026-05-26 | Finnerty Kevin J |
Grant/award | 16,739 | — | — |
| 2026-05-26 | Hebard Peggy Hwan |
Grant/award | 17,279 | — | — |
| 2026-05-26 | Saltzman David |
Grant/award | 17,279 | — | — |
| 2026-05-26 | Le Melle Patrice M |
Grant/award | 16,199 | — | — |
| 2026-05-26 | Kripalani Ranjit M |
Grant/award | 16,739 | — | — |
| 2026-05-20 | Saltzman David |
Open-market sale | 66,748 | $9.26 | $618.1K |
| 2026-05-20 | Saltzman David |
Open-market sale | 14,174 | $9.19 | $130.3K |
Well-known investors holding RITM (13F)
| Investor | Quarter | Shares | Reported value | % of their 13F | Change vs prior quarter |
|---|---|---|---|---|---|
| D. E. Shaw & Co. | 2026-06-30 | 2,136,467 | $20.1M | 0.01% | Reduced 14% |
| AQR Capital Management (Cliff Asness) | 2026-06-30 | 552,987 | $5.2M | 0.0% | Reduced 35% |
| Millennium Management (Israel Englander) | 2026-06-30 | 408,272 | $3.8M | 0.0% | No change |
| Renaissance Technologies | 2026-06-30 | 150,805 | $1.4M | 0.0% | New position |
| Two Sigma Investments | 2026-06-30 | 99,498 | $934.3K | 0.0% | New position |
| Citadel Advisors (Ken Griffin) | 2026-06-30 | 62,159 | $583.7K | 0.0% | Reduced 80% |