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New Residential Investment (NRZ)

Participants
Kaitlyn Mauritz Investor Relations
Michael Nierenberg Chairman, Chief Executive Officer and President
Nick Santoro Chief Financial Officer
Jack Navarro President and Chief Executive Officer, Servicing, NewRez
Andrew Miller President, MSR
Doug Harter Credit Suisse
Bose George KBW
Stephen Laws Raymond James
Kevin Parker Piper Sandler
Henry Coffey Wedbush
Trevor Cranston JMP Securities
Giuliano Bologna BTIG
Tim Hayes B. Riley FBR
Call transcript
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Operator

Good morning and welcome to the New Residential Second Quarter 2020 Earnings Conference Call. All participants will be in listen-only mode. [Operator Instructions] Please note that this event is being recorded. I would now like to turn the conference over to Kaitlyn Mauritz with Investor Relations. Please go ahead.

Kaitlyn Mauritz

Great. good and Jason you, morning everyone. Thank like second quarter would for us. to thank welcome Residential’s New joining to today XXXX all you you I earnings and call

the and are morning. and MSR Officer Navarro, portfolio. supplement runs this New NewRez; President earnings the call our Joining and Chief of Jack Michael morning, CEO Throughout going division website here Santoro, our Residential the posted today Chairman, me to was we our CEO to Servicing President; and Andrew Nick Financial who reference Nierenberg, that are of Miller the this

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

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

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

Michael Nierenberg

thanks us. joining for everyone Thanks, Kate. and morning, Good

report happy our continue we fronts. to am we recovery made As that I great days from early on COVID-XX, have the many progress of

holiday. mortgage-backed any and the financing XX% capital made portfolio of has handle capitalized. We to out mark-to-market than of has of securities sure with our additional mark-to-market a our agency advanced if amounts investment $X our non-daily closed and needed. quarter exposure better cash more have we over surplus mark-to-market and investment We a or ever or sheet from in weigh company cash portfolio. of before. of reduced have our We been termed daily today We balance never billion the liquidity

far So increased not needs advanced our to-date, have at all.

better actually grow now advances, earnings way, which company. are we pre-tax portfolios have only company investment and power and mortgage performance, our in company which result our fact, cash of our book to value over to In focus Ditech, acquired in I fully and we surface. both on the in we XXXX. the The NewRez and the grew for a growth operating net scratched positive integrated We an company actually to will has the and had book prepays The important have cash employees and of positive room company required and When less due to is million of in has upwards is player the that income. earnings continue business. have our XXXX, plenty one Along today expect assets acquired mortgage in we million ecosystem. $XX and make $XXX X,XXX feel we of that its made in

of. is seriously we proud I on hardships and focus helping by through Our something am them take caused very and COVID-XX very customers

recently retention. partnership important very we channel with experience. our with better help help a efforts will to Salesforce our announced This recapture direct-to-consumer is our that partnership in will in Our The business. us customer direct-to-consumer also customers

non-agency lower. of over seen expect our As the have we spreads lagged portfolios, we our and get plenty amortization which lead the will to better time our values MSR investment and normalization should the mortgage corporate increase On to portfolios. profits have some increased our we markets of be markets in room have improve, in will and tightening

our are investment open. core securitization amount to small non-agency that not quarter, of markets the During a The we strategies. sold bonds are

loan financings. deals, quarter, non-performing RPL financings three completed and which MSR During financings, we include the

of financing back $XX funds spreads When billion cost We will arbitrage across We have in million entire comes back portfolio. our continue rights. calling to and deals. the and the do call and still to locking we term of tighten, lower term game $XX in get securitizations will

today the MSR lowest and pricing years. go They portfolios the when seen are rates in classes some origination have seeing asset are one business. our few we offset great in value up of Our a are that rise of to

company all So, what than does Our ever. stronger this mean? today is

really book confident going potential Our getting to dividend earnings and I time. refer I with look a market business, cap which today, at price which I is double-digits. company we X is am back of a have online be should is in and able our we the that’s earnings our hopefully one continue run-rate normalized been. begin that part grow to posted supplement, little our we the been snapshot has now just mortgage am our to management business. over our Page share X. different Origination company bit back the growing ever is Page to of a what creating $X.X will and investment then it’s seeing When servicing, that billion. and than of will more no our

year-end And is million. net Page our be mortgage pro to company for between $XX and and on billion billion, portfolio $X.X billion, forma $XX.X almost run-rate, pre-tax $XX to we servicing $XXX we the XXXX. project of in servicing our income a billion billion investment equity have $XX X. of business originations billion at expect Our $XXX

a the Core dividend that’s we company June Book billion. $X.XX Net that’s $X.X end in again $X.X to share. as or MSR faster and our million $X.XX X/XX. second per value cut portfolio. we higher hand of New from a For time due just $X.XX do when diluted is We loss amortization out paid million. capitalize over on of of recovery. to few the that our think position our of of X, We $XXX not set and opportunities million on was the to mortgage want income strengthen quarter portfolios. Dividend cash One quarter. Page will Cash dividend we GAAP equity number a $XX.XX objectives We faster $X.XX the forth quarter, as from amidst to COVID, per amortization did the net saw them. at diluted XX, yields, $X up north or $XXX on of on highlight X.X%. diluted per first volatility. share share, normalize. earnings Pre-tax XX our of the MSR road $XX.XX of from I June Residential’s Coming billion. up ongoing of that

to risk on play offense able than our sheet, cash more $X in balance billion lower are our We leverage. ever cash defense, and lower our profile, again before,

of servicing agency from have having a margin securities, earlier, our daily company. pointed XX% our to origination investment and I holiday. Continue no As away great mortgage company, out portfolio out build mortgage-backed grow or in to we pre-tax in is the do $XXX that Volume XXX% are up quarter, direct-to-consumer through income, quarter-over-quarter increase that’s The way Again our XX%. is going quarter-over-quarter. business. million Protect recapture. our MSR mark-to-market

been $X.XX share numbers our we through we sheet on that and stated peak X. loans of the in X. per is return, of I our hardships. book us to quarter of then from ended This additional COVID-XX we if have a COVID at a market that at and looking estimated a balance Again, and for more We core lot to deployed cash we with lot As our there financing, a quite $X.X about in Page to to a like some Create liquidity decreased than run-rate little are took homeowners under coming on bit frankly to What capital lot the core before. tried to our than there. for here basis. diluted help who advances. we of of it a with continue grow a with forbearance room work book quarter-over-quarter value we earlier, and we we dealing do pointed numbers, $XX.XX. finally, implied advanced with QX Salesforce our of ever billion work X.X% value, our capacity is and would needed. sheet the announcement XX% should talk would for have Page out illustrate relationship some were X.X% higher unused forbearance And recent

the If a pre-tax estimate on $XXX we million take a of the earnings you three multiple and our between will you be put put $XXX north million if multiple to look that, and on which estimate at give earnings our operating for some something $X XXXX, approximately for of our company that value billion. little earnings, and enterprise bit

add the If and book job great portfolio, to facilities. investment that approximately the Page employee reducing $X again, then our and mark-to-market. share. exposure X. you The that between night mark-to-market team the you XX%, at $XX of value per daily implied last Stock closed our is $XX something. done leverage, long-term risk if value has a $X.XX and – no daily our per financing share, take entering Reduce of add

Some even in portfolios. and of higher quarter. potential our we some needs out of Again, – extra loan years on facilities our anticipation the protection of of need out some advances our took advanced X go in around didn’t that loan

comes MSR our securitization existing MSR we has we will that’s MSR the the And quarter, the deals. in the We million portfolio, term that do changed no through of am deal make lot on continue want another to our financing the of that the facility prudent securitization see in second again, during road. what down $X.X to has our third off to again advances, On $XXX at are one issued mark-to-market quarter and with did We nothing the spend of more and three exposure. be Servicer completed extended the because here. recently happens And I daily going on extra securitizations the sure road. to conservative we are and down we keep lines, end portfolio We an very time the of we that quarter. going side, In billion a year. largest of will quarter. not lenders bank XX% we

On the portfolio the XX% no loan portfolio, mark-to-market. daily has today, of

that the XXX%. by We expect QX be number closer to to of end

of it’s balanced portfolio portfolio as ever a been. no our either It’s it’s smaller. X, much than been. is different mark-to-market better instruments. comprised financed investment think XX other company? portfolios, Page that’s we investments. of about the LTV than do XX% portfolio Our our It’ non-agency On ever the feel much approximately strips How no like daily the and interest-only has XX%ish and some exposure,

levered We not lot the Servicer of there change our to been expect in deploy are capital been on have has securities good. place, and of Origination loans same single-digit then recovery no frankly future to be are where MSR and and there in return. assets business very than advances portfolio. some kind back servicing The lot of primary a again, XX the today much loan note we smaller the and quite X-year basis a going XX-year a note the security business than on been go in point past. point kind in equity quarter, a rates evenly our a XX they about and of to and in not first portfolio return continue a type When has we think basis with they have mid focus. with that very, been

year approximately in $XX extremely acquired $XX or $XXX we perform about to the million. since As the make servicing And at XXXX and the we volumes be which origination it’s end want should market, $XX about billion in the we approximately be to our billion were continue to year billion. again, at saw million. take sit market, earnings sure $XX $XXX company, this XXXX, from look this refinancing in portfolio should mortgage a quarter. gone robust When you going have Today, The housing well the first we there. in give robust to results up NewRez that end our year billion, we

are the our is this some recapture. One important So, things the company what year? for of

go today. we our could word customers. amortization very You year, of the minimize the rest important, through going something that hear so and we MSR it’s are to that’s And our as retain

de-risk to in across been our today the a business servicing And perspective, From all scale of channels. market Continued have margins share and never our servicing origination counterparties. better. continue growth

things that remarks, in Ditech. opening the of we the serviced had acquired out number of of I assets Ditech us. my a for One pointed earlier assets

you next of actually have Some up of that some course quarter. where we integration servicing transfers PHH the complete. is And from – the over coming fully

our is ShellPoint, servicer the very, well in industry. growth, servicing regarded very Third-party special

through the XX current about third-party and as And and clients We then about have technology, with we grow that will continued growth to continue pandemic. use XX of think we website deal to lot different proprietary to experience. – COVID-XX as our this to portal efficiencies customers they have processes currently in experience, our digital help our to customer we get made that drive the of tweaks a hardships

think XX. we today? ourselves do about Page how So,

the repositioned company. We have

We are elevated well low business as portfolio mortgage high as activity. today operating our investment our on focused margins, with refinancing obviously rates,

to business. We origination on are our focus to continue going

As have I surface. pointed only out earlier, we the think scratched we

grow. We room of lot have a to

We one on of company. our of dedicated are improving actually are remotely. and most company have kids great them block we the X,XXX to a professionals across the new working our with Again, forward look who job we doing

think cash to than a about are going more volatility, we we have. As we retain ever lot

in financed investment term acquisitions reduced on any do We have that $X $X.XX. been some have the core you down side, XX% gave billion mark-to-market financing, return, additional markets. a the will we cash. of an the if at term Portfolio our be about deployed run-rate illustration that I in can, capital quarter earlier for road daily we we would the likely wherever

about reputation in side fabulous a job working ShellPoint industry. Navarro organization of requests, do As our his we pointed I great Jack our team think has customers. leading again and the and forbearance out a that with

the capacity, nothing then there side, we digital about what nature to On in are and spoke to the excess again, talk trying really I advanced do. billion $X.X of about

of to for billion XXX% an going else quarter-over-quarter. the us sale obviously the that Page over in important harping be to focus that’s am QX. of again on. this This $XX on and most XX, quarter million, in on return continue one we our return about origination margins our income Pre-tax $XXX XXX% I Page and approximately flip to on in to channel. XX. things Now, on is robust Gain I again, Production the is keep industry. capital, equity side. recapture the continued everybody for increase direct-to-consumer the

our We direct-to-consumer direct-to-consumer as of service. many more We MSR the have on our in better robust. in as channel our for And We will very almost thing need to continue drive amortization create one need as off side. company provide the keep customers, hopefully them pay to ecosystem servicing and here down as possible. X are million to focus the we and we we main profits of our retain customers margins

QX, is of time for in than equity Page billion $XX and servicing XX% quarter. XX, increased to in in estimate return our the we year side, XX XX% times servicing between and helping and the XXX,XXX $XXX On at forbearances about is servicing in portfolios the billion our year-over-year. homeowners about million over portfolio pre-tax obviously volumes. income end hard during the be this Again, XXXX Page always this XX, talks more granted year-to-date, XXXX that’s $XXX

business whatever to to be work to we plans, homeowners solutions his job. it fabulous to continue move continue from will to there team and help need forbearance and again, mods, will repayment help whether servicing Our do do. Jack a permanent And do deferments, loan homeowners

on Page going about MSRs I spend portfolio. am talk I our Now, XX. time bit little on investment to will a of

of this MSR a purchase this as prepayments, result faster as of refi faster end as as well QX, refinance amortization of the Our portfolio billion – market. today the market $XXX

between to the this We is that our it very, origination portfolio Think a on over expect way, amortization abate very and time. good about the hedge. MSR businesses offset

years. opening very, So pointed very in levels gain as values at in be lowest are the sale we should tails business at the significant. you my seen on that point MSR origination remarks some business down in MSR the out of some the will today have earlier see off the road, I that

frequently little our is the a we portfolio Page We This industry? compare do our calls. a Q&A. to we XX, slide on will talk How earnings talked that our more bit portfolio. about during about own

Our June. the Our average XX% average than loan slower size that? is industry. industry prepayments are fees smaller Why the in is than

more average origination, we seasoned the industry XXX,XXX, industry much weighted than XXX,XXX, industry, size average XX Our from XX loan have months portfolio is the a months.

go basis refinanceable versus about value, instruments industry pricing in of How of and than do we population XX% one the XXX in recent few the XX%. seen lows XXX point FICO more more we Our the years. at will credit versus XX historical FICO our much XX-year that smaller business, impaired, have up MSR is at scores, income think fixed notes, some the

of about is Page we think as ton MSR I XX. a think upside business. there the

out or On the rid of loan our not but much side, in we out out out coming get financing. to coming daily set of COVID, mark-to-market of of as March as

XXX% end be by The mark-to-market out the should I financing. almost quarter, non-daily we loan $X As today pointed this business is of billion. of

the other returns If earnings if add continue absolute capital. our on to will not, our We will to across of think we sense cost make increase for portfolio. that we ways focus

On our a time any no change there gotten we because cash last that to cash, pointed have whatsoever future then to out the anybody know know continue leave the And residential The COVID in again, much, overall, of really servicer XX% I play pre-COVID in security Page only returns non-daily of not our the On has than out more spend think lot to have are decline. it’s about rights. this portfolio since XX, stuff, forbearance event had quarter. difference capital on, single cash Returns system. We that’s levered where does. going business I a positive side, as pointed actually into again I today advances. been as were the I still been in what don’t is call on then We versus our we out non-agency And roughly brings. mark-to-market. that finally we mid forbearance, not much numbers smaller. and going is we don’t go to am

I to and sure it to this. customers with questions. will enough that, We back turn and deal on the operator And through servicer we our for advances are helping hand going open have up it to can cash with we make

Operator

Credit We Please question-and-answer will The now from first Doug comes go question begin the from Instructions] Harter ahead. [Operator session. Suisse.

Doug Harter

example about timeframe said cash, into? talking illustrated deploying a securities you cash? be didn’t give sense that but of know as want And for deploying what now, would us what to Michael, kind you you Thanks. might that can deploy assets to kind you of of right I like

Michael Nierenberg

to about of think the we out came nothing. I as So, reduced deployment, thing next say positions the one agency during we is the quarter we to as our we would QX, cash

about $X agency the added billion we During have to quarter, billion mortgages. of $X

As likely would we capital we think Fannie caveat to need agency into of agency is one some get we will versus deploy trading, about mortgages. go And do up. through the are quarter, prices. mindful we to I our The in X.Xs MSRs more are At point, the that be going think rates I business business. to add $XXX $XXX.X how

we, So have agency MSRs. mortgages when against had we our mortgages our MSRs. pre-COVID, Today, we against agency

much, is However, today lower. pricing MSRs the is difference much in

come Right So we we very I deploy would than will mortgages. in other deployment of cash things it’s sit recent likely that want our – in past. today form don't in. a value lot we capital now, think we in many will sheet that in agency to I And see likely of the more don't cash balance with have

Doug Harter

the repurchase how you discount also in I you then equation currently consider And trade book guess up? to that do share given that

Michael Nierenberg

price, amortization getting there, would to, share price everything is that think opening book my billion we portfolio – on let’s down book does understated, at think our think we And remarks It’s stock again, we the this volume, mortgage of about quarter of one a on driving you worth a anything is it I in double-digit company, back a table value. in slows value at our about is $X.X say $XX.XX. about higher. closed point in When as slide put and the double-digit, way, some $X if churn MSR say less if really the

$X share mortgage instead multiple, approximately if are and a stock think something value four of company close So, an about price. three talking even the to was in $XX the you it even multiple a or you today, if roughly versus $XX.XX book MSR a about $X value broke

And we recovery. think theme truly my lot of that there road is are. bothers theme are our grow. we is tremendously we where – room us So trading to and It the to we

and to continue the or have to high a allocated returns capital shareholders our Our responsibility that’s us, do we drive customers to are we for to that. going fiduciary

we So going are whatever we to need do. to do there,

Doug Harter

Michael. Great. Thank you,

Operator

The go ahead. KBW. next from question from George Bose comes Please

Bose George

morning. debt question terms are Thanks. to your took any paying some Doug’s in guys have liquidity back? just Good which that on or cash Actually, thoughts of that you you out about at what of and use, is cost follow-up pre-payable capital high time, the

Michael Nierenberg

One So, today things. reserves higher there are right normalizes. world than and of have is we carry the couple until going are to we cash

about warrants think were As equity, loan issued historical to around dividend were we yield with the capital, going yields, raise along an the we cost capital would to second, the is we so back be that loan, of warrants our coupon. itself to barring that something were dividend if for XX% If separate a XX%. the raise

high cost the we point, likely with will some something XX%, yes, refinance else. loan at itself capital, but that So, at

are month our what One because capital not are we and options? is we don't we think at we debt going and daily, to go turn not around just term pay it just back as this then we because do safe, look out world is is that sheet. there a to – markets something balance to am tighten, going but more the those and loan will later, I it’s on carry unsecured So our continue know.

So in cash. to general, we carry are more going

not going to today. going And are whatever are do our can to drive higher. to – we share are We we loan price use the going to we payback

Bose George

lower billion of to volume was the that the what little noted June, you April. guided quarter And $XX to in for billion Makes to volumes, this run-rate because you was year, mortgage switching Okay. $XX sense. guys over the

gets for of June a kind of run-rate is the curious, $XX the Just back billion that that billion to year? volumes to the suggesting you half $XX

Michael Nierenberg

Yes.

channels. obviously as non-QM, we on of in – back of was example March lower, was and April – on for got we March our pulled our on some pulled out back So,

a So, going were was continue. out. March under billion, bit lower. and volumes that’s going came be little and to number June where are April $X robust we the a July bit to little is And think think I

is I we much billion, it’s one make how $XX be shareholders. money to thing, $XX I billion. clear important So, it’s little the think not under about but that’s most thing bit can about or want for was about doing And June a $X billion the

Bose George

elevated. in Okay. And sale the on gain July remain margins similarly

Michael Nierenberg

say Yes, little they robust – direct-to-consumer, the side, business the I very of but are originated bit or robust. the would you very are very, tightening third-party starting a stuff to see the corresponding JV margins. on

Bose George

Okay, great. Thanks.

Michael Nierenberg

Bose. Thanks,

Operator

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

Stephen Laws

the Doug on the Kind but in on and driving question, higher what’s Bose’s talk following-up of margin about clearly can slides, for just increase you direct-to-consumer, increase volume there, much still the your the sale the from on and mix gain platform? guys higher initiatives what that blended to efforts to what mix across continue had you made that and drive can have to have origination you do

Michael Nierenberg

Stephen. morning, Good

of the of be manual with something going process process. seamless We ever that are going we better greater with able personnel side, you think job. have all the to and the think do customers announced The process a if million X have calls of a We to going is amount Things is much Salesforce to more be incoming help via on amount amount roughly So, direct-to-consumer be we to phone today, we these us we have we was that it, again, so-called company telephone. than have than in to the more retain far will customers. we much the the with personnel is had. need which think about automated the and are that relationship

lot a to have of do. We work

We are efforts. our very focused marketing on

a these not now going need that and on a we better volumes now, not processing Fannie do elevated, the portals. do hire are are loans volumes. us a in working this such morning the $X do the We the announced some job year. Officer out thing We why came on is only higher. to new you better web trillion is margins on of saw for Marketing production and mortgage to they need robust This for We are Chief going our good industry overall, It’s a job job. to this that of I to based this and on easiest markets be seeing channels. think there Mae

customers, retain high direct-to-consumer to channel better we the for all more place volumes more our for those relationships automations, announced So, much and ones customers. Salesforce. should affiliate enable the the I do of more in service get us, combination to better with And a more like of us think and

Stephen Laws

you runs far benefit by them moving that or about then want Great. And election cover do? side that you recent you business is of and origination that up maybe as channel? How Are be upcoming going ties up change being will government mentioned talk your from away And expand think on this you the a you DTI. is as you who to as does you the Presidential Supreme positives taking around really ruling any that impacting changes a the or think guys on to origination you extended. about at that things the to stuff either FHFA more that non-QM. as kind the the…. in looking appointee? end place Since take into little hurt talk the could narrowed macro negatives or outside you even Patch you products, that XX% Can about to decision have the seen Patch could QM this to non-QM is is QM announced could the everything There the Court that

Michael Nierenberg

there. and do I to don’t in know, side, there. non-QM, geopolitical to what’s a is the we think the on the perspective, don’t for with about what you to when any We help control need continue do continue FHFA So, on business. on macro – do from to and I need can’t what customers are in and to CFPB anybody money-making happen going our have perform we patch we

lot the We in a was the no of Our market. pulled back back room on mortgage frankly, mortgages earlier, there liquidity liquidity was company, quite as in no I to the non-QM pulled pointed a when, when there markets. has We grow. out agency

put better put what that’s much in us today are position this that, better So spot we in that’s us in this than but a position. what – then we in that probably ever, are

we think I sense something where lot will on focus sense. we can makes we that a makes things is The of agency that So business now. that –

we have have unless in some business those think rights, the think we to again. we the we We to robust a non-QM are them $XX that that there make we in comments is It’s money, call are back sense. not to until call earlier going gains. in we my of are jump but something evaluating of Similar going not lot are deals billion they just

we will origination the focus to think strategic be but I around agency side the side. So on it will going be continue the continue on it, is to

Stephen Laws

you on of worst X%. bigger outlook or And guys how basis do the case I high you XXXX? is forbearance think near-term do from your forecasts Kind a in the more table the around it you down bigger forbearance case your kind risk down the the think but Great. numbers deck of showed it a the of XX lastly, about some in bull pulled that I slowdown under from is economic scenario, from remember number think bear risk slide there, points, if and to kind

Michael Nierenberg

add on get thoughts Jack, Act, our know phone. CARES We some partner Navarro, homeowners. at are you be mean, you point, I to Jack and I but want to is but from helpful, the another The commentary anything don’t have if to who is partner standpoint? a my could think this that bill going really I

Jack Navarro

increased move permanent have gone sort a hardship I are down we that the overall Michael. just their is very basis. There are to and that significant the a basically come still about the and the would have people there One of ready very forbearances has ways who down have portfolio say forbearing Yes, today to significantly said over that is daily two significantly number and of on of forbearance that is the have is has number clear down. they and thinking they requests but new some, trends come we for number today. solution direct are and that on

So, are clear. trends those pretty

I is the and special mentioned am will obviously not – in thing might but trying insurance see again COVID to the talk not I we see them add country. activity and and that the that will You like we increase the you am in expire see sort not of But one, July in other an I economist earlier. an advances special see around we the unemployment

head the with are going we how things will today indication very the have are we just Michael’s are going to have to on enterprise to to we That’s trends sort out. are And positive direction no the And those be So change. on to across these see sphere these that are of operation, – we living issues. the is of servicing today. play what trying at there – but the vigilant are we trends

Stephen Laws

Thank Jack. Michael, color, that you. Appreciate Great.

Michael Nierenberg

Thanks, David.

Operator

Piper The Parker ahead. from next comes Sandler. question Please from go Kevin

Kevin Parker

you. Thank

want second the quarter direct-to-consumer just to fourth in right you month what back double how that’s and estimates I progressing us originations July. direct-to-consumer June are can your the of like for from of an idea of billion for you numbers now your Michael, then through the doing of in look originations is what So in month $X quarter? reference a approximately to give the

Michael Nierenberg

is What it?

Kevin Parker

just want to trajectory? exit the Yes, rate in I the understand

Michael Nierenberg

June Yes, did we billion. $X.X

recapture, quarter to about think hit the think get able and are we So them. it’s fourth in $X and those numbers we billion, $X quarter when whether or real better going to we numbers billion be as channel fourth we are talking we are we that the think around of

Kevin Parker

are do you to going you one So did be put to think you are you run-rate already? of do X.X that that if going to X.X where or June, up in – close Is to in you think going July? what that’s north end

Michael Nierenberg

we at are – $X We be about think September. billion target going our to to is by be

Kevin Parker

the programs going you marketing that be targeting confidence Is you continued what quarter are the recapture or of demand we that rates to to there doing? hit there specific that Okay. you saw going second to in or refi because different are it able programs levels jump number? that are And that then at is that gives is

Michael Nierenberg

be we will I will – a It’s better got everything. – our We lead of be little bit think conversion. around

but going of we is a quite – in better. money as the the President, time I say that think and for changed an Jack. billion to talk $X I away, refi leadership need $X.X us surface only to some us purchase are would $X company, a multiple hear alongside in we We you to Silverstein looking be standpoint, to we the lot a business. the added about to some of goes your will billion, be make me the our four the There Bruce we frankly know multiple we have I It’s three better. market If fine-tune billion. the from MSR or again, every hard origination multiple, joined mean, have Baron We estimates. company, goes are and working extra you are we – analyst we from whether do an go market tell. away make scratching

value be but of offsets XX. amortization MSRs stays we company the have where ball, it seeing lot mortgages company, the you is, book our continue the MSR levels at if keeping but will the valuations. of today’s see portfolio, happy of profitability think us that really mortgage are the to are to Our there higher originating in we on we mortgage crystal and a None is a way will

Kevin Parker

there, the origination with $X, of those given associated market multiple X, Slide what Okay. just value to or from types additional little on and over going that then $X franchise. And But it – like seen comps do book separate improving as be market but it – Do in entity? the like in significantly. seems you it’s credit have it better do $X get your value think you or might you we are a that feel you of estimating the for are typically puts it eventually very of will back volatility earnings, little out value the additional approximately think $X you

Michael Nierenberg

question, It’s Kevin. a great

way us that. I needs for look by if value, think I do a mean, to will, will create we itself. more NewRez is we to shareholder to always there standalone

point multiple offset or valuations, don’t make in there the volatile to stream. you Cooper trades where if know portfolio $X you companies, we if multiple, MSR is $X three think But yet. where our that But Penny a down your that few two again, to our will point, money. are billion for origination some To typically you on and more course or gain side, the I don’t multiples of a get look much the we it’s I because the $X earnings higher the think get that it’s look on about marked quarters. continue of we over north whether at trades So those same businesses these past

I positioned, some things are are. I like the I way So, we like the of where these love valuations

going for you I month, another foggy how ends think are system lot they it whole a get from another whether this of are seen, the more attractive. us one, out. of going into play ball going question, why CARES the money extremely more very get That’s very, cash crystal be mean, of is The at end us, bit, a I Stephen’s today back again, what’s And I happen. none this carrying we remains this the to think you to is because to all Act when any bill, today. know whether to

Kevin Parker

my questions. you Thank taking Alright. for

Michael Nierenberg

Thanks.

Operator

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

Henry Coffey

the taking got you have thank an it business, capital it? to where a Mike, you to business. you two investment Is think that an that open and the is of say everyone you morning, way our agency basically that mainly about going eye business, then going and question. you origination on are pouring for business is to And into are see opportunities? for where be lot businesses, focused servicing keeping my and growth simplest Good that to oversimplification keep

Michael Nierenberg

and Yes no, Henry.

right. did a acquired, Ditech good XXXX. the portfolio. with – some years, NewRez in NewRez, over actually We developed billion deal have partnership MSR We We in XXXX. the Penn HLSS very the in XXXX. We we had $XXX good acquisitions, we deal When did with have a did very Ocwen. we have New We

around strategic were these of advances. MSRs All

his support more into the our As my large job at that business. of that our portfolios. however, we because we you a but non-agency credit do great from issuance NewRez portfolio at business, that operating got When look lot the got and team the side, our amount I is operating of comfort take is notes, side servicing portfolio a our find to Shellpoint serviced and on a of there in Jack around by in business again credit to

it’s of when of portfolio we capital. to standalone right coupon sense. for does investment asked, not are return, thing Bose around an investment whether debt just before doesn’t a – going paying today go make sense, capital it support the our it’s term it about, just X% a Kevin, our are the loan on main while doesn’t of you lot your cost out – our Then and make somebody XX% X%, So, levered deploying business, deploy capital is My out to portfolio. loan the

and cost that that off. debt pay We lower of will

but X standalone, but together. clearer I of once do the whatever months work next the think over of a they picture they the we to do course XX have world,

best it. the way it’s think I think to of

Kevin Barker

that And press, little interest press? of forbearance be anyone good for last obviously, good talked can rates. there borrower to that is as tail there so I – out of has then a HAMP don’t whole HARP time for we or some would months for bit it form reality this from a no is and it would economics just be about know but refinance, who take of really end who the been the streamlined in the we verification that will the been discussion you the something, that in the X.X XX forbearance I mortgage get to nowhere, someone mods, And equation discussion has or some advantage in be but would you. get of good and for then some low it loses, X get

Michael Nierenberg

with well, is alive, times be that world it’s think nothing longer that is aware it’s don’t just bit right that but now, am sheer But more I a happens It’s anything no. processing road. not about anything it’s robust. all am the is seeing. what answer volumes know. I today, table origination everything little sure depends to think because mortgages, do need the And I these Yes, today. I take surprising? the everybody Fed of the of buying When the down The it than you on Would that, they –

Kevin Barker

and on a questions And congrats for Great. answering great thanks my quarter.

Michael Nierenberg

Thank will. you. We

Operator

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

Trevor Cranston

capital could of the see opportunities, third-party in terms in follow-up whether that are are what deploy you capital you given if business retaining flow what deployment multiples Thanks. primarily servicing as And you be can origination it’s bulk? market you MSR looking or generate more One right today somewhere or you thanks. if seeing just Hey, talk to about can guys low how now? are on potentially focused through the you

Michael Nierenberg

mortgage we in is loans. few acquired The twofold. we mortgage think thing is are and are mortgage MSRs packages Mortgage I refinance one of One business – the it’s the past market and come bankers have to seeing to years. the loans lot a large we over been I bulk of of originate market. in couple not would the bulk a banking course MSRs say of have

them ourselves, are could So, where cheaper on levels origination unless to we own to unless going think we originate, we we that axe are there below be again, we acquire I would they to originate these continue our because are than going able assets, think we at not are where to business. focus

create that, multiples very unless agency just is pool label Xs one and MSRs cheaper. that mortgage is MSRs saying think handles will frankly, jump to there thing that quite for very, two learned much to stuff on While but on gets again, we reason low and are and to loans us private this bankers have refinance in attractive, no two I they note continue

Trevor Cranston

in the helpful. multiples realized to quarter, of was this terms the market expected payoffs of in MSR and versus much you of and in quarter going That’s a then got the that And interchange it. the change this of how due value us change Okay, terms split can in fair prepays give forward?

Michael Nierenberg

we assumptions the everything. assets rates One have we for a bit say in of on we portfolio certain have of our our What is down speeds, I increased recapture have lowered would multiples our road. – larger and It’s little when Xs. the where is multiples, our at some our speed our and we we much mid conventional are are we conventional the multiples, look conventional Ginnie Ginnie at that the Ginnie than business. in is looked then multiples – business way

X. low conventional we side, in very the On the are

So are we some levels overall like years. X a which seen many multiple, of is we in have again many, lowest the

the excited to anytime So, why robust we that does amortization fair refi create But going down slow are we That’s love think robust up to we going now. are we side. capitalize MSR where is to we housing slow going is soon, down, where this origination there. we when sit stuff market in amount. I a to and because don’t right That’s we the that are that go know it market. on where are

Trevor Cranston

Okay, appreciate the you. Thank comments.

Michael Nierenberg

you. Thank

Operator

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

Giuliano Bologna

some kind the as you and side correspondent JV direct-to-consumer what of of are the curious of platform of margins your generating retailing the – quarter. of on of the I just and questions a I jumping have morning fine-tune asked congratulations will versus on kind well. and some have been we origination to that on that was the Good side guess great before. some

Just there coming of difference of how from margin to much a a is DTC? from try is and and where the get sense

Michael Nierenberg

These the sale margins we are at are points. roughly gain basis direct-to-consumer XXX On gross numbers. side, seeing on

to get for that take side, They customers, to retain we hammer our the basis – channel, to why in is are drive more help point is going our This only higher than or are system in home not need is better earnings that. through direct-to-consumer even going the retail we because points. it shareholders. they On lot that through continue us the XXX to it’s a give that

take spreads you you starting as we see the point where at side, tightening MSR correspondence versus or are range. probably were a QX. in basis there multiples a are you of give seen to the increase XXish And On result, have end the of

saw odd times tough give the the points. I right number March probably, basis during of now. under and take take points is basis saw think April highs in or stuff think give on XX we correspondence XX or I net we COVID-XX, The

Giuliano Bologna

of of those up they that thinking That that a to go loans this off. sense. that come customers portfolio-wide your you, a in months had then of for kind people terms are hopefully strategy with is makes you that and of the kind contacts lot out it a few re-perform part of have go of forward, we forbearance, Is as year? refinance growing as of drive the margin lot can volume or And you trying already find obviously, just direct-to-consumer will lot recapture you recapture more once come

Michael Nierenberg

solutions it’s will think in portfolio-wide. is where work that and with forbearance are focused. mean homes, other them we the I provide more and stay are to I portfolio people help mods in their but broader

Giuliano Bologna

are sense. how have levels – of last that do any close the or are to at have you of we long or optionality hedges of and you kind time. as makes lower leaving one how open out portfolio thinking kind of But you point? And are hedging hedging higher rates moving rates of are the the in in your seen kind this MSR terms you a moving obviously, on lowest one That quick values some about at to whole,

Michael Nierenberg

We are doing both.

MSR We mortgages, business. which have agency hedge your

mortgages of billion against We have our today. agency north MSRs $X of

We points. basis are was XX X/XX Today, at about points. basis the of XX XX-year end rates March, it’s monitoring the Treasury

essentially So it’s unchanged.

are think I the basis the tightened. we has end mortgage the was today seeing difference of March versus what that

because environment in so for absolute rates So But has a for lower right they continues the Fed perspective go rate at a monitor to to will the only just now Fannie lot our have a example, much than tightened, point, to where continue some – basis we more of higher in mortgages. investors. buy going return income are are X.Xs an mortgage nothing, but done up from fixed

ways. are we both monitoring So

are think going go to biased think But we don’t ways. – point. I some protected necessarily I at We it’s are to we more rates are think higher are today. probably both

The multiple other on overall are but loan at there ago. couple to and was an we point thing have is portfolio duration, less three obviously have out bond risk a there bonds, that agency have of have there than do we we we think we mortgages, – have a quarters MSRs, is we loans, today

Giuliano Bologna

really will you. Thank great. it. And I I That’s back appreciate into queue. jump

Michael Nierenberg

Thank you.

Operator

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

Tim Hayes

are good Hey, morning, Mike. well. Hope you doing

more question, those further these how First you talk operating a companies this in company? then just point I can sense the operating think sheet you posed and to performing sheet I last question it your at recently? quarter, think but companies balance been do investments investments bolster what on-balance And about makes internalize off have bit

Michael Nierenberg

the family. of are Street appraisal NewRez has So, part company. balance been – the there. stuff, and title and are and on been ShellPoint what call sheet the would off have I Avenue XXX There East no which a They change

do business we those volume overall obviously appraisal more and will businesses grow will As the grow. grow, the title business there, from earnings will the

in have upfront million payment with foreclosure the perspective $X million business do of guys the where it’s out $XX been have They million $XX job. earn-out get million a of $XX again a company are going this suite year made about debt. and solutions be sales other would by little prints of give was property as similar the and that and or million what acquisitions, third-party there. travel EBITDA equity. things to originators They million it, purchase negatively. about $XX revenue. run There million. impacted $XX have million million into there if that moratoriums That’s we in total Guardian, from and standpoint servicers, million to make $XX a They impacted drive of earnings total have million provide Guardian think great investment been overall a tech-enabled million do a and a this the to That’s REO $XX and EBITDA million year. more of great moratoriums, out call of I broad from harder has. take $XX obviously between moratoriums will you is more Covius, with we to where $XX The this think $XX $XX But and that. is create between and between $X should and year. The price obviously, bit light But EBITDA I foreclosure of

off the three all-in-all, balance those business, two do So, continue part really to fine. sheet most it’s should businesses for

kind We will we come Those do the – this balance of sheet world. probably really off of the better investments. once are two COVID-XX out largest

Tim Hayes

Got it. sense And question, companies? your then internalize I part just that think it of second was you the in point further to these makes what guess at stake or do investments yes, these

Michael Nierenberg

ours. Clements do grow, want very who are of increase the Rob to as XX% we so own of But partners we that we Well, depending our about would that optionality we vocal of, have their I have are Covius great pretty upon how earnings Covius that. of, see, we own we team they been there. the XXX% Guardian, John extent and to to own to do, fond Guardian like ownership Surface we and management

Tim Hayes

think see where that you you very if wondering you there dividend while distant but raised there don’t know much okay. keep it’s the run-rate just more some me be of near-term getting the strong have and the respecting it, and just And below still to made ahead? this core one more quarter in just at given kind then sense higher future defensive earlier about trending level, position, hopefully that uncertainty the the dividend how to liquidity recently is comments on decision, it it’s really you makes arguably, a too it and need earnings I Got so this not in it, you a from board well that

Michael Nierenberg

continue it would think value get it, it’s at book and something in again, would don’t for that, earnings to versus bit there. board little of a to $X.XX. just to get make discuss. very sense put that paid there decision, it's we level? big earnings. because and there to a is If strong delta we normalized are We and something we Does say of what quarters you thought, run-rate grow to world, out it through uncertain I of Obviously, would I get keep it’s a couple capital our this a want $X.XX We a both. back it’s want

and use I plus if $XX, our we so, the the market MSR and to $X. trading book example value is Our came of at $X, main was was let’s truly $X the upper share, thing XXs stock say per it’s $XX.XX

cheap. should that You in, that capital yields again, operating it’s don’t in environment. this or trading REIT interest be XX% don’t a is think without stock other know the there dividend us kind that rate to would of how we But of just space, or I are XX% peers the in all mortgage for equity is I have to our do any it. whether the put friends very, and at out getting think And zero out world, – credit very we which want

as and – we I will world going gave to Right everybody to for want about So, a that’s perform book to think we and you like I back what’s want hard to it. our It’s specifically, monitor to mean, that’s vague broad the we think answer our I in get for it’s something we enough. value. shareholders important, pretty I you – would shareholders. as are happen. that very see want now, I to

Tim Hayes

about get it. No. you are how I thinking

of I do jump book And more will So, off, update quick appreciate today? that. one value a as then you have just one

Michael Nierenberg

I similar, think. pretty It’s would

Tim Hayes

Okay.

Michael Nierenberg

little a MSR give take, are or the higher closed right quarter, slightly higher, be we now. because values might Where bit

Tim Hayes

thanks Got my questions. for it. taking Alright,

Michael Nierenberg

you. Thank

Operator

over Nierenberg Michael like for session. back any to question-and-answer conference our remarks. I concludes closing turn This would the to

Michael Nierenberg

everybody’s performing summer. Well, world obviously, and you call. to a on great stays forward Have we for all updating the and everybody our look in. in earnings appreciate support Thank we hope next throughout this well. crazy our you. live We I quarter shareholders

Operator

presentation. concluded. now for Conference Thank attending is today’s you

You disconnect. now may