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New Residential Investment (NRZ)

Participants
Mandy Cheuk Investor Relations
Michael Nierenberg CEO
Nick Santoro CFO
Jonathan Brown CAO
Jessica Levi-Ribner FBR
Bose George KBW
Jason Weaver Wedbush
Fred Small Compass Point
Trevor Cranston JMP Securities
Sam Martini Omega
Call transcript
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Operator

Good morning. My name is Matthew, and I'll be your conference operator today. At this time, I would like to welcome everyone to the New Residential Third Quarter 2017 Earnings Call. All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a Question-and-Answer Session. you. Thank Instructions] [Operator may conference. you begin Cheuk, your Mandy

Mandy Cheuk

Thank like New to and good Residential’s I would morning, everyone. welcome quarter earnings you, XXXX Matthew, Third call. you today to

today our CAO. this New the Nick here Joining earnings our to are Residential morning. Throughout Michael posted supplement and Brown, CFO, website that call, CEO; was me Jonathan Santoro, are going our reference we Nierenberg, the to

now. I so, If you suggest you download already have would it that done not

to Michael, annual disclaimers filed I be I I like the our regarding statements and SEC. press turn review actual over to statements you and and with will Before out point factors the today release by uncertain and certain from supplement the forward-looking in would contained quarterly that review results. risk differ encourage reports our the are call to in earnings statements These to materially may their forward-looking made nature statements.

measures some in our most In directly call to found the measures be addition, And the we can A financial comparable Michael. to discussing will over turn GAAP non-GAAP earnings of during measures call. to be I these like would now reconciliation supplement. today’s

Michael Nierenberg

joining morning, our Good thanks quarter everyone, Mandy. and earnings call. Thanks, third for

we would see by a As you the had quarter. numbers, terrific

of perform from has billion approximately which MSR the full our with supplement of opening done online. purchase am well. Ocwen, a All will by lines I full to we agreement of then posted to the segment, of I when segments, acquisition In very comments, continue business will MSR MSR. and $XXX announced break out been refer our I

trustees, the into work our MSR to and to others agencies continue rating we with name. Ocwen, the While transfer

Since billion our of from try to into all we Ocwen MSRs $XX we $XXX name. transaction, measures process. taking currently the out billion We’re full transferred about announced of that expedite the to

environment, current are do the forward. where As about the portfolio, on we based look this in think in great you as asset rate we portfolio the MSR should

assets Our an very bond had good demand. portfolio excellent income as all are seeing fixed quarter

advance portfolio In approximately call For about prove in balances of and delinquencies gain which should quarter, was trend our one one closed and did in The around as non-agency both in over our between the deals, collateral continue million the our $X.X early quarter, the Total unrealized time had to the we and unrealized gains QX QX. portfolio lower. velocity which three closed billion other are securitized business $XXX life-to-date an million. deals. $XX

quarter did segment a our as good we Our on well one consumer and very had securitization loan. Prosper

We $X.X purchased $X out the advance billion and decline earlier, $X.X to with have made a billion segment, as Prosper from we of I this last partners, year. commitment of total continue billion. is and balances, part pointed In our advance loans

Just to put both -- was from perspective, Nationstar we and that all give advances approximately the when $X you billion. in the initially Ocwen, total acquired

that’s very significantly. So down

to our the extremely has know all posted is current times, refer I will well we play we and for in supplement business feel online. December, with As Fed positioned now in the which been

Page full between to broken That’s MSRs MSRs. and portfolio perspective, MSRs. $XXX going X. UPB on of had am I So we begin out From excess billion a

billion MSR MSR and about is billion. excess $XXX is portfolio $XXX Our approximately our full portfolio

the of you continue. the pipeline could than see that The more give legacy perspective. anybody a marketplace I to just the market today, I and than collateral, cleanup trend delinquencies as and think, balances $XXX little We legacy We of is today greater in mortgage mortgage trend lower, -- the again, on put lower bit non-agency legacy billion. rights advance call have market acceleration control of mortgage market that and non-agency a you mortgage $XXX in think billion,

we overall, mid-teen-type easy portfolio, returns, our this not market. try know in you very to current target As

fixed the size As When out, assets very strong demands interest right look we rate is and now. environments. for our portfolio income portfolio I the across pointed in various

in that extremely our should $X.X think collateral, addressable large XX% you in trillion. it consumer and our the When Returns basis assets rate higher mortgage collateral, had trillion our and year year. the in. the two portfolio pipeline to at U.S. dividend a about bond well $XX existing The housing be rate. portfolio, XX%. we portfolio environment. MSR look the Our of market is market as whether businesses during on approximately about for about an we of market And invest bond really floating is the continue perform consumer our We've are is annual increases

to income As or investment X net $XXX million. of we between Page is diluted net $XXX look the did our MSR is show the portfolio snapshot per of quarter amount or of million What our earnings, $X.XX on $XXX full diluted X, we combined dividend total GAAP share. is MSR portfolio. share; this quarter, for or pay And excess portfolio $X.XX and $X.XX earnings core per you we billion. the a MSR at million we $X.X Page our

of is market Currently perspective. finance. part the financing that a is MSR from cash other flushed The with

other there is it Currently is the our, So market pointed with do $XXX it and fund million we’ll investment that fully think, at you when in whether fund repo MSR net know, the continue we times as the our look times in we’ll class. lower. from it be financing around asset trend of out or the there counterparties Servicer asset we class. I have to asset, securitization Advances,

consumers, greater & Securities and assets. those our of there of have As rate XX% to you million go Most billion. investment On in is just resi than billion we of is to $X.X net floating there, market. between and you are the Residential a loans, call XX%, little consumer $X Call $XXX Rights, over down, that equity business. due give our residential loan breakout of

opportunistic at are We times.

and one-off large end to as And X/XX/’XX portfolios. was that course of Page of over with XX%. buying $XXX we've and do about try And Typically well. portfolios the non-performing bit high-coupon-type X. loans market to loan of loans. reperforming able as the in past out then greater I'll in quarter, little of million, the that We been are talk a than or returns not the source cash we'll

frankly quite performed the part do our quarter, have: the continues segment, a believe well continue our the like bigger became Call portfolios business, bit to MSR which we to For as around of little to business continue consumer execute it eventful; well; also. and should Rights; not

quarter, price out real quickly, the non-agency million. $XXX pointed billion acquire, I roughly as $XXX for earlier, So MSRs of agreed we Ocwen, purchase about to from

during to billion. flow deals and during XX to collateral. MSRs We that end quarter. of of executed $X quarter, $X.X we $X cleanup calls subsequent We acquire third in the billion And in on securitizations are also billion agreed seasoned, of the the completed non-agency two then non-agency

bringing are $XXX decline of XX% sense, year-over-year During give of about balance million to Advances, you that end outstanding billion from advance versus mortgage securities, our meaningfully. UPB $X.X I billion, the the out QX. billion balances non-agency of In as in of down net quarter, before, about Total as continue of Servicer we to the purchased down a $X.X to $X.X pointed in advance equity end X.X%. XXXX. XQ end of That’s the as the to quarter.

that have So seen in we years. the numbers that’s some of lower

trustees perform a group to amount that spring rights pointed call then buy you bondholders a have market legacy our clean mortgage IRs loan through billion securitization up servicers, Prosper, of million. market. On a which earlier, taking the that extremely just the consortium Work I are rights. On have Page securitization side, the loans. of same. mortgage did capital we consumer and -- greater the on continues Story with own little rights. and call we $XXX with Net-net, about of greater the than the Prosper X, are our call is associated XX% life-to-date with We bonds small $XXX then and legacy well.

bonds As again, and earlier, on attractive now. prices not right I very pointed are out yields asset

that. rights, the the where about quarter continue the acquire of extent That’s can that call in investment to have However, $XXX the will as then third And we to we assets bonds. do billion we of the call to and market and We Again, REO the at the very strategy, the liquidate in loans look those we straight then out securitization. market a you come we to with non-performing mark the forward. deals.

million that I We really continue -- nothing our $XXX different at quarter. to average mark-to-market $XX last purchased of an On out, about price of pointed non-agency lines as Page X, from quarter portfolio, increase overall business the and million, bond $X.XX. third security

non-agency bond bond or greater think $XX the value million. is of increased XX% rate. the of than floating book non-agency take, of And the roughly again, $X.XX now. average I or is, the by paydowns the of price XX% portfolio Quarter-over-quarter, net-net give portfolio right

LIBOR on our end, So see particularly are portfolio. income higher, go in we earn as to and the rates going higher, interest go more front net you bond

standpoint, We’re over business, anticipate billion: Page and deal us very our QX. from I in bond the prices portfolio, higher. overall happy QX, continue We’ll to deals We quarter, I settled with that. pointed settled accelerate time. out $X.X hopefully call Call did one one two in the in X. in our on business would - more again, X, a MSR drivers discount and are doing $XXX delinquencies, lower lower again, loan bonds one bond fourth seems go billion. then advances the quarter, Page and

and on extent based some are our $XXX to seeing the is production could billion. Fed billion, think this continue And chatter MSR. the a do think will MSRs MSR what newer will of around some that then. I we to portfolio excess source in $XXX market legacy, Full portfolio I we some of grow fantastic the

very, very have of we average that speeds, think because XX MSR and bit why look our every met a little XX in a see Average size out I very about During didn’t why go out our not XX, different. that was loan portfolios to our it more; going the NRZs is little in lower; of because marketplace. point the or Page parameters. gross buy assets is quiet, investment passed quarter, When you talks portfolio at couple we a were we bit and industry XX that FICO actually we -- seasoned. portfolio net.

as continue agreements the investment. to our portfolios as entire On our in XX, market. talks outperform this to the to on Prosper So portfolios having the That's of nature well recapture due Page just portfolio. the

or loans Jefferies four-group of a Point, part to Prosper. purchase billion of $X and from Third Soros. commitment four-firm It's are us We

$X.X pointed I little out earlier, a we billion. As purchased over

the the company. investment, warrants we in of part As got

over far time, As loans fund out greater XX%. pointed life-to-date of those than consumer warrants so we we'll the earn I returns as

the received is one. on greater time spend IRR just that. profit it expect good investment. that we Life-to-date million. be early, life-to-date Page SpringCastle spend going a I'll is very, XX%. very our XX seconds. to really is I'm greater than investment $XXX While We of than to not two

portfolio. to continue monitor We that

As discuss funds. look we shows happy with Servicer down cost portfolio. our at slide we're Page very Advance our the point but -- it tops, XX of shows pays some make refinance of it, current

As billion of we $X pay out, currently continues of advances debt, $X.X LTV. so billion of to with pointed and it go XX funded down lower roughly

be going On we're is rise. a about XX%, or where and of Again, of unless currently hurdles in rates, our where XXXX. the termed In If maturity in returns, decision into very back are interest time great most we XX% to back opportunistic billion. MSRs to as our billion was we And investment expected this good on you that $X.X good go we our we're today On to have good related do it’s XX, to expect portfolio year, to would think we portfolio. portfolio between frankly, fixed would Philosophically that lower not is a we large continue that decision, continue do out unless loan financing next that the lead short and Advance not. look XX% Page portfolios quite higher of end portfolio, it's as Roughly performing. the out curve talks to once buying actually $X.X concerned to residential that last think rates is our going Servicer roll return about again and Page continue. -- on our to that returns XX, there, we I the seeing marketplace most or an because XX% loans, as recall stuff portfolio it rates. this of were

to floating do so are coupons portfolio will well, enough non-agency the then continue portfolio, to should should rate. over those legacy Our as relevant the do high mortgage well. cleans because portfolio that continue the market of up. become Advances Servicer And consumer are XX% less loan on

As going capital same. be deploy to tons think lower-yielding rate environment. we it look forward, in quite to frankly, not this is in assets the of I going We're more

plenty and few investment, over of I'm has MSR we right absolutely -- concerned back look pace the in now forward our the forward. next equity and go because, or pipelines, the of look frankly, quarter, what we're quarter. scenarios different the are rate quite third we're we cautious. to working and think investments headed, we slowed I marketplace think to get capital you where if hope the markets we that The we opportunities other markets for could where bit on the have potential down opportunistic transactions done we about the little course markets are as and

we’ll and tune. open up So back will questions. that, the it for operator it stay I With turn to

Operator

the from question Jessica line Levi-Ribner [Operator comes instructions] with FBR. Your of first

open. is line Your

Jessica Levi-Ribner

Thank much are reserve my rights, you been how for you taking trustees with have quarter terms in the Why the about of Good legal discussions call around we next morning, -- or what think questions. that so so? the and in why guys. the -- the can

Michael Nierenberg

Just XX deals or down for different reserves, we to settled a extent that sense, we October. the To yesterday the that. have do called of we we reserves require month to give take trustees the you that

done million about holdback think in we is life of that have $X.X the our total you current If total. by deals amount to-date, trustees

call, sheet. existing amount that been, to a are appropriate our capital, holding on would basis So far reserves But small the on it our so a it’s we’ll business. the to the trustees I as relative extent balance back relates take

bondholders, saying continue market. cetera. with the agencies, overall While and rating trustees that, work we our trustees, et for work solutions to the figure with We

billion. overall, million I So far, on think plus call $X.X of for a $X.X north done population total we’ve so again, that

Jessica Levi-Ribner

Okay.

for pipeline legacy looking you the look it As non-prime market talked at the new MSR more you to relates that or like are just does today? about, What MSRs or issuance? both

Michael Nierenberg

whether couple of not there's think on. we're a do or it's I first to that stuff -- non-prime happens there. the quarter, working in it portfolios But that today. there There's happens quarter Whether fourth the happening

As of to that the new couple did we on production quarter. out point during I portfolios relates stuff, passed large it the a

the I headed we do view think going higher. view I are rate -- from rates the company where Fed is of do think interest that continue a we to that the part that we likely with hikes, perspective, have are have

As we the a MSR result, asset a is think great asset.

I to continue but that to we'll there's as pipeline, at over opportunity the all of at things visible, more couple So think look have types, quite we time. are a And source we'll think frankly. our look I

Jessica Levi-Ribner

business your you, there's the fit the out Act they came model? just for of And in Claims False And MBA of terms could the opportunity how there comments one, overall do last Okay. of on FHA that with one -- the that think you conference, remove of lenders? especially from kind if threat

Michael Nierenberg

Yes.

what's think to from to regulatory a continue going evolve. the I happen mortgage standpoint market will or

parts extremely And we've the think good to active. us. are that I on clean of assets, types of in front. And see quite that going parts, certain other frankly, I acquiring think seen you're particularly become banks for the some MSR more

As us it we will it think for down relates as go that FHA to create stuff, the the road. I opportunity

us. think there opportunities should I be good for yes, some So

Jessica Levi-Ribner

you. Thank great. Okay,

Operator

comes from from Bose question George next Your KBW. the of line

Your line open. is

Bose George

us sale the from through, interest contribution that how Or And First, was came just through? can income? give you that calls? again, cleanup or the whether on

Nick Santoro

$X.XX. for the quarter amount approximately total The was

Bose George

line just the that items breakout of And where the through? how came

Nick Santoro

income would it on the through For interest line. core, come

Bose George

you out between just I did, don't returns have buckets from? quarter, the of terms MSRs kind that driving you handy, did, areas the there what then for are it of just to the is returns sort loans in of Okay. way a if your but break other the the know capital And like consumer the

Michael Nierenberg

Yes, and could listen, approximate. we

I think, unlevered-yield asset MSR XX% we're itself, basis. X% or think between about an take, on the you marked, If and give

$X.X $X.X about committed equity think of on we you it, have billion roughly If billion investment. a

will be you some mid-teens. and the to that with around So in overall could returns continue assume leverage, the

and think the between it's consumer I XX% be, going to XX%. on stuff, again,

are XX%. better as early the quite we of are see bond levered far, think $X.XX just XX% We'll that's returns you Nick then call interesting, our about that the XX% loan see I to Bonds numbers portfolios So on existing north basis. where not -- the just frankly. that portfolio, portfolio, those, are continue to. a alluded it's on -- to And loan XX% and

Bose George

investment on And side, is the far? how in loans Prosper capital the much so

Michael Nierenberg

acquired, securitizations the the billion on negligible. issued $X.X capital we we amount those. In It's $X.X that do of the billion continue or we that -- to for pretty

With the is so million. know, our for low. just $XX including self, the very X-person equity is consortium, consortium, it Total you

own of next and about So amount is it's I down, $XX have to $XX equity if million legacy nothing. break portfolio, loans, million that total. On that you our of million we and $XXX between on think the Prosper

Bose George

more on earnings? the Okay. just the to to related of that? Great. Is through just mark from And come Altisource in was the one going Or agreement with quarter. then during that any future there benefit sort

Nick Santoro

through purposes, future come For call it earnings. will with

we will the you a purposes, transaction. onboard GAAP mark Ocwen For as see

Bose George

Okay.

that $XX -- I -- it'll since guess it did over So will on? will the billion, happen it X comes you be -- X whatever, but time or but over quarters mark in that

Nick Santoro

correct. That's

Operator

the Your Weaver next line of with question Wedbush. from Jason comes

Your open. line is

Jason Weaver

question. quarter. Congratulations on morning. good the Hey, taking Thanks for my

Michael Nierenberg

Jason. Thanks,

Jason Weaver

be ratio me of gauge let historically it could down. how X%, to close where I'm to go? are where So X.X%, and down. surprised pretty you but at we'd mean, on as we possibly that the the I come advance Can balance, apparently UPB that's thought I a fast

Michael Nierenberg

less to will consumer you continue -- the The consumer just have balances will because as think healing have consumer, delinquencies And the consumers mods to to balances whether trend or will continue a I those the I do yields, you're Jason, see do -- think lower. advance trend will better. lower. as going you loan advance

Now see tell. where It's this of to to we point can the go? question, hard really the

about it the from them. a across between think you Ocwen it's perspective If really both capital for servicer Nationstar, and

is we about goal. got mortgage been with et after So And of quarter bondholders, legacy this and that's quarter, cetera. the truly that happen to meaning and all market as talking I've -- up trustees, clean us, a

I continue the floor you'll see lower. issued what 'XX think go I most between those was anytime and collateral be. to don't of But will just the know 'XX.

to XX mortgage. into you're this So into XX that years --

expect would I So it continue go lower. to to

Jason Weaver

And was market right. -- I I when also, be here? resecuritization on called gain historically, tightness think in loans given XXX Any and change the of know, could that All sale basis points. target higher? the that your And to for the

Michael Nierenberg

I XXX to when Obviously, right? short X-year call deals, these fixed X issue think a The or you've rate parts there's we morning. this note end, got XXX that, debt. we

side on spreads. did give market those so loan think And So a to $X.X we're to or the that rates $X.X see general, is doesn't could was, we going take, of billion, or when we In million that gain, into mark little we about future the you that up. million take that. eat have those $XX include That portfolios are -- as I gains it bit the in. $X.X of tighter billion. that The on flip

to to been be able or what going been have to whether know, advertising. less, more and you we're consistent no there's do deal going different. numbers we've with as the think I far, So each But very be is guarantee

Operator

Jaffray. Kevin the with next comes from line question Piper of Your Barker

Your line is open.

Kevin Barker

other can possibility for the talk MSRs? consumer lending consumer the lending, you to in to invest for outside regards in about investments of you pipeline potential Mike,

Michael Nierenberg

Sure.

unless I There that again, north there like other there, something but that. our to When focus that; there's we've the on again, that the we fixed going everything there view. that continue that assets, kind There's consumer On done themselves We're is, view opportunistic I -- not investment. that's would at life-to-date are there's if efficient. not sitting of do out to to of SpringCastle are the in things not and -- some very return the are think very, count core working to same of outlier more that on comes that capital on general, for some markets where side, income something love XX%, look across obviously, we out we'd is listen, another could as is you spreads be no amount a do going giveaways. and the things consumer

get buy not to So a we that's a to patience, be saying on nothing be things that can we in have to not of couple we see. game smart caught a portfolios. may obvious of we asset hopefully, of different But working that capital, It's with we're or our and every going have other that acquire may that than there's couple materialize. up

Kevin Barker

a see So shrink yield the drawing the the non-agency could point? search if possible as opportunities, looking at the MSRs, run we investment is see regards start see balance of to to sheet we we especially in at to a for lot one and in a continue of off market portfolios it

Michael Nierenberg

If there's it great sense for could think that we get shareholders, smaller. makes investment no

I that about think is $X that out is to X% to going tell non-agency the that. bonds capital that don't generally billion that I to strategic do in buy you unless opportunistic. go deploy we're next a been to ways reason are thinking record track are But are good again, and we very our yielding there want of

we've smaller Our There's at $XX balance of things name. just $XXX quarter transferred end quarter-over-quarter, give And you that into a cash this million. showed a one example, over to back we look our on need fund cash time. the Ocwen things balances, of when we sense, billion -- you of will the for MSRs, the to a of couple

will things MSR MSR then is able we're vetted deploy we'll the capital into are trustees all unwind be that and until transferred excess into to And likely approvals, where our we the to to appropriate name. the get as sooner. the of going going over do, everything time, get with an we the with One transaction out enter Ocwen

to that the we side financing enough have the equity that market. to flip However, hitting MSR without is, do

balance fair interesting. cash right So And to capital -- where we've how got we're there's going We deploy our that fund to guarantee think amount with cash. going because of to nothing we're sheet. we're our running a no now, plenty again, of in, have is

Kevin Barker

been market. within of of there's you lot a the of And talk or a lot in servicing consolidation next Are potential M&A the a Okay. for seeing consolidation lot the of year two? here or

Michael Nierenberg

Yes.

-- for around think, be assets. space. Obviously, we They this we'll partners. opportunistic a servicing I have us of do again, vested fair interest amount our in a hold

comes the to that makes that. So -- that we'll there's extent think that's to sense, something across try we do

We our are servicing very supportive partners. of

our there hopefully, way. that is something So comes

Kevin Barker

Thanks question. for taking the

Mandy Cheuk

Thanks, Kevin.

Operator

the Fred line Your next Point. from comes question Compass Small with of

line open. Your is

Fred Small

Hey, Thanks your call. for for the quarter? were taking good questions. what estimate of cash or couple morning. What's my A earnings

Nick Santoro

Cash -- was to the in close earnings came approximately it GAAP numbers.

it, So quarter. for was you figure it the approximately $X.XX

Fred Small

core on a a what between that Okay, difference of the basis up cash majority versus And the great. number? makes

Nick Santoro

that The down you basis I the versus cash separately. break core for number? could

Fred Small

And as come capital Does back the come P&L then supporting sheet? just anywhere? advances, the equity come Is that's that does down, that onto through? that cash Okay. coming where balance or the the through the the advance balances

Nick Santoro

be sheet. cash the on to back would That coming balance

Fred Small

down? the how balances how advance I quarter guess, cash just came much, Okay. that? And on much much from came back the based How in

Nick Santoro

have out broken that don't now separately I right Fred.

Fred Small

Okay.

restructuring? in there get any those there, chance the to termination Walter Walter agreement covenants of all from or they of clauses know -- and restructures? waive of to the subservicing terms? that any is were the better impact on as but On lot the a sort I plan with NRZ continue see there it Is will

Michael Nierenberg

We're perspective, that our not -- the don't I deal. Yes. of was announced. obviously, from part deal

think no at performance don't I'm just supportive I go As want but on portfolio, way we're our with tell been going Walter going to we're of date, this to which about call frankly. because we getting not optimal sit -- know and quite make that you this point, to sure this that. there's we We've to around very

industry two to I over think Kevin's to course change the lot back the question, I the next is -- industry servicing one going the over servicing going think a to is years.

I it's environment. consolidation to a rate do because be for going folks to grow see think higher some we'll in As harder

but So of we're same. and exactly to with our leave to continue everything all servicers, can't going I you we'll subservicers work that tell the

Fred Small

the it. as you're Yes, mean it Is just you you a they based deal, file have some subservicing I on, the but got it going bankruptcy, I -- party that restructuring Okay, on of to them prepackaged mean, right terminate I looks would you give if to do say what's not like the a sub-servicer. agreement, mean, right?

Michael Nierenberg

correct. is That

Fred Small

Okay. And timeline of then transfer just those expect full Ocwen. a last the one you for on What's the PSAs?

Michael Nierenberg

get I'm the first it hoping that quarter. we by done

Ocwen, is economics excess enter going we're do the over As and the deploy capital to earlier, our what I same the get pointed which essentially of transfer into name. an into the try to out to to to would these MSR to mimic -- get structure, get our MSR capital,

-- the -- our So be with or our advance funded on will gets capital deployed, that existing MSR MSR financing.

we our the on is that month. next within have that come wouldn't to But get pocket it capital deployed out we of So hope that.

Fred Small

mean, for Okay, accounted as everything currently excess And an you right? I old HLSS account great. deals the for from NRZ,

Nick Santoro

It's as accounted an for instrument. an both excess and advance

So you'll in on places our balance sheet. X see it

Fred Small

new or excess but Ocwen -- have, if structure that right, deal a economics... on the you do you're based Right, new cutting cut where you with you

Nick Santoro

will It excess. be

Michael Nierenberg

continue will to be We excess.

Fred Small

advances. And

Michael Nierenberg

Correct.

Nick Santoro

correct. That’s

Fred Small

lot. Okay, a great. Thanks

Michael Nierenberg

Thank you.

Operator

Trevor from JMP line next the [Operator instructions] Securities. of from question your comes Cranston

is open. line Your

Trevor Cranston

thanks. Hi,

investment being investment find the some and attractive on opportunities to or had harder returns portfolio quarter. this less question more today. the one Just new securities marginally new The non-agency

start the find sit is Or to of the spreads collapse acquisitions your in reasonable pace continuing where expect sense of for you the of today, are light it buy Given here? that bonds down to ability make securities slowing from us to non-agency to deals? to

Michael Nierenberg

sure. Yes,

I the I latter. demand lot more -- of these we basis. a There's on mean think a fair a trade there's for amount of that of as it's bonds weekly assets. the marketplace in

business, call makes we'll -- the to it extent to us, For as continue capital. sense deploy that our of that part

I trades basis think investment-grade are at points. comments -- broader my XX basis index XX the

we or index, sit, to want are You All income think to a where But with fixed capital the we of XXX. -- forced doubt. something like look XXX high-yield and be us. assets I'm without call sense into give we associated continue lot I for take, different assets well bid. that at we deploying extremely rights, that acquire our makes will don't a don't but it's, again, -- I a don't these are into not

Trevor Cranston

Got it, okay. That's helpful, thank you.

Michael Nierenberg

Thanks.

Operator

Martini Omega. the Sam line question of Your from next from comes

line is open. Your

Sam Martini

sure forward Hey, today someone that in ago? some this, just into where everyone going be the of question. compare just not views for to X, looking of any housekeeping, I we I'm to be, markets, advance the understand Mike, I finally, would as on market? Mostly but earlier on you then should any I It's they financing What's kind question tighten don't. give supplement, us asking of expect on What the the else on guys. understands different just buckets. versus forward get I'm MSR to sure understand you rates? bad cash? we see year they I'm the kind Thanks of just Would but MSR asked covenants on if funding markets sort noncash -- removed? but financing for you get the X Question What's rate? us opportunities could to X? sort situation. the assets, advanced understand just taking tax to the on cost? REIT an And be? And UPB. Would question give similar to And your balance, be on update just maybe go you wanted tax trying to wanted are I Would those other making hoping they they call you're be guarantees, if would on a where the

view you give got excess and all the then in put differently, and around little excess of equity rights to help what's MSRs, just financing me summary a move servicing like high-level those, you've MSRs sort of method hoping or either So bucket? I Page me each on They receivables. X bit just of could MSR's mortgage a was

Michael Nierenberg

everything Hold on, asked. let me just you think just about

Sam Martini

question that three in one parts. And was

Michael Nierenberg

love I it.

talk to talk Let financing. Nick the of some MSR I'll stuff. other me -- will the to

where MSR there's for a think do us capital. the on that's going to be to visible Here's pipeline stuff. we're deploy I able

a unused to our us of of current financing now. sense MSR $XXX is give million, about pipeline, think available we to you just today As financing, that's as

MSRs you've capital asset want seen around seen rates of called spread I So funds or couple us a note the seen, to the for ago the because we've couple plus or deals plenty rate on on done or XXX. of to different, us, a a -- us out that up standpoint, a overall so couple for to financing issued past of bring X.XX% that we'd We've of seeing from I that by over originators. term for there was PLS. of that we class. of we with I there. years the something lend cost around plenty think be call, We're a was MSR associated year, course approximate currently at of folks What there's standpoint -- mortgage what LIBOR The had that around coupon

better, is, if that's X-handle. more a LIBOR about looking get going are more banks and think finance there's So to you think do to that where XXX, add this. I as you're

would thing only folks investors our class, asset with as continue be expect with the in well get term-like the to in the able to issue I work other financing D.C. to to we is -- markets as The capital around it that and better. with do

is, capital, So of plenty of for my financing. belief MSR available plenty capital

we If currently. we head lower... likely cost have come will get more, and Spreads it I of more. have the need can in, funds believe We

Sam Martini

advanced plus is Is that LIBOR that sort to XXX? on the MSR? rates of like-for-like Mike, X.XX% And

Michael Nierenberg

rate that that Yes, coupon some a on we fixed was PLS stuff did.

in I higher think was One 'XX. they'll by rated doing around Morningstar, with asset. it believe in other rated to will things securitization like rates. to long, do the is can AAA advance to where That we're see a going out first in be long be time. we the rates, come going a one MSR On financing be done that's term marketplace MSR that's going We're advance long, that be notes. I

cautious balance is, and -- The about are overlever want to going could be to financing higher. sheet. I lower to I advance head we head again, only want our believe, thing rates So one don't rates stuffs just

Sam Martini

Right.

-- tax situation? the about What taxes Okay.

Nick Santoro

we the on most tax our taxes, of terms that is we're And of the purposes, And excess. a from lot spent for profitability dealing comes a excess. time that MSRs. taxes, focusing into broken is now In full given of with expectation full and MSR the base an

given going of material, don't taxes the split and to be base excess, So forward. expect we

Sam Martini

Okay.

on how I statement I moving expense normalized over of the should place, income all -- level? get sort to of to that what when the or see I the through should So tax shift a predictive kind

Nick Santoro

is the you balance that significantly. for driven you'll saw, quarter MSR tax the as the deferred of on as second expense tax quarter, and transformation both that asset that. HLSS primarily to The accounting third our balance old the a the decreased in full our by see sheet And well

basis, repeat So noise won't that won't on go-forward itself. a -- it

Sam Martini

the then last what's on the way those And X each about just just think Nick, is bucket? lines to high-level the in a Okay. sort supplement. What's piece, of

Nick Santoro

Sure.

mortgage-servicing servicing our excess sheet accounted our our rights our in as well So balance rights our balance either our advanced in sheet, lines. purchase item full there's line as receivable. line MSR servicing transaction HLSS mortgage those well as or It's are on MSRs transaction. balance contain for mortgage legacy The right sheet X advanced our a as on and

Sam Martini

the and equity Okay, then method?

Nick Santoro

method you owned well that MSRs. our own equity ones the as -- interest Q, we could rights directly we investees. through investee, excess that excess the in And servicing we when as both are equity that's detail simply The our method publish

Sam Martini

you, much taking questions. Great. Thank very guys, for the

with questions. brain the these numb Thank to you. Sorry

Michael Nierenberg

Thanks.

Operator

Michael I the further back in will no to are There over questions queue, Nierenberg. call turn

Michael Nierenberg

you. Thank

with the following So I you leave to want thoughts.

For our from the $XXX business, We we quarter ended available have to financing in million cash. with us of plenty perspective. capital a

attractive continue that to extent are So capital. we that is we to investments there will the to us, deploy believe

same have continue patient, be we'll invest The I the and more is But capital performing to more been to going we patient. are rear We do do business to extremely their think thing. head, well. will opportunities the

rate we're good shareholders of And the forward generating of all We returns and environment. see you current end to positioned you. look well the we'll think quarter. I at the our for fourth for extremely

great weekend, a in. for thanks have and dialing So

Operator

call. today's concludes conference This

disconnect. may now You