Rithm Capital Corp. operates as a global asset manager focused on real estate, credit and financial services.
The company seeks to generate long-term value for its investors by using its investment expertise to identify, manage and invest in real estate related and other financial assets, as well as offering broader asset management capabilities, in order to provide investors with attractive risk-adjusted returns. The company’s investment team is made up of individuals with deep experience in f...
Rithm Capital Corp. operates as a global asset manager focused on real estate, credit and financial services.
The company seeks to generate long-term value for its investors by using its investment expertise to identify, manage and invest in real estate related and other financial assets, as well as offering broader asset management capabilities, in order to provide investors with attractive risk-adjusted returns. The company’s investment team is made up of individuals with deep experience in financial services and real estate investing at both the institutional and operating company level. Rithm Capital has a global presence with offices in London, Hong Kong, Shanghai and Tokyo.
The company’s investments in real estate related assets include its equity interest in operating companies, including leading origination and servicing platforms held through wholly-owned subsidiaries, Newrez and Genesis, as well as investments in SFR, title, appraisal and property preservation and maintenance businesses.
The company’s Asset Management business primarily operates through its 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 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.
Segments
The company conducts its business through the following segments: Origination and Servicing, Investment Portfolio, Residential Transitional Lending and Asset Management.
Acquisition of Computershare
On May 1, 2024, Rithm Capital completed the acquisition of Computershare Mortgage Services Inc. (Computershare) and certain affiliated companies, including Specialized Loan Servicing LLC (SLS).
Mortgage Originations and Servicing
The company’s ability to originate and service residential mortgage loans positions it to support, connect with and provide solutions to homeowners throughout the lifetime of their residential mortgage loan. The company’s third-party solutions include performing loan servicing, special servicing (which requires high touch customer service, more frequent customer outreach than performing loan servicing and higher staffing levels and sub-servicing fees) and recovery options for deeply delinquent loans.
Asset Management
The company’s Asset Management segment primarily operates through its wholly-owned subsidiaries, Sculptor and RCM Manager. Sculptor is a leading global alternative asset manager and a specialist in opportunistic as of December 31, 2024. Sculptor 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.
Sculptor pursues consistent, long-term performance by balancing the flexibility to act swiftly in ever changing markets with a rigorous diligence process that aims to minimize risk for clients. Sculptor continues to see strong momentum across the platform and capitalize on an attractive investment opportunity set, delivering strong risk-adjusted investment performance to fund investors.
Investment Portfolio
Rithm Capital’s investment landscape has broadened over the years to include a wide range of products, including but not limited to, residential mortgage loans, consumer loans, Non-Agency RMBS, Excess MSRs, servicer advances and SFR properties.
Residential Mortgage Loans
Rithm Capital accumulates its residential mortgage loan portfolio through originations, bulk acquisitions and the execution of call rights. The market dynamics are marked by increasing home prices, strong credit quality of loans and rising yields, all of which enhance the appeal of the mortgage market to investors.
Non-Agency RMBS
Corporate credit spreads are at multi-year lows, reflecting strong demand for spread products across the private-label sector. This demand has been supported by the expansion of real estate loan products, including closed-end seconds, home equity lines of credit, home improvement loans and more. Despite high mortgage rates, this diversification has facilitated the issuance of additional private-label securitizations (PLS). These instruments provide locked-in borrowers with opportunities to monetize their home equity, further driving activity in the RMBS sector.
Consumer Loans
Consumer loans delinquencies are generally returning to pre-pandemic levels or are largely confined to recent loan originations with higher interest rates, limiting their broader impact on consumer stability.
Strategy
Rithm Capital has grown from solely a manager of MSRs into a diverse and opportunistic platform that includes its operating companies, investment portfolio and management of third-party products. Rithm Capital seeks to draw on its expertise in origination, servicing, asset valuation, structured finance and mergers and acquisitions, as well as in operations and restructuring in the financial services, credit and real estate sectors, to source, acquire, manage and seek to enhance the value of its investments.
Portfolio
Origination and Servicing
The company’s Origination and Servicing businesses operate through its wholly-owned subsidiaries Newrez and New Residential Mortgage LLC (NRM).
The company has a multi-channel residential lending platform, offering purchase and refinance loan products. The company originates loans through its Retail channel, offer purchase, refinance and closed-end second opportunities to eligible new and existing servicing customers through its Direct to Consumer channel and purchases originated loans through its Wholesale and Correspondent channels. The company’s 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, RMBS and other securities that are issued by either public trusts or private label securitization entities (Non-Agency securities) and non-qualified residential mortgage (Non-QM) loans through its SMART Loan Series. The company’s Non-QM loan products provide a variety of options for highly qualified borrowers who fall outside the specific requirements of agency residential mortgage loans issued by the GSEs or Ginnie Mae (Agency securities). The company additionally originates closed-end second lien home equity loans to its existing consumers to access the equity in their home without the need to pay off their existing first lien mortgage.
The company’s channels consist of:
Direct to Consumer — The company’s Direct to Consumer channel originates loans directly to borrowers and is highly focused on meeting the financing needs of its existing servicing customers.
Retail/JV — The company’s Retail/JV channel employs loan officers who are located and involved in the communities they service and have relationships with realtors, home builders and other referral sources. These referral relationships are integral to the company’s success in the purchase mortgage market. The company also has joint venture partnerships with realtors, homebuilders and mortgage banks, as well as traditional distributed retail business units.
Wholesale — The company’s Wholesale channel originates residential mortgage loans through customer loan applications submitted by select mortgage brokers, community banks and credit unions. While the loans are sourced through third parties, the company underwrites and funds these loans according to its own quality and compliance monitoring standards. The company provides these select mortgage brokers, community banks and credit unions with differentiated products and pricing, as well as superior customer service through its experienced salesforce and its proprietary technologies.
Correspondent — The company’s Correspondent channel purchases closed residential mortgage loans that meet its specific credit and underwriting criteria from community banks, credit unions and independent mortgage banks and funds them in its own name. In this capacity, the company plays an important role in providing efficient capital markets access to these institutions. The company’s Correspondent channel is an important component of its strategy to grow its customer base and add to its MSR portfolio.
The company generally services all of the loans that it originates, which provides it connectivity with its borrowers throughout the lifecycle of their loan. The company’s servicing business operates through its performing and special servicing divisions. The performing loan servicing division services performing Agency and government-insured loans. The company’s 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. The company is highly experienced in loan servicing, including loan modifications, and seek to help borrowers avoid foreclosure.
The company generates 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. The company sells conforming loans to the GSEs and Ginnie Mae and securitize Non-QM residential loans. The company utilizes warehouse financing to fund loans at origination through the sale date.
The company’s servicing business includes owned MSRs primarily serviced by Newrez. As of December 31, 2024, 88.9% of the underlying UPB of mortgage related to owned MSRs is serviced by Newrez.
The company’s servicing business also includes subservicing for third-party clients, including 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 options for deeply delinquent loans. The company generally earns tiered subservicing fees based on delinquency status and performance requirements, as well as ancillary income on each loan serviced.
The company finances its investments in MSRs and MSR financing receivables with short- and medium-term bank and capital markets notes. An MSR provides a mortgage servicer with the right to service a pool of residential mortgage loans in exchange for a portion of the interest payments made on the underlying residential mortgage loans, plus ancillary income and custodial interest. An MSR is made up of two components: a base fee and an Excess MSR.
The company funds advances primarily from a combination of cash on hand, loan prepayments and secured financing arrangements. The company finances its servicer advances with short- and medium-term collateralized borrowings. These borrowings are non-recourse committed facilities that are not subject to margin calls and bear either fixed or variable interest rates offered by the counterparty for the term of the notes, generally less than one year, of a specified margin over SOFR.
The company largely invests in government-backed securities (Agency RMBS and U.S. Treasury securities), which are generally meant to act as a hedge to its MSR portfolio and provide additional qualifying assets and income for the purposes of meeting the REIT requirements. The company finances investments in government-backed securities with short-term borrowings under master uncommitted repurchase agreements. These borrowings generally bear interest rates offered by the counterparty for the term of the proposed repurchase transaction (e.g., 30 days, 60 days, etc.) of a specified margin over SOFR.
Mortgage Pass-Through Certificates: Mortgage pass-through certificates are securities representing interests in pools of residential mortgage loans secured by residential real property where payments of both interest and principal, plus pre-paid principal, on the securities are made monthly to holders of the securities, in effect passing through monthly payments made by the individual borrowers on the residential mortgage loans that underlie the securities, net of fees paid in connection with the issuance of the securities and the servicing of the underlying residential mortgage loans.
Interest Only Agency RMBS: This type of security only entitles the holder to interest payments. The yield to maturity of interest only Agency RMBS is extremely sensitive to the rate of principal payments (particularly prepayments) on the underlying pool of residential mortgage loans.
To-Be-Announced Forward Contract Positions (TBAs): The company utilizes TBAs in order to invest in Agency RMBS. Pursuant to these TBAs, it agrees to purchase or sell for future delivery, Agency RMBS with certain principal and interest terms and certain types of underlying collateral, but the particular Agency RMBS to be delivered would not be identified until shortly before the TBA settlement date. The company’s ability to purchase Agency RMBS through TBAs may be limited by the income and asset tests applicable to REITs.
Specified RMBS: Specified RMBS are pools created with loans that have similar characteristics, such as loan balance, FICO, coupon and prepayment protection. The company invests in these securities to take advantage of particularly attractive prepayment-related or structural opportunities in the Agency RMBS markets.
The company’s Origination and Servicing segment also includes the activity from several wholly-owned subsidiaries or minority investments in companies that perform various services in the mortgage and real estate sectors. These subsidiaries and investments include: DGG RE Investments LLC d/b/a Guardian Asset Management (Guardian), which is a national provider of field services and property management services, eStreet Appraisal Management LLC (eStreet), which provides appraisal valuation services, and Avenue 365 Lender Services, LLC (Avenue 365), which provides title insurance and settlement services to Newrez.
Investment Portfolio
The company’s Investment Portfolio primarily consists of residential mortgage loans, SFR properties, consumer loans, Non-Agency RMBS, Excess MSRs and servicer advance investments. The majority of the company’s residential mortgage loan portfolio is serviced in-house. With respect to the company’s Excess MSRs, servicer advance investments and consumer loans, it engages third-party servicers to service the loans, or loans underlying the investments, as applicable. As of December 31, 2024, the company’s third-party Servicing Partners include, but are not limited to, Mr. Cooper Group Inc. (Mr. Cooper), PHH Mortgage Corporation (PHH), Valon Mortgage, Inc. (Valon), Fay Financial LLC (Fay), Systems and Services Technologies, Inc. and OneMain Holdings, Inc.
Additionally, the company’s commercial real estate platform is part of its Investment Portfolio and is focused on growing a direct lending platform and a leading CRE asset management business through its in house operator partner, GreenBarn Investment Group, which provides acquisition and development opportunities, asset and property management, leasing and construction support.
Residential Mortgage Loans
Rithm Capital accumulates its residential mortgage loan portfolio through originations, bulk acquisitions and the execution of call rights.
Loans are accounted for based on the company’s strategy for the loan and on whether the loan was performing or non-performing at the date of acquisition. Acquired performing loans means that, at the time of acquisition, it is likely the borrower will continue making payments in accordance with the contractual loan terms. Purchased non-performing loans means that, at the time of acquisition, it is not likely that the borrower will make payments in accordance with contractual loan terms (i.e., credit-impaired). The company considers the delinquency status, loan-to-value (LTV) ratios and geographic area of residential mortgage loans as its credit quality indicators.
The company finances a significant portion of its investments in residential mortgage loans with borrowings under repurchase agreements. These recourse borrowings generally bear variable interest rates offered by the counterparty for the term of the proposed repurchase transaction, generally less than one year, of a specified margin over SOFR.
Single-Family Rental Properties
The company’s subsidiary, Adoor LLC (Adoor), focuses on the acquisition and management of its SFR property business. The company’s strategy with respect to the SFR property business involves purchasing, renovating, maintaining and managing a large number of geographically diversified high-quality residential properties and leasing them to qualified tenants, including through the purchase of residential properties in build-to-rent (BTR) communities and leasing them to qualified tenants.
The company’s revenues are derived primarily from rents collected from tenants for its SFR properties pursuant to lease agreements which typically have a term of one to two years. The company’s Investment Portfolio segment also includes the activity from several wholly-owned subsidiaries or minority investments in companies that perform various services in the mortgage and real estate sectors. This includes the company’s strategic partnership with Darwin Homes, Inc. (Darwin) to run a property management platform, Adoor Property Management LLC (APM). All of the company’s SFR properties are managed through APM.
Consumer Loans
The company pursues various types of investments as the market evolves, including opportunistic investments in consumer loans. The company’s portfolio consists of consumer loans purchased from Goldman Sachs in June 2023 (the Marcus loans or Marcus) and consumer loans purchased from SpringCastle (the SpringCastle loans or SpringCastle) held by Rithm Capital through certain limited liability companies (together, the Consumer Loan Companies). The company has financed its investments in the SpringCastle loans with securitized non-recourse long-term notes with a stated maturity date of May 2036. The Marcus loans are financed with long-term notes with a stated maturity date of June 2028.
Non-Agency RMBS
Within its Non-Agency RMBS portfolio, the company retains and owns risk retention bonds from its securitizations. The company also retains and owns bonds from its consolidated private label mortgage securitizations.
The company finances its investments in Non-Agency RMBS with short-term borrowings under master uncommitted repurchase agreements. These borrowings generally bear interest rates offered by the counterparty for the term of the proposed repurchase transaction (e.g., 30 days, 60 days, etc.) of a specified margin over SOFR. A portion of collateral for borrowings under repurchase agreements is subject to daily mark-to-market fluctuations and margin calls.
Excess MSRs
Investments in Excess MSRs represent the MSR servicing fee component exceeding the base fee. Excess MSR assets include Rithm Capital’s ownership of Excess MSRs and associated recapture agreements acquired from and serviced by Mr. Cooper.
Servicer Advance Investments
The company’s servicer advance investments are associated with specified pools of residential mortgage loans in which it has contractually assumed the servicing advance obligation and include the related outstanding servicer advances, the requirement to purchase future servicer advances and the rights to the base fee component of the related MSR.
Residential Transitional Lending
Through its wholly-owned subsidiary Genesis, the company specializes in originating and managing a portfolio of primarily short-term business purpose mortgage loans to fund single-family and multi-family real estate developers with construction, renovation and bridge loans.
Construction — Loans provided for ground-up construction, including mid-construction refinancing of ground-up construction and the acquisition of such properties.
Renovation — Acquisition or refinance loans for properties requiring renovation, excluding ground-up construction.
Bridge — Loans for initial purchase, refinance of completed projects or rental properties.
The company finances construction, renovation and bridge loans using a warehouse credit facility and revolving securitization structures.
Properties securing the company’s loans are typically secured by a mortgage or a first deed of trust lien on real estate. Depending on loan type, the size of each loan committed is based on a maximum loan value in accordance with the company’s lending policy. For construction and renovation loans, the company generally uses loan-to-cost (LTC) or loan-to-after-repair-value (LTARV) ratio.
The company receives loan origination fees, or points. These origination fees factor in the term of the loan, the quality of the borrower and the underlying collateral. Typical borrowers include real estate investors and developers. Loan proceeds are used to fund the construction, development, investment, land acquisition and refinancing of residential properties and to a lesser extent mixed-use properties. The company also makes loans to fund the renovation and rehabilitation of residential properties. The company’s loans are generally structured with partial funding at closing and additional loan installments disbursed to the borrower upon satisfactory completion of previously agreed stages of construction.
A principal source of new loans has been repeat business from the ocmpany’s customers and their referral of new business.
Asset Management
The company’s Asset Management business primarily operates through its wholly-owned subsidiaries, Sculptor and RCM Manager. Sculptor is a leading global alternative asset manager and a specialist in opportunistic investing. Sculptor 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. RCM Manager externally manages Rithm Property Trust and may in the future manage additional entities.
AUM refers to the assets for which the company provides investment management, advisory or certain other investment-related services. This is generally equal to the sum of net asset value of the open-ended funds or gross asset value of real estate funds, uncalled capital commitments and par value of collateralized loan obligations (CLOs).
Regulations
The company’s subsidiaries that perform mortgage lending and servicing activities are subject to extensive regulation by federal, state and local governmental and regulatory authorities, including the CFPB, Federal Trade Commission, the U.S. Department of Housing and Urban Development (‘HUD’), the VA, the SEC, and various state licensing, supervisory and administrative agencies.
In addition, the company is subject to periodic reviews and audits from the GSEs, Ginnie Mae, the CFPB, HUD, USDA, VA, state regulatory agencies, and others. The company and its subsidiaries must comply with a large number of federal, state and local consumer protection laws, including among others, the Dodd-Frank Act, the Gramm-Leach-Bliley Act, the Fair Debt Collection Practices Act, Real Estate Settlement Procedures Act, the Truth in Lending Act, the Fair Credit Reporting Act, the Servicemembers Civil Relief Act, the Homeowners Protection Act, the Federal Trade Commission Act, the Telephone Consumer Protection Act, the Equal Credit Opportunity Act, as well as individual state licensing, privacy, foreclosure laws and federal and local bankruptcy rules.
Further, the company is subject to the registration and reporting provisions and requirements of the Securities Exchange Act of 1934, as amended (the Exchange Act) and is therefore subject to regulation and oversight by the SEC. As a company with a class of securities listed on the NYSE, the company is also subject to the rules and regulations of the NYSE. Certain of the company’s wholly-owned subsidiaries, including, but not limited to, Sculptor and RCM Manager, are registered with the SEC as investment advisers under the Advisers Act, and it may have additional subsidiaries that register as investment advisers in the future and is subject to the various requirements under the Advisers Act and the rules and regulations promulgated thereunder. In addition, among other rules and regulations, the company is subject to regulation by the Department of Labor under the U.S. Employee Retirement Income Security Act of 1974 (ERISA). As a registered commodity pool operator and a registered commodity trading advisor, the company is subject to regulation and oversight by the Commodity Futures Trading Commission (CFTC) and the National Futures Association. Sculptor’s United Kingdom (UK) sub-adviser is subject to regulation by the UK Financial Conduct Authority (FCA) and Sculptor’s Hong Kong sub-adviser is subject to regulation by the Hong Kong Securities and Futures Commission (SFC). The company’s investment activities around the globe are subject to a variety of regulatory regimes that vary country by country including in the U.K. and in Hong Kong. In certain jurisdictions, including the U.S., the European Union (EU) and the UK, the company is also subject to risk retention regulations applicable to securitizations and similar transactions, including CLOs and other transactions that it manages or may manage in the future.
The company is also must comply with federal, state, local and foreign laws related to data privacy and the handling of non-public personal financial information of its customers, including the California Consumer Protection Act, which went into effect in January 2020, as amended by the California Privacy Rights Act, which went into effect in January 2023 (collectively, CCPA), the European Union General Data Protection Regulation 2016/679 and applicable national supplementing laws (the EU GDPR) and the United Kingdom General Data Protection Regulation and Data Protection Act 2018 (the UK GDPR and, together with the EU GDPR, the GDPR) and similar laws, which limit how companies can use customer data and impose obligations on companies in their management of such data.
Tax Status
The company has elected and intends to qualify to be taxed as a REIT for the U.S. federal income tax purposes. As such, the company would not be subject to the U.S. federal corporate income tax on that portion of its net income that is distributed to stockholders if it distributes approximately 90% of its REIT taxable income to its stockholders by prescribed dates and complies with various other requirements.
History
The company, a Delaware corporation, was founded in 2011. It was incorporated in 2011. The company was formerly known as New Residential Investment Corp. and changed its name to Rithm Capital Corp. in 2022.
