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New Residential Investment (NRZ)

Participants
Michael Nierenberg Chairman, Chief Executive Officer and President
Nick Santoro Chief Financial Officer
Kaitlyn Mauritz Investor Relations
Bose George KBW
Giuliano Bologna BTIG
Doug Harter Crédit Suisse
Tim Hayes B. Riley FBR
Trevor Cranston JMP Securities
Matthew Howlett Nomura
Henry Coffey Wedbush
Kevin Barker Piper Jaffray
Stephen Laws Raymond James
Doug Harter Credit Suisse
Call transcript
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Operator

Ladies and gentlemen, thank you for standing by, and welcome to the New Residential Investment Corporation Third Quarter 2019 Earnings Call. At this time, all participants are in a listen-only mode. After the speaker’s presentation, there will be a question-and-answer session. [Operator Instructions] Please be advised that today’s conference is being recorded. [Operator Instructions] I would now like to hand the conference over to your speaker for today, Kaitlyn Mauritz, Investor Relations. ma’am. ahead, go Please

Kaitlyn Mauritz

And to everyone. XXXX New you and Carl. welcome earnings like you thank joining. today Residential’s for good you, I’d morning to call Thank third quarter

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

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

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

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

I’d that, like to the to over With call Michael. turn

Michael Nierenberg

today. morning, Good Kait. joining us and thanks Thanks, for everyone,

more good different little third bit one quarters other where for a were business challenged. areas a others of So The is quarter more us, our quarter the was than segments for the very any us. saw contributing in

to end XXX XX-year During the of approximately quarter, at rallied treasury closing rates points a basis QX. X% XX versus by yield the

see the same. the However, market did not mortgage

basis fell mortgage during quarter, XX the rates the During points only quarter. by

lower during Refi incentives cheaper. a the mortgages bit agency little effectively got So quarter. were

value. hedging strategies Our robust risk help protect and book management

increase saw value. the slight a we in During book quarter,

performed are the really well. extremely to our of today, portfolios see we’re mortgage we company. investment Our earnings power starting Where

enabled and end loans improve our we cuts QX run lower happened borrowing up to ways number to this continue million from our Ditech scale very creates to focus Fed saving annual we’re and the one to for rates us do more completion rate franchise. should further in continued on the create our growth as ramp to in of see more $XX reduce our MSR even costs. subsequent starting the us environment and acquisition originate recapture really excited the which an will to increase The believe has on see our costs, We company to more. as Shellpoint rate we financing will well to year, NewRez which our portfolios. The It’s and two savings of that approximately great capacity on

a coupled velocity our On advance backdrop should as call lower call business, help balances we provide go favorable lower delinquencies forward. with for

forward, us the yields environment To operating management to a on for forward. as should risk help will look our coupled businesses remain challenging focus likely only but look our we investing low good investment As for we shareholders our with not returns presenting with industry. approach provide discipline

of which now and to $X.X our QX on end This of highlight been start three. online will the kind going Market I’m to the page supplement is refer I at slide. cap has billion. posted was

We assets. have of $XX billion

Our was dividend XX.X%. yield

a is book paid total billion shareholder we return inception inception. XXX% whopping XX%. since inception Our generated We’ve dividends and up since value in out since $X

be focus at right the continues mortgage the now, pie side doing you on to One as I our page. portfolio of of big other And loans. platform, bonds, call that think is we’re if a investment things great MSRs, have the we some look our includes think platform. about you look When capturing whole that at have a we the very we different rights,

million or financials. million $X.XX Core diluted share. or GAAP $XXX per earnings XX income diluted of share. quarter three, net $XXX Page per the in $X.

share, There the common value per economic the of ever $XX.XX $X.XX bit of at of The funds XX.X% return dividend of $XX.XX, of offerings. from QX. first XX. the is September in X.X% of them two again Book up yield quarter during north a end QX end that’s resulting and third as of Total were of quarter. dividend we in approximate million cost raised during a stock preferred $XXX little X%. our Our

proud On total in stuff other are of. the and shareholder $X.X we’re see bottom billion right return we all equity left for quadrant, have XX.X% the the you can on net XXXX then very

somewhere investment XX%. When are equity billion in of portfolios $X on The net XX% levered those our servicing you yields our look at are and portfolios, effective page or mortgage between five, today XX% rights.

again, Our risk advances disciplined our that management hedging XX% take in book MSR around remarks, a we opening XX% my fully. to more out to our approach and of as pointed I much

activity a investment targeted rights, in portfolio, us our for On at little under as between yields were – we bond something little billion the levered see equity market XX% if portfolio, net quarter, to net X% call $X lifetime X% that’s invest and in the where very residential today. the with of to XX%. capital activities end it Obviously XX% of securities we is to yield

then we’re side, opportunities. of On very small billion, our lot targeted on of a business a those loans $X.X seeing loan net portfolio, it’s activity not of our as a lifetime yields amortize, of the to of there north XX% XX%. part new consumer continue equity little residential under today And segment, or

capital a bit due quarter the million. a $XXX was October and Ditech standpoint, on That little just enough ended purchase, having which over We occurred fund from our to liquidity to cash X.

and portfolio, our think folks are their time for XXX% of our of quarter. dedicated slide is managed truly Page that protect to hedge us. six, value you we how hedge during We business. number actively we showed this our a as a When portfolio to we the we have about our new book

servicing duration mortgage bonds there positive with negative whole the agency value part the to robust of balance coupled you quarter. businesses, call side page, legacy and the an book includes – rights. On again all in negative The our a increase business, have positive loans, duration during hedging have The led which of operating left part if origination is look, the the business the bonds our rights, duration.

looked in we started we we January at stability at from book – roughly in When perspective. or At same are XXXX, in of we XX.XX December value end end year QX, a book our place. in the of the the value

lot of So assets. put do how we our a work in on being protect

have new another we. changed markets again and seven, Page so The slide. have

the was the XXXX, in If to conjunction parties acquisition. an with to MSRs page We had excess securities, side truly rely the – servicing some we mortgage all We company of third a consumer Nationstar. residential the Shellpoint SpringCastle loans, rights, every you truly loans, look mortgage the investment on on our left had which mortgage in at back work. do and

number If but you same a to we’ve of the with pie. added mortgage have our capability, asset again, the whole things capturing go ancillary mortgage side do only the services, of right classes, servicer, theme our origination our we notably page the today, of consistent not mortgage

figure As go earnings we areas. different forward, opportunistic ways to be to in and out we’ll grow to continue try

right costs, to recent I impact continue we pointed fiscal about Page market LIBOR, basis now looking favorable for rest on low. funding help one save rates an we That declining business, annual XXXX. What’s at our lower projected climate should out result Fed the the our – us. origination on and drivers are to having $XX to cuts Mortgage two believe million. in of in the eight,

to are NewRez When in going we This mortgages. the about that $XX you they origination. $X think XXXX project year originated $XX they and between entire be year and billion in of billion billion something

consumer healthy the as our in but only the bond frankly, not The overall that both helps side and call importantly and origination side. there portfolios shareholders growth in most side as the significant and well servicing business. on So quite our for earnings is

billion side What Page page, business servicing get? some nine, forward an loans, assets, in on an would On think is and the some we left financial some from the other for our a MSRs. time we Ditech perspective. on which spending upside – of then as got we acquisition. go which lot of mortgage interesting advances, And $XX a recovery which earnings business, – significant add we we’re it be really did

side, Pennsylvania, Ditech operating operations that’s where in the headquartered. is On

our out building business. We’re in wholesale correspondent

upside lot side, our in be ops the West Coast on which a Arizona, we now in retention business. of servicing picked gives And time. ability to then on up have We the us

warehouses then on side how right And X,XXX employee servicer and new the of in loan we cash employees, side, million on it, financing the and advanced MSR including pace facilities the $XXX and other page, facilities. for

standpoint, of by employees. does origination of billion The $XXX we billion balance From to as something or XXXX, an of billion be bottom go mortgage we of and own look we’ll UPB $XX our presence we’re the Servicing part MSRs, sheet, XX bi-coastal customers. origination forward, between $XXX end page service, like? believe X a billion million of X,XXX what of have billion XX lot year. going next the company

overall. very highlights, capital QX little deployed

we I servicing about. a XXX% and which Guardian equity. and did, our businesses acquired we’re services think excited grew field about called we million Asset Management. XXX% Things provider $XXX quarter, new so the during or net of year-over-year. origination deployed We by We

rate of cost think, And annual about in billion million, million declared we We of We we’ve overall dividends by equity separate issued lowered funds basis. preferred an inception. two $X our surpassed in $XXX run since again, $XX offerings. on

XX. page we’ve in pie. take talking Now, past capturing Again, when quarters whole on the couple to business about the call, on been operating you of earnings we’d been I’ll the

of like. I think this is a great looks our business what snapshot

servicing We in have origination, and special servicing our business. loan performing Shellpoint in

delivered in I XX% out company. ancillary that services, And where we if of we own not last quarter by the only investment also an made you at Shellpoint, look but Covius pointed

not the relationship only of EStreet, industry all insurance Matic growth us We’re third a are have then side. Avenue hopefully party excited we other the XXX, to the participants. Guardian Shellpoint from family. there, And part but on see with from

in should investment that on think we’re extreme focused seeing growth Overall, an lines help from market earnings business the with the we offset yields in standpoint. lower these the

out MSR loans. originated origination. a on our shareholders. plus more to origination. of do billion should really $XX One pay higher our mean? dividends is is What target $XXX in XXXX this does portfolio on billion earnings. we’re billion This to ability to our we mortgage with Two year help for portfolio in I billion, that XX, NewRez significant $XX think $X Page increase pointed in recapture

have lot We grow. to of a room

We work excited business. but have about our do, lot to we’re really origination of a

over our part own think risk family will Ditech side, the of overall is be our On theme our the our extremely that’s and has portfolios. Having past to talented been employees as quarters counterparty really their I to us. the of big that couple life. relevant performance with there Clearly, control something servicing out for

servicing. in we On the again, end at expect about billion side, to servicing XXXX $XXX

servicer of service special to a have Shellpoint the in growth will we’re brand consumers. providing most importantly seeing that in we’re or we’re the again and and and excited We for the business clean NewRez the that profitability

page I’ll Those take repayment Each QX. MSRs quickly XX on every and you highlights to We end protection on Now, XX XX, of from for $XX through months the were in one QX. of agreed billion months. approximately of MSRs. settled has to the those

$XXX as totaled MSR end billion the of to the billion at QX. $XXX of Our end of portfolio QX compared

and the the points we XX savings of advances extension basis about in deal. effectively notes. basis approximately was and We servicer points per three funds During resulting of cost capital quarter, in a billion to our funds $X.X issued markets reduction our XX refinanced cost maturity

in billion $X.X sold non-agency securities, we space, why. non-agency the On

X% were our our not investment to call strategy Our yields core levered around business. X% overall to

call We securitizations deals, of loans is higher. XX on successfully business. quarter-over-quarter right $XXX We for which completed We billion $X.X about million. our XX% UPB, two call executed about

$XXX million. side, one for loan securitization for did securitization $XXX we residential one the million non-QM RPL On and

We also non-QM funded $XXX NewRez. origination from million of

cost tighter roughly the inaugural on XX second $XX points million again, things, then take raised overall and out, in roughly X%, preferred costs our in which rate north annual was was again, financing funds million on Other of separate about a $XXX offerings of little portfolio stock, run offering basis we a one pointed than – basis. an I we two corrective the a

couple $X.X One, RPL securitizations. another and Post we $XXX QX, two, securitization, billion closed collapse get Ditech, of a advance $X.X million and securitization. $XXX billion million

let’s left, of thing the couple things the bottom Page point we portfolio, you at there’s – MSR versus is XX. here. left One out actually loan our when is start – look want the that XXX. a at size Look XX, our page which page. When MSR look portfolio, our to MSRs. On our the is couple note – at XXX,XXX I industry, our average of a part to is is

the than portfolio impaired credit seasoned more rest. much a have We

I that As And about out, environment is XX% on when months. we all to only ranging our overall refinancible currently pointed have based our we’re in. past rates months well from XX our MSRs then mortgage our seen newer have three as prepayment roughly portfolio, think have as years. on protection rates, level over MSRs – rate XX production mortgage the XX the this back XX% lower we of of balance which sheet dates

call our number is callable. That Roughly consistent. billion XX, are Page business. $XX pretty

come and hope call continue delinquencies to the we off, call entire market deals roughly advance balances legacy we As more XX% rights mortgage to of have on.

portfolio mortgages there. and extremely The portfolio, to bonds, not The with well other well. been other all performance continues itself We extremely good. again, corporates bond overall bond some report did is Non-agency income fixed than well. sell non-agency lot agency has a to performing assets performing well perform high-grade market very

we’ve the we quarters. I subsequent to past side, active out fairly the over RPLs securitization. of a $X.X acquiring few QX that On loan some the pointed been billion course did

the from risk there the book Shellpoint. is haven’t super. overall have And serviced down some particularly well. buying loans We the our since Really, our to we’re been as thesis transfer service returns end been overall standpoint XX%. special QX that RPLs at say about, would Our I servicing roughly by of

upper And current took part one the pool six significant look current we delinquency the XX% left from if in to you page, months. XX% of

Shellpoint as great a job consumers. the great there So performance to as improving providing doing a overall well service is

servicer We do call do our business, and Page diversified. do non-QM we financing. it’s MSR We have very pretty some do business, we large advances. XX, securitization we

I’ll overall XXXX And Q&A. very, us, up XX. for could So open you active been has at then for a finally look very page have and then

for focus, in team a thing Our value the important this we now rate stabilizing book foremost and shareholders doing think do and kind has right can is the environment of think great most job I first that. done we

going yield in as We need We’ll same invested going to with equity marketplace. standpoint, out yields in we’re $XXX to and From be again to pointed to be we’re more net – notes that million much be an XX-year approach with XXX investing extremely we opportunistic not to take continue continue the I we about the disciplined go in before, and QX. roughly forward. there’s

growing ourselves risk. Our what our operating very, business. business And growing call alleviating very I servicing recapture, focused would growing origination, counter-party of, on

in-house can. to to to management protect much as taking continue We point out of our as value need possibly So assets control important extremely to over overall lives the we our and risk us. continue as is I

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

Operator

[Operator go question from comes Bose from KBW. George you. Our ahead. Instructions] first Please Thank

Bose George

portfolio color Can deployed The morning. Ditech ROEs transaction? will great. how and us there remind the on equity good just be Ditech Yes, the much a little you also would be in

any Just like cost differences the loan service, size, your to from portfolio?

Michael Nierenberg

Sure.

a we that the smaller nature. MSR PLS balance, delinquent let bit and little bought the Ginnie address are first, Fannie, MSRs me higher the in is assets So both more

of we who NewRez because the per those cost portfolio. us loan consistent way servicing about our we think to be would are or per whether entire across is it a at same give think cost LoanCare loan and that loan it currently when service I our cost service, that look portfolios

think say When hoping the would we’re – about I return this. equity we on

agreed we transaction market to the bond it the crazy. time funded hedge like until and was the the do On throughout took that acquisition, Ditech risk MSR this rallied

extremely So for these that we our MSRs business. overall multiples the acquired were attractive

picking I employees. When talented pointed return equity about the X,XXX the we’re we on business, think up of out

Arizona getting our Coast operation. West a We’re presence in

on this think excited I that because we tell a about. we’re picking up north expecting be We’re now thing The X. business I this ROEs can’t on to XX% overall extremely October of closed we’re you recovery on acquisition.

Bose George

you’re And where terms it? you going just actually of that mark versus or is any to just MSR, thanks. got then in closed sort the Okay, felt on based there of the it acquiring, be up down

Michael Nierenberg

Yes, they up. will marked be

or pointed little the acquire multiples will the out, of between different – overall take take Obviously the we bit a the multiple, rallied those are it each give is product As market valued south separately. thing two significantly, I something mix. bond

a mark asset. up you’ll on So that see

Bose George

can sheet through just much much walk – Okay, and derivatives, then of thanks. just sort just the is little hedging, the on on you agencies bit? strategy the philosophy And How how the is a MSR balance of that?

Michael Nierenberg

our So And now we the about haven't book past. at the bond have book a nature of about book was that bulk in the portfolio think into coming QX, had of large billion. it is about been I vocal our then $X agency billion, $X – of pretty was the we balanced loan we have end our

leverage leverage our see versus we right sheet, as think, MSRs. pools ratios we balance the are of threes on our ratios the that put on sheet our So result agency mid I balance a in, now our

so which the that So bit XX we one homeowners rates. rates have by have couple, – in means quarter rallied little the treasury I versus lower basis pointed or only agency points, mortgage the widening against as refi for incentives mortgages a themselves the strategy so rally in we is mortgages earlier is a in our that we basis, out the MSRs. saw agency

So mortgages. that's use why we

have which receivers in On have against portfolio, side where swaps market. that, protects the of that other we a us we rallying

one I sure just, and have we was. portfolio. say, overall of what illustrated coupled slides. that our page not with the we our would I think long on And So it's really in I'm that swaps mortgages duration that

Bose George

Okay.

portfolio the MSR one, rates? Can of the So million. runoff just that was negative of on part what that's helpful. Thanks. And just versus $XXX it last the actually move you mark, dis-aggregate one the the the

Michael Nierenberg

do that? was MSR quarter. want you the that to lower in than take mark And Nick, The

Nick Santoro

amortization. the related of Sure, to are majority those

the and mark. you're amortization approximately was remainder million $XXX million referencing the of So that $XXX was

Our quarter for met $XX negative was mark million. a the

Bose George

Okay, Thanks. great.

Michael Nierenberg

Thanks, Bose.

Operator

Our BTIG. Bologna next go question from Giuliano Please from comes ahead.

Giuliano Bologna

for questions. taking Good morning thank and you my

Michael Nierenberg

Good morning.

Giuliano Bologna

kind to want the – of on first on touch is I Well, front. originations

billion You significant savings of guys about kind $XX margin targeting generate recapture and there? the could because replenishment that billion there's the any side $XX next kind of Is are and on margin sense cost there year. you of

Michael Nierenberg

do listen, and path the wholesale. easy think, more to grow to I is Yes, it's correspondent

and I even working a overall in So some is one making do things morning our marketplace. with us to we I us were in increasing the what tier comparable that's on call how think this our about think putting on the sale of of we prior would the – gain peers

So a we to of work lot there. have do

I think as we looking more little different a correspondent at retail you're going forward, to we're see of more a go wholesale. lot And channels. bit then

So, I'd be for be less rather more but than and because money. to I volume growth overall think, for money and shareholders will more us, make less prudent do the significant have we do make volume

portfolio, MSR is our and thing have think Big billion sheet a is really really, we keeping that I so again, key. protecting $XXX balance

$XXX I – last book earnings. run overall book company down of made true the other are XXXX. thing the some now Shellpoint to take the earnings getting and we're think our think interest I for value, in between make business And hopefully, The acquired see million This side for significant be year industry we point and The that continue servicing our think peers million you million, we I value third in or origination into year, out party lines. a Covius the rate that fully $XX on involved ancillary growth partnering with the business, again, business the to just $XX friends we road. to about want We about in is, as really at business could when and we look when and revenue there. of one

the in growth, So and what we're business, but earnings. in not more it's shareholders huge doing importantly for only

Giuliano Bologna

the makes also that replenishment next granted about to the billion high-end, also portfolio able lot a But from sheet. be probably kind this your can stabilizing I Ditech billion amortization could of replenish – your trying if portfolio. of $X.X at little on That a you – would perspective, balance in was way of most you of take the $XX from on it the a to billion MSR kind is take originate was sense. was before And because effect $XX a XX% which under look great XX% to year, internally, away you're – to which could

Michael Nierenberg

is as everything work as the listen, mean protecting providing value for both long earnings earnings shareholders. I right, and Well, about

we're yes, board. So on

Giuliano Bologna

is can That there sounds good. profitability house. taking you around of of and kind that business bring you're something because in it scaling pieces up The type that on other subservicing, only that generate the margin obviously internal

there's next some or you as potential So five so especially scale the up $XXX accretion there, in another quarters? billion

Michael Nierenberg

continues into the that where business well just to don't, rolls third business, the consumer on should You his and I If they I or in is servicer. about us. we the party And the side? way – as extremely a really with was industry, third Shellpoint Yes, do think, if One business And special think truly two are a the work Shellpoint is extremely Navarro mean at treated servicing profitable. there you the well. a operate Shellpoint should very continue business over look Jack it's and things. are parties countercyclical get a not team very so scenario it, to we recession

Giuliano Bologna

really great. it. that's I Well, appreciate Thank you.

Michael Nierenberg

Thank you.

Operator

Doug question ahead. next Crédit from Please from Harter Our go Suisse. comes

Doug Harter

a color on little Thanks. Ditech. Michael, for goal that XX% more on – return just your bit

wondering of target? the that achieve [indiscernible] pacing Just to kind get there ultimately

Michael Nierenberg

maybe of will we steps. on it those, we the but take the be on You acquired portfolio could I based levered bit, north returns broke XX%, I a is the up little pointed price One as out. MSR in think acquisition

grow, I by all to sense, get I that is where be building. just the the employees of a On think and origination couple a of Ditech overall XX, NewRez November same mean, have lot a weeks, which will business to we – room in in

hopefully deal this done in winning we've getting So to significant this the a of working amount company awarded of deal. alongside anticipation planning us prior

– of where we're point, have I to do. anything, roll to we would now. are and going lot But work we a get to time say think like it I to a I and to ready – bit rolling that little takes I of want So still

But will going that significant and a be doubling company $X XX XX for even is of from next volume more step step. to or billion origination a the year significant

pointed comments the as money in earlier and return, that we're If not more volume doing making you're volume less end we're just as in seeing I but up we'll long it real works. – volume, throttling the them if back, out As the doing more profitable volume.

to to So pay kind really we have of attention that.

Doug Harter

And mean then to integrate do platform? on you I you servicing kind to you – the side into on of Ditech or as Ditech plan portfolio Shellpoint the sort operationally that kind kind roll Knight of planning continue of the are use to how – the of Black

Michael Nierenberg

don't basket. look our to overall, we say, want in all one would have I eggs

business, concerned job great able we prefer really we counterparty that pretty the offer – of products, consumers a that's side. think ultimate use we a – that recapture, grown on the from and life Shellpoint, that's that's But loan us solution And guys a But ancillary But the being servicing a better have a care have significantly offer do and about not own safe great get to our to do. New with that a they've being I to some other thing Clearly, why say. risk able and for to just relationship the do third job counterparty a goal. Res for there. the our homeowner that's risks something servicing. guys parties we're great is they our controlling

is but if not and a months. flip over XX a I and okay, The other of buy rights, go we're This you point Shellpoint the later or know next on take. like to we six – know over thing NewRez transferring days switch it's you will say, mortgage to out this, or pool servicing don't

Doug Harter

Great, you. thank

Michael Nierenberg

Doug. Thanks,

Operator

next FBR. go question Tim comes B. Please ahead. Hayes Our from from Riley

Tim Hayes

morning good Thanks taking questions. my Hey, Mike. for

And it First you your one, then the least at pace attractive And slight stock expect what you is the yield? XX.X% do see view think You discount deployment touch this to modest, at capital across term. in buyback asset pretty on book how And do use just the classes. where a capital you actually in most the to where context of you highlighted like be returns portfolio allocation? near to do of growing? today? trading sounds be about the at you with can a But the

Michael Nierenberg

Great question.

investing at in sold the the in environment the think couple mortgage all to billion of income $XX the been year market we if do look since marketplace. RPL, for loan is example, interesting. of volumes, that fixed things for what out saw roughly I XXXX, So we XXXX a sold this into you just in loans into legacy not A year-over-year just $XX marketplace; year-to-date billion has point

up NPLs. the obviously on So continue a drop the and RPLs as continue to But huge clean legacy an to banks annualized their basis. GSEs and I would expect that

well markets extremely overall, So those should remain built.

you're last just because I get capital that product probably down deploy. people these our been but on we good less go returns, the we loans. time in plenty We’ve think, and to able think see are returns very asked business generate going to I of call, in why So have earnings there's investing to over

X%. bonds over of course some The non-agency sold the we consistent Last to quarter the bond few past are X% levered that our call bonds business because years, we bought yields with strategy. were

them could we'll we into redeploy own significantly sell something levered quarter assets to are else, returns, or X% that capital obviously where that that strategy, So that. we cheaper, if of kind we if not do did sell are X% call

the out will book to dividend there's So can be yields protect XX% Depending some when our NRZ, the book on whether I as attractive. a And remains the in out going me at a need upon seems crazy. And there. dividend is we we forward, point it want to yield, we've ever as been. you dividend XX% that peers know continue to book, X% opportunistic, would any point stock friends where look important The that that XX% percentage whether is to thing we I protect yield, of our of I if we this we on are to out value. think, most trade notes, thing and I XX-year XXX to don't be at or marketplace, magic value one

So really there. the value out managers there's no to given

at But look forward, where in. going see those for protect right we'll value, we to maintain So because we could right we're table. looked going nothing what on where that's more invest going at to the now we jumping It now. us tell look can't right now stock opportunistic I are there's but things everything, we're there's to go. you cash, at nothing but book buy be backs,

Tim Hayes

Okay.

made outlook Okay, you making? color some done forward top number the would environment, and and quite the just for protecting good put yield looking other about is coverage given all you at and book I of very time earnings little the say that that overall dividend but capital earnings steepening wondering meek. I reflecting a you've is your quarterly your the going then core this in priority you've quarter, deployment bit lowest environment dividend, and there. the been investment core it investments that. value think $X.XX you've clear a but up little the bit But how curve and job covered appreciate But And a in

Michael Nierenberg

going We're quite operating to to business. frankly grow our have in

our are mean, Dimon we've Jamie a way do because out don't core anything manage downside. to environment talking anything number. in quarterly about to skewed we you seen and the quarterly higher some could acquisition, had, to think, stupid when year earnings, Shellpoint to, earnings. in I marketplace do mean, business I where we'll thing in want to think want to But play run higher stupid, example, other don't returns it. year get the I how $XX think into have this the if grow listen I all million that's a we're about acquisition, way that really $XXX million to have to – think to and ago, Doug on roughly in going steady Ditech about rate we on I it a asked we're this If this we grow earnings, this absolutely earnings we things, to going ROE a about the risk think for and

of company people. So operating little there X,XXX a over we business lot growing our people a that has focus have

risk we On side the models Fortress on management else. professionals have NRZ dedicated working and side everything XX and

no We have think out there's lunch, there's very right nothing the investment easy but that cheap again business, now. we big in a is there free

disciplined So we'll very be about capital.

Tim Hayes

That but businesses, to guess just see earnings you the those and willing makes my bit go steady? through time you platform I'll they how sounds guess a but in question the just know that you maybe confidence down to but grow in lot a is sense. decision, And a I like I Board I you bit core have operating up it are over on being investments are pick of little this and of making able it's little wondering think a that? go before dividend earnings keep about more, kind

Nick Santoro

and higher investments back trading to monitor in Could it. yielding or do was $X.XX, not how X.XX% about rate they about if dividend $X, talk you higher promise this core $X.XX, burning to a I'm before think I environment – we have to question it ramp going XX% point. really does to dividend or stuff yields Because crazy. the think to our it off dividends about up? going matter earnings a is go down lot. lower at this no XX% up, long We take XX-year Doug's as again at Absolutely. back go

Tim Hayes

contribution then call earnings from you I one just this would from quarter? me, have agree with that. core rights And do last the

Nick Santoro

It cents was quarter. $X.XX for the

Tim Hayes

well guys Great, again congrats and good Great. quarter. a thanks on

Mike Nierenberg

Thank you.

Operator

from comes Please JMP Cranston question go next ahead. Securities. Our Trevor from

Trevor Cranston

Good morning. thanks. Hey,

you to guys explored credit into if guys kind in have you the that's risk forward? on are for the originations origination expecting where As be or be deploy on with your next growth side several able loan entering the can comment think not you the capital to looking of and about on and over might something guys quarters, the places agreements might you interested you're fresh going doing retain you you whether agencies

Nick Santoro

the mean, billion volume billion Yes, quarter. we did I of think $X.X or in I $X.X

small obviously excited runway our in and friends which whether and the That's a little will why our bit really conversations As ability transfer it about or credit business to bonds grows, those peers versus other the risk we we're marketplace. right has, we're now. grow happen our do

we So that part are extremely about. excited

figure business And in to But in table, ways the were ago. Trevor, risk. market. is from think done now importantly now grow rate we operating we're is a a that help earnings reasons most segment that's right clearly but alternative we've on I of difficult bigger and control this out everything a years couple where the few obviously counterparty for to to

Trevor Cranston

sales the that of not bond non-agency Okay, quarter, you the say would that of mentioned this that sales you might they the you call the bonds much strategy. portfolio of rights non-core consider core Can the non-agency remaining were you. then rights roughly at And sort to something of look call were got on to you opportunistically? how securities

Nick Santoro

is. Yes, most of it

acquired our south an is the value the overall Most to billion bond billion. so I rate portfolio had We a $X did over a half mortgages from at spread of that time. market course good $X between year and were stuff Our billion, little or it’s a and of thought of bit where we think, it the $X is AAA some fixed past passthroughs core.

mid-teens call our type different is call the but our stuff of returns. But core think like those So strategy, to strategy. have are levered than now we most

Trevor Cranston

on there be in color that any would holdings you last balance you, loan are you just any additional additional those like Got can just or of give question, the you low bonds on And then now, color okay. guys the or are just have agency helpful. holding guys generic, the terms on sheet MBS around that balance,

Nick Santoro

And some are those, low up Xs, generic. points Xs. – balance. of the versus fairly a and as our again, of for we for we've are X.X are paying part that They loan been They newer they think a lot we MSRs most X, use hedge production Fanie our

Trevor Cranston

comments. great. you. the Okay, Appreciate Thank

Operator

Please Matthew Our Nomura. Howlett next question from comes go from ahead.

Matthew Howlett

doing? for acquisition contemplate there is for or more the lower just looking on got Slide the target. Hey like you this Mike X win a morning. given that now how the flow big just out Ditech What is Does – the ambitious servicing product an on targeted, seeing you you there are sort at my that's maybe front? taking MSRs? bid the acquisitions Just it are question. to Good some size, Thanks $XXX billion UPB of type of

Nick Santoro

go Yes as really it's the Ditech own acquisition we and our really forward. production it's

We think, with funded our this QX. couple production geared own to But is in have we pipelines. our overall, – to that's – of own not larger MSR prepaid QX protection these I more in a agree acquisitions

Matthew Howlett

more just That's internally.

Nick Santoro

Yes, exactly. the mean, million. With you To if that, lower, Ditech, and I transfer about we absolutely. now I right at $XXX think, are

Matthew Howlett

Okay.

Nick Santoro

get, year, production going all that's this biggest, and we we most can. everybody we is we'll to year's with be as the the need the think couple boarded I It's be but next goal then not the be not here, be profitable as we to point make to to to but – to think possibly it's don't

So that's the or as the that as really number to we're long service is. And whatever homeowner, is XXX, or goal. proper number the XXX, providing

Matthew Howlett

then that's my next And Got it. question.

forward? help – Ditech the you look the to recapture you I get that. that with and Actually, where recapture, mean, think we'll you do target? On we the do at up Where to? about going like How what's

Nick Santoro

now amount be spending importantly, right lot a importantly, have of data that recapture of say whether of or on lower it but not most business. focused time wouldn't importantly part models are on we'd We're rates analytics, I the the So like. we most personnel than and

we would I when the of for Ditech, very up quality good pick significant ask who've So call folks business mortgage amount years. what a been many about you in

rates the years we help side. to going in on the go is recapture. part if probably upon Overall were back product you a that us recapture So few back, mid-XXs depending

stuff but XXs. lower overall the in are numbers okay, is refi kind your of the Now

of we got a to room So lot go.

part this this what's think, important, growing is to business. for through that driving you our on And whole origination operating I money increasing, But of a is we've us our forward of lot more shareholders. our great recapture, great around made and profitability go business. in tell thing business operating to Fabulous, really year for it's

Matthew Howlett

some outlook? in Got it overall you do break expect but banks you refi down how would out CPRS think will sort just on higher in saying? and the it. XXXX be like – expect of And on XQ know are you to them And just you then that Q, I about come do subside the of they the in the

Nick Santoro

look few we go and different off. And them Yes, level speeds than are see our a although then to overall little consistent how as book, it's at months at market. we bit some broader kind of now next a higher think expect the we we that's with forward little for the point

Matthew Howlett

the last lower. question you pointed then Mike Got And with last just XX%, dividend the two X%. under out yield preferred it. at you and at mentioned in sort The I of one you came noticed did

cheaper to look preferred your capital just when just given a is? realistic clearly equity at So you now is target in the of yield more common where more source dividend that or

Michael Nierenberg

capital, – common. issue could but retail market it's a a bit preferred mean, much the the we have very I I Yes, is for with little it's I need mean don't you a if than, valid – problem mean, point. it's smaller

Matthew Howlett

Right.

Michael Nierenberg

obviously was billion, liquidity thing cash do, explore Ditech sheet. and large With our options. we significantly $X.X – with and dealing raise didn't we’re we that explore of we needed something equity The still we'd on balance to a all a bunch

So bond our asked or planning our Trevor think a question and around liquidity I Tim about portfolios.

of lot back $XX we twice. a if have and We generate think you portfolio – our step you take can't billion have from on to have liquidity that a liquidity a

to balance off three need have bunch that of sheet. raise today. a could we our we we money, If lines So do

Matthew Howlett

That’s Mike. helpful. Thanks. Got it. Thanks

Michael Nierenberg

Thanks Matt.

Operator

from Henry ahead. Our from Wedbush. next comes Please Coffey go question

Henry Coffey

taking Great quarter. And everyone. for morning Good questions. thanks my

Michael Nierenberg

morning. Good

Henry Coffey

really the business. And you understand enormous time to spent helping get me quarter guys an amount me this of with

that. team for So I wanted on IR to your thank everyone

the number one, with I'll tough start question. Just

a As access at good dividend, dividend your look you've you GAAP book earning on to got you're value capital. basis, in

say, look, the book and look a got at or value to you the balance two do point need well you I reduce versus hedge defend to a mean, sort of do You've I you value? where both. dividend How book those portfolio. is have dividend to there grow

Michael Nierenberg

I we're all warriors. would say

out to some want remarks, We try we in much as possibly of can. as as stupid. our But, earlier don't do will anything defend we pointed to both I

up, markets the dividend the plays tell could this can't I move business. We between but see in going got is out X% quarter going a so up, think the bounces couple right. you matter happen can't not treasury of going you days. a And And about XX-year in what operating how tell X.XX%, right, to we're I So whether rate, and you doing whether and it's the down. much, when

we're we the know we closer to to make that during protect really But where end this. on don't get the quarter just up quarter falling we of have out to end going we book So until that our value. sure

Henry Coffey

XXX And $XXX.X technical gains, in of million does terms gains, call general then in non-agency, investment just terms. – sale question, just in that a of agency, a breakout right kind trading, of sale how of

Nick Santoro

of remaining RPLs. the sale of and sale non-agency both Approximately million a of from $XXX primarily came securities. that agency And the was

Henry Coffey

how an a non-QM – related And a hold on terms NRZ. this you that creates and lump out to the of on was fund the Is business there operating can And to overall focus going acquire then originator? operating business creates be a building costs? securitizations? as Is – focus sheet looking having opportunity value then okay. of assets on integrate in in the and it then and is cut mortgage to a at terms balance your What's thing for strategy

Nick Santoro

going I aspects XX% XX%, help to portfolio. recaptured in of our better from I business that's forget XX% – if you to financial go going XX% to MSR overall results well, it's about mean our having to or think it, a the

give our management. roughly everybody There'll to growth that paid business be some creating I Shellpoint. million from for and just we the think mean $XXX operating out the something I in earn math

you value, about company value worth million. of So let's $XXX that. look at $XXX it's a a get When of $XXX probably generating million say roughly you that the that's EBITDA to book Xx million

about standpoint, from shares XXX value And understated sheet our think amount. that fair book balance by you're if on outstanding, million a a you

a at really So all value book your of is a least $X sudden higher.

[indiscernible] the be looking key do So our to biggest there's would there. opportunity business continue around to something of we're works that's If a We're going do lot shareholders, to not call, to some it. of, we're mortgage could what origination the for that doing we things and business. I that

good not But all just to acquisition one. in like is place. money capital good want I this making to of That's running not sounds something around we're Reducing not over out for Shellpoint shareholders the has – a a a Strategically, the deploy stuff thing. been we’re to point as all counterparty well. capital. We're deploy lot risk or and

Henry Coffey

Great, thank you. quarter. And congratulations on a great

Nick Santoro

Thanks Henry.

Operator

from Kevin comes question line ahead. next from Piper of the Please Barker Jaffray. Our go

Kevin Barker

that On Ditech less regarding MSR. the you fee. Bose’s And mentioned question got two servicing you them for than times

profitability should lower would think given balances you that valued so do the MSR lower the I smaller When MSR you lower the the given Ditech think it's balance where you on UPB? a expect it has stuff, be just revenue the Now about understand revenue. just on

Michael Nierenberg

probably in about approximately million, from $XX just be $XX They'll the million perspective. up value value

Kevin Barker

what? the On portfolio roughly overall

Michael Nierenberg

when the like settle, Ginnie of $X you guess PLS, servicing, by the in On billion. breakout $XX there's Mae's we we there's is keep and billion at mind the – little And $XX look time which $XX billion MH it's of billion conventional. under a I mostly there's of

is Ginnie, the higher and the mixed. multiples the PLS. than than So Fannie Obviously, higher it's are the Ginnie

Kevin Barker

within across And what you performance compared most this saw compared seen up specific the your to quarter regard better quarter? saw of industry there really Was anything from we Okay. what held MSR then to the market. we've or the well adjustments this MSR to that

Nick Santoro

XX-year here what rate. you, have bucket. seen tell and how of did look these I bunch back, mean, lower to regression rates, I portfolio of our we I if a of in Yes, folks going many is is XX% mean, analysis we XXX And that

acquired in we parties third pointed MSRs funded production quarter. the new and the I million $XX On out from

prepayment have those of All protection.

the industry. X.X% are CPRS than slower Our

or slower industry net-net. Our net X.X XX% in of prepayments were the

scenarios would that the acquired that since that this we of marked rate not of in were fair the So impaired down of that seeing $XXX company Seattle we a it's kinds end perform of MSRs haven't and now. credit thesis thought overall we're the is last was started, above with nature all year well amount like million when But money, extremely was our consistent

Kevin Barker

up, there drivers rate Were this it lower rates the specific with quarter discount or… that any held was

Michael Nierenberg

they're Discount do rate of of The things, than this and all Again, answer mean, it's lower? portfolio is level years. seen is quite think has should right. our three other a But little they bit XX% I older I rates be yes. frankly, lower. these

lower refinance – stuff we for pre-payments, We and of our did there. then perspective, look some refinancing it have of near increase the has lower forward then of production net From see is what for we'll only on today. the a eligible term all stuff happens our And the again prepayments. new some speeds as XX% again, We prepayment gross for protection. next it

Kevin Barker

the with more Okay. the going towards lot think you the given do where the than portfolio And And MSR can just new servicing re-financeable – is platform of then a portfolio actually greater – a basis platforms? and think origination $XXX and rise platform, you it target billion you agency Ditech or much refinanceable? forma on given to pro the growing or much on different it servicing how that be do sits to the here Ginnie's, of growing how

Michael Nierenberg

be from could we XX%, a more Underwriting GSC bit XX%. if more and about we we're current the right. we what right non-QM going PLS. reform go Where you it's it forward open estimate some Freddie of little Fannie, stuff Again based doing the standards, now see kind of and and industry in on see door and to

back at think – And to lot loans and significant That’s pipelines when XXXX of a a our we of total originated are borrowers times. portfolio, Kevin just there's have that's or stuck portfolio PLS from But at that in these amount our in these of lot these out – a But servicing these of large look and $XXX delinquent amount. stuff PLS. billion I the was from you of PLS. XXXX kind a would is another anywhere point a

continue clean been well. to and to billion market, the do we call could which help some would see could business try legacy faster if to trying do, But we'll our up Now PLS $XXX prepays. as that we've

So there’s offset there. an

Kevin Barker

types So borrowers? you're of those that saying alternative there's products some to offer can you

Michael Nierenberg

I the our play years, stretching don't that mean, boundary origination of the just we not Yes, seen know. We've on we're over stuff. any obviously. out

more want non-QM on stuff. able right So we a she offer But credit as significant our boundaries. what products But We that this product, even with we're cautious around answer's depending we're yes. the may things. to to now they of on and to that amount, But do reform goes. GSE right with change pay extremely people happens afford the steady were

Kevin Barker

keep in of then start order the And to a re-eligibility? quite to some origination Does from to eligibility? you of some grow, where bit. to your your you're or restructure coming point impact REIT business, gain revenue taxes Okay. at with starting that maybe would on what to it's or sale have the the And start

Michael Nierenberg

Right have maybe to to I continue from we're But and now to we outpace REIT to to origination continued always the plenty at you with status. business our different rethink if a And down tax rate corporate looking maintain runway our stay for or things. our we're continue XX% – think going our of that. business now path continue REIT. grow portfolio, Obviously at investment standpoint, servicing

Kevin Barker

questions. Okay. Thank taking for my you

Nick Santoro

Thanks, Kevin.

Operator

Laws next from Raymond Our Please ahead. comes question James. from Stephen go

Stephen Laws

good Hi, morning.

Nick Santoro

Stephen morning Good

Stephen Laws

your response lot the opportunity. but is bit Mike, want a that? to a it your How And it's Henry's statement. You How or to of go touch metric whatever which the services? doesn't is, of ancillary we hit as in whether income right A services on question on track really should partnerships, that's of done importantly, little through this is just it penetration number lot integrated through new.

of minority creating we in think grow? these So value those reflected maybe as how investments your about aren't do book value the businesses some that in

Michael Nierenberg

keep they the questions, to are to We company revenue of trades XX Covius. run going of from friends to the own that But true likelihood or kind a won't our business. earnings party multiple, never the goal stream you with be would – a continue be large internal EBITDA could in create value it'll the grow Three mortgage because be. services company, see realize for that is you that it's real that. to there to at third what try at company to if And pick times so we’ll some any going going we're our shareholders

grow that industry So a XX% the now it own for to to under there's people own create I with folks well, opportunity quite vehicle If other ability create right as for example, to really that way the Covius book to little frankly, where of we XX%. value with a more shareholders. think XX%, that's

going that, for and times that's our go shareholders where at be there. if with and earnings example, trades it XX% winner and own the So year a $X.X, well a million are to we $XXX to XX

So that's give another share take. $X roughly a or

I acquisition, Shellpoint a look $X at book least $X, another our you gain value pointed earlier, out at If think, there. implied as I of there's

I any our our our counting couple rights, stated value, given of there things value plus the So understated. credit not what for think, book significantly book any call

Stephen Laws

That's really appreciated.

Michael Nierenberg

Distribution start or distributions now. rolling value creation. in results the value book creating book some see You’ll

Stephen Laws

that year low or the $XX we or high used as seeing on widening that a you quickly next dropped there. have interest rates kind get end on the for the $XX and looking assumption target, Appreciate watch that the end year, that rate to make rate is $XX should mortgage some for would stated as at billion comments What projection haven't We're kind billion mortgage of origination of to there Mike. And significant to rates. rates then to as of a from out love inflection there the all level we opportunity XX amount frame significantly or the where volume where or kind the turns billion points all see less? cuts sudden on end Kind get months. a on keep refi on next thoughts Are that if your of of maybe dropping significantly mortgage any we the off say rates look mortgage a you refi? of for on more high next origination

Nick Santoro

the don't I what is. know rate magical

that I ability have. some think we really currently market share it's don't capture our of desire to and the

don't this that's volatile environment, is are know, if stayed geopolitical stay could XXX the which stuff because of just I going the so possible, through this So in on. markets the you very based XX-year in on the notes rest rate we year right,

just that it's really more share. think capturing I market

rates So go a can bit. move little a up bit, little can they down

go. growth runaway have a amount large I just think to initiative and we of

or of I others. November withstand rate dropped billion year, XX-year if what yes share on. take this billion But year, That's environment, mind last about XXX. focused this right. $XX market capture in again, $X origination actually a rates more rate now benign think $XX we really could have Keep we ton, are we billion from we was Last XXX,

Stephen Laws

the GSE response a expiration. patch issues and – picture you QM question or significant of last And think I of reform GSE taking kind Washington, pose reform, But are you're on GSE but there you that one mentioned there to Kevin. place whether or couple bigger And in your to a GSE touched time to any reform? that think reforming comments it's at the redefining around Right. same anything that in QM of coming one you are closely positives watching then predict bigger that's might the or out business? of – the a two hard know you discussions that topics headwind

Nick Santoro

Listen, everybody keeps talking about the patch.

was doing that's million agency can't $XXX alternatives quarter there that $XXX But to but everybody for they belittle other mortgage. homeowners not to get you’re said if they or great, non-QM be million about needs talking non-QM. years For and an a

private patch GSCs opportunities on think, own, go create that'll I comes capital. the capital. for for private the off opportunity if and when create Should their So that'll an

come. private situated of this, year of think election it's But that. good to going of need patch. lot amounts that to lot large a of other when don't capital. And for think kind of advantage next don't a is year a how happens know stuff between there's out I perfectly require an they come we're which into of come. I think there's the maybe than that getting stuff could then take need, now and So I I Obviously good you're and anything will

Stephen Laws

Right. I a appreciate day. the great comments, Mike. Have

Michael Nierenberg

a Have you. Thank good weekend.

Stephen Laws

Thanks.

Operator

question from go ahead. next Harter Our from Doug Please comes Credit Suisse.

Doug Harter

Thanks.

I and payout following-up from portfolio. investment profitability kind question guess, the just how is do Board is that So the you more the earlier status, right REIT what about, the of on operating ratio coming think the about businesses versus now of

Michael Nierenberg

any I think we'll can on doing will And percentage at we been have any continue this there to don't pay I out what think we're think basis. don't a shift. currently I point. has shift

always dividends. shareholders there obviously to want So be maximize earnings now for and no shift. for our Doug, structure capital we our But and will

Doug Harter

Thank you, Great. Michael.

Michael Nierenberg

you. Thank

Operator

queue time. turn in back questions this We to the at have Michael closing further I'll no remarks. call for

Michael Nierenberg

was great that to questions a thanks And have updating our everybody's forward great a everybody Thanks and Have with one. for a QX and look your season. for holiday support. all weekend results. long Well,

Nick Santoro

Thanks you.

Operator

Ladies and gentlemen Thank today’s you concludes you for call. conference this participating, may disconnect. now