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New Residential Investment (NRZ)

Participants
Bohe Yu Investor Relations
Michael Nierenberg Chairman, Chief Executive Officer and President
Nick Santoro Chief Financial Officer
Baron Silverstein President, NewRez/Caliber
Bose George KBW
Kevin Barker Piper Sandler
Eric Hagen BTIG
Doug Harter Credit Suisse
Stephen Laws Raymond James
Giuliano Bologna Compass Point
Trevor Cranston JMP Securities
Courtney Bahlman Barclays
Call transcript
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Operator

Good morning and welcome to the New Residential First Quarter 2022 Earnings Conference Call. [Operator Instructions] Please note this event is being recorded. I would now like to turn the conference over to Bohe Yu [ph]. Please go ahead.

Bohe Yu

Thank you and good morning, everyone. you earnings us call. thank first New to XXXX quarter like for for joining Residential’s I’d Financial Baron With CEO Caliber. New Chief and today President and me are of Residential; Michael Nick NewRez President of Silverstein, Nierenberg, Chairman, Officer; and also Santoro, the to the that are earnings Residential website going the posted to New we this call, supplement Throughout reference was morning.

actual encourage the filed be done like SEC. regarding results. forward-looking forward-looking to download statements materially now. I’d to If annual factors review their out from uncertain supplement press you with the today review These and our nature you the I reports risk and the our disclaimers statements. encourage quarterly will in have statements statements earnings by may so, I’d contained to not and release certain point already in you that are presentation and differ

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

Michael Nierenberg

Good for morning, everyone. us. Bohe. joining Thanks, Thanks

is we in world. As pain and there of the suffering all lots know,

who payer, everyone and warm about need think or to in the a end then we As and hope help as soon we possible. of our out healing send is wishes for war as

volatility markets, company our the the had good in business, despite quarter. very Now on to a

protect positioned portfolios we rates. prior the during have As for from to calls, mentioned taking company companies rising and rate our we all a have our necessary actions operating interest higher environment,

at value Currently, $XX.XX. to approximately increased book value book our quarter, $XX.XX. the sits During our

Fed along our as should portfolio, to which our only long expected forward place, actions. duration value in We have MSR hedges interest which go on book with increase based help assets, we protect rate our

increased cash $X.X levels and to liquidity We billion. have our

first quarter these for be the business. was services diversified patience believe example of across rewarded opportunistic be in we the will great investments markets We our will financial as look patient and We sector. a

be Regarding the the our companies, end of operating integration will NewRez QX. and done by Caliber of

sales previously As we area in million to the million. mentioned, we of expected $XXX $XXX

forward, million of believe initially we more loans, We other we and light we mentioned, have $XXX homeowners, to excess the more sales able support homeowners about our we as As that them looking number we and number. offer in will are go to our ways we go is forward. for ways to products be as likely think

middle years, the all the extremely our now view in had as capacity future. part overall origination the serious buildup the As of for contraction unwind. to big and remain the in will is which we of been essential The couple near of business strategy. origination is profitable now past business, way a of know, We the this

focus will retention part focus origination channels bigger various will Our retail and business. the on of the purchase our will on market, which customer a become

Our ability to our products from on us HELOCs differentiate will focus non-QM, new jumbo, launch peers. and

need businesses. community to order banking lead as more M&A will MSR lead believe we in mortgage this bankers mortgage This fund their rally more As profitability unless across back see the enormous pressure to would the on in we – the I market forward yields. origination industry, put business little treasury expect go will a to will as and to will we lower sales This sell whole. to looking MSRs the very

on plan an will Genesis, of is closed which expansion we we fix-and-flip at have think up the many embarked business, about broader lender, When in December. our operating more As that that we businesses, a look U.S. open base markets on we across

business, our floating loan this the volumes short origination for balance high our force assets, sales asset lowest a company. the assets Having business. believe and rent sheet. cap of to cross-sell continue of building make in portfolio On with rental a coupon, affordability housing of enable duration ability will rates have years, for should a with great at dry the single-family powder Our to Caliber REIT some with growth additional way, taken The through door, coupled levels growth. coupled us to approach the should cautious we a come create perfect our

and mid-teens. space note On the the has I beginning in XXX% of the the point put XX-year of XX look X-year today, have yesterday are levered on at from posted online. positioned am which has are. investment front, year look the and on credit in points out advantage spreads you in the yields. company the we company assets start When to paid basis and the now billion spreads X.XX%. certain end the are at been are the treasury we at $X December X% note has securitized to of now since To to returns particularly massive, to of beginning moves where X. way dividends risen refer have with in a to the risen our Page When will the are since great take doubled These in treasury supplement, a where massive look to going credit this we at market, I inception. the and than in context, yields we widening have from mortgage classes more in in attractive asset products, XXX% rise

I are sheet about business. yield servicer our not at cap companies originator owned a businesses, about One When industry-leading we profitability. of size, dividend billion, MSR our equity $X.X top in an and billion $X.X we we balance are our of the portfolio, be look of we market mortgage our X.X%, MSRs. are $XXX of today Our billion, operating and clear, $XX net thing to want billion, non-bank X

do. for that less and that’s forward, money make We So make as go our will we shareholders want if we to originate sure customers. what we our we support loans

just to. industry We leading referred in lender which have Genesis, an business purpose I

X, or preservation pointed will rise. we out today Financial Guardian. the the some results $XXX MSRs, today then have a per appraisal quarter and grow all quarter. on billion. share; up results common first equity, complementary portfolio, cash $XX.XX an much billion; to use or industry MSR of environments. is business, share; operating highlights million $X.X positioned liquidity, per I rates across to first are great the book named title, perform. higher leading before, We rates. as rate common positioned core including Page diluted line in value for net you go $X.XX; value, in as the that continues business million interest income quarter, $XXX.X I rental billion, stock company Business single-family businesses, We Our earnings for and GAAP property will dividend, share; and $X.X always tell net $X.XX this $X.XX diluted $XXX.X we per saw

continues little continue origination be purchase focused bit. on to franchise – Our in to a will and recapture, will Baron that talk

on other XX%; road I Assets against value billion partners possible. do and customer duration look the and quarter, look $X.X sheet have XX% down quarter, more customers. our mark-to-market. reducing Cash capabilities, that return and we shareholder businesses. focus is We again, continue expenses. the will from we them financing And returns to new work as markets to quarter, we $X.X all as securitizations are pointed We liquidity, that ways financial positive a of of for rates. our including and during earlier, have be on customers. the financing services up mortgage companies out that rising business. types up our portfolio the great support company, our expand insurance through of at That’s represents supporting to likely looking we establish we we our our job which our products anything When lines capital is capacity our we non-daily and continue X.X all of and are base, balance our approximately When away to our book for approximately X operating agency currently, hedged at shareholder X%; continue billion, with closed across and profitability, to banking ROE third-parties, collateral. million

the integration continues quoted that when be deal be will we NewRez million as did is forward. Page Caliber expense out strategic how by complete XXXX, was company residential pointed really of to million to $XXX and earlier, significantly our that just will save and go As just excess $XXX really Caliber The we and formed. it other the initially higher assets. Newcastle of our and was It evolution end acquire of and the built X MSRs spun in QX. out of likely

the on Over have grown real into mortgage company a years, side. the operating we

lending. have business purpose added We

Fed is no have added believe, only for we environment, excited the to there sector. rates, XX in just at raise other that secrets and tell to We the Inflation And services X-year and again, widened concerns. will have week. ‘XX. and macro the have I this of is financial The you future highs. where fourth basis am to spreads, multiyear here. market XX-year yields, significantly, I The complementary we Credit begun. going what quarter. I points quarter continue were they in uncertainties the where treasury once double volatility add The in have about they pointed done geopolitical out macroeconomic businesses

Affordability On the pressure should housing market, SFR on market and is Price lead a low. this continues extremely under to the to better growth much side. remains increase. housing inventory

not at rent patient, at great factor And we a point currently business. we HPA, growth down in the we and acquiring sit business, securitization out rates. think be there, about the units will just to look We where appropriate cap however, like do and we when in in we SFR that market road

handle we in The the team seen we seasoned during overall current XXXX in these markets, Our and seen have has the can management think obviously have investment have only we markets, not March we COVID; period very challenges Great experience Recession; we a the who anything. seen

to from continue learn We markets. difficult

Our cash and $X.X of billion again, liquidity. balance sheet,

to to think best, just continue you in MSR approach will an how quarter about portfolio to much X, the to prioritizing first in the really we opportunistic investments equity biggest. Page the first quarter you goals our higher. capital the in be drove treasury Mortgage yields the We as return maintain show rose, rates just rapidly on that company. allocation rose performed not

to remain business QX, look be And lower origination MSRs at growth our lending the trillion, of estate our up operating we the if commercial very the We Page will income, will value $XXX our continue, of at been continue into $XX will businesses, which you pre-tax Book and XX.XX forward. will and we look expect to amortization billion, in much vocal we very, leading earnings, business Earnings go into page, agency real when can portfolio pressure. again, around earnings, business, in stable look Below purpose origination to billion. value, under core as number the companies, end ‘XX, and we I products, first in around segment, pretty the we getting believe have that today. XX.X right of core ‘XX, not as also of franchises the the Page quarter, Large business will overall then complementary Capital, buy are core about citing is to residential across not playbook. have today, mortgage market space. go $X.XX NewRez/Caliber marketplace out in $XXX single-family What where operating for ability origination do to here the purpose the go total industry the against for and that, non-agency lender. see across market. compete only And Genesis addressable ‘XX. go we XX, the but in in X, across you see the others what and origination to a earnings different then $X.X and we listed about in lending assets. We the different is side our you manufacture assets. quarter market million need

be We are going to patient.

We I’ll are forward. non-bank leading have we across servicing XX, us. do in $XXX When will as or five to talk with now of very front we put for some the of business investment is many what Page billion, here, opportunities servicer, banking channels, own that serviced we all flip and And you excited just have be to things can opportunities which top us we the summary. mortgage ahead of our business about that at go different mortgage different verticals $XXX combined is in-house. about billion our servicing, look originator

MSR-related We have investments.

did bond this here very We you From serviced the investment being rate first we love the third-parties. we asset again, extremely to that have our environment. right standpoint, look estate real in the by MSR with when back on a markets side businesses, And choppy. little quarter,

really a the full is constant which just to We on MSR refinance. the forward expect we until MSR that stat. here. is XX really settle Page to remain of the as our interesting go money today, in portfolio portfolio X% market down Only

back up go to towards ‘XX, was that number If XX%. ‘XX or you

quarter this quarter. lot of to MSR mortgage average MSRs I originated dead were in A going originated X.XX%. the fourth not newly those Our rate an had of am horse. beat an a mortgages front, From

single-family move X,XXX Let’s to about talk just Today, units. rental on roughly Page business. our we XX have and

average is $XXX,XXX. Our cost basis

We positioned in markets XX are across states. XX

cap Our average is rate X%.

our sector, our maintain call then more XX, to We around This on cash economics servicer we XX%. it, not which time. volatilities business, of discipline approximately simply is cap Servicer we good lot rights, don’t billion, over X% we at the from rights are growth in a going down talk rent And continue that of to not about when look continue we stabilized warrant Call rates, growth, forward. grow lot the X%. up to see to a advance rent go will area business were will market as there. prevent occupancy $X.X deals Page advances down build as to December. from so us the activity calling

and I Baron, who in have will an company financing going that business. talk about it capacity. we to excellent plenty back Q&A. We to am some will We turn the of come over now do for job mortgage then

Baron Silverstein

Mike. Thanks morning, everyone. Good

environment the slowed pressuring As interest months. earlier, Michael are volumes has macro margins last refinance and rates has dramatically over current origination the Sharp mentioned in increase overall. changed few certainly

and of benefit with balanced market and pre-tax balances. higher coupled interest the origination of billion NRZ, for and shown in million. the million, portfolio of We business. originations, funded servicing originated is servicing servicing which proves will mark-to-market to the includes volumes, in an reduction environment our which With It’s a billion XX% notional continue a first rate gain income $XXX in NewRez for our increased with the $XXX market. $XX However, to our sub-servicing MSR performance partnership quarter a and and Caliber with stabilization our decline approximately provide quarter-over-quarter in $XXX our MSR

two Over through both of the to we about Caliber best quarters, continue between and progress companies. past see practices implementing our we and been have talking integration successes NewRez

to second now But initial has the talked to run-rate $XXX the our by have target year the aligning as exceed to our the integration current Michael expect by We to end we million environment. million of business channel and end synergies will of $XXX shifted the quarter, finalized focus of our about. origination our

our continue experience customers and the best we take sector continue maximize opportunities our headwinds, current even overall steps to We ensuring the capacity, origination to the But to our and lower platform. to while deliver cost our employees, be in disciplined evaluate in our for partners. in value managing with we

decline to pre-tax approximately adjusted approximately Turning quarter-over-quarter. ended XX, is the the with $XX in Slide first in pull-through volume, a origination which quarter respectively billion million income and $XX of XX% division and XX% lock

the margins see able pressure in all we quarter. Slide there spike appendix, maintain is the a were with throughout still detail continue but Regarding decline XX channel, slight channel. In to our in direct-to-consumer first channels. the has averages interest historical margins, in for April we The rate further above our on and compressed margins only further to

this division. retail pressures to quarter-over-quarter, coupled a seasonal XX% platform distributed the factors, margins which with to saw added and Our drop joint competitive venture has in

other The similar in coming wholesale have approximately our lower. we our volumes, driven quarter-over-quarter, lending competition However, the And season spring correspondent channels, lower division from to volume seen margins funded XX% as increased non-QM from benefiting buying April margins some easing maintained product. of continues. has has

and is maintain the have are to well. scalable as a April there been seeing able in highly and Our quickly flattening we margins platform

in While our and of it reflects the pre-tax patient conditions arise. ROE market focusing and they these reflects of while on strategy margin current pressures, decline income taking disciplined, opportunities when pricing also our advantage being

Turning to Slide XX.

and our of will joint market an to partnerships, expansion have so and purchase We platform. opportunistic grow new our we the continue platform, retail volume through to ventures able to be and we’ve incredible origination do share, and proven

and new LOs alignment succeed through which and with title all partnership of renovation housing product partners platform Capital of our with adding our growth in our and throughout in Genesis Our their fix-and-flip affordable growth will our our growth firm, third-party in also of markets; non-QM targets channels, in construction FHFA, the and footprint, set; local program continued referral and Michael also talked expansion help about focus a ancillary includes our strategy respective within a businesses this expansion and our accounts. own of

by to with environment. partnerships the path $XXX tech this Our quarter in in interest gain, with amortization. the division as but our purchase platform approximately about, benefit platform, our lower the income, mark-to-market million product of will and first servicing rates remain On Michael predominantly XX, investment the previously succeed ended coupled in positioned and portfolio, size is focused driven Slide to MSR the talked Servicing higher and from pretax

size X% our in our service focused approximately increased that stay that us our the first growing approximately remained quarter-over-quarter of in for subservicing focus home. the portfolio in and confidence also and and homeowners by of helping an their quarter direct and our our increase portfolio on in portfolio shows by results clients’ our in X%. We’ve We includes subservicing

coupled We journey. of homeownership throughout opportunity have a million the in and new servicing MSRs, with lot our their assist homeowners to have X.X we residential business approximately

On the recapture. XX, slide, Slide last talking about

have our recapture quarter-over-quarter. that rates refinance remained You’ll see strong

equity XX% them to of home home over now HELOC at which our into April also our low-rate Since rise, customer of to their direct-to-consumer customers continue to has home, allowing base While percentage product their tap to based rates servicing upon will now equity in production least seen half for XX%. the mortgage we’ve exceeds existing allow expansion and homeowners continue cash-out rise, a retain target their or new otherwise. we renovations that while refinances launching are

be will opportunities back outcome. channels network this leads a The distribute plan in base. that, strategically services, Also local and able and homeowners, future. We our product purchase as Michael, refinance relationships to us also and to launch benefit products you. the we beginning share across quarter, with with in successful expect continue higher take to our additional mature be our of and recapture we offering channels our to customer key including our to utilize to in by the a to being, On retaining partner second also maximize

Michael Nierenberg

Thanks, Baron.

slides Just couple of excited We apart. this XX XX, I as two of quick Page This billion the we different finally, appropriately we we’re of ourselves REIT, how have that to liquidity, be settle ourselves to over about working I today. need manager just Once cash we’re companies. time in will and but portfolio. very is an markets a really No MSR of and quick or couple to grow operating pointed liquidity think a will out, important continue a is comments. talk a our $X.X like strategies. across And think think really again, investment as space. Cash – the ourselves and commercial Page on note. of on we set capital about. things about just not down, investment the as allocating then really

let’s $X.X it a a, and an about even deployed we way, call couple just deployed be million that use it XX% in $XXX $X billion if that years If return, back ago, a of extra think year levered this would earnings. billion you we go of that, a if

in a with it’s be – XXX core that you shares roughly if shares, of million think XXX pickup million So our business. substantial substantial to earnings ish would that about

we forward. having think going We’re cash there balance because liquidity just rewarded go be and not do go a we larger much as on our today sheet simply will to we

ability assets, I truly that think Our to manufacture differentiates us.

will prudent. We be extremely

us that sale of folks And business. think a only will Gain really you’re only great on in I pull the some horrible MSR Thus, see create We for opportunities get worse. back will mortgage in to worse. get lot origination. to going side. are a It’s that actually going to on market have for

a will care think steward being ton but our think And a about of track forward. capital, seen it shareholder going we of haven’t do about I really as We record, making yet, that come returns. then we

up good. are And and with I’ll Our to can the numbers Q&A. for it back that, turn we open operator,

Operator

Instructions] go KBW. George Please first will Bose our [Operator ahead. from come And question of

Bose George

servicing is up? the Hi, room trend book how imply everyone. update. curious, for continue valuations? then does see Good of morning. further for I just what value Thanks MSR rates that if was in we to increases, valuation left And terms much

Michael Nierenberg

the average end weighted the Bose, of at MSR multiple or So approximately X.X our quarter, was X.XX.

at quoted X.XX. basis XXX the value forward, XX.X XX-year change now a MSR which we up XX March was points, we would an book up X.XX, taking As the the end treasury $XXX we basis multiple look of today, XXX go and project value of of million. rate, approximately be I If about points, book in

some book that already $XX of that, in somewhere is amount of get to $XX the company. captured, you’d on So and but value between likely

Bose George

you on out? thanks, then subservicing Ocwen Great, think, or July. how is that think benefit I with stuff that’s that platform to in Or too helpful. contract that do delinquent? any mean plays is that your I moving just to And own Okay. just there ends, your

Michael Nierenberg

a good have relationship we working Obviously, Ocwen. with

think come. to I is more there

keep likely the portfolio will We Ocwen. with

on with come future think I discussions them frequently you’ll near that. and see hopefully out the something have on in We that,

Bose George

made plan about consolidating is progressing? onto Okay, On thanks. more. or platform technology, And then servicing you have one actually where just one that

Michael Nierenberg

essentially Director, platforms. the we’re Service Caliber two when different Caliber, went acquired is and Sagent And So to we legacy on then system. MSP. Shellpoint which fired currently One is

so, the that. component on some discussions with had to in and all marketplace, a that parties regarding think be with different that we likely decision and best would for to players you and our do currently number with we continue We’re what discussions, and have what there shortly. in we equity We’ve be will the for along imagine, a comes market could best as company could be will of the hope

Bose George

Thanks lot. Great. Okay. a

Operator

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

Kevin Barker

you. Thank whether at I you operating just just the retail or to the morning. Good was on reduce you’re order there in anything origination that focusing reducing of of And you expenses considered channels profitability? from and whether changes, origination significant place wondering some the in bigger in putting that’s initiatives discuss the of Could amount you’ve channel? the you’re that structural in on looking sustain I to is you’re coming side synergies if correspondent? merger. have structurally in Caliber are cost a understand amount place

You it’s also at the saves but you alluded difficult cost far as environment. you’re to additional what there, add obviously, can origination Anything a on very as looking side?

Baron Silverstein

Look, the sure everything Kevin, to everything that perspective – is us the from of we on profitability. make maintain table

includes that and is, – we evaluate each and technology our view perspective, of how businesses. our from Our from

will we build ability in about, way drive additional expectation that, as continue We and continue that with are is I we make to are sure growth profitable our want way that today each we like partners our additional to on and where all – four be we our to to is So is that partnerships And as as of out channels. will continue fully we the channels talked we loaded the continue to products, succeed. the a perspective. existing

Michael Nierenberg

business. when each will think quarter allocate smaller to and you channel are into day, we Every look to you when the first fully second make where on gotten or we and unit we about over front, this that about produce, that is that say, all the fully want significantly unit channel. at the business, money Baron we make Kevin, in get even that And units. to expenses single the break does making sure calculus that just the we money? corporate quarter in Each we’ve – origination loaded And part channel of spoke on

comments are channel, people a because extent think so origination, our mortgage In pull significantly, in back money this as fighting is the know, my are we back to we going pulled that capacity lot. earlier going the continues And being out. significantly more be now about we I a in either units. volumes get where don’t will that for and that to we I be can market much for we horrible will forward make system, we think is all think to down So go as there us. we much That’s not are or

business. But originators the for do sake larger some against we’re conventional to market. that mentioned products. We think something Baron see the full-scale I it the it’s and going will of roll the origination Mae to us and decline other Baron is different mentioned roll maybe types – other to gains mentioned compete non-QM HELOC, other have in We about things. we in not the going to the of would jumbo before some doing side – HELOC, of love I out MSR don’t financial to could mentioned we like become I need be to a could compete up go – think limits. you’re real products to out the company, the loan, of going we flip Ginnie unless loan or offset – the customers, I in a see value a which our services of for

Now to But they know the the because are have we room go a there our the they some convexity value negative and all more we mindful go question is point, some market at be MSR up on think skewed they side, get that Bose’s about, Where point up capped they now, that X.X, we in so are only essentially high. we is go. to to plenty ton going downside. risk-reward we don’t extremely at think of will

Kevin Barker

servicing could that the servicing getting seeing hedging protect in transactions the putting that to mean would say, some a cases, servicing feel market multiples post start in are some highest comments. value the those point just do we’re I to Xx, where probably – type you you’re given we’ve follow-up multiples of or on today mean we’re, instruments that crisis? you in seen it’s I I place fee. financial like The a pushing approaching Xx

Michael Nierenberg

go. The a it’s – there to No, good room Yes. question. is

a have think, the conventional handle five I have, MSRs now side. production New on right

if income and is looking shows this get to against north their Fed short down If long getting to about the along will to at charts Fed value. way. a Fed in in projection the instrument X.X% ‘XX, other X%, an just see I’m you futures, we it, protect middle goes go It Fed goes put some asset – And think X% fixed that Fed of, you funds look economists XXXX. morning you the call the if XX-year rate that – in if go funds market if you goes go of duration morning, Fed hedge, at our implied a of the you to that this futures, one that – the funds the obviously will it, has

think keep in reallocated business. out, case, rather the pointed more that I in investment cash I to, I’d

think we’re mid-teens financing, a could we right if be able deploy of now, going You proper generate – with type in kind to to deploy we capital capital returns.

So need and an we REIT. being not I is really manager back think a – we to where go this investment and

how about across think capital deploy paradigms. we the different to have We

undue to originate mortgages risk. originate So and we’re not mortgages to just going take on

Kevin Barker

asset those still utilizing ADC and of like a that at could I’m significant yield? versus have that this cash point MBS buy you type assets – would while the amount buy to probably countercyclical saying Yes. by some just a MSR retaining class

Michael Nierenberg

about think this it way. Well,

go your points. to Fannie you get Fannie originating long coupon MSR, is X an a X.X and that let’s coupon, X% XX go You’re to say, X.X down will going

treasury not going go we don’t the get to at to basis. fight I we not if fight Fed I – the going we’re into mean now, may what there going recession, point, some mortgage right – I But don’t quite do is around frankly. think and we to we’re So

Kevin Barker

Micheal. Okay. the questions. Thank Thank you, you for

Michael Nierenberg

Thank you.

Operator

of The Please Hagen BTIG. Eric comes next question ahead. from go

Eric Hagen

Good right nice any guys thanks. are Hi, Do in if of capital perspective morning, which management, and Ginnie liquidity how quarter. Mae all? a rules you might FHFA approach capital now? have process that the And on the to drive and at the modifying

Michael Nierenberg

don’t Nick Why that handle let one? we

Nick Santoro

Sure.

gone So have I’m that the read back. the letters FHFA all comment you’ve sure

we believe those the to increase down. has Xx is capital, put FHFA it, the industry the and listening the will rules is call come As out the written, requirements, would as requirements current expectation industry

the meeting comfortable will written, align. the our as think in requirements position with requirements as we We’re ultimately liquidity and

Eric Hagen

opportunity remind MSRs secured funding? Great, with achieve on assets can thank secured appreciating floating? much is how the those fixed us the to advance is of current then value, And there a you. funding, higher you rate with in versus And

Michael Nierenberg

So the asset answer of goes down. first is the to value your your yes, up, is As going right? LTV theoretically, the question

the in that’s stuff we’re that interest the locked been is due offset with $X.X create the fixed equity then of you we asset. essentially other of fixed. quarter, look – at either is most look of have on our of Thus, seeing the When partners, MSR the funding, do the end hedges on billion a which So balance of in when banking have could some in We or at strategic our of sheet, funds which equity. it to is rise markets some most you capital that’s rate with at it’s Fed – side, our rate. our And own either more we net the lot it’s it floating.

that rate same interest that to with our rate question have leading my assets in comments swaps. fixed us duration hedging So, about earlier or

interest rate business sheet also when applicable balance towards They which loans, your us to has entire rate look X% those initially our at are higher will fabulous. loans. protect That swaps, are take, X% or floating give they is coupon, X%, where rates. Genesis Our you

or sheet, on the with Fed as increase. in to hedges get friends have working front are going from believe As us protect banking a securitization balance do continue funds end to our they standpoint, their sit we we for we financing our ready to

financings rate front-end our think feel that more have or the from hedge standpoint, back biased sheet to side, different we’re recession, then – for are we – friends and swaps, sheet bias. balance that our to interest protected these with the everything bank but we is immediately than environment on Kevin’s would going protected longer the rate we’re into have, our in. on an right asset of if more our all more short we’re we’d a we classes so balance going assets rate a across to with enter as now, just But So to than we thought we adapt thing, we’re covered protected I

Eric Hagen

you, Thanks helpful. Michael. very That’s

Michael Nierenberg

Thanks, Eric.

Operator

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

Doug Harter

much quantify, much you kind was I deals you run the guess think put or just come kind available about investable? said hoping of of that just should are to you more into would it kind saving kind How liquidity Thanks. help you you how we you of want billion Michael, with liquidity, teens around could today? of I today see there are of how $X.X opportunistic returns that that of is cash to that and of if be

Michael Nierenberg

Yes.

environment,” could listen, billion, over. yes. – the as quotes that billion Jones I we being think we the has market, on is on seen this going in I be looking the it investable, equities today’s be on I Would what’s is of that $X Tudor worst sure said, not based no. Fed the bonds call, and the Paul the seen just that we he in and I worst “This could am at have of some am in investing is world. answer are $X mean thinks, billion invest play $X.X for what he

patient going and going stuff that spend likely the very over we go commercial just will in think money. I The again, on single-family of harping some we that, we So, keep to residential time. space, away are out to be space. I not from are diversify do

one that. real about going some want like our investments small commercial that We But it’s the today do get to to great out as when making to we are rewarded. the put want amounts sheet to forward. be is that to we We rewards to as and capital, have financing is XX% go has and debt be patients think and there, some be estate XX% things we returns two strategic balance

Doug Harter

the team in-house an kind require like that you about. an of guess the something get or might talked of right I have is team? something right do the you you acquisition kind that on commercial, or to of kind already just investment feel have And investment in –

Michael Nierenberg

space we folks. have some is No, side. – will the Yes. come real investing in resources estate with great NRZ on commercial the the But there listen,

So, time money. either make track long a how great who a people proven shareholders’ have that know to record, or who we for LP’s know money

– our here will is more business. we bring So, around to it’s going terrific, the team expertise you but

Doug Harter

Great. Thank you.

Michael Nierenberg

Thank you, Doug.

Operator

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

Stephen Laws

can The to volumes steps Hi. related much achieve on that to so wanted much expenses. to Good outlook of reductions far? to variable How And where to the follow-up you decline in headcount that originations? Kevin’s think formal that loan the the about talk synergies with have overcapacity, are compensation sector the was guys see decline tied I of question about how or we of can about of what sequential you decline, is there morning. the you the able today? are across we expect kind kind as from take should here, more for industry other mortgage been

Michael Nierenberg

volumes needed there year, I because or if year, $XX-ish and did because sat mortgage billion so up – hiring we home business, And people billion Why and going The of folks to take from we money we be we don’t folks because originate we mortgages. a have of realized Nick I when origination will Baron don’t refer as on do we on XXX to at and of most our would to can look to remote at month want process last about we This will we what quote then just to Yes. reduce we look we your thought make volumes. perspective, it’s the back keep far. $XXX with loans, profitability. more part – costs, and last XXXX, origination. you something, were question, If a number to I the a those

think going it in people on Housing I people to whether is they capacity you So, headcount. try snippet, would just or system. up another folks It’s their Wire too go. day, headcount, itself read smaller. to are is other are of the compete don’t reduce for to much the substantiate you for, units to those bridge are going make And what that going see or to letting be for get every to industry some that that do There

to is As a there be made is no unit. There going to result, per very money. little be money

So, with we the the effort approach our lot mention probably mentioned – we prior sure, two, She on and call, we One we headcount, a experience. from Kainth is leading digital our Cooper reduce taken one, thing didn’t has who think in I Neenu worked synergies. before to have of marketing we there. a She making hired side.

Head drive we folks technology, two either groups. coupled about of those pumped we our or when saves So, our about Lack, ability reduce think Neenu costs Dino with those in pretty Technology, to are in

synergies you to So, your of got get business. out

smaller more but the You headcount got going to you create industry. see efficiency, get are to across

to We current our those business cuts. but significant forward. the move have environment made need be and don’t We get we to want just for folks, right-sized

guys as we to are? take kind as maybe that then sales of and – want far where you So

Baron Silverstein

Yes.

call I did million, Michael run at it we synergies. what were as $XXX So, where about talk rate

You rate down quarter-over-quarter. obviously $XX run see even a perspective rate our in from is our origination million overall expense business,

respect continue With to we I year. with would see and versus just discussion what as will call the are to forecast headed is our to fixed rest on of where continue We for what we call have that having variable, to can drop we I number expect that. the out – recommend a originations a think the follow-up

Stephen Laws

that. Look to Excellent. forward

SFR loan As transitional and and going pricing to SFR grow at volatile availability environment, a first talk continue you looked loans? markets in did you second market like as question, you first Obviously, there spread the your reception look and resi rate transitional about securitization. forward the your you Can those for residential it how securitization, those?

Michael Nierenberg

Yes.

for assets. really are is that’s of think we north fully of the up, want I our business, great. our once rate sure advance ROE was you capital are a to look securitization make important, is leased that on reception that assets one one XX% those The the at The truly – markets a pool shutdown. Stephen, thing that we we to assume when creates

think our when to in buttoned our business we we up million about the extremely today. called, do way all there how is when and if the sheet. loans, at look protect balance our So, And that that’s financing want I we volatility, that’s that think capital quarter, in $XX we running that ensure the volatility why first saw of no is we we markets, are we that

this the We quarter into standpoint, more But we have just either we right units. now, X,XXX are is, overall the we unit probably as late probably another – – quarter, securitization in acquire are be roughly clear an will units. third from to

in to business adding equity grow very, we are small. are We resources, small are folks capacity. some total adding is some that. with in we about amount talks looking of operating But the The really very today.

will have we in would a as need good big growth us industry, We we cap this bit. to with for be little up the relationships think go do very affordability housing decreasing, a that and to forward. area We some like rates go –

our points, we we entry go be going are think way as a So, good to in very forward.

Stephen Laws

I comments appreciate this the morning.

Michael Nierenberg

Thank you.

Operator

Giuliano from of Point. Compass Bologna comes next The go question Please ahead.

Giuliano Bologna

on a congrats and Good morning quarter. great

deposit get about picking get portfolio you servicing a And I income custodial sense your getting big moving short of the to of the sense on was portfolio size is to the to is and the side. just carry some higher One if obviously you – the might be how size curious brains for upside that of able your and the – and kind have just kind of deposits? am a it additional rates the on I areas of on disclosed how curious reason deposit that side. those of direction what of from of on custodian those

Nick Santoro

Hi Giuliano, Nick. it’s

don’t to they billion $XX average. about we in on balances, run custodial our Our but billion do disclose them $XX financials,

Michael Nierenberg

higher it, is in call a income and we extreme see rates off more, more float aggressive if fashion your our Fed will To question, raises deposits. will you the

Giuliano Bologna

the different that’s of an I the kind like was was of to and upside – That the model, of right. what to some just pieces That’s yes. get going

to rates billion. we that’s bps short bps, to material As XXX higher, move $XX if move $XX impact on obviously, XXX billion a

Nick Santoro

in as pickup know, MSR you in Giuliano, our value, the is embedded And value.

Giuliano Bologna

are you are on you have in you capabilities peak potentially or some MSR MSR then more the do a little very have market the there couple MSRs of be there or may values marked your something are unique realize that from side around bit. as point? values last that or questions more terms add I asked interesting curious need – they of there have That’s to do Would a you more a and right. any a in are of there, preference a that a to so. portfolios unique a years interest marked would origination similar do your back where adding have have handful years have by to you shifting or also perspective, closer discount. even how origination asset you I over from kind are out XX platforms about very public And than hedging that lower be reach out at there, looking topics origination or platforms showing XX – capabilities, think of focused you companies this they lot

Michael Nierenberg

we great We all of we on that a pieces origination have course, at distressed kind there of this it. If the need the point. pursue side, was opportunity

of capital comments matters. some back your goes to allocation it think I earlier

not are company. We mortgage a

an are manager. investment We

a REIT. not are We

job. has where So, not operating those out do to as that which example, guys we named just great another example buy will for deploying an that’s buy company and go and a so to business, capital company, And services, we assets, grow. And of a go think we out about something need need lot that’s across Guardian, of we have property financial preservation a third-party clients.

point, if Assuming a cash-on-cash to company into recession a continue grow, the and will some business. earnings does in economy go the that’s that that just at

this call, thing I don’t to to So, to cash one of get go the lot sitting think get just like we across We most things need I spend across more it. important the of important or a and that liquidity. would on are

continue allocation are Our But of be a grow. rate currently in deal. big book to and will likely the we core is value should where area run capital

or have take billion comes the it way, If $X buy that. mortgage business, six another origination are at doesn’t do because Just buy our will opportunity in multiple. you go the mean platform a and that mortgage to you higher we think we But deploy do way about shareholders. earnings how drive one. And how more to get the for meaningful and diversify, point returns higher it’s Two, do across. going I and a to we that’s that’s in capital core MSRs more

Giuliano Bologna

appreciate great. back in the queue. jump and That’s questions. I And will answer really I

Michael Nierenberg

Thank you.

Operator

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

Trevor Cranston

related question more MSR One valuations. Thanks. to Hey.

other companies talk mentioned of sale course more guys the as of low of have would more how you you coming adding about Can potentially over much the mortgage MSR years? the the able you see You coupon upside of year. you struggle possibility out MSR might for deploy sort for into? the MSR generally, asset last capital would returns how more that’s been originated couple be of over Thanks. on versus classes purchases bulk kind today to And

Michael Nierenberg

Trevor, it all comes back returns. to

so. way we get what to at X% going come – them don’t can a could different we You X.X to that’s going to. and know think down because we buy mid-teens could it’s gross really returns, a returns we in I right deploy in think capital we a that mid-teens are it’s But buy WAC the I think same MSR if at multiple, we think levels

the things unit? that allocation security is loaded Can macro when we on add basis, saying, then on does our for sell one environment this of produce And broader the the going about we it We excess the a “Okay, where environment for the XX%-plus capital, any going returns. again, every levered need it full. unit that’s example, the we think AAA don’t MSRs yield? grow example, estate universe, how to are think between if going portfolio, MSR down what’s grow comes that, And the a we is that just we Will it to we We originate generate or Charles is answer value our “Okay, – investment origination $XXX think off, to is back can organically how at say, that business. yes. got yes on will XX?” we, there, If going Sorrentino depends deploying we And can consumer the add look billion to to we to it does in day we breakeven forward?” real compare the goes capital that at can more. be at to do is the be but we and through to, we an looking all and on that commercial side [ph] NRZ may we fully compare thing, side how operating there business So, him or think outsized that is in macro

it’s your MSR it’s return companies, to of value So, how to bond a not mortgage for business, not as create just capital. a just really think we business. a do It’s with just grow us it’s grow growing not total single-family manager shareholders

Trevor Cranston

Yes.

Okay. It you. makes sense. Thank

Michael Nierenberg

you. Thank

Operator

go The next question comes from Courtney of Barclays. ahead. Bahlman Please

Courtney Bahlman

and to regards able provide to guys questions. In drop with be sticky one there? difference area, We for April is that gauge there consumer of the Thank trending have how to the then the I Hey you it. more year, to cadence volatile. getting past, and is the and that Do me. X.XX%. X.X% pertaining March, have Throughout demand purchase this quarter and monthly guys. there regards to quarter huge a side? super any any Thanks the quarter origination just appreciate also, that thoughts weeds, we the how time trying X%, color on here you. with Obviously, seen third panned we much the just things for to the consumer in might the this am was you was is resilient Really And first Really any seems color market out started about X.X%, the around volumes? with so off on averaged it how far?

Michael Nierenberg

resilient. the consumer the on think – side, I it’s yes, is consumer

out at read where – look I home or appreciation into numbers like am or and something are rate to remain lot I quarter, were the not The think go now, I they unemployment we economist, are. want across obviously, we because to lower retiring. around in they a we right rates even for an as don’t listen, – price of the of and that People lower. continues first you workforce age XX% the the country. drop I If work folks mortgage are project X.X%. to do think and

some it the double think the mortgage prices just own think opinion. way, doubled the this average and the and point will some rates consumer, you for first have a That’s that back about XX% quarter. quarter, going fourth are do you If impact up home will to I payment my at have homeowner personal slowdown. is in

think the pretty far are with system, you do has been, of one trends the of on where the is consumer. actually a a point consumer. you gas, that have acquire gallon the I you if I into, And pretty $X at point, folks rush couple things at But consumer first mortgage it of side some look the flip is right leaving mortgage now, the double, the of So the seen the that rates some of to homes at think healthy. plays lot think it that are Starbucks, the $X have quarter cup seems strong, for up. banking coffee rates folks expectation I a at industry amount consumer with in mortgage going I impact that The think the

swath looking BofA remains consumer probably their like from yet. it the large seen strong, worth card data around JPMorgan or a haven’t We data business. a of The at have

Courtney Bahlman

color you. monthly Thank with quarter? would in the regards directionally Any be to appreciated. Alright. Thank Anything you. cadence even

Michael Nierenberg

the Relating consumer? to

Courtney Bahlman

origination to volumes. Relating

Michael Nierenberg

Yes. I mean…

Baron Silverstein

already forecast between be to volume in somewhere is the that XX funded will put XX. our We expectation that our

We the higher of that’s we that end guidance somewhere range. be expect that to that provided. in But

Michael Nierenberg

$XX make to we XXX. the kind much million be and do XX, for just what the the in money have And It service we $XX we billion how it’s provide something the be what it’s about related can that could it. machine the project on shareholders We It And We on of to year. or profitability, we to quarter. – think full did depends first like unit to number. number that that depends each number that $XX homeowner. for could billion volume not can

Courtney Bahlman

Yes. Understood. guys. Thanks

Michael Nierenberg

Thank you.

Operator

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

Michael Nierenberg

everybody joining we day. follow-up Have great as to through performing go Thanks a your to for around and course and forward any year, this the morning. for everybody out we the hopefully stay are Look questions call of questions. for the well,

Operator

And concluded. Thank now for may now attending conference you you today’s disconnect. is The presentation.