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New Residential Investment (NRZ)

Participants
Kaitlyn Mauritz Head, IR
Michael Nierenberg Chairman, President & CEO
Douglas Harter Crédit Suisse
Bose George KBW
Timothy Hayes B. Riley FBR, Inc.
Stephen Laws Raymond James & Associates
Kevin Barker Piper Jaffray Companies
Trevor Cranston JMP Securities
Matthew Howlett Nomura Securities
Call transcript
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Operator

Good morning. My name is Jack, and I will be your conference operator today. At this time, I would like to welcome everyone to the New Residential Investment Corp.

Second Quarter 2019 Earnings Call. [Operator Instructions]. you. Thank

Investor begin with conference. you Relations, Mauritz, your may Kaitlyn

Kaitlyn Mauritz

I'd good welcome Second Thank Call. and everyone. Quarter like Earnings Residential's you, Jack, New morning, to to you XXXX today

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

not already the done so, you encourage download have I'd presentation to now. you If

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

some our financial during measures directly In addition, to be these non-GAAP most measures A supplement. we'll in today's found reconciliation comparable can the GAAP measures of earnings discussing be call.

I'd the like to to over now call And Michael. turn

Michael Nierenberg

and Good earnings this into dialing Thanks, morning, call thanks our Kait. morning. everyone, for

to fall nature treasury rates and to the in mortgage rates our MSR quarter, the decline As diverse investment the during continued of offset helped portfolios values.

falls the the year. XXX points During the basis the the since quarter, saw Mortgage late points and declined points same, we since and, basis year, last declined it they about declined XX-year last XXX quarter Treasury XX yields XX rates points high highs since on last by by over late basis about basis rates in November.

income, had our gains bond offset the strategies helped we quarter. in the marks hedging negative and our portfolios in growth and helped portfolios, of some to generate MSR loan which Our

all portfolios With business week, the hedged. of are fully cut they across will rates MSRs, signaling our Fed including our likely this lines,

we current of all lowering have and at we advantage we our in the environment. financing wherever of and deals this will be rate lines marketplace, take rates are We looking and can

quarter, the cost deal, securitizations points. of funds do we consumer go funds points. million QX, lowered facilities our There'll more our by in a basis SpringCastle lot second by $XXX cost advanced to During one by we over deal, refinanced of XXX we basis of Subsequent forward. of those lowering a to as the XX be and

Our should perform continue call business well environment. to in rate extremely this

of vendors clean stated relationships in the working new we I've to have legacy ways established with on As to third-party at the are clean up help up market and past, delinquent mortgage some loans. pipelines the

see continue You to have the deck we will different and will established partnerships so. do in our

has the front, NewRez operating our terrific. investment and been in On Shellpoint

$XX Originations, billion year on The some $XX and we Ditech third-party the end $XXX billion, will ended servicing, course assuming year. around the $XXX between closed of EBITDA threefold our end at While has the at past something we're from up over portfolio, last is own consists will likely of the as $X billion this billion MSRs the which of which time billion, the closed increased of this acquisition. their last July, year at servicing year, that which well as transaction. year

to lots income, so were this as What more here. There of monetize much does all mean? we do customers forward. More us go to our opportunity for

them. recapture all our increase wonderful and We possible can by we and rates our the for rates customers to create experience do appropriate will invest where a offering lowest

grow. team as we third-party well closed as as this and Our we at the John that business in hope with is On other next We with expect be partner to which are bankruptcy Covius scheduled of large past Rob hearing, still the and consistent this Friday, believe confirmation excited sales. the approved and is team challenges the legal week. Aquiline Ditech, investment sale get for resolved management there will

with are online. through working has forward We supplement looking talk been about, team. not the but the to which Ditech Obviously, posted to let's flip lot

I'm to take page, on XX%. as X/XX Page just you of to since the growth is billion. this X. on through begin And quick $X.X value going Book end at cap real market inception,

our And -- inception, a over Assets $X.X under our That things billion includes total inception, since sheet. Dividend Since we our dividend. shareholder management, that XX%. are other billion. return, $XX.X balance since of lot the securitizations on consolidated XXX%. paid in and yield,

Page X.

earnings, per For or Core $X.XX diluted share. the $X.XX $XXX.X loss per share. GAAP or $XX.X diluted million quarter, million of net

MSRs, pay as the $XX.XX. quarter yield, that is to of during X/XX. Our XX% diversified the the declined is not of value some the power but before, performed think stated in I the deployed we big as quarter. Overall, dividend dividend in we there. $XX.XX extremely our strategies what that I illustrates investment well for think race market, Book as I portfolios overall, of $X.XX. well at from the hedging And we rally great end the Obviously,

us would Shareholder as X.X% to X.X% on returns, of and go a cost And that's quarter, the we tap during at expect basis of economic $X.XX I year-to-date, in funds we try a also did return our capital We raised $XXX of million on Year-to-date go-forward comprised a forward. rate of decrease economic XX.X%. deal. source into inaugural dividend. Total of an during return preferred our $X.XX that QX, X.X%. book fixed-to-floating to for value return.

Prosper diminished a We X. call the full the XX% and of a investments rights, That's And our kind time. our advances, of we our billion. grew lot as our $X.X SpringCastle equity portfolio, XX-ish have $X portfolio. little format loan percent our programs of That consumer of to of there's loan servicer billion. portfolios. business, portfolio. here, that our now Securities our we and XX% the is at try little That's portfolio. quarter. and during here refinanced there MSRs deal we about equity is And our a changed bit not illustrate over across Page but bit what net just

thinking that done and of we've how X Page business. opportunistic talks the just we're about really about our things some

I things of here that, us portfolios. against there. do focus to on business we insurance of ability recapture to one, our other Shellpoint. subservicing the servicing of It think again, reason provides our The on It to gives some capacity acquisition the added are, and focus our the grow also MSR partners. couple

to And before, out volumes and of gone over we end has growth billion the at pointed from origination been in year, $XX $XXX-plus I close As the to touch servicing a portfolio billion, threefold. the earnings expect growth the year. billion to the there has $XX something

that there on before, we the services portfolios business. more of mentioned existing of and of I triple tap the two course that Friday. business grow third-party believe a franchise. three Covius, earnings our growth true the ownership into have in transaction the to years we over will we closed NRZ outside next Essentially, a as XX% And the

mentioned I week. there's Ditech, hearing confirmation before, next a On

knows, As named that deal bidder, were winner I everybody week. as confirmed or horse stalking to and next we think get we expect

mortgage moved do customers. recapture there. we does An Refinancing in has rates means us? profits, a origination, our to Page more means mean all increased. ability work that have Mortgage activity more today? increase more means to of X, Obviously, to What refinancing where lot are lower. of

capacity. the bit limited little today, in is industry think I a

behavior as our we to as to folks our all either boots doing we're can more to work on on models well try increase predictive recapture our portfolios. the So -- ground of

partners. concentration and to with a Each broader servicing loans, for of of in high agreements which and And to this our our Today, highlight, seasoned has compared to the XX% of our place market. MSRs of our are all portfolio every likely one refinanceable refinance. sub-servicers have less I want is recapture XX% portfolio still

we think still portfolios estimate to portfolios. or legacy of be credit-impaired our I about XX%

Where the Asset are prices tight. are we today in are Spreads elevated. market?

anything. is no a for We rush do have There great us to portfolio.

what is the capitalized increasing origination more will expectation this our investing our businesses prudently focus with strategy. in of pay businesses, profitability some dividends execute So to the shareholders that been capital that future. investments operating doing within Today, well around we're and our on on for our fit we've our

We fairly have of pipelines plenty our robust. of segments all and our across cash, today is

of to the healthy. increase result the cash revenue will more flow consumer in growth environment, our out In before delinquencies more portfolios as forward. interest And all pointed the lines. drive cost we The our very will on continue volumes recapture. rate still of and we and market funds call low our for is believe on lower strong fairly I go as again, will the value decreasing housing rights decline, origination that to work is We financing higher rates of

that. Page I'm X going reel. to is over really the just pass highlight

little go did to the and different as could a as QX. some I'll XX that at bit You take of Page portfolio our segments. I'm talk things going and in our the on which post about far performance. through we then And that of have you our a some now investment look quarter is to

the $XX-ish different During of counterparties. from acquired MSRs seven quarter, we billion

we quarter the say, there; of first were or Servicer I a with at at compared first-ever of our MSR billion advance flat, $XXX and the Mac ended March. to portfolio billion about MSR lot completed not issuance talk end essentially Freddie should Our note. $XXX term balances the a issuance,

space, $XXX we purchased million face of the Non-Agency value On Non-Agency securities.

call billion UPB, business. call $XXX for completed and execute million. rights about to securitization We our we deals around a continue of We XX $X.X called

more On is continues has pointed work completed a Shellpoint we segments, of that think $X.X And now our are MSRs, quarter. equate about work performance of this to today, at of the cheaper some million for this point, to then our X% the billion there. look in the highlight securitization a Prosper, when loan out X% then The And need in that continue performance reel. across as we Prosper. our at securitization different servicers. to a an point, segments portfolio currently you refinanced we reperforming of portfolio that. loans. we other the of SpringCastle, than little that's there. we all that warrants the believe front, non-QM which figure bit and improve Again, do I out what also others. with acquired as have ownership of to we we to we out We and one improved we $XXX with And different bringing

month. I We gross offering. as which in -- deal, equity blessed announced raised a strategic we QX, in raised this deals. $XX a to One Ditech, again we investment and from buy issued in then is in million servicing closed advance the more We XX a about And $XXX We securitization billion proceeds we our preferred announced the we out, We pointed including hopefully fund our is points. couple week. -- basis which which deal, issued gets things. of first-ever Ditech closing of lowered different post cost agreed next Other where Covius. MSRs, collapse

the front, bucket not Page each you I'm to in XX. going On MSR take through here.

current working theme environment highlight there. and subservicers I that standpoint. is I us. with That one, originators think the rate is, want capacity a the I in way focus for out different major do tapped to we're believe to to from capacity increase a the industry our in, We're a is figure

as legacy MSRs hedged go portfolio production Our environment. are should fully MSRs And today's new forward. in our continue outperform rate to we

and my to we opening them Page quarter, of talk continue And out relationships in our remain to XX. we with ways better subservicers clean of they'll balances Currently, there. -- our pipelines. is new declined those or the that. servicers elevated address are some about to call the about pointed on new can't elevated. to remarks Delinquencies Story callable. and in remain same that it $XX Why out I work advance rights, deals And the our Call remains be pipeline billion off? ways

Year-over-year, Page extremely deals. portfolio, that's our XX% Default the when rates is are XX, improvement Again, strategy our course XX%. to do in well. our our over year. by delinquency we around bond of the lower Non-Agency performing key call past

acquired out, RPLs. XX on I loans. pointed billion we of $X.X Page Activity,

deals. more call to continue We

you XX-plus homeowners number from in rates to thing percent On continue to That going $XX sales there market we the to cleaned We'll look their I think we if of NPL about performance, or and last focus banks of servicers have our they're at offer I improve The when and to down of up continue our sales deals some market. year RPL NPLs. take do then NPLs. give to year-over-year, better what where with to point down bring to want the were there. work nonexisting different dramatically to front, a RPLs of out, likely lot be one the billion as kind is saw with something

consumer is out Prosper, Highlight securitized lot these. of Page not Love of a there. XX, X% out not of There's do current there. deal, reel SpringCastle of ton equity been here. ownership more have them great. a Things to We point again, and terrific. returns our loan to portfolio, our

cost lower Page advance servicer again XX, lowering on of funds. our lowered servicer facilities did hopefully in and of we be The be will outstanding Each XX just of facilities. have advances. every those points. funds basis and deal funds around we cost our that of Very our focused will cost all to able one our of July addressed by

have. across I is we is consumer different slide. We Page refinanced really XX, highlight issued think you at it platform Mac you notes. lines power the our look can business think this -- the of We that bottom. MSR look And does really the Freddie deal. I the terrific What when

We on we're and a loan, in deal. We another we continue our marketplace with and we're loan the collapse securitization, did work non-QM did one -- out to reperforming now.

So stuff securitization proud in the the we're doing issuance the job markets. really around of that

Now about operating bit of little our stuff. the flip to we're where and headed talk where portfolio I think on XX kind are and we investment a I'll to Page businesses

As speaks I for itself. pointed out, it

our no loan to sake lot deploy of just of and The do offset is business offsets balance by need rights. we negative our turn business, business each and MSRs We are our by our other. around call then RMBS a capital in the of in The for by capital. duration deploying nature rush, nor

portfolios So are this our hedged very again, there. fully happy point. And at

reasons. of future. increase, continue the operating continue volumes earnings only on bring good look not We a portfolios Shellpoint, we at us but side our been that of to has servicing again, true we part or only eStreet team the Not that about origination only will not acquisition growth and to our our When the business either business. businesses increased ton may think are those you to or also look Shellpoint and When volumes around helps today a very tremendous, and have of management family. of a have our right that businesses, for lines third-party increase. Avenue number a expertise ancillary XXX that look Covius the the at other page, in company is

own that. pointed I As we of out, about XX%

to to ability the have We ownership the over next grow years. number that of equity XX%

portfolio and operating highlights. our XX, Page

and part huge will think I I Currently, we $XXX year. do Ditech, end recapture protecting most of as the billion strategy And billion Ditech. there. assets. last our focus we $XX on expect $XX Originations, the X Again, up $XXX of end year to go our that from MSR With business I That's Expect at Ditech. then a from without hit how these. forward, about grow. Big expect Ditech, to better we're without of billion to Shellpoint $XXX billion. about $X that a ago. billion at servicing With be billion. standpoint

different about partnerships. Page XX. spoke I our

Covius. the Avenue for the family. Altisource And auction of Shellpoint on eStreet come that new And That the auction.com the services had is I Altisource, Matic. portfolio. as we've that operating mentioned us Just partnership relationship part REO. have take online and REO

will it On bond better that excited that the on one through and go have foreclosure, investment, REO. much business we're about we a loans quicker rather is performance for insurance is sit these that neighborhoods foreclosure provide clean as holders, there where in let working we're will small where Matic than loans auction.com an liquidating from well. relationship up

very should reason away Couple but to that on from We think Origination hard something We're of here assets. We XX. focus What excited here get this. on mean? a I'm about origination. recapture. $XX more billion or origination Page things thing assets to the to are is just stay extent do We the Ditech growing a are are is at That why rates. billion to in need the side. going and term we about that very, $XX closed business year. believe, between Ditech rates big of focus to slide what on lower next with this. highlight This need we to this we probably believe near does on rates

terrific lot a have There's great of people team. origination They a there.

about So us servicing that. in operations gives we're Mortgage now thrilled Arizona.

So time we now Florida. in are Coast West as as in well

We have and a a good pretty very that servicing division, integration. will seamless be

servicing value, and shareholder capacity, more recapture when it overall, how look I more this more and again, standpoint. a our at origination So profitability from drives

about sheet, our There's value do to side. to pretty our then Markets ancillary massive Finally, is we a overall, on essential loan. out protecting could our the We've of want where to we on pie. where risk going maximize pretty there. vocal seen pretty origination. about I've job to each is of management, create to protect ways a I've protect value And on for Page we think the figure do the just to assets. are each shareholders. every opportunistic it we of is we to mission I going continue our for more what the call. capturing recapturing It's earnings we that our We're We and And to our create assets, can. value the that I We be where that. value want been believe been in vocal assets. our lot balance rates. done the to think focus? and that whole not rallies focus need difficult. Our We we've shareholders. on today XX, continue value and considering were, are We're

to over it the turn to going questions. I'm operator that, with So for

Operator

with [Operator Crédit Instructions]. Harter Suisse. Doug

Douglas Harter

the just you the Ditech away got in of MSRs, second the attractiveness about was -- you bit do do could acquired look larger deal? those? third from And assets returns? just bulk quarter, like? little what talk to that I in types the of compared hoping kind Mike, kind And those are of returns those what the What of how a sort of

Michael Nierenberg

them there's a but smaller acquisitions, not something there's for for or one then take around $X one ones. about smaller billion, one ton -- mostly there's give smaller most they're another billion, are $XX some there's and So billion, like bulk. we of It's there's -- $XX are of talk for when another there bulk,

bulk. most of So them are

something between XX%. be expect to We probably XX% and returns

they before, of out pointed yield I from perspective. return a As fully actual the asset a on year that part the There's it are hedged.

The continue will grow our other our off part for third-party down X X.X not having million million businesses, is, as grow we businesses businesses, or today continue pay to of think shareholders, road. the we around businesses, but integrate operating our some and our we to -- customers as will those ancillary maybe

we're a to fully XX% on upside leverage returns So focused that ancillary businesses more assets, hedged around XX% on. a then lot basis, the and

Douglas Harter

you kind kind of of then a a said rate And should the what if kind of about sensitivity how of of how times, just you means MSRs, around and build that? kind little gone could more we fully of just on comment hedged that think couple description you've for of the hedging little clarity about kind a

Michael Nierenberg

Yes.

MSRs, portfolio about So we think we when the entire we investment about think have.

which our have has of we $X take billion about book give loan equity. or So

I quarter think out we've long pointed I running duration been last there.

duration been bond there. which long our we've portfolio have running We

MSR Our duration. negative has obviously portfolio

that adding spec receivers pools swaps on the value we've as asset. quarter, been protect putting the of throughout and So to

to think interest and is -- queues, a spread sense, in of rate insensitivity. overall, you So when think credit some there there kind I give we always the is

a down an in estimate $XX environment about rate In portfolios value we environment, rate go of value up expect our down of the will from we the that we're $XX XX% business our now, be up to where million. about XX% I think million.

what So to take, do trying as home. give our books to or our we're is, run close

some we I last think looking November, it's rates. a go Doug. I year good to swap at really If question, in was back

XX-year higher, year, we in a X%. when rates swap just to X.XX%, swaps sense. XX-year on at November you go around we last going give significantly are were or take Today on thought Sometime rates swaps give paid to

So had fairly I protected. and we rates, think rally in are a have the massive portfolios well overall,

$XXX The other have MSRs, negative point out the marks thing to portfolio a overall still, our that today, want we in taking of MSR gain million. our I in year-to-date, despite fact

this So a have just going like those are themselves, yields negative to it's guess, person if hard I rally. to of to markets Fed of believe the we for debt are. Being they overall seems continue the now. value that is XX-plus but rates the week, projected assets, see to XX% seasoned going markets years, it cut

the the fight to Fed, and So not we're going going tape. we're not fight to

and we do a MSR portfolios, And by in So need hedges assets protect by in putting position our to we're our our other the -- against that. -- others assets. great and long we getting running think to

Operator

Bose George KBW. with

Bose George

follow-up to conventional, on returns. Ginnie? Is it give that? question the First a you MSR the deals Can unlevered Doug's just on

Michael Nierenberg

conventional. mostly It's

Our levered overall have that are your sizing I to against we're something you think We stuff yields lower and double-digit around, have you the say, were on about then XX% from would And -- right now. be XX% a going production XX%. perspective. it. hedge spec new them returns It's the way pools

Bose George

that Is yield levered or? the

Michael Nierenberg

yield. Unlevered, around those, kind That's X% of levered unlevered. think are an we something a

Bose George

that Or disaggregate $XX it the just that quarter, the -- And million portfolio? residential include does on loans this bond gain? Great. you the just Okay. gain can

Michael Nierenberg

portfolio the gain approximately NRZ. related here origination million book. $XX the And to book, The remaining million origination mark at on the on includes our on our $XX loan gain the Shellpoint to relates

Bose George

the Okay. do? How did MBS portfolio bond agency

Michael Nierenberg

sorry. portfolio? I'm MBS agency How the did bond

Bose George

Yes.

Michael Nierenberg

to our in mind, value, not it some in they hedge up go you in on portfolios, MBS, will they because saw they I a agency hedged when widened using nominal bit portfolios But for MSR those side. other overall, have a swaps. are on most little for basis keep Well, part, QX, versus the quarter, think, that throughout gains the our the

Bose George

Yes. Yes.

in do -- go bit? position can sort you just over you do I in be just what need of for done then And there that? need more comment a to Or acquisitions revenues, needs to you flesh are Okay. about to that mean, to ancillary opportunity out little sort your of capturing -- incremental

Michael Nierenberg

Sure.

call, relates million. So what invested about lot third-party say, origination Covius, as going be so far to That servicing streams. would of, We and revenue to it business. I is Covius truly a has running, $XX

really you to And gains when today more then could think it that shareholder will down any So where see a going today. think you dilutive not about returns road. we you're almost from than our perspective, about go as the for

So that some at and I mortgage think NRZ will small. as strategic shareholders, think which an that investment time by into There market go think good. come business -- The which legacy some with in of we a is T be has we there legacy be of in operating stuck about for that, loans some that much focus that. from mortgage will more monetization than a to -- will REO. cleaning be -- will and again, will event you'll truly side been getting deal one grow a believe sit The will have will auction.com up loss the Matic have for waiting We a severities ours. ancillary revenue rather those very lower

The other will benefit to think bondholders severities. truly is lower we thing that

be So revenue there. will some there

at other to I tight look We investments in operating would are businesses. what other, continuing call,

grow. think could Some that we smaller in frankly, really we of them quite are nature,

of chunk you when acquisition, the around that of MSRs. or was was, at Shellpoint So the the well, value $XXX give A overall, the that good take, strategy look million. something

Bruce having been a the ancillary the just book more the and great of month ours. business, team, but has that they've for not giving his great overall to premium only about expertise us and So partners us, and just an there. the ability to And from franchise the paid of the protecting learn in earnings perspective, think again, been I Williams ones

So we'll be look continue and to opportunistic.

that isn't our The X%, that a do are I've bond for Leverage yields saying just shareholders. quarter. X%, stuff quarter don't been after X%, lot interesting. not

that investments other to for by be So alpha We're continue certain things making and yield are to more going or the shareholders assets. we selling either operating to at acquiring our we more look think higher businesses. strategic ways generate in in returns

markets thrilled mean, won't not we're I anybody are. where they're So -- anything. are we say I the giving

going portfolios portfolios operating to road. But us like enable the investment our investments. down stuff to we is have should truly continue are power today those and real think I And of been. to pay play our the run for existing the dividend dividends continue to our shareholders

Operator

Riley. with Hayes B. Tim

Timothy Hayes

My first follow-up the acquisitions. on MSR a just question,

are? Just it the those regulatory just function a banks Or prepayments to headwinds? or are ahead And profiles seller wave potentially? Is wondering who kind funds? of it of get mostly of is of looking

Michael Nierenberg

few was we're not for It's part of was been banking sure. that But a most community one in the more general, different more I fund. but the the or a our we this can In of and banks. sellers, really services more having is we them say, they've what mortgage the where in a selling but that part. ancillary X billion, environment, growing theory yes, There But again, with could strategic really it's the other return what X bulky not was, customer would assets, for billion And of revenue. seen other our acquire nature. from haven't it's then ton happen, that is And MSR answer the where just products asset, to customers base. the only X.X do billion, and of

Timothy Hayes

you what any are this are? -- year. not then any CPRs or valuation other cuts September? August and maybe what does how cut of the impact rate in think can clarify could second that just reflect assumptions MSR assume the there's What the currently before time expectations could that look I'm the potential are? wondering Okay. just week Understood. I these potentially rate And end My valuation like in your going forward. you the reflected question,

Michael Nierenberg

Yes.

we I at any of look asset, look all, rates. think, first at buying buying forward when we

assumptions. make to have We

to negative out long, As having yield. see actually having the going hard this CPRs XX% person being we're at rate I long we debt we if the capacity but issue. I speeds, earlier, slower than income time, global to think believe is footprint When I in what believe do for two of where for Speeds forever, quarter, we are, look I a pointed fixed environment at a we're to look thought. and overall markets an initially the be

Going to home not through late that we we or should once get into home that about this, think buying as robust. your you CPRs seasonality and August little numbers have we winter the been off where bit, the new September, fall, as the a going you're months probably forward, July, do particularly come go in have have increases buying

speeds Speeds actually on. for I origination, think point we to and two this we're about expect we that's CPRs see own that where the increase. speeds. an it, we slower than are and that it rate The for is in capacity market model the So our at thought we business, something way working issue our were quarter in

see. So we'll

Timothy Hayes

Okay. income have Got in it. on gain than sale better And would then operating quarter. would gotten this G&A quarter. increased maybe you I have significantly thought more seasonally stronger leverage a

ramp-up in mortgage you in -- lenders brought if to Just improve general, the just Or some expect there on. profitability bank wondering with forward? new do was you at going

Michael Nierenberg

Yes.

in in the I'm will somebody of gain on as we clearly this up published That's going agency the are looking year-over-year. we at numbers. have I'd something that non-QM we'd our you're -- have grow on be the products, than G&A seeing was gain that and NewRez. business operating see have on sale our overall, business. some the at XX% operating morning to smaller back are that large to to think we a -- -- sale -- origination I or Shellpoint expenses But I not come the you something to

EBITDA $XXX million either of will in of next the years. company million make couple this to year That $XXX or

fully thrilled ability And pivot servicing and and we that give that's around So recapturing us have. ancillary the with about will we're net-net. loaded partners Then work of third-parties the that. to around some our

a sure on been We'll one back we -- So us. not I'm are net-net, G&A. that. about But great to you come that's the for

Timothy Hayes

the year? know of refi your are you what And was do half quarter? of the versus expectations And NewRez Okay. at the mix for this what back purchase

Michael Nierenberg

robust. fairly will continue refi I remain market think the to

points of impaired. legacy/more give our on couple note of the our take think are credit or portfolios-ish to stuff, I XX%

get of questions. me done double with the these check to we're purchase back just and Let refi you number, once on all I'll

Timothy Hayes

And Sure. I'll the in queue. one me more and then from just back Sure.

basically As the in said the I'm letting patch week, sure QM out late came you and expire they're Mike, XXXX. saw CFPB last

wondering being comes what the you, this? were that to around at for if NewRez? might thoughts your surprise If case? it up Just end all as if you what a opportunity so, bring think And

Michael Nierenberg

Yes.

it to our government model assuming will I as not, all we forward don't think current as in think I tries or sense market. be footprint stuff, moves all I back of to Whether stays this a of business mortgage beneficial the happens administration the from in go know. the these likely intact, step their really

setup very for rates do to all well, are politically. quite are think able I homeowners. and for particularly as think these shed the things risk is hard and frankly the I extremely lower make credit current working provide they agencies, money

us that and QX. XX-XX, July, about to is looks decides refi the loan of a purchase refi it's it move somewhere for point want XX% One to the easier stuff, like the question, else. refinancing purchase loan other pay is XX% other on end is than your much about was towards to recapture, new to purchase. a as refi, homeowner I that's it's back Getting there make that

Operator

Raymond Stephen James. Laws with

Stephen Laws

of give focus? residential share is of market. you you? with XXXX, market going of new for of the repeat. patch big appropriately expire -- that What this if non-QM apologize billion shift that your Tim's response looks do an But take of a loans QM one questions, fits part January think missed or let so is to the to CFPB the opportunity draft the How like the kind private about in I $XXX rules into

Michael Nierenberg

will of it out, for big businesses. place, in there'll But stays origination can a that think, all think I regulations rules thesis come think don't the our around think very know. benefit guestimate. positive common our an How in perspective. Again, net-net, current potential do of and new that of very could operating come be be great perspective some that things I the I administration and out will of these I rules if servicing And -- play opportunity kind until to I it's hard opportunity is? an from us

Stephen Laws

of focus the about doing things shift to next given think that that and to Right. portfolio. the the growing the XX% over investments years? And that you're should increased recent may how and loans big coming acquisitions of and recapture, couple but here Michael, on should there's origination, a of we there we know about percentage think about other looks that. from or But large things XX% I like marks how some

Michael Nierenberg

what would loans their seeing have chunk the up good the a themselves banks think are to loans. have pipelines around agencies nonperforming I I call of cleaned --

Our call is to second none. to ability loans

That theoretically the folks do great about amount we we billion-ish the enormous our that market. of auction.com with If control we have is for at an the could the example, legacy mortgage could new on you think if job. up thus calls clean call legacy mortgage would XXX collateral a market, relationship, business,

this sales are year Loan pretty year-over-year. down substantially

probably I quarter. brought we think the doing. loans $X.X loan the mortgage currently margin as as that we did in we're of that sector of believe focus well is market in billion MSR I stuff growth the Our the some RPLs on the cheapest that in

details, grow. could it will it smaller it call but think than I So will was if we today is sold mind grow year I in loans of the keep pipeline a more ago. think being But

Stephen Laws

think But business are that are? -- the liquidating? less of where know Are elevated, rights classes the that growth. call where page you stopped of you any even view priced Do seem as your general. mentioned forgot for you're given to due the now segments Thanks right but know asset you patient that color. fairly that in slide business -- much being one the lastly, you bullets overvalued? part were or any there prices what there are referred you asset And of they to you're which you I drops I assets about same I asset prices excited investing

Michael Nierenberg

Sure.

it bond levered on bond on our are. or accretive call based anything of not call whatever stuff -- portfolios, returns So the that's the we're on of or X% to those evaluating core, X% today numbers strategy, think, I

those So there's assets. of rotate to out the potential

The saying tighten look and bonds, if do I on week yield you spreads high think, will to look market get on at that, you investment-grade a across do if that happened do last and on us and tightening, happened tighter nominal think I spread asset to While they has raise mortgage better. at board. basis what lagged prices continue likely the what and will

stuff is Loan interesting.

the around continue will out MSR that some stay on to hoop of some of sales the we think bankers. come of mortgage I the

So in general, there's no giveaways.

be the from perspective, acquiring us is -- big we something and side, purchase return really environment. now. kind that's shareholders think some important MSR we different I -- be think MSRs of them forward. they're had We on protect we sure accretive to will asset could of now we if we should that hedged have as a to that Clearly, where a need for our It's portfolio. making gains in in go strategy are. fully we've We're rate our that because

to should nothing those that no we'll cheap there is, and better, giveaways, So basis. on do Loans continue focus a and on go-forward again, bonds there. out

Operator

Jaffray. Piper with Barker Kevin

Kevin Barker

we I was like the rates? there this specific derivative Mike, originated believe you the gains on this in quarter derivatives quarter mortgage a on that loans there loss maybe loans. movement Is mortgage on it given this environment losses looks this would some with small out anything caused stands rate losses well as as probably given expect well. took that

Michael Nierenberg

derivative out, those So of in higher. covered positions our we're on hedges long think, of pointed going last the some year, when I And of our as some bond we at it, put We end loan we versus to we because and losses that go I don't portfolios. hedges think from I long have, significantly kind say, assets. we've protecting we had go in in fruition, our what something of our the systemic and as a bit is little forward running, like came I are DVXX a portfolio. some to would market

the the get I'd On origination to I'm looking sure, Kevin, you're you side, regarding have what versus at. losses -- not mortgage to back

with So need at and who's you on kind just I'll NewRez our that. go through and of I -- Nick to get back to CFO

Kevin Barker

rates then... million we origination this. $XX a loan which can And derivatives. instruments, other that a movement maybe of seem on mortgage would derivative but and was those even way, losses unrealized the I follow would $XX up million, believe lot that's And go it the loss the of on on

Michael Nierenberg

to Yes. me double on get Kevin, and check that let that. back you on

Kevin Barker

little $X.X you especially RPL RPLs RPL and But competitive, what the that in given that and purchasing mean the make out very the you're over quarter, there, been the market this around NPL -- supply was there's market? I very billion then purchase mentioned years. a market few competition and Why now, become it has attractive. last just Okay. NPL the has and seeing investments broadly the those And

Michael Nierenberg

One banks. of improved. the partners what we've been or of learned performance is, those a servicing that others be some at agencies one could with these and closely has pointed is think of X% actually we from loans Shellpoint I we've that And actually I our the standpoint it sitting improve pools that I out of some the have think what working whether and seen with of I with Shellpoint, performance think

we're others Fay by underwriting what we're servicing performance -- our as to different around with business. So it our working surpassing or that that whether is seeing partners, it Shellpoint, relates our underwriting be

We're for or part a Wells we're returns is be the I do think two And part Wells servicing living. there. loans in to able their and the desk. ago, investment -- on mean and to not we'll business. We're money a buy it are invest And not stuff. seen actual around every going last grow to capital outperform the week, ancillary on make or pool. realize we ourself. going some separate going we trading to are weeks a asset If environment. stuff of servicers an to continue the but to better do only side, going not is think there. revenue We're our We've participate cheapest we I of sold those We significant of didn't do portfolios have what based rate bunch gains its sold to

up don't We've up assets of and will X, purchased again, some to here. treasuries, couple chase be supply there's meaningful. points mortgages, not that going the X ago much not just of But it think that there, outperforming were outperforming And swaps. I we're months anything a that seen we outperforming

capital. how be deploy we'll that about we So prudent

Kevin Barker

And as on Okay. business that of part you to you And long moving give like the the It's purchase of right make us company do was that why now? And profitable to Ditech. of period Ditech? you coming time. a not that for out pro liabilities. then struggled different could given And the profitable time? for what not -- long a idea And make are can just purchasing things it. asset, be forma Could you capacity there's the earnings just how obviously think

Michael Nierenberg

question. Great

valuations we asset are So MSR side, where they're think, first the only the are, valuation thing The that to want currently the I floating side side of I asset think we with side, fine. the assets the on those market. point is out the

confirmed the get will on we that be extremely assets extent those multiples the to to week, So shareholders. attractive next

a So of business has from the they in very business call an -- good that's can't those center to number I years. expenses and talk number origination were how run years. the been Two, for how operating for past standpoint, their -- we of one.

we that when rates we with the -- folks, that will time. us our recapture an look book, become follows: our Obviously, in because people for to our lot long of every the the have dividend about but us ability more profitability on personal All to we side attractive. able we that pay that It's back going of their give think origination believe have low give going MSR to segment. That's is really white of doing with the going one to focus years from companies, Two, origination origination to way be some asset going to -- going this And $XX-plus things is billion be very we're we the particularly we and at label it to is today. think origination it to many that have business with going a we're a run grow are relationships around a standpoint, originators. more as

west. Arizona. get have don't we in anything On operations the out mortgage side, servicing We

some So -- to through great Ditech for the years -- the bankruptcies times, at there been in -- way people life. three quite they've and two a have number tough a frankly, have been years, and is your they people not live of and

runs servicing. we're So The acquire our all get asset We'll good. is operations we think the talent to pool of lead there very continue price where -- -- Navarro are going around we're effort of servicing Jack The assets where is to terrific. the going business. sites. pick to up the that couple He'll a

really, going we to it's And I not premium us. for really be a think So paying good to on can We're on. book. go and

go year I and investments deal think year, $XX think dividends Ditech numbers. our XXXX about And This from like to the -- make Ditech as an we good in were we're we Those well. hope when the million. This think I we stuff, -- $XXX able not earnings grow so fiscal did earnings did July, are perspective, pay ago million. and money. we out Shellpoint something when around to a pointed is be to I making future to investments business. with We we're continue for the make I I

excited. we're So

Kevin Barker

the you NRZ a needs it say stand-alone profitable? it's do like to with would entity today, integrated Or as system? So you feel be business

Michael Nierenberg

Ditech?

Kevin Barker

Yes.

Michael Nierenberg

will division under not then will And be be a Shellpoint servicing. folded third-party -- be for clean to company. will NewRez servicer. the be this be NewRez. NewRez this will one -- They -- company. the Yes. Shellpoint there'll we're be the called on will and not servicing It is The looking origination

So it's here. companies all one. servicing We're different not four running

Kevin Barker

do you I'm is would ultimately saying to be happen it's today? occur NewRez need what feel profitable? to with integration for need it order in to profitable that All the Or like

Michael Nierenberg

of a of it with great there. management would the We're and kinds would again, lot leadership -- anticipation getting there's been and people do We No. now. excited to confirmed. them. different this with Ditech identified folks integrate We've There's all tell that you closely we've I we the of deal a working not things. unless work with

integrated. get week, business to get will hoping this for If on close an X/XX next as blessed usual. be we're and So we

Operator

Trevor JMP Securities. Cranston with

Trevor Cranston

Question around quarter. recaptures this

you platform the you're grow? do gave to forward this -- provide that volume wondering if continues going able recapture you in And you some think of NewRez there was you Shellpoint, as the terms room improve I think of were that additional could to potential quarter. I through around to is refis percentage able But that how color refi do to what Shellpoint. much

Michael Nierenberg

was as Ginnie including is We purchase I recapture telling. pretty line on So partners the not others, Across and percentages underwriting. subservicing our with on servicing, actually are on Board portfolios recapture saw in percentage the Cooper of great. all Mae much here's -- our what such

underperformed we side, Board, not and side, the only of Shellpoint Cooper this but also across some conventional there. the on think the NewRez I includes includes on out the other and folks

to part you capacity, is much part is On a think refi again, purchase. asked I -- than is a it recapture a it's good question. refis, easier

if to the going of recapture harder some XX-XX So it's be have to you purchase purchase refi, folks.

do On the refi should able to better. you side, be

company. NewRez the I improvement the something side just partners. is is on as on ton but think not And focus could this a also there do is our we working that us, that of with utmost a

we and together stuff There's rather folks of around phone with better ring. the to number We've Now lot can of performance us for as think waiting we that give hired than a modeling. can recapture. include that work our NewRez improve around we Shellpoint predictive collectively folks that to a

were point than I bit speeds did we that a underwrote. slower little out

recapture. the for saying I recapture no back sitting are to kind the But underperformance, of slow percentages offsets for is waiting there appropriate. speeds and would that So down say, and in us

lot -- around X.X each and be retain have want the to our that we So of ability, customers, that our million in to make recapture million other them got up products them. of X offering every of area. ancillary we and being, to that one number services best whatever customers, ends to businesses we'll a investment and is and

Trevor Cranston

Got it.

program you potentially might Freddie guys quarter. Can structures of terms Mac the And going bit private for market? available little the you compares you think about about MSR how of other to have how question in Okay, that's the in be you source a Freddie -- a financing this note a you about Mac that more talk helpful. issued big that And then forward? could of

Michael Nierenberg

of most Fannie limited nature. very frankly market. have the done. note notes in to financed in Mac similar MSRs So MSR term quite that They our is term are now them. we've very on MSR They're the mark-to-market Freddie The triggers

I cash contribution something trigger or of up think mark-to-market. XX% on you LTVs have parts kind of to go any XX% to like or LTV even those before

So we'll of in Ginnie that as don't term we'll much our continue do to it focus to possibly we notes. ultimately continue as with a do be would goal Fannie but could, out our whether and debt ton the that. be space, to on We

probably to to try you we'll could handle, of finance improve banks that. a three Cost continue relative funds, the what and in is to

XXX something I LIBOR, take. with -- or about or to XXX XXX XXX. So that, think give it's if one It's you now plus think something LIBOR like

down have a So rates come lot.

think all of in across likely market the of is one of the rate go I that's asset also financing down in we're the seeing cost benefits rally classes. board our will on our true this

Operator

Matthew Howlett with Nomura.

Matthew Howlett

some Fed how ease holistically, financing they year? that, call sort and on of old the and of deals improvement the funds do follow about over the the reintroduce, to you legacy do XXX of of these then cost next bps? benefit Just in think also do Is the some it

Michael Nierenberg

a XXX easing let on happen, going the don't and me that's I'm know. to a XXX Listen, get think I Fed Matt, not off sure me we bps. call go bps. But they if outside

XX an cost an lower see in opportunity us this funds. and to going We -- go of to they're continue what think I to deal for issued July. advance happens. week It's then this

SpringCastle XXX We cost of by I think basis something. funds the XXX was our points. lowered

have of of more our billion lower funds cost bond couple We advance of the to on book. facilities a

of better we lower even term that of some stuff on we hard -- out funds to repo working we're do. the cost can ways out that figure in currently if or with debt So

think overall, should we as to going we're to considerable which I forward. income go savings So see add

Matthew Howlett

Okay.

to the the came XX You you've that down bps said that resecuritized? events, servicing on one

Michael Nierenberg

Yes. now. there's ready it. deal. That more was We're deal And to another behind that getting one go

Matthew Howlett

Got it. was capital. question I only on to going And the then ask

one. in know first used You is like you one. your It old the looks it But I the Newcastle, to did issue preferred this which was preferred. first the well. went

if looking like some you do to hopefully -- Ditech servicing. of you position company obviously more clearly XQ? the the closing and the You're the access at other How said, at preferred, capital can. you'd You of what's look

me how the think through a half you the bit of walk capital about Just little back the in year?

Michael Nierenberg

Great question.

Just clear upon to I Matt, million think equity about whether Ditech it be side. we conventional and happens if is so staggered side think, on we're when the it that could be I the $XXX going versus the Ginnie on approvals, on acquisition, be And that deal the million-ish. when depending get $XXX

balance for no on capital a sheet. that deal. reason. We cash this preferred deal on there's retail our currently for So need did have We

book. below Our is stock trading

we issuance So where I currently right are don't any anticipate seeing equity now. trading

do by will there's the term we And get another are where deal if example. to queued to to and to even trading to in And and ready selling preferred go. we did assets that in are is up marketplace. the stuff, that think that raise on that. just capital, give think some we we of retail market I here want ways One accretive the for likely little near we bit you two yesterday get come currently a to not

of the these on deal, now. market be And million, sevenhandle million wants think whatever I $XXX a cost whether $XXX give could that around funds that or to it's us,

are think nonaccretive sevenhandle at something X%, you let's some good X% the at this say, our of about point cost capital source if So shareholders. of bonds a for assets, this selling on to of legacy that it's even funds around

Matthew Howlett

Yes, last you did X.X%. just the one

I guys. the is, down preferred some mid-teens in mean go have to as -- could kind I total terms be low I mean, access X.X% seeing you capital. it that part -- market of how the as -- mean could We're are you long of of go. more. other to as you some think part X% hit mean as from bigger But a rates You big -- I ways of the them of and

trends you as be your around thoughts to overall want structure? far the any Just as capital in where pricing that

Michael Nierenberg

Our current deal is trading was. where above it

that's So that purchased folks thing think, a the those for, assets. I good

Operator

difficulties. experiencing some currently We're technical

presenters reconnected. until begins. musical The conference have will lines be on the Your

Michael Nierenberg

bills. Technical the guys. Got Matt? Sorry, pay difficulties. to

Matthew Howlett

on Mike, the Yes. preferred just you as part capital, comment how on do the the big of maybe want long-term?

Michael Nierenberg

all I of you basis. billion don't on million small mean, equity. that, are so. when have way We at can shareholders more capital right? and almost we dividends, think then deals, $X we earnings create we'll our if do I good of and $XXX did source that we The know. it's they for this, nominal look small continue And a about and to

massive So they are not deals.

Operator

the There to are Nierenberg remarks. no further back to questions at turn closing this for time. I call would Michael now like over

Michael Nierenberg

a support. we'll Thanks. of see rest Appreciate see to call. the the dialing for and give Any don't Enjoy hesitate we summer, you. in. Thanks, follow-up questions, us everyone, the when

Operator

This Investment New Residential Corp. concludes the

XXXX Quarter your for Second Call. participation. Earnings you We thank

You disconnect. now may