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Executives at Rithm Capital, the parent of multichannel mortgage lender Newrez, said on Friday that the firm will not sacrifice earnings for growth, even amid the mortgage industry wave of consolidation represented by the Rocket Companies’ acquisition of Mr. Cooper Group.
That doesn’t mean Rithm is sitting on the sidelines. New York-based Rithm plans to remain active in mergers and acquisitions, while looking to capitalize on subservicing opportunities that may emerge as a result of the Rocket-Mr. Cooper transaction.
“Performance matters first, and we will never sacrifice performance in lieu of growing our platform,” Michael Nierenberg, Rithm’s chairman, CEO and president, told analysts during the company’s first-quarter earnings call on Friday.
In Q1 2025, Rithm reported $80.7 million in net income, down from $291.9 million in the previous quarter. GAAP net income came in at $36.5 million.
Rithm has already been active on the M&A front. In 2023, it acquired $1.4 billion in consumer loans from Goldman Sachs, completed a $720 million purchase of Sculptor Capital Management and struck a deal for Computershare Mortgage Services and its subsidiary, Specialized Loan Servicing.
Looking ahead, Nierenberg said Rithm’s M&A pipeline remains “very active,” particularly in the mortgage and asset management spaces. Market volatility has brought valuation down, while scale makes a difference.
“We are active and we hope to get deals done here in the near future,” Nierenberg added.
The mortgage business
Newrez, Rithm’s mortgage platform, posted a 19% pretax return on its $5.5 billion in equity for the first quarter. Net income reached $146.7 million, down from $316 million in Q4 2024.
In total, funded loan volume totaled $11.8 billion, up 9% year over year, though down from $17.3 billion in the previous quarter. The lender continues to rely heavily on the correspondent channel and saw its gain-on-sale margin improve to 1.37% in Q1 2025.
Newrez’s servicing portfolio grew to $845 billion in unpaid principal balance, up 30% year over year. That includes $254 billion in third-party servicing—more than double from a year ago—and the company expects this segment to continue expanding.
Newrez president Baron Silverstein said he sees opportunities in subservicing as competitors consolidate. He said the firm will continue to focus on its consumer direct refinance recapture, which was at 56% in the first quarter.
Overall, Nierenberg said the company continues to work on its capital structure to unlock shareholder value, so that the public markets can value it correctly. One option is to turn Newrez into a public company.
Following the earnings call, analysis at BTIG wrote that downsize risk to Rithm’s valuation appears limited, compared to asset managers and mortgage originators. Valuations for asset managers are down on macro concerns and wider credit spreads, but there’s a case for longer-term upside on the heels of the Rocket and Mr. Cooper deal, they said.
“We’ve been bullish on the prospects for RITM to spin out or monetize its ~$4 billion of net capital in NewRez, mostly because we think the business has stronger and more stable value if it can flexibly retain earnings outside the current REIT structure,” the BTIG analysts wrote.
Rithm Capital shares were trading at $10.50 on Friday at about noon, up 1.10%.
