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What changed in Rithm Capital Corp.'s 10-K — 2024 vs 2025

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Paragraph-level year-over-year comparison of Rithm Capital Corp.'s 2024 and 2025 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2025 report.

+1008 added−954 removedSource: 10-K (2026-02-19) vs 10-K (2025-02-18)

Top changes in Rithm Capital Corp.'s 2025 10-K

1008 paragraphs added · 954 removed · 631 edited across 8 sections

Item 1. Business

Business — how the company describes what it does

124 edited+109 added−127 removed35 unchanged
Biggest changeIn certain jurisdictions, including the U.S., the European Union (“EU”) and the UK, we are also subject to risk retention regulations applicable to securitizations and similar transactions, including CLOs and other transactions that we manage or may manage in the future, which may require us to retain a portion of 14 the securities or other interests issued in some of these CLOs and other transactions, whether in order to satisfy compliance obligations directly applicable to us or in response to investor demands based on regulatory requirements imposed on such investors.
Biggest changeOur global investment activities are subject to regulatory regimes that vary by jurisdiction, including in the U.S., the European Union (“EU”) and the UK. 13 In certain jurisdictions, including the U.S., the EU and the UK, we are subject to risk retention and related regulatory requirements applicable to securitizations and similar transactions, including CLOs and other transactions that we manage or may manage in the future.
Other types of Agency RMBS and other related financial instruments in which we have invested or may invest are set forth below: • Mortgage Pass-Through Certificates: Mortgage pass-through certificates are securities representing interests in “pools” of residential mortgage loans secured by residential real property where payments of both interest and principal, plus pre-paid principal, on the securities are made monthly to holders of the securities, in effect “passing through” monthly payments made by the individual borrowers on the residential mortgage loans that underlie the 8 securities, net of fees paid in connection with the issuance of the securities and the servicing of the underlying residential mortgage loans. • Interest Only Agency RMBS: This type of security only entitles the holder to interest payments.
Other types of Agency RMBS and other related financial instruments in which we have invested or may invest are set forth below: • Mortgage Pass-Through Certificates: Mortgage pass-through certificates are securities representing interests in “pools” of residential mortgage loans secured by residential real property where payments of both interest and principal, plus pre-paid principal, on the securities are made monthly to holders of the securities, in effect “passing through” monthly payments made by the individual borrowers on the residential mortgage loans that underlie the securities, net of fees paid in connection with the issuance of the securities and the servicing of the underlying residential mortgage loans. • Interest Only Agency RMBS: This type of security only entitles the holder to interest payments.
Most servicer advances are considered “top of the waterfall” and are generally repaid from amounts received from the related residential mortgage loan pool, and to a lesser extent, payments from the borrower or amounts received from the liquidation of the property securing the loan, which is referred to as “loan-level recovery.” Loan prepayments made by the borrowers on the residential mortgage loans underlying the securitizations can only be used to fund principal and interest advances.
Most servicer advances are considered “top of the waterfall” and are generally repaid from amounts received from the related residential mortgage loan pool, and to a lesser extent, payments from the borrower or amounts received from the liquidation of the property securing the loan, which is referred to as “loan-level recovery.” 6 Loan prepayments made by the borrowers on the residential mortgage loans underlying the securitizations can only be used to fund principal and interest advances.
These institutions would generally have held a majority of their originated residential 1 mortgage loans as interest-earning assets on their balance sheets and would have performed all activities associated with servicing the loans, including accepting principal and interest payments, making advances for real estate taxes and homeowners’ insurance premiums, initiating collection actions for delinquent payments and conducting foreclosures.
These institutions would generally have held a majority of their originated residential mortgage loans as interest-earning assets on their balance sheets and would have performed all activities associated with servicing the loans, including accepting principal and interest payments, making advances for real estate taxes and homeowners’ insurance premiums, initiating collection actions for delinquent payments and conducting foreclosures.
Our servicing business also includes subservicing for third-party clients, including performing loan servicing, special servicing (high touch customer service requires more frequent customer outreach than performing loan servicing and involves higher staffing levels and sub-servicing fees to support such higher staffing levels) and recovery options for deeply delinquent loans.
Our servicing business also includes subservicing for third-party clients, including performing loan servicing, special servicing (high touch customer service, which requires more frequent customer outreach than performing loan servicing and involves higher staffing levels and sub-servicing fees to support such higher staffing levels) and recovery options for deeply delinquent loans.
Today, institutions (including non-bank originators) that originate residential mortgage loans generally hold a smaller portion of originated loans as assets on their balance sheets and instead sell originated loans to third parties. The GSEs are currently the largest purchasers of residential mortgage loans.
Today, institutions (including non-bank originators) that originate residential mortgage loans generally hold a smaller portion of originated loans as assets on their balance sheets and instead sell originated loans to third parties. The GSEs are currently among the largest purchasers of residential mortgage loans.
The remaining collateral is not subject to daily margin calls unless the collateral coverage percentage, a quotient expressed as a percentage equal to the current carrying value of outstanding debt divided by the market value of the underlying collateral, becomes greater than or equal to a 10 collateral trigger.
The remaining collateral is not subject to daily margin calls unless the collateral coverage percentage, a quotient expressed as a percentage equal to the current carrying value of outstanding debt divided by the market value of the underlying collateral, becomes greater than or equal to a collateral trigger.
This is what is often referred to as a “general collections backstop.” See “Risk Factors—Risks Related to Our Business—Servicer advances may not be recoverable or may take longer to recover than we expect, which could cause us to fail to achieve our targeted return on our servicer advance investments or MSRs.” We fund advances primarily from a combination of cash on hand, loan prepayments and secured financing arrangements.
This is what is often referred to as a “general collections backstop.” See “Risk Factors—Risks Related to Our Business—Risks Related to Origination and Servicing—Servicer advances may not be recoverable or may take longer to recover than we expect, which could cause us to fail to achieve our targeted return on our servicer advance investments or MSRs.” We fund advances primarily from a combination of cash on hand, loan prepayments and secured financing arrangements.
The capital markets notes are typically issued with a collateral coverage percentage, which is a quotient expressed as a percentage equal to the aggregate note amount divided 7 by the market value of the underlying collateral.
The capital markets notes are typically issued with a collateral coverage percentage, which is a quotient expressed as a percentage equal to the aggregate note amount divided by the market value of the underlying collateral.
For construction and renovation loans, we generally use loan-to-cost (“LTC”) or loan-to-after-repair-value (“LTARV”) ratio. For bridge loans, we use an LTV ratio. LTC and LTARV are measured by the total commitment amount of the loan at origination divided by the total estimated cost of a project or value of a property after renovations and improvements to a property.
For construction and renovation loans, we generally use loan-to-cost (“LTC”) or loan-to-after-repair-value (“LTARV”) ratio. For bridge loans, we use an loan-to-value (“LTV”) ratio. LTC and LTARV are measured by the total commitment amount of the loan at origination divided by the total estimated cost of a project or value of a property after renovations and improvements to a property.
Non-Agency RMBS Within our Non-Agency RMBS portfolio, we retain and own risk retention bonds from our securitizations that we do not consolidate in accordance with risk retention regulations under the Dodd-Frank Wall Street Reform and Consumer Protection Act (including the rules promulgated thereunder, the “Dodd-Frank Act”).
Non-Agency Securities Within our non-Agency securities portfolio, we retain and own risk retention bonds from our securitizations that we do not consolidate in accordance with risk retention regulations under the Dodd-Frank Wall Street Reform and Consumer Protection Act (including the rules promulgated thereunder, the “Dodd-Frank Act”).
See Note 18 to our consolidated financial statements for further information regarding financing of our servicer advances. We largely invest in government-backed securities (Agency RMBS and U.S. Treasury securities), which are generally meant to act as a hedge to our MSR portfolio and provide additional qualifying assets and income for the purposes of meeting the REIT requirements.
See Note 17 to our consolidated financial statements for further information regarding financing of our servicer advances. We invest in government-backed securities (Agency RMBS and U.S. Treasury securities), which are generally meant to act as a hedge to our MSR portfolio and provide additional qualifying assets and income for the purposes of meeting the REIT requirements.
A portion of collateral for borrowings under repurchase agreements are subject to margin calls only after certain “margin holiday” triggers are hit. 9 Single-Family Rental Properties Our subsidiary, Adoor LLC (“Adoor”), is focused on the acquisition and management of our SFR property business.
A portion of collateral for borrowings under repurchase agreements are subject to margin calls only after certain “margin holiday” triggers are hit. SFR Properties Our subsidiary, Adoor LLC (“Adoor”), is focused on the acquisition and management of our SFR property business.
Our strategy with respect to the SFR property business involves purchasing, renovating, maintaining and managing a large number of geographically diversified high-quality residential properties and leasing them to qualified tenants, including through the purchase of residential properties in “build-to-rent” (“BTR”) communities and leasing them to qualified tenants.
Our strategy with respect to the SFR property business involves purchasing, renovating, maintaining and managing a large number of geographically diversified high-quality residential properties and leasing them to qualified tenants, including through the purchase of residential properties in BTR communities and leasing them to qualified tenants.
We also retain and own bonds from our consolidated private label mortgage securitizations, which we eliminate in consolidation. The equity value is reflected in assets of consolidated CFEs and liabilities of consolidated CFEs on the consolidated balance sheets. We finance our investments in Non-Agency RMBS with short-term borrowings under master uncommitted repurchase agreements.
We also retain and own bonds from our consolidated private label mortgage securitizations, which we eliminate in consolidation. The equity value is reflected in assets of consolidated entities and liabilities of consolidated entities on the consolidated balance sheets. 10 We finance our investments in non-Agency securities with short-term borrowings under master uncommitted repurchase agreements.
The difference between the collateral coverage percentage and the collateral trigger is referred to as a “margin holiday.” Excess MSRs Investments in Excess MSRs represent the MSR servicing fee component exceeding the base fee. Excess MSR assets include Rithm Capital’s ownership of Excess MSRs and associated recapture agreements acquired from and serviced by Mr. Cooper.
The difference between the collateral coverage percentage and the collateral trigger is referred to as a “margin holiday.” Excess MSRs Investments in Excess MSRs represent the MSR servicing fee component exceeding the base fee. Excess MSR assets include Rithm Capital’s ownership of Excess MSRs and associated recapture agreements acquired from and serviced by Rocket Companies, Inc.
In the event that we determine to raise additional equity capital, our board of directors has the authority, without stockholder approval (subject to certain New York Stock Exchange (“NYSE”) requirements), to issue additional common stock or preferred stock in any manner and on such terms and for such consideration it deems appropriate, including in exchange for property.
If we determine to raise additional equity capital, our board of directors has authority, without stockholder approval (subject to certain New York Stock Exchange (“NYSE”) requirements), to issue additional shares of common stock or preferred stock in any manner and on such terms and for such consideration as it deems appropriate, including in exchange for property.
Once a property is available for its initial lease, we incur ongoing property-related expenses, which consist primarily of property taxes, insurance, HOA fees (when applicable), utility expenses, repairs and maintenance, leasing costs, marketing expenses and property administration. Prior to a property being rentable, certain of these expenses are capitalized as building and improvements.
Once a property is available for its initial lease, we incur ongoing property-level expenses, which consist primarily of property taxes, insurance, HOA fees (when applicable), utilities, repairs and maintenance, leasing costs, marketing expenses and property administration. Prior to a property becoming rentable, certain of these costs are capitalized as building and improvements.
We and our subsidiaries must comply with a large number of federal, state and local consumer protection laws including, among others, the Dodd-Frank Act, the Gramm-Leach-Bliley Act, the Fair Debt Collection Practices Act, the Real Estate Settlement Procedures Act, the Truth in Lending Act, the Fair Credit Reporting Act, the Servicemembers Civil Relief Act, the Homeowners Protection Act, the Federal Trade Commission Act (the “FTCA”), the Telephone Consumer Protection Act, the Equal Credit Opportunity Act, as well as individual state licensing, privacy, foreclosure laws and federal and local bankruptcy rules.
Our subsidiaries are required to comply with a broad array of federal, state and local consumer protection laws including, among others, the Dodd-Frank Act, the Gramm-Leach-Bliley Act, the Fair Debt Collection Practices Act, the Real Estate Settlement Procedures Act, the Truth in Lending Act, the Fair Credit Reporting Act, the Servicemembers Civil Relief Act, the Homeowners Protection Act, the Federal Trade Commission Act (the “FTCA”), the Telephone Consumer Protection Act and the Equal Credit Opportunity Act, as well as individual state licensing, privacy and foreclosure laws and state bankruptcy rules.
Loan origination and renewal fees are deferred and recognized in income over the contractual maturity of the underlying loan. 11 Typical borrowers include real estate investors and developers. Loan proceeds are used to fund the construction, development, investment, land acquisition and refinancing of residential properties and to a lesser extent mixed-use properties.
Loan origination and renewal fees are deferred and recognized in income over the contractual maturity of the underlying loan. Typical borrowers include real estate investors and developers. Loan proceeds are used to fund the construction, development, renovation (including fix and flip), rehabilitation investment, land acquisition and refinancing of residential properties, including multifamily properties, and to a lesser extent mixed-use properties.
We consider the delinquency status, loan-to-value (“LTV”) ratios and geographic area of residential mortgage loans as our credit quality indicators. We finance a significant portion of our investments in residential mortgage loans with borrowings under repurchase agreements.
We consider the delinquency status, LTV ratios and geographic area of residential mortgage loans as our credit quality indicators. 9 We finance a significant portion of our investments in residential mortgage loans with borrowings under repurchase agreements.
Treasury securities and U.S. Treasury securities payable; • TBAs; and • other similar financial instruments Subject to maintaining our qualification as a REIT and exclusion from registration under the 1940 Act, we may, from time to time, utilize derivative financial instruments to hedge the interest rate risk associated with our borrowings and utilize other techniques that we deem appropriate.
Treasury securities and U.S. Treasury securities payable; • TBA forward contracts; and • other similar financial instruments. Subject to maintaining our qualification as a REIT and exclusion from registration under the 1940 Act, we may, from time to time, utilize derivative financial instruments and other techniques to hedge interest rate risk associated with our borrowings and investments.
We believe that, commencing with our initial taxable year ended December 31, 2013, we have been organized in conformity with the requirements for qualification and taxation as a REIT under the Internal Revenue Code and that our manner of operation will enable us to meet the requirements for qualification and taxation as a REIT.
We believe that, commencing with our taxable year ended December 31, 2013, we have been organized and operated in a manner consistent with the requirements for qualification and taxation as a REIT under the Internal Revenue Code, and that our current and anticipated manner of operation will enable us to continue to meet these requirements.
This category also includes residential mortgage loans issued to borrowers that do not meet conforming loan standards, but who qualify for a loan that is insured or guaranteed by the government through Ginnie Mae (Ginnie Mae, collectively with the GSEs, the “Agencies” and each of Fannie Mae, Freddie Mac and Ginnie Mae, an “Agency”), primarily through federal programs operated by the Federal Housing Administration (“FHA”), the United States Department of Agriculture (“USDA”) and the Department of Veterans Affairs (“VA”). • Non-GSE or Non-Government Guaranteed Loans.
This category also includes residential mortgage loans that do not meet conforming loan standards but are insured or guaranteed by the government through the Government National Mortgage Association (“Ginnie Mae” and Ginnie Mae, collectively with the GSEs, the “Agencies” and each of Fannie Mae, Freddie Mac and Ginnie Mae, an “Agency”), primarily through federal programs operated by the Federal Housing Administration (“FHA”), the United States Department of Agriculture (“USDA”) and the Department of Veterans Affairs (the “VA”). • Non-GSE or Non-Government Guaranteed Loans.
Our portfolio consists of consumer loans purchased from Goldman Sachs in June 2023 (the “Marcus loans” or “Marcus”) and consumer loans purchased from SpringCastle (the “SpringCastle loans” or “SpringCastle”) held by Rithm Capital through certain limited liability companies (together, the “Consumer Loan Companies”).
Our portfolio consists of consumer loans purchased through a forward-flow agreement with Upgrade, Inc. (the “Upgrade loans” or “Upgrade”), consumer loans purchased from Goldman Sachs in June 2023 (the “Marcus loans” or “Marcus”) and consumer loans purchased from SpringCastle (the “SpringCastle loans” or “SpringCastle”) held by Rithm Capital through certain limited liability companies (together, the “Consumer Loan Companies”).
Decisions regarding the form and other characteristics of the financing for our investments are made by our officers subject to the general investment guidelines adopted by our board of directors. 13 Regulations We are subject to numerous legal and regulatory frameworks across our business lines.
Decisions regarding the form and other characteristics of financing for our investments are made by our officers, subject to the general investment guidelines adopted by our board of directors. 12 Regulations We are subject to extensive and evolving legal and regulatory requirements across all of our business lines.
Loan commitments at origination are typically interest only, bear a variable interest rate tied to the SOFR plus a spread ranging from 4.0% to 17.2% and have initial terms typically ranging from 4 to 120 months in duration based on the size of the project and expected timeline for completion of construction, which we often elect to extend for several months based on our evaluation of the project.
Loan commitments at origination are typically interest only, bear a variable interest rate tied to SOFR plus a spread ranging from approximately 4% to 17% and have initial terms typically ranging from 6 to 120 months in duration based on the size of the project and expected timeline for completion of construction, which may be extended based on our evaluation of the project.
We make available, free of charge through our internet site, our annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, proxy statements and Forms 3, 4 and 5 filed on behalf of directors and executive officers and any amendments to those reports filed or furnished pursuant to the Exchange Act as soon as reasonably practicable after we electronically file such material with, or furnish it to, the SEC.
We make available, free of charge on our website, our annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, proxy statements and Forms 3, 4 and 5 filed on behalf of our directors and executive officers, and any amendments to those reports, as soon as reasonably practicable after such materials are electronically filed with, or furnished to, the SEC.
The U.S. federal income tax rules applicable to REITs may require us to implement certain of these techniques through a domestic taxable REIT subsidiary (“TRS”) that is fully subject to U.S. federal corporate income taxation.
The U.S. federal income tax rules applicable to REITs may also require us to implement certain risk management techniques through a domestic taxable REIT subsidiary (“TRS”), which is subject to U.S. federal corporate income taxation.
Investment Guidelines We make decisions about our investments in accordance with broad investment guidelines adopted by our board of directors to evaluate specific investments. Our general investment guidelines prohibit any investment that would cause us to fail to qualify as a REIT and any investment that would cause us to be regulated as an investment company.
Investment Guidelines We make investment decisions in accordance with broad investment guidelines approved by our board of directors, which are used to evaluate specific investment opportunities. Our investment guidelines generally prohibit any investment that would cause us to fail to qualify as a REIT and any investment that would cause us to be regulated as an investment company.
These borrowings are primarily recourse debt and bear either fixed or variable interest rates, which are offered by the counterparty for the term of the notes for a specified margin over the Secured Overnight Financing Rate (“SOFR”). However, this year we completed a first-of-its kind non-recourse term financing of MSRs.
These borrowings are either recourse or non-recourse debt and bear either fixed or variable interest rates, which are offered by the counterparty for the term of the notes for a specified margin over the Secured Overnight Financing Rate (“SOFR”).
An MSR is made up of two components: a base fee and an Excess MSR. The base fee is the amount of compensation for the performance of servicing duties (including advance obligations) and the Excess MSR is the amount that exceeds the base fee.
The base fee is the amount of compensation for the performance of servicing duties (including advance obligations), and the Excess MSR is the amount that exceeds the base fee.
The trustee or a separate securities administrator for the trust receives the payments collected by the servicer on the residential mortgage loans and distributes payments pursuant to the terms of the pooling and servicing agreement. A servicer generally takes actions, such as foreclosure, in the name and on behalf of the trustee.
The trustee or a separate securities administrator for the trust receives the payments collected by the servicer on the residential mortgage loans and distributes payments pursuant to the terms of the pooling and servicing agreement.
Once a property is rentable, expenditures for ordinary repairs and maintenance thereafter are expensed as incurred, and we capitalize expenditures that improve or extend the life of a property. Our Investment Portfolio segment also includes the activity from several wholly-owned subsidiaries or minority investments in companies that perform various services in the mortgage and real estate sectors.
After a property becomes rentable, ordinary repairs and maintenance are expensed as incurred, while expenditures that improve a property or extend its useful life are generally capitalized. Our Investment Portfolio segment also includes the activity from several wholly owned subsidiaries or minority investments in companies that perform various services in the mortgage and real estate sectors.
In satisfying the 55% requirement under the Section 3(c)(5)(C) exclusion, based on guidance from the SEC and its staff, we treat Agency RMBS issued with respect to an underlying pool of mortgage loans in which we hold all of the certificates issued by the pool as qualifying real estate assets.
In determining compliance requirements and based on guidance from the SEC and its staff, we treat Agency RMBS issued with respect to an underlying pool of mortgage loans in which we hold all of the certificates issued by the pool as qualifying real estate assets.
In executing our strategy, from time to time, we explore and will continue to explore various opportunities for acquisitions and dispositions of assets and financing transactions, which may include equity or debt offerings by us or one or more of our subsidiaries, business combinations, spin-off transactions or other similar transactions.
In executing our strategy, we may from time to time pursue acquisitions, dispositions, financing transactions or other strategic initiatives, which may include equity or debt offerings by us or one or more of our subsidiaries, business combinations, spin-off transactions or other similar transactions.
ITEM 1. BUSINESS Company Overview Rithm Capital is a global asset manager focused on real estate, credit and financial services. Rithm Capital is a Delaware corporation that was formed as a limited liability company in September 2011 (commenced operations in December 2011) and, became a publicly traded entity on May 15, 2013.
ITEM 1. BUSINESS Company Overview Rithm Capital is a global asset manager focused on real estate, credit and financial services. We are a Delaware corporation formed in September 2011, commencing operations in December 2011 and becoming a publicly traded company on May 15, 2013.
See “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Liquidity and Capital Resources—Debt Obligations” for further details about our debt obligations. Hedging Strategy We use various hedging instruments and techniques to actively manage and hedge our investment portfolio across various interest rate environments.
See “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Liquidity and Capital Resources—Debt Obligations” for further details regarding our debt obligations. Hedging Strategy We use various hedging instruments and risk management techniques to manage the impact of changes in interest rates on our investment portfolio across different interest rate environments.
These securitization trusts fund the acquisition of residential mortgage loans by issuing securities, known as RMBS, which entitle the owner of such securities to receive a portion of the interest and/or principal collected on the residential mortgage loans in the pool.
These securitization trusts fund the acquisition of residential mortgage loans by issuing securities, known as RMBS, which entitle the owner of such securities to receive a portion of the interest and/or principal collected on the residential mortgage loans in the pool. Purchasers of RMBS typically include large institutions, such as pension funds, mutual funds, insurance companies, hedge funds and REITs.
We have financed our investments in the SpringCastle loans with securitized non-recourse long-term notes with a stated maturity date of May 2036. The Marcus loans are financed with long-term notes with a stated maturity date of June 2028.
The Upgrade loans are financed through a secured revolving credit facility that matures in July 2026, and the Marcus loans are financed with long-term notes with a stated maturity date of June 2028. We have financed our investments in the SpringCastle loans with securitized non-recourse long-term notes with a stated maturity date of May 2036.
We may engage in the purchase and sale of investments. Our officers and directors may change any of these policies and our investment guidelines without a vote of our stockholders.
Our officers and directors may change any of these policies and our investment guidelines without a vote of our stockholders.
For purposes of the foregoing, we treat our interests in certain of our wholly-owned and majority owned subsidiaries, which constitute more than 60% of the value of our adjusted total assets on an unconsolidated basis, as non-investment securities because such subsidiaries qualify for exclusion from the definition of an investment company under the 1940 Act pursuant to Section 3(c)(5)(C) of the 1940 Act (the “Section 3(c)(5)(C) exclusion”).
Reliance on the Section 3(c)(5)(C) Exclusion For purposes of maintaining our exclusion from registration under the 1940 Act, we treat interests in certain wholly owned and majority owned subsidiaries, which represent more than 60% of the value of our adjusted total assets on an unconsolidated basis, as non-investment securities because those subsidiaries rely on the exclusion provided by Section 3(c)(5)(C) of the 1940 Act.
The residential mortgage loan market is commonly divided into a number of categories based on certain residential mortgage loan characteristics, including the credit quality of borrowers and the types of institutions that originate or finance such loans.
The residential mortgage loan market is commonly divided into a number of categories based on certain residential mortgage loan characteristics, including the credit quality of borrowers and the types of institutions that originate or finance such loans. While there are no universally accepted definitions, market participants commonly describe the following categories: • Government-Sponsored Enterprise and Government Guaranteed Loans.
We also may make loans to, or provide guarantees of certain obligations of, our subsidiaries. Subject to the percentage ownership and gross income and asset tests necessary for REIT qualification, we may invest in securities of other REITs, other entities engaged in real estate activities or securities of other issuers, including for the purpose of exercising control over such entities.
Subject to the ownership limitations and the gross income and asset tests applicable to REIT qualification, we may invest in securities of other REITs, other entities engaged in real estate activities or securities of other issuers, including for the purpose of exercising control over such entities. We may also engage in the purchase and sale of investments.
See “Risk Factors—Risks Related to the Financial Markets and Our Regulatory Environment—Maintenance of our 1940 Act exclusion imposes limits on our operations.” Competition Our overall success depends, in large part, on our ability to acquire target assets on terms consistent with our business and economic model.
See “Risk Factors—Risks Related to the Financial Markets and Our Regulatory Environment—Maintenance of our 1940 Act exclusion imposes limits on our operations.” 17 Competition Competition in our businesses is significant, and our results depend in part on our ability to originate, acquire, manage and finance assets and to raise and retain capital on terms consistent with our business and economic model.
As the securitization market has matured, non-bank originators have gained significant market share in the residential mortgage market. In connection with a securitization, a number of entities perform specific roles with respect to the residential mortgage loans in a pool, including the trustee and the mortgage servicer.
In connection with a securitization, a number of entities perform specific roles with respect to the residential mortgage loans in a pool, including the trustee and the mortgage servicer.
Under the U.S. federal income tax laws applicable to REITs, we generally will be able to enter into certain transactions to hedge indebtedness that we may incur, or plan to incur, to acquire or carry real estate assets, although our total gross income from interest rate hedges that do not meet this requirement and other non-qualifying sources generally must not exceed 5% of our gross income.
Under the U.S. federal income tax laws applicable to REITs, we generally may enter into certain hedging transactions related to indebtedness that we incur, or expect to incur, to acquire or carry real estate assets; however, gross income from interest rate hedges that do not satisfy these requirements, together with other non-qualifying income, generally must not exceed 5% of our gross income.
Further, we are subject to the registration and reporting provisions and requirements of the Securities Exchange Act of 1934, as amended (the “Exchange Act”) and are therefore subject to regulation and oversight by the SEC. As a company with a class of securities listed on the NYSE, we are also subject to the rules and regulations of the NYSE.
We are also subject to the reporting, disclosure and governance requirements of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and are regulated by the SEC. As a company with securities listed on the NYSE, we are subject to NYSE listing standards and related rules.
Policies with Respect to Certain Other Activities Subject to the approval of our board of directors, we have the authority to offer our common stock or other equity or debt securities in exchange for property and to repurchase or otherwise reacquire our shares or any other securities and may engage in such activities in the future.
Policies with Respect to Certain Other Activities Subject to approval by our board of directors, we may offer shares of our common stock or other equity or debt securities in exchange for property. We may also repurchase or otherwise reacquire our shares or other securities. We may make loans to, or provide guarantees of certain obligations of, our subsidiaries.
Additionally, our commercial real estate platform is part of our Investment Portfolio and is focused on growing a direct lending platform and a leading CRE asset management business through our in house operator partner, GreenBarn Investment Group, which provides acquisition and development opportunities, asset and property management, leasing and construction support.
Additionally, except for our commercial real estate assets acquired in the Paramount Acquisition, our commercial real estate platform is part of our Investment Portfolio and includes direct lending activities and commercial real estate asset management conducted through our operator partner, GreenBarn Investment Group, which provides acquisition and development opportunities, asset and property management, leasing and construction support.
In addition, we believe we will not be considered an investment company under Section 3(a)(1)(A) of the 1940 Act because we will not engage primarily or hold ourselves out as being engaged primarily in the business of investing, reinvesting or trading in securities.
We also believe that we are not an investment company under Section 3(a)(1)(A) of the 1940 Act because we do not engage primarily, and do not hold ourselves out as being engaged primarily, in the business of investing, reinvesting or trading in securities. Rather, through our subsidiaries, we are primarily engaged in operating and asset-based businesses.
The amount of leverage we deploy for a particular investment depends upon an assessment of a variety of factors, which may 12 include the anticipated liquidity and price volatility of our assets; the gap between the duration of assets and liabilities, including hedges; the availability and cost of financing the assets; our opinion of the creditworthiness of financing counterparties; the health of the U.S. economy and the residential mortgage and housing markets; our outlook on interest rates; the credit quality of the loans underlying our investments; and our outlook for asset spreads relative to financing costs.
The amount of leverage we deploy for a particular investment is based on our assessment of a number of factors, including the expected liquidity and price volatility of the assets; the duration profile of assets and liabilities (including the effect of hedges); the availability and cost of financing; the creditworthiness of financing counterparties; macroeconomic conditions, including conditions in the U.S. economy and the residential mortgage and housing markets; interest rate expectations; the credit quality of the loans underlying our investments; and expected asset spreads relative to financing costs.
Additionally, we have acquired and are continuing to acquire additional homes through the purchase of BTR communities and portions of BTR communities from regional and national home builders.
We have also acquired, and may continue to acquire, homes through the purchase of BTR communities and portions of BTR communities from regional and national homebuilders.
Our ability to identify and acquire properties that meet our investment criteria is impacted by property prices in our target markets, the inventory of properties available, competition for our target assets and our available capital as well as local, state and federal regulations.
Our ability to identify and acquire properties that meet our investment criteria is affected by a number of factors, including pricing in our target markets, available inventory, competition, our available capital and applicable local, state and federal regulations.
Government securities and securities issued by majority owned subsidiaries that are not themselves investment companies and are not relying on the exclusion from the definition of investment company for private funds set forth in Section 3(c)(1) or Section 3(c)(7) of the 1940 Act.
Securities issued by wholly owned or majority owned subsidiaries that are not themselves investment companies and are not relying on the exclusions provided by Section 3(c)(1) or Section 3(c)(7) of the 1940 Act are excluded from the definition of “investment securities” for purposes of this test.
If our board of directors changes any of our investment guidelines, we will disclose such changes in our next required periodic report. Financing Strategy Our objective is to generate attractive risk-adjusted returns for our stockholders, which at times incorporates the use of leverage.
Our board of directors may amend these investment guidelines without stockholder approval, and any such changes will be disclosed in our next required periodic report. 11 Financing Strategy Our objective is to generate attractive risk-adjusted returns for our stockholders, which may, from time to time, involve the use of leverage.
We also operate our securitization program and our servicing and origination and asset management businesses through TRSs. 1940 Act Exclusion We intend to continue to conduct our operations so that neither we nor any of our subsidiaries are required to register as an investment company under the 1940 Act.
Exclusion from Registration under the Investment Company Act of 1940 We intend to continue to conduct our operations so that neither we nor any of our subsidiaries is required to register as an investment company under the 1940 Act.
Based on our own judgment and analysis of the guidance from the SEC and its staff with respect to analogous assets, we treat Excess MSRs for which we do not own the related servicing rights as real estate-related assets for purposes of satisfying the 80% test under the Section 3(c)(5)(C) exclusion.
Based on our analysis of SEC guidance relating to analogous assets, we treat Excess MSRs for which we do not own the related servicing rights as real estate-related assets for purposes of satisfying the 80% test. We also treat Agency and non-Agency partial pool RMBS as real estate-related assets for purposes of this test.
Our investments in real estate related assets include our equity interest in operating companies, including leading origination and servicing platforms held through wholly-owned subsidiaries, Newrez LLC (“Newrez”) and Genesis, as well as investments in SFR, title, appraisal and property preservation and maintenance businesses.
Our investments in residential real estate-related assets include equity interests in operating companies and investments across the residential mortgage and real estate lifecycle. These include origination and servicing platforms operated through our wholly owned subsidiaries, Newrez and Genesis, as well as investments in SFR properties. We also own businesses providing title, appraisal and property preservation and maintenance services.
See “Risk Factors—Risks Related to the Financial Markets and Our Regulatory Environment.” Operational and Regulatory Structure REIT Qualification We have elected and intend to qualify to be taxed as a REIT for U.S. federal income tax purposes.
Operational and Regulatory Structure REIT Qualification We have elected and intend to continue to qualify as a REIT for U.S. federal income tax purposes.
Our qualification as a REIT will depend upon our ability to meet, on a continuing basis, various complex requirements under the Internal Revenue Code of 1986, as amended, (the “Internal Revenue Code”), relating to, among other things, the sources of our gross income, the composition and values of our assets, our distribution levels to our stockholders and the concentration of ownership of our capital stock.
Our qualification as a REIT depends on our ability to satisfy, on an ongoing basis, a number of complex requirements under the Internal Revenue Code of 1986, as amended (the “Internal Revenue Code”), including requirements relating to the sources of our gross income, the composition and value of our assets, the level of distributions made to our stockholders and the concentration of ownership of our capital stock.
We recruit, hire, assign and promote without regard to race, national origin, religion, age, color, sex, pregnancy, sexual orientation, gender identity or expression, disability, genetic information, veteran status or any other characteristic protected by law. To support new employees, we design tailored onboarding and training plans to ensure success from day one.
Our employment practices comply with applicable federal, state and local laws, and we recruit, hire, assign and promote employees without regard to race, color, national origin, religion, age, sex, pregnancy, sexual orientation, gender identity or expression, disability, genetic information, veteran status or any other status protected by law.
We also treat whole mortgage loans that each of our subsidiaries relying on Section 3(c)(5)(C) may acquire directly as qualifying real estate assets provided that 100% of the loan is secured by real estate when such subsidiary acquires the loan, and the subsidiary has the unilateral right to foreclose on the mortgage.
We also treat whole mortgage loans acquired directly by such subsidiaries as qualifying real estate assets, provided that the loans are secured by real estate and the subsidiary has the unilateral right to foreclose.
Our special servicer, services delinquent government-insured, Agency and Non-Agency loans on behalf of the owners of the underlying mortgage loans. The special servicing division also includes third-party serviced loans on behalf of unaffiliated investors. We are highly experienced in loan servicing, including loan modifications, and seek to help borrowers avoid foreclosure.
Our servicing business operates through our performing and special servicing divisions. The performing loan servicing division services performing Agency and government-insured loans. Our special servicing division services delinquent government-insured, Agency and non-Agency loans on behalf of the owners of the underlying mortgage loans. The special servicing division also includes third-party serviced performing loans on behalf of unaffiliated investors.
We finance our investments in MSRs and MSR financing receivables with short- and medium-term bank and capital markets notes. An MSR provides a mortgage servicer with the right to service a pool of residential mortgage loans in exchange for a portion of the interest payments made on the underlying residential mortgage loans, plus ancillary income and custodial interest.
An MSR provides a mortgage servicer with the right to service a pool of residential mortgage loans in exchange for a portion of the interest payments made on the underlying residential mortgage loans, plus ancillary income and custodial interest. An MSR is made up of two components: a base fee and an Excess MSR.
For more details on our portfolio, see “—Our Portfolio” below, as well as “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Our Portfolio.” For information concerning current market trends which impact our portfolio, see “—Residential Real Estate Market,” “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Market Considerations” and “—Quantitative and Qualitative Disclosures About Market Risk.” Acquisition of Computershare On May 1, 2024, Rithm Capital completed the acquisition of Computershare Mortgage Services Inc.
For more details on our portfolio, see “—Our Portfolio” below, as well as “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Our Portfolio.” For information concerning current market trends impacting our portfolio, see “—Residential Real Estate Market,” “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Market Considerations” and “—Quantitative and Qualitative Disclosures About Market Risk.” Markets in which We Operate Mortgage Originations and Servicing The U.S. residential mortgage origination and servicing market is complex and highly regulated and includes both bank and non-bank participants.
Residential mortgage loans that are not guaranteed by the GSEs or the government are generally referred to as “non-conforming loans” and fall into one of the following categories: jumbo, subprime, Alt-A, second lien or non-qualifying loans.
Residential mortgage loans that are not guaranteed by the GSEs or the government are generally referred to as “non-conforming loans” and may include jumbo, subprime, Alt-A, second lien or non-qualifying loans. Loans may be non-conforming due to various factors, including mortgage balances in excess of Agency underwriting guidelines, borrower characteristics, loan characteristics and level of documentation.
We expect these instruments and techniques may allow us to reduce, but not eliminate, the impact of changing interest rates on our earnings and liquidity.
These instruments and techniques are intended to reduce, but not eliminate, the effect of interest rate changes on our earnings and liquidity.
In the past, a borrower seeking credit for a home purchase would typically have obtained financing from a financial institution, such as a bank, savings association or credit union.
Additionally, non-bank originators and servicers have grown their share of overall origination and servicing activity. 1 Historically, a borrower seeking credit for a home purchase would typically have obtained financing from a financial institution, such as a bank, savings association or credit union.
The principal underwriting guideline is the conforming loan limit which is established by statute and currently is $806,500 for 2025 (an increase from $766,550 in 2024) with certain exceptions for high-priced real estate markets.
This category includes “conforming loans,” which are first lien residential mortgage loans secured by single-family residences that meet the underwriting guidelines established by the GSEs. The principal underwriting guideline is the conforming loan limit, which is established by statute and currently is $832,750 for 2026 (an increase from $806,500 in 2025), with certain exceptions for high-priced real estate markets.
For purposes of the foregoing, we currently treat our interests in SLS servicer advances and our subsidiaries that hold consumer loans as investment securities because these subsidiaries presently rely on the exclusion provided by Section 3(c)(7) of the 1940 Act.
For purposes of applying the 40% test, we currently treat our interests in certain subsidiaries holding servicer advance investments and consumer loans as investment securities because those subsidiaries rely on the exclusion provided by Section 3(c)(7) of the 1940 Act. We monitor our asset composition on an ongoing basis to maintain compliance with the 40% test.
Our rental rates and occupancy levels are affected by macroeconomic factors and local and property-level factors, including market conditions, seasonality and tenant defaults, and the amount of time it takes to turn properties when tenants vacate.
Rental rates and occupancy levels are influenced by economic conditions and local and property-level factors, including market conditions, seasonality, tenant defaults and the time required to re-lease properties following tenant turnover.
If a borrower defaults on a loan and the lender takes ownership of the underlying property through foreclosure, that property is referred to as real estate owned (“REO”). The volume of mortgage loan originations associated with home purchases is generally affected by the overall strength of the economy, interest rates, housing pricing and unemployment rates.
If a borrower defaults on a loan and the 2 lender takes ownership of the underlying property through foreclosure, that property is referred to as real estate owned (“REO”). Origination volumes are influenced by macroeconomic conditions, including interest rates, housing prices, employment rates and affordability.
We also must comply with federal, state, local and foreign laws related to data privacy and the handling of non-public personal financial information of our customers, including the California Consumer Protection Act, which went into effect in January 2020, as amended by the California Privacy Rights Act, which went into effect in January 2023 (collectively, “CCPA”), the European Union General Data Protection Regulation 2016/679 and applicable national supplementing laws (the “EU GDPR”) and the United Kingdom General Data Protection Regulation and Data Protection Act 2018 (the “UK GDPR” and, together with the EU GDPR, the “GDPR”) and similar laws, which limit how companies can use customer data and impose obligations on companies in their management of such data.
We are also subject to federal, state, local and foreign laws governing data privacy and the protection of non-public personal information, including the California Consumer Privacy Act, as amended by the California Privacy Rights Act (collectively, the “CCPA”), the European Union General Data Protection Regulation (the “EU GDPR”) and the United Kingdom General Data Protection Regulation and Data Protection Act 2018 (together with the EU GDPR, the “GDPR”), as well as similar laws in other jurisdictions.
These subsidiaries and investments include: DGG RE Investments LLC d/b/a Guardian Asset Management (“Guardian”), which is a national provider of field services and property management services, eStreet Appraisal Management LLC (“eStreet”), which provides appraisal valuation services, and Avenue 365 Lender Services, LLC (“Avenue 365”), which provides title insurance and settlement services to Newrez.
These subsidiaries and investments include: Guardian Asset Management (“Guardian”), which is a national provider of field services and property management services, eStreet Appraisal Management LLC (“eStreet”), which provides appraisal valuation services, and Avenue 365 Lender Services, LLC (“Avenue 365”), which provides title insurance and settlement services. 7 Residential Transitional Lending The Residential Transitional Lending segment consists primarily of short-term business purpose mortgage loans originated and managed through our wholly owned subsidiary Genesis.
We sell conforming loans to the GSEs and Ginnie Mae and securitize Non-QM residential loans. We utilize warehouse financing to fund loans at origination through the sale date. Our servicing business includes owned MSRs primarily serviced by Newrez. As of December 31, 2024, 88.9% of the underlying UPB of mortgage related to owned MSRs is serviced by Newrez.
Profit margins per loan vary by channel, with Correspondent typically being the lowest and Direct to Consumer being the highest. We sell conforming loans to the GSEs and Ginnie Mae and securitize non-qualified residential mortgage (“Non-QM”) loans. We utilize warehouse financing to fund loans at origination through the sale date. Our servicing business includes owned MSRs primarily serviced by Newrez.
Accordingly, we may, without a stockholder vote, change our target asset classes and acquire a variety of assets that may differ from, and are possibly riskier than, our current portfolio, as long as they are within such guidelines. Additionally, these investment guidelines may be changed by our board of directors without the approval of our stockholders.
Subject to these guidelines, we may, without a stockholder vote, adjust our target asset classes and acquire a variety of assets that may differ from, and could be riskier than, our current portfolio.
Certain of our wholly-owned subsidiaries, including, but not limited to, Sculptor and RCM Manager, are registered with the SEC as investment advisers under the Advisers Act, and we may have additional subsidiaries that register as investment advisers in the future and are subject to the various requirements under the Advisers Act and the rules and regulations promulgated thereunder.
Certain of our wholly owned subsidiaries, including Sculptor, Crestline and the Rithm Advisers, are registered with the SEC as investment advisers under the Investment Advisers Act of 1940 (the “Advisers Act”), and additional subsidiaries may become registered investment advisers in the future. These entities are subject to extensive regulatory requirements under the Advisers Act and related rules.
Performing loans are residential mortgage loans where the borrower is generally current on required payments. By contrast, non-performing loans are residential mortgage loans where the borrower is delinquent or in default.
The non-GSE category also includes “investor loans,” which reflect primarily non-owner occupied investment properties. Residential mortgage loans are further classified based on certain payment characteristics. Performing loans are residential mortgage loans where the borrower is generally current on required payments. By contrast, non-performing loans are residential mortgage loans where the borrower is delinquent or in default.
As a REIT, we generally pay no federal, state or local income tax on income that is currently distributed to our stockholders if we distribute at least 90% of our current taxable income each year.
As a REIT, we generally are not subject to U.S. federal, state or local income tax on income that is distributed to our stockholders, provided that we distribute at least 90% of our taxable income each year. Certain of our assets and activities do not qualify for REIT treatment or present uncertainty under the REIT rules.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeThese factors include, among other things: • interest rates, including increases thereof and credit spreads; • the availability of credit, including the price, terms and conditions under which it can be obtained; • the quality, pricing and availability of suitable investments; • liquidity in the credit markets; 37 • the ability to obtain accurate market-based valuations; • volatility associated with asset valuations and margin calls; • the ability of securities dealers to make markets in relevant securities and loans; • loan values relative to the value of the underlying real estate assets; • default rates on the loans underlying our investments and the amount of the related losses and credit losses with respect to our investments; • prepayment and repayment rates, delinquency rates and legislative/regulatory changes with respect to our investments and the timing and amount of servicer advances; • the availability and cost of quality Servicing Partners, and advance, recovery and recapture rates; • competition; • the actual and perceived state of the real estate markets, bond markets, market for dividend-paying stocks and public capital markets generally; • uncertainty related to U.S. federal fiscal, tax, trade or regulatory policy; • terrorism or cyber terrorism; • unemployment rates; and • the attractiveness of other types of investments relative to investments in real estate or REITs generally.
Biggest changeThese factors include, among other things: • interest rates, including increases thereof and credit spreads; • the availability of credit, including the price, terms and conditions under which it can be obtained; • the quality, pricing and availability of suitable investments; • liquidity in the credit markets; • the ability to obtain accurate market-based valuations; 24 • volatility associated with asset valuations and margin calls; • the ability of securities dealers to make markets in relevant securities and loans; • loan values relative to the value of the underlying real estate assets; • default rates on the loans underlying our investments and the amount of the related losses and credit losses with respect to our investments; • prepayment and repayment rates, delinquency rates and legislative/regulatory changes with respect to our investments and the timing and amount of servicer advances; • competition; • the actual and perceived state of the real estate markets, bond markets, market for dividend-paying stocks and public capital markets generally; • the impacts of inflation; • uncertainty related to U.S. federal fiscal, tax, tariff, trade, including sanctions, immigration or regulatory policy; • political uncertainty or civil unrest in the U.S. and abroad; • geopolitical uncertainty related to the war in Ukraine, ongoing tensions in the Middle East, including in Iran, tensions related to the control of Arctic regions and U.S. foreign policy in Latin America, including in Venezuela; • terrorism or cyber terrorism; • the occurrence of natural disasters or global pandemics; • unemployment rates; and • the attractiveness of other types of investments relative to investments in real estate or REITs generally.
Failure to successfully modify, resell or refinance our repurchased Ginnie Mae loans or a default of a significant portion of the repurchased Ginnie Mae loans may adversely affect our business, financial condition, liquidity and results of operations.
Failure to successfully modify, resell or refinance our repurchased Ginnie Mae loans or a default of a significant portion of the repurchased Ginnie Mae loans may adversely affect our business, financial condition, liquidity and/or results of operations.
Termination or non-renewal of the Rithm Property Trust Management Agreement would result in the loss of our incentive income therefrom and may adversely affect our business, financial condition and results of operations. Competitive pressures in the asset management business could materially adversely affect our business, financial condition or results of operations.
Termination or non-renewal of the Rithm Property Trust Management Agreement would result in the loss of our incentive income therefrom and may adversely affect our business, financial condition and results of operations. Competitive pressures in the asset management business could materially and adversely affect our business, financial condition and/or results of operations.
We may lose fund investors in the future if we do not match or provide more attractive management fees, incentive income arrangements, structures and terms than those offered by competitors. However, we may experience decreased revenues if we match or provide more attractive management fees, incentive income arrangements, structures and terms offered by competitors.
We may lose fund investors in the future if we do not match or provide more attractive management fees, incentive income arrangements, structures and/or terms than those offered by competitors. However, we may experience decreased revenues if we match or provide more attractive management fees, incentive income arrangements, structures and terms than those offered by competitors.
While we believe that the sellers and servicers would be in violation of the applicable Servicing Guidelines to the extent that they have or in the future they improperly serviced mortgage loans or improperly executed documents in foreclosure or bankruptcy proceedings, or do not comply with the terms of servicing contracts when deciding whether to apply principal reductions, it may be difficult, expensive, time consuming and, ultimately, uneconomic for us to enforce our contractual rights.
While we believe that the sellers and servicers would be in violation of the applicable Servicing Guidelines to the extent that they have improperly serviced or in the future may improperly mortgage loans or improperly executed documents in foreclosure or bankruptcy proceedings, or do not comply with the terms of servicing contracts when deciding whether to apply principal reductions, it may be difficult, expensive, time consuming and, ultimately, uneconomic for us to enforce our contractual rights.
Prepayments may have a negative impact on our financial results, the effects of which depend on, among other things, the timing and amount of the prepayment delay on our Agency RMBS, the amount of unamortized premium or discount on our loans and real estate and other securities, the rate at which prepayments are made on our Non-Agency RMBS, the reinvestment lag and the availability of suitable reinvestment opportunities.
Prepayments may have a negative impact on our financial results, the effects of which depend on, among other things, the timing and amount of the prepayment delay on our Agency RMBS, the amount of unamortized premium or discount on our loans and real estate and other securities, the rate at which prepayments are made on our non-Agency securities, the reinvestment lag and the availability of suitable reinvestment opportunities.
In particular: • part of the income and gain recognized by certain qualified employee pension trusts with respect to our stock may be treated as unrelated business taxable income if shares of our stock are predominantly held by qualified employee pension trusts, and we are required to rely on a special look-through rule for purposes of meeting one of the REIT ownership tests, and we are not operated in a manner to avoid treatment of such income or gain as unrelated business taxable income; • part of the income and gain recognized by a tax-exempt investor with respect to our stock would constitute unrelated business taxable income if the investor incurs debt in order to acquire the stock; and • to the extent that we are (or a part of us, or a disregarded subsidiary of ours, is) a “taxable mortgage pool,” or if we hold residual interests in a real estate mortgage investment conduit, a portion of the distributions paid to a tax exempt stockholder that is allocable to excess inclusion income may be treated as unrelated business taxable income.
In particular: • part of the income and gain recognized by certain qualified employee pension trusts with respect to our stock may be treated as unrelated business taxable income if shares of our stock are predominantly held by qualified employee pension trusts, and we are required to rely on a special look-through rule for purposes of meeting one of the REIT ownership tests, and we are not operated in a manner to avoid treatment of such income or gain as unrelated business taxable income; • part of the income and gain recognized by a tax-exempt investor with respect to our stock would constitute unrelated business taxable income if the investor incurs debt in order to acquire the stock; and 62 • to the extent that we are (or a part of us, or a disregarded subsidiary of ours, is) a “taxable mortgage pool,” or if we hold residual interests in a real estate mortgage investment conduit, a portion of the distributions paid to a tax exempt stockholder that is allocable to excess inclusion income may be treated as unrelated business taxable income.
S&P, Moody’s and Fitch rate Newrez as a residential loan servicer, and a downgrade of, or failure to maintain, any of these servicer ratings could: • adversely affect Newrez’s ability to maintain our status as an approved servicer by Fannie Mae and Freddie Mac; • adversely affect Newrez’s and/or Rithm Capital’s ability to finance servicing advance receivables and certain other assets; • lead to the early termination of existing advance facilities and affect the terms and availability of advance facilities that we may seek in the future; • cause Newrez’s termination as servicer in our servicing agreements that require Newrez to maintain specified servicer ratings; and • further impair Newrez’s ability to consummate future servicing transactions.
S&P, Moody’s and Fitch rate Newrez as a residential loan servicer, and a downgrade of, or failure to maintain, any of these servicer ratings could: 30 • adversely affect Newrez’s ability to maintain our status as an approved servicer by Fannie Mae and Freddie Mac; • adversely affect Newrez’s and/or Rithm Capital’s ability to finance servicing advance receivables and certain other assets; • lead to the early termination of existing advance facilities and affect the terms and availability of advance facilities that we may seek in the future; • cause Newrez’s termination as servicer in our servicing agreements that require Newrez to maintain specified servicer ratings; and • further impair Newrez’s ability to consummate future servicing transactions.
These risks include, without limitation: possible declines in the value of real estate; risks related to general and local economic conditions; possible lack of availability of mortgage funds; overbuilding; extended vacancies of properties; increases in competition, property taxes and operating expenses; changes in zoning laws; increased energy costs; unemployment; costs resulting from the clean-up of, and liability to, third parties for damages resulting from, environmental problems; casualty or condemnation losses; uninsured damages from floods, hurricanes, earthquakes, wildfires or other natural disasters; and changes in interest rates.
These risks include, without limitation: possible declines in the value of real estate; risks related to general and local economic conditions; possible lack of availability of mortgage funds; overbuilding; extended vacancies of properties; increases in competition, property taxes and operating expenses; changes in zoning laws; increases in energy costs; increases in unemployment; costs resulting from the clean-up of, and liability to, third parties for damages resulting from, environmental problems; casualty or condemnation losses; uninsured damages from floods, hurricanes, earthquakes, wildfires or other natural disasters; and changes in interest rates.
See also “—The geographic distribution of the loans underlying, and collateral securing, certain of our investments subjects us to geographic real estate market risks, which could adversely affect the performance of our investments, our results of operations and financial condition.” Additionally, ESG concerns and other sustainability matters and our response to these matters could harm our business, including in areas such as human rights, climate change and environmental stewardship, support for local communities, corporate governance and transparency and consideration of ESG factors in our investment processes.
See also “—Risks Related to Our Business—The geographic distribution of the loans underlying, and collateral securing, certain of our investments subjects us to geographic real estate market risks, including environmental risks, which could adversely affect the performance of our investments, our results of operations and financial condition.” Additionally, ESG concerns and other sustainability matters and our response to these matters could harm our business, including in areas such as human rights, climate change and environmental stewardship, support for local communities, corporate governance and transparency and consideration of ESG factors in our investment processes.
Favorable servicer ratings from third-party rating agencies, such as S&P Global Ratings (“S&P”), Moody’s Investors Service (“Moody’s”) and Fitch Ratings (“Fitch”), are important to the conduct of a mortgage servicer’s loan servicing business, and a downgrade in Newrez’s servicer rating, NRM’s servicer rating or a Servicing Partner’s servicer ratings could have an adverse effect on the value of our interests in MSRs and result in an event of default under our financings.
Favorable servicer ratings from third-party rating agencies, such as S&P Global Ratings (“S&P”), Moody’s Investors Service (“Moody’s”) and Fitch Ratings (“Fitch”), are important to the conduct of a mortgage servicer’s loan servicing business, and a downgrade in Newrez’s or NRM’s servicer ratings could have an adverse effect on the value of our interests in MSRs and result in an event of default under our financings.
These lower standards include mortgage loans made to borrowers having imperfect or impaired credit histories (including outstanding judgments or prior bankruptcies), mortgage loans where the amount of the loan at origination is 80% or more of the value of the 34 mortgage property, mortgage loans made to borrowers with low credit scores, mortgage loans made to borrowers who have other debt that represent a large portion of their income and mortgage loans made to borrowers whose income is not required to be disclosed or verified.
These lower standards include mortgage loans made to borrowers having imperfect or impaired credit histories (including outstanding judgments or prior bankruptcies), mortgage loans where the amount of the loan at origination is 80% or more of the value of the mortgage property, mortgage loans made to borrowers with low credit scores, mortgage loans made to borrowers who have other debt that represent a large portion of their income and mortgage loans made to borrowers whose income is not required to be disclosed or verified.
As a result, the requirement to distribute a substantial portion of our net taxable income could cause us to: (i) sell assets in adverse market conditions; (ii) borrow on unfavorable terms; (iii) distribute amounts that would otherwise be invested in future acquisitions, capital expenditures or 58 repayment of debt; or (iv) make taxable distributions of our capital stock or debt securities in order to comply with REIT requirements.
As a result, the requirement to distribute a substantial portion of our net taxable income could cause us to: (i) sell assets in adverse market conditions; (ii) borrow on unfavorable terms; (iii) distribute amounts that would otherwise be invested in future acquisitions, capital expenditures or repayment of debt; or (iv) make taxable distributions of our capital stock or debt securities in order to comply with REIT requirements.
Any distributions will be authorized by our board of directors and declared by us based upon a number of factors, including our actual and anticipated results of operations, liquidity and financial condition, restrictions under Delaware law or applicable financing covenants, our 63 REIT taxable income, the annual distribution requirements under the REIT provisions of the Internal Revenue Code, our operating expenses and other factors our directors deem relevant.
Any distributions will be authorized by our board of directors and declared by us based upon a number of factors, including our actual and anticipated results of operations, liquidity and financial condition, restrictions under Delaware law or applicable financing covenants, our REIT taxable income, the annual distribution requirements under the REIT provisions of the Internal Revenue Code, our operating expenses and other factors our directors deem relevant.
Increased focus on environmental, social and governance (ESG) issues, including climate change and related regulations, may adversely affect our business and financial results and damage our reputation. We, our operating companies and portfolio companies in which our funds invest are subject to increasing scrutiny from advocacy groups, government agencies and the general public over various ESG matters.
Increased focus on sustainability, including environmental, social and governance (ESG) issues and climate change and related regulations, may adversely affect our business and financial results and damage our reputation. We, our operating companies and portfolio companies in which our funds invest are subject to increasing scrutiny from advocacy groups, government agencies and the general public over various ESG matters.
If the market value or income potential of qualifying assets for purposes of our qualification as a REIT or our exclusion from registration as an investment company under the 1940 Act declines as a result of increased interest rates, changes in prepayment 45 rates or other factors, or the market value or income from non-qualifying assets increases, we may need to increase our investments in qualifying assets and/or liquidate our non-qualifying assets to maintain our REIT qualification or our exclusion from registration under the 1940 Act.
If the market value or income potential of qualifying assets for purposes of our qualification as a REIT or our exclusion from registration as an investment company under the 1940 Act declines as a result of increased interest rates, changes in prepayment rates or other factors, or the market value or income from non-qualifying assets increases, we may need to increase our investments in qualifying assets and/or liquidate our non-qualifying assets to maintain our REIT qualification or our exclusion from registration under the 1940 Act.
Furthermore, the legal, technology and other costs associated with regulatory investigations could increase to such a level that they could have a material impact on our business, financial condition or results of operations. These global financial services regulators affect us not only with their regulations, but also with their examination, inspection and enforcement functions.
Furthermore, the legal, technology and other costs associated with regulatory investigations could increase to such a level that they could have a material impact on our business, financial condition or results of operations. 47 These global financial services regulators affect us not only with their regulations, but also with their examination, inspection and enforcement functions.
As a result, our ability to vary our portfolio in response to changes in economic and other conditions may be limited. Our real estate and other securities have historically been valued based primarily on third-party quotations, which are subject to significant variability based on the liquidity and price transparency created by market trading activity.
As a result, our ability to vary our portfolio in response to changes in economic and other conditions may be limited. 21 Our real estate and other securities have historically been valued based primarily on third-party quotations, which are subject to significant variability based on the liquidity and price transparency created by market trading activity.
If regulatory approval for each such transfer is not obtained, we may incur additional costs and expenses in connection with the approval of another replacement subservicer. Certain jurisdictions require licenses to purchase, hold, enforce or sell residential mortgage loans and/or MSRs, and we may not be able to obtain and/or maintain such licenses.
If regulatory approval for each such transfer is not obtained, we may incur additional costs and expenses in connection with the approval of another replacement subservicer. 50 Certain jurisdictions require licenses to purchase, hold, enforce or sell residential mortgage loans and/or MSRs, and we may not be able to obtain and/or maintain such licenses.
If an Issuer is unable to pay the outstanding balance of the notes, the financing sources generally have the right to foreclose on the servicer advances pledged as collateral. Currently, certain of the notes issued under our structured servicer advance financing arrangements accrue interest at a floating rate of interest. Servicer advance receivables are non-interest-bearing assets.
If an Issuer is unable to pay the outstanding balance of the notes, the financing sources generally have the right to foreclose on the servicer advances pledged as collateral. 56 Currently, certain of the notes issued under our structured servicer advance financing arrangements accrue interest at a floating rate of interest. Servicer advance receivables are non-interest-bearing assets.
These ownership limits could delay or prevent a transaction or a change in our control that might involve a premium price for our common stock or otherwise be in the best interest of our stockholders. Even if we remain qualified as a REIT, we may face other tax liabilities that reduce our cash flow.
These ownership limits could delay or prevent a transaction or a change in our control that might involve a premium price for our common stock or otherwise be in the best interest of our stockholders. 61 Even if we remain qualified as a REIT, we may face other tax liabilities that reduce our cash flow.
Those investments will be subject to the risk that the company in which the investment is made may make business, financial or management decisions contrary to our 26 expectations, with which we do not agree or that the majority stakeholders or the management of the company may take risks or otherwise act in a manner that does not serve our interests.
Those investments will be subject to the risk that the company in which the investment is made may make business, financial or management decisions contrary to our expectations, with which we do not agree or that the majority stakeholders or the management of the company may take risks or otherwise act in a manner that does not serve our interests.
No assurance can be given that we will be entitled to a deduction for such excess, meaning that we may be required to recognize “phantom income” over the life of an Excess MSR. Other debt instruments that we may acquire, including consumer loans, may be issued with, or treated as issued with, original issue discount.
No assurance can be given that we will be entitled to a deduction for such excess, meaning that we may be required to recognize “phantom income” over the life of an Excess MSR. 60 Other debt instruments that we may acquire, including consumer loans, may be issued with, or treated as issued with, original issue discount.
It is possible that the integration process could take longer than anticipated and could result in additional 66 and unforeseen expenses, the disruption of our ongoing business, processes and systems, or inconsistencies in standards, controls, procedures, practices and policies, any of which could adversely affect our ability to achieve the anticipated benefits of such acquisitions.
It is possible that the integration process could take longer than anticipated and could result in additional and unforeseen expenses, the disruption of our ongoing business, processes and systems, or inconsistencies in standards, controls, procedures, practices and policies, any of which could adversely affect our ability to achieve the anticipated benefits of such acquisitions.
Our or a Servicing Partner’s failure to maintain favorable or specified ratings may cause their termination as a servicer and may impair their ability to consummate future servicing transactions, which could result in an event of default under our financing for servicer advances and have an adverse effect on the value of our investments.
Our failure to maintain favorable or specified ratings may cause their termination as a servicer and may impair their ability to consummate future servicing transactions, which could result in an event of default under our financing for servicer advances and have an adverse effect on the value of our investments.
In addition, after purchasing the delinquent Ginnie Mae loans, we expect to resecuritize many of the delinquent loans into another Ginnie Mae guaranteed security upon the delinquent loans becoming current either through the borrower’s reperformance or through the completion of a loan modification; however, there is no guarantee that any delinquent loan will reperform or be modified.
In addition, after purchasing the delinquent Ginnie Mae loans, we expect to resecuritize many of the delinquent loans into another Ginnie Mae guaranteed security upon the delinquent loans becoming current through the borrower’s reperformance or through the completion of a loan modification; however, there is no guarantee that any delinquent loan will reperform or be modified.
See also “—Our failure to qualify as a REIT would cause our stock to be delisted from the NYSE.” Unless entitled to relief under certain provisions of the Internal Revenue Code, we also would be disqualified from taxation as a REIT for the four taxable years following the year during which we initially ceased to qualify as a REIT. 57 Our failure to qualify as a REIT would cause our stock to be delisted from the NYSE.
See also “—Our failure to qualify as a REIT would cause our stock to be delisted from the NYSE.” Unless entitled to relief under certain provisions of the Internal Revenue Code, we also would be disqualified from taxation as a REIT for the four taxable years following the year during which we initially ceased to qualify as a REIT.
Certain of our floating rate securities are valued based on a market credit spread over the SOFR and are affected similarly by changes in SOFR spreads. Additionally, the interest rates on the CLO investments loans are variable based on SOFR or the Euro Interbank Offered Rate (“EURIBOR”) (subject to a floor of zero percent).
Certain of our floating rate securities are valued based on a market credit spread over the SOFR and are affected similarly by changes in SOFR spreads. Additionally, the interest rates on the CLO investments loans are variable based on SOFR or the Euro Interbank Offered Rate (subject to a floor of zero percent).
In connection with formal and informal inquiries, such Servicing Partners and subsidiaries may receive numerous requests, subpoenas and orders for documents, testimony and information in connection with various aspects of their activities, including whether certain of their residential loan servicing and origination practices, bankruptcy practices and other aspects of their business comply with applicable laws and regulatory requirements.
In connection with formal and informal inquiries, such subsidiaries may receive numerous requests, subpoenas and orders for documents, testimony and information in connection with various aspects of their activities, including whether certain of their residential loan servicing and origination practices, bankruptcy practices and other aspects of their business comply with applicable laws and regulatory requirements.
In periods of declining interest rates, prepayment rates on mortgage loans generally increase. If general interest rates decline at the same time, the proceeds of such prepayments received during such periods are likely to be reinvested by us in assets yielding less than the yields on the assets that were prepaid.
In periods of declining interest rates, prepayment rates on mortgage loans generally increase. If general interest rates decline at the same time, the proceeds of such prepayments received during such periods are likely to be reinvested by us in assets yielding less than the 41 yields on the assets that were prepaid.
If any of our sources are unable to or elected not to extend or refinance such arrangements, we may not be able to find a replacement counterparty in a timely manner. 55 Many of our servicer advance financing arrangements are provided by financial institutions with whom we have substantial relationships.
If any of our sources are unable to or elected not to extend or refinance such arrangements, we may not be able to find a replacement counterparty in a timely manner. Many of our servicer advance financing arrangements are provided by financial institutions with whom we have substantial relationships.
The residential mortgage loans underlying the securities we invest in and the loans we directly invest in are subject to delinquency, foreclosure and loss, which could result in losses to us. The ability of a borrower to repay a loan secured by a residential property is dependent upon the income or assets of the borrower.
The residential mortgage loans underlying the securities we invest in and the loans we originate and/or directly invest in are subject to delinquency, foreclosure and loss, which could result in losses to us. The ability of a borrower to repay a loan secured by a residential property is dependent upon the income or assets of the borrower.
These modifications are currently reducing, or in the future may reduce, the value of a number of our current or future 52 investments, including investments in mortgage-backed securities and interests in MSRs. As a result, such loan modifications are negatively affecting our business, results of operations, liquidity and financial condition.
These modifications are currently reducing, or in the future may reduce, the value of a number of our current or future investments, including investments in mortgage-backed securities and interests in MSRs. As a result, such loan modifications are negatively affecting our business, results of operations, liquidity and financial condition.
More significantly, if a financing agreement counterparty elects not to extend our financing, we would be required to pay the counterparty in full on the maturity date and find an alternate source of financing. Alternate sources of financing may be more expensive, contain more onerous terms or simply may not be available.
If a financing agreement counterparty elects not to extend our financing, we would be required to pay the counterparty in full on the maturity date and find an alternate source of financing. Alternate sources of financing may be more expensive, contain more onerous terms or simply may not be available.
If we purchase assets at 35 a premium to par value, and borrowers prepay their mortgage loans faster than expected, the corresponding prepayments on our assets may reduce the expected yield on such assets because we will have to amortize the related premium on an accelerated basis.
If we purchase assets at a premium to par value, and borrowers prepay their mortgage loans faster than expected, the corresponding prepayments on our assets may reduce the expected yield on such assets because we will have to amortize the related premium on an accelerated basis.
In any event, if our investments generate more taxable income than cash in any given year, we may have difficulty satisfying our annual REIT distribution requirement. 59 We may be unable to generate sufficient cash from operations to pay our operating expenses and to pay distributions to our stockholders.
In any event, if our investments generate more taxable income than cash in any given year, we may have difficulty satisfying our annual REIT distribution requirement. We may be unable to generate sufficient cash from operations to pay our operating expenses and to pay distributions to our stockholders.
No assurance can be given that any property that we sell will not be treated as property held-for-sale to customers, or that we can comply with certain safe-harbor provisions of the Internal Revenue Code that would prevent such treatment.
No assurance can be given that any property that we sell will not 63 be treated as property held-for-sale to customers, or that we can comply with certain safe-harbor provisions of the Internal Revenue Code that would prevent such treatment.
No assurance can be given that we will make any distributions on shares of our common stock in the future. We may in the future choose to make distributions in our own stock, in which case you could be required to pay income taxes in excess of any cash distributions you receive.
No assurance can be given that we will make any distributions on shares of our common stock in the future. 65 We may in the future choose to make distributions in our own stock, in which case you could be required to pay income taxes in excess of any cash distributions you receive.
Furthermore, if we are forced to compete with other alternative asset managers on the basis of fees, we may not be able to 28 maintain our current management fee and incentive income structures, which drive our revenues and earnings.
Furthermore, if we are forced to compete with other alternative asset managers on the basis of fees, we may not be able to maintain our current management fee and incentive income structures, which drive our revenues and earnings.
During the term of the repurchase agreement—which can be as short as 30 days—the counterparty will make funds available to us and 54 hold the asset as collateral. Our counterparties can also require us to post additional margin as collateral at any time during the term of the agreement.
During the term of the repurchase agreement—which can be as short as 30 days—the counterparty will make funds available to us and hold the asset as collateral. Our counterparties can also require us to post additional margin as collateral at any time during the term of the agreement.
See “Risks Related to the Financial Markets and Our Regulatory Environment—Certain of our subsidiaries and Servicing Partners have been and are subject to federal and state regulatory matters and other litigation, which may adversely impact us.” Additionally, servicers are subject to as various other risks, including, but not limited to those pertaining to: • risks related to compliance with applicable laws, regulations and other requirements (see also “—Risks Related to the Financial Markets and Our Regulatory Environment—Our subsidiaries that perform mortgage lending and servicing activities are subject to extensive regulation by federal, state and local governmental and regulatory authorities, and our subsidiaries’ business results may be significantly impacted by the existing and future laws and regulations to which they are subject.
See “Risks Related to the Financial Markets and Our Regulatory Environment—Certain of our subsidiaries have been and are subject to federal and state regulatory matters and other litigation, which may adversely impact us.” Additionally, servicers are subject to various other risks, including, but not limited to those pertaining to: • risks related to compliance with applicable laws, regulations and other requirements (see also “—Risks Related to the Financial Markets and Our Regulatory Environment—Our subsidiaries that perform mortgage lending and servicing activities are subject to extensive regulation by federal, state and local governmental and regulatory authorities, and our subsidiaries’ business results may be significantly impacted by the existing and future laws and regulations to which they are subject.
There can be no assurance that risk retention regulations will not materially and adversely affect our business and operations and/or the price of our common stock. 53 Regulatory changes in jurisdictions outside the U.S. could adversely affect our business.
There can be no assurance that risk retention regulations will not materially and adversely affect our business and operations and/or the price of our common stock. Regulatory changes in jurisdictions outside the U.S. could adversely affect our business.
Management fee or incentive income rate reductions on existing or future funds, particularly without corresponding increases in AUM or decreases in our operating costs, could materially adversely affect our business, financial condition or results of operations.
Management fee or incentive income rate reductions on existing or future funds, particularly without corresponding increases in AUM or decreases in our operating costs, could materially adversely affect our business, financial condition and/or results of operations.
In addition, in the U.S., a court has held that certain regulators exceeded their statutory authority by requiring managers of “open-market” CLOs to hold risk retention interests in those CLOs under U.S. risk retention regulations.
In addition, in the U.S., a court has held that certain regulators exceeded their statutory authority by requiring managers of “open-market” CLOs to hold risk retention interests in 54 those CLOs under U.S. risk retention regulations.
A number of factors create competitive risks for us: • We compete in an international arena and, to remain competitive, we may need to further expand our business into new geographic regions or new business areas where our competitors may have a more established presence or greater experience and expertise. • A number of our competitors have greater financial, technical, marketing and other resources and more personnel than we do. • Several of our competitors have raised and continue to raise significant amounts of capital, and many of them have or may pursue investment objectives that are similar to ours, which would create additional competition for investment opportunities and may reduce the size and duration of pricing inefficiencies that many alternative investment strategies seek to exploit. • Some of our competitors may have higher risk tolerances or different risk assessments, which could allow them to consider a wider variety of investments and to bid more aggressively than us for investments that we may want to make. • Some of our competitors may be subject to less extensive regulation and thus may be better positioned to pursue certain investment objectives and/or be subject to lower expenses related to compliance than us. • Other industry participants will from time to time seek to recruit our active executive managing directors, investment professionals and other professional talent away from us.
A number of factors create competitive risks for us: • We compete in an international arena and, to remain competitive, we may need to further expand our business into new geographic regions or new business areas where our competitors may have a more established presence or greater experience and expertise. • A number of our competitors have greater financial, technical, marketing and other resources and more personnel than we do. • Several of our competitors have raised and continue to raise significant amounts of capital, and many of them have or may pursue investment objectives that are similar to ours, which has in the past and could continue to create additional 36 competition for investment opportunities and may reduce the size and duration of pricing inefficiencies that many alternative investment strategies seek to exploit. • Some of our competitors may have higher risk tolerances or different risk assessments, which could allow them to consider a wider variety of investments and to bid more aggressively than us for investments that we may want to make. • Some of our competitors may be subject to less extensive regulation and thus may be better positioned to pursue certain investment objectives and/or be subject to lower expenses related to compliance than us. • Other industry participants will from time to time seek to recruit our active executive managing directors, investment professionals and other professional talent away from us.
In addition, another party could impair our ability to exercise our cleanup call rights by contesting our rights (for 40 example, by claiming that they hold the exclusive cleanup call right with respect to the applicable securitization trust).
In addition, another party could impair our ability to exercise our cleanup call rights by contesting our rights (for example, by claiming that they hold the exclusive cleanup call right with respect to the applicable securitization trust).
In addition, we must limit our aggregate income from non-qualified hedging transactions, 60 from our provision of services and from other non-qualifying sources, to less than 5% of our annual gross income (determined without regard to gross income from qualified hedging transactions).
In addition, we must limit our aggregate income from non-qualified hedging transactions, from our provision of services and from other non-qualifying sources, to less than 5% of our annual gross income (determined without regard to gross income from qualified hedging transactions).
We cannot assure you that our hedging strategy and the derivatives that we use will adequately offset the risk of interest rate volatility or that our hedging transactions will not result in losses.
We also cannot assure you that our hedging strategy and the derivatives that we use will adequately offset the risk of interest rate volatility or that our hedging transactions will not result in losses.
Distressed investments may be involved in work-outs, liquidations, spin-offs, reorganizations and similar transactions and may purchase high-risk receivables. ◦ Credit risk may be exacerbated through a default by or because of one of several large institutions that are dependent on one another fail to meet their liquidity or operational needs, so that default by one institution causes a series of defaults by the other institutions. ◦ Fund investments are subject to risks relating to investments in commodities, futures, options and other derivatives, the prices of which are highly volatile and may be subject to the theoretically unlimited risk of loss in certain circumstances, including if the funds write a call option. ◦ Our funds may make real estate investments, including, without limitation, the acquisition of real estate assets, the purchase of loans secured directly or indirectly by real estate and the purchase of public and private market securities backed by real estate assets or mortgage loans secured by real estate, which will be subject to the risks incident to the lending, ownership and operation of commercial and residential real estate.
Distressed investments may be involved in work-outs, liquidations, spin-offs, reorganizations and similar transactions and may purchase high-risk receivables. ◦ Credit risk may be exacerbated through a default by or because of one of several large institutions that are dependent on one another fail to meet their liquidity or operational needs, so that default by one institution causes a series of defaults by the other institutions. ◦ Client Account investments are subject to risks relating to investments in commodities, futures, options and other derivatives, the prices of which are highly volatile and may be subject to the theoretically unlimited risk of loss in certain circumstances, including if the funds write a call option. ◦ Our Client Accounts may make real estate investments, including, without limitation, the acquisition of real estate assets, the purchase of loans secured directly or indirectly by real estate and the purchase of public and private market securities backed by real estate assets or mortgage loans secured by real estate, which will be subject to the risks incident to the lending, ownership and operation of commercial and residential real estate.
Accordingly, based on our own judgment and analysis of the guidance from the SEC and its staff identifying Agency whole pool certificates as qualifying real estate assets under Section 3(c)(5)(C), we treat whole pool Non-Agency RMBS issued with respect to an underlying pool of mortgage loans in which our subsidiary relying on Section 3(c)(5)(C) holds all of the certificates issued by the pool as qualifying real estate assets.
Accordingly, based on our own judgment and analysis of the guidance from the SEC and its staff identifying Agency whole pool certificates as qualifying real estate assets under Section 3(c)(5)(C), we treat whole pool non-Agency securities issued with respect to an underlying pool of mortgage loans in which our subsidiary relying on Section 3(c)(5)(C) holds all of the certificates issued by the pool as qualifying real estate assets.
Opinions of counsel are not binding on the IRS and no assurance can be given that the IRS would not successfully 61 challenge the conclusions set forth in such opinions.
Opinions of counsel are not binding on the IRS and no assurance can be given that the IRS would not successfully challenge the conclusions set forth in such opinions.
Our failure to meet the challenges involved in successfully integrating the assets acquired in MSR acquisitions involving servicing transfers with our current business could impair our operations. For example, it is possible that the data our applicable subservicer acquires upon assuming the direct servicing obligations for the loans may not transfer from the seller’s platform to its systems properly.
Our failure to meet the challenges involved in successfully integrating the assets acquired in MSR acquisitions involving servicing transfers with our current business could impair our operations. For example, it is possible that the data our applicable servicer acquires upon assuming the direct servicing obligations for the loans may not transfer from the seller’s platform to its systems properly.
If the Servicing Partner actually or allegedly failed to comply with applicable laws, rules or regulations, it could be terminated as the servicer, and could lead to civil and criminal liability, loss of licensing, damage to our reputation and litigation, which could have a material adverse effect on our business, financial condition, results of operations or cash flows.
If a servicer actually or allegedly failed to comply with applicable laws, rules or regulations, it could be terminated as the servicer, and could lead to civil and criminal liability, loss of licensing, damage to our reputation and litigation, which could have a material adverse effect on our business, financial condition, results of operations and/or cash flows.
In addition, new technology that could result in greater operational efficiency may further expose our computer systems to the risk of cybersecurity incidents.
In addition, new technology that 69 could result in greater operational efficiency may further expose our computer systems to the risk of cybersecurity incidents.
In addition, the perception of non-compliance with such requirements or policies could harm our reputation with investors in our Client Accounts and our public stockholders. 29 Our affiliates or portfolio companies may be service providers or counterparties to our Client Accounts or their portfolio companies and may receive fees or other compensation for services that are not shared with our Client Accounts.
In addition, the perception of non-compliance with such requirements or policies could harm our reputation with investors in our Client Accounts and our public stockholders. 67 Our affiliates or portfolio companies may be service providers or counterparties to our Client Accounts or their portfolio companies and may receive fees or other compensation for services that are not shared with our Client Accounts.
The Rithm Property Trust Management Agreement is in effect until June 11, 2027 and then automatically renews for successive two-year terms. However, with the consent of two-thirds of Rithm Property Trust's independent directors, and upon 27 providing 180-days’ prior written notice, Rithm Property Trust may elect not to renew the Rithm Property Trust Management Agreement.
The Rithm Property Trust Management Agreement is in effect until June 11, 2027 and then automatically renews for successive two-year terms. However, with the consent of Rithm Property Trust's independent directors, and upon providing 180-days’ prior written notice, Rithm Property Trust may elect not to renew the Rithm Property Trust Management Agreement.
As a result, we could be materially and adversely affected if one of our Servicing Partners is unable to adequately carry out its duties as a result of: • its failure to comply with applicable laws and regulations; • its failure to comply with contractual and financing obligations and covenants; • a downgrade in, or failure to maintain, any of its servicer ratings; • its failure to maintain sufficient liquidity or access to sources of liquidity; • its failure to perform its loss mitigation obligations; • its failure to perform adequately in its external audits; • a failure in or poor performance of its operational systems or infrastructure; • regulatory or legal scrutiny or regulatory actions regarding any aspect of a servicer’s operations, including, but not limited to, servicing practices and foreclosure processes lengthening foreclosure timelines; • an Agency’s or a whole-loan owner’s transfer of servicing to another party; or • any other reason.
As a result, we could be adversely affected if one of our third-party subservicers is unable to adequately carry out its duties as a result of: • its failure to comply with applicable laws and regulations; • its failure to comply with contractual and financing obligations and covenants; • a downgrade in, or failure to maintain, any of its servicer ratings; • its failure to maintain sufficient liquidity or access to sources of liquidity; • its failure to perform its loss mitigation obligations; • its failure to perform adequately in its external audits; • a failure in or poor performance of its operational systems or infrastructure; • regulatory or legal scrutiny or regulatory actions regarding any aspect of a servicer’s operations, including, but not limited to, servicing practices and foreclosure processes lengthening foreclosure timelines; • an Agency’s or a whole-loan owner’s transfer of servicing to another party; or • any other reason.
If we or such Servicing Partner is terminated as servicer with respect to a PSA and we are unable to enforce our contractual rights against such Servicing Partner, or if such Servicing Partner is unable to make any resulting indemnification payments to us, if any such payment is due and payable, it may have a material adverse effect on our financial condition, results of operations, ability to make distributions, liquidity and financing arrangements, including our servicer advance financing facilities, and may make it more difficult for us to acquire additional interests in MSRs in the future.
If we or such applicable servicer is terminated as servicer with respect to a PSA and we are unable to enforce our contractual rights against such servicer, or if such servicer is unable to make any resulting indemnification payments to us, if any such payment is due and payable, it may have a material adverse effect on our financial condition, results of operations, ability to make distributions, liquidity and financing arrangements, including our servicer advance financing facilities, and may make it more difficult for us to acquire additional interests in MSRs in the future.
Any recovery in such circumstances, in the case of Non-Agency RMBS, will be highly conditioned and may require, among other things, a new servicer willing to pay for the right to service the applicable residential mortgage loans while assuming responsibility for the origination and prior servicing of the residential mortgage loans.
Any recovery in such circumstances, in the case of non-Agency securities, will be highly conditioned and may require, among other things, a new servicer willing to pay for the right to service the applicable residential mortgage loans while assuming responsibility for the origination and prior servicing of the residential mortgage loans.
There is some risk that we will be required to dispose of interests in MSRs either through an in-kind distribution or other liquidation vehicle, which will, in either case, provide little or no economic benefit to us, or a sale to a co-investor in the interests in MSRs, which may be an affiliate.
There is some risk that we would be required to dispose of interests in MSRs either through an in-kind distribution or other liquidation vehicle, which would, in either case, provide little or no economic benefit to us, or a sale to a co-investor in the interests in MSRs, which may be an affiliate.
If we are required to re-classify any of our subsidiaries’ assets, including those subsidiaries holding whole pool Non-Agency RMBS and/or Excess MSRs, such subsidiaries may no longer be in compliance with the exclusion from the definition of an “investment company” provided by Section 3(c)(5)(C) of the 1940 Act, and in turn, we may not satisfy the requirements to avoid falling within the definition of an “investment company” provided by Section 3(a)(1)(C).
If we are required to re-classify any of our 46 subsidiaries’ assets, including those subsidiaries holding whole pool non-Agency securities and/or Excess MSRs, such subsidiaries may no longer be in compliance with the exclusion from the definition of an “investment company” provided by Section 3(c)(5)(C) of the 1940 Act, and in turn, we may not satisfy the requirements to avoid falling within the definition of an “investment company” provided by Section 3(a)(1)(C).
The duties and obligations of mortgage servicers are defined through contractual agreements, generally referred to as Servicing Guides in the case of GSEs, the MBS Guide in the case of Ginnie Mae or pooling agreements, securitization servicing agreements, pooling and servicing agreements or other similar agreements (collectively, “PSAs”) in the case of Non-Agency RMBS (collectively, the “Servicing Guidelines”).
The duties and obligations of mortgage servicers are defined through contractual agreements, generally referred to as Servicing Guides in the case of GSEs, the MBS Guide in the case of Ginnie Mae or pooling agreements, securitization servicing agreements, pooling and servicing agreements or other similar agreements (collectively, “PSAs”) in the case of non-Agency securities (collectively, the “Servicing Guidelines”).
The geographic distribution of the loans underlying, and collateral securing, our investments, including our interests in MSRs, servicer advances and loans, exposes us to risks associated with the real estate and commercial lending industry in general within the states and regions in which we hold significant investments.
The geographic distribution of the loans underlying, and collateral securing, our investments, including our interests in mortgage loans, RTLs, MSRs and servicer advances, exposes us to risks associated with the real estate and commercial lending industry in general within the states and regions in which we hold significant investments.
If our employees are unable to access customer information easily or are unable to produce originals or copies of documents or accurate information about the loans, collections could be affected significantly, and our subservicer may not be able to enforce its right to collect in some cases.
If our employees are unable to access customer information easily or are unable to produce originals or copies of documents or accurate information about the loans, collections could be affected significantly, and our servicer may not be able to enforce its right to collect in some cases.
Any of the foregoing risks, among others, could have a material adverse effect on our business, financial condition, results of operations and liquidity. 22 For additional information about the ways in which we may be affected by mortgage servicers, see “—The value of our interests in MSRs, servicer advances, residential mortgage loans, business purpose loans and RMBS may be adversely affected by deficiencies in servicing and foreclosure practices, as well as related delays in the foreclosure process.” A number of lawsuits, including class-actions, have been filed against mortgage servicers alleging improper servicing in connection with residential Non-Agency mortgage securitizations.
Any of the foregoing risks, among others, could have a material adverse effect on our business, financial condition, results of operations and liquidity. 28 For additional information about the ways in which we may be affected by mortgage servicers, see “—The value of our interests in MSRs, servicer advances, residential mortgage loans, RTLs and RMBS may be adversely affected by deficiencies in servicing and foreclosure practices, as well as related delays in the foreclosure process.” A number of lawsuits, including class-actions, have been filed against mortgage servicers alleging improper servicing in connection with residential non-Agency mortgage securitizations.
Our failure to appropriately manage or address conflicts of interest could damage our reputation and adversely affect our business, financial condition and results of operations. As we expand the number and scope of our business, we increasingly confront potential conflicts of interest relating to our investment activities and the investment activities of our Client Accounts.
General Risks Our failure to appropriately manage or address conflicts of interest could damage our reputation and adversely affect our business, financial condition and results of operations. As we expand the number and scope of our business, we increasingly confront potential conflicts of interest relating to our investment activities and the investment activities of our Client Accounts.
A failure by any or all of the members of Advance Purchaser LLC to make capital contributions for amounts required to fund servicer advances could result in an event of default under our advance facilities and a complete loss of our investment.
A failure by any or all of the members of Advance Purchaser LLC (“Advance Purchaser”) to make capital contributions for amounts required to fund servicer advances could result in an event of default under our advance facilities and a complete loss of our investment.
In addition, under applicable accounting standards, we may be required to treat some of our investments as derivatives, which could adversely affect our results of operations. Market conditions could negatively impact our business, results of operations, cash flows and financial condition.
In addition, under applicable accounting standards, we may be required to treat some of our investments as derivatives, which could adversely affect our results of operations. Market and political conditions could negatively impact our business, results of operations, cash flows and/or financial condition.
In certain of these circumstances, the related Servicing Partner may be terminated without any right to compensation for its loss, other than the right to be reimbursed for any outstanding servicer advances as the related loans are brought current, modified, liquidated or charged off.
In certain of these circumstances, the related servicer may be terminated without any right to compensation for its loss, other than the right to be reimbursed for any outstanding servicer advances as the related loans are brought current, modified, liquidated or charged off.
Accordingly, any of the foregoing could materially and adversely affect our business and our financial condition, liquidity and results of operations. Certain of our subsidiaries and Servicing Partners have been and are subject to federal and state regulatory matters and other litigation, which may adversely impact us.
Accordingly, any of the foregoing could materially and adversely affect our business and our financial condition, liquidity and results of operations. Certain of our subsidiaries have been and are subject to federal and state regulatory matters and other litigation, which may adversely impact us.
Certain of our subsidiaries and Servicing Partners have disclosed certain matters in their periodic reports filed with the SEC and there can be no assurance that such events will not have a material adverse effect on them.
Certain of our subsidiaries have disclosed certain matters in their periodic reports filed with the SEC and there can be no assurance that such events will not have a material adverse effect on them.
Similarly, collections could be affected by any changes to our applicable subservicer’s collections practices, the restructuring of any key servicing functions, transfer of files and other changes that occur as a result of the transfer of servicing obligations from the seller to our subservicer.
Similarly, collections could be affected by any changes to our applicable servicer’s collections practices, the restructuring of any key servicing functions, transfer of files and other changes that occur as a result of the transfer of servicing obligations from the seller to our subservicer.
The regulatory bodies with jurisdiction over our investment advisory business, such as the SEC, the CFTC, the FAC and the SFC, have the authority to grant, and in specific circumstances to cancel, permissions to carry on our investment advisory business and the authority to conduct investigations and administrative proceedings.
The regulatory bodies with jurisdiction over our investment advisory business, such as the SEC, the CFTC, the FCA and the SFC, have the authority to grant, and in specific circumstances to cancel, permissions to carry on our investment advisory business and the authority to conduct investigations and administrative proceedings.
While Rithm Capital is currently not registered, or required to register, as an investment adviser under the Advisers Act, certain of our subsidiaries, including, but not limited to, Sculptor and RCM Manager, are registered as investment advisers and other subsidiaries may be required to register as such in the future, which subjects us to extensive regulation as an investment adviser and could adversely affect our ability to manage our business.
While Rithm Capital is currently not registered, or required to register, as an investment adviser under the Advisers Act, certain of our subsidiaries, including, but not limited to, Sculptor, Crestline and the Rithm Advisers, are registered as investment advisers and other subsidiaries may be required to register as such in the future, which subjects us to extensive regulation as an investment adviser and could adversely affect our ability to manage our business.
If we are not able to obtain adequate financing to purchase servicer advance receivables from our Servicing Partners or fund servicer advances under our MSRs in accordance with the applicable Servicing Guidelines, we or any such Servicing Partner, as applicable, could default on its obligation to fund such advances, which could result in its termination of us or any applicable Servicing Partner, as servicer under the applicable Servicing Guidelines, and a partial or total loss of our interests in MSRs and servicer advances, as applicable.
If we are not able to obtain adequate financing to purchase servicer advance receivables from our applicable servicers or fund servicer advances under our MSRs in accordance with the applicable Servicing Guidelines, we or any such servicer, as applicable, could default on its obligation to fund such advances, which could result in its termination of us or any applicable servicer, as servicer under the applicable Servicing Guidelines, and a partial or total loss of our interests in MSRs and servicer advances, as applicable.
The federal conservatorship of Fannie Mae and Freddie Mac and related efforts, along with any changes in laws and regulations affecting the relationship between these agencies and the U.S. government, may adversely affect our business.
The federal conservatorships of Fannie Mae and Freddie Mac and related efforts, along with any changes in laws and regulations affecting the relationship between these agencies and the U.S. government, may adversely affect our business.
In addition, servicer advance financing facilities contain provisions that modify the advance rates for, and limit the eligibility of, servicer advances to be financed based on the length of time that servicer advances are outstanding, and, as a result, an increase in foreclosure timelines could further increase the amount of servicer advances that we need to fund with our own capital.
In addition, servicer advance financing facilities contain provisions that modify the advance rates for, and limit the eligibility of, servicer advances to be financed based on the length of time that servicer advances are outstanding, and, as a result, an increase in foreclosure timelines has in the past and could in the future further increase the amount of servicer advances that we need to fund with our own capital.
For example: ◦ The funds may engage in short selling, which is subject to the theoretically unlimited risk of loss because there is no limit on how much the price of a security may appreciate before the short position is closed out. ◦ Our funds may invest in companies with weak financial conditions, poor operating results, substantial financial needs, negative net worth and/or special competitive problems or that are involved in bankruptcy or reorganization proceedings.
For example: ◦ Client Accounts may engage in short selling, which is subject to the theoretically unlimited risk of loss because there is no limit on how much the price of a security may appreciate before the short position is closed out. 35 ◦ Our Client Accounts may invest in companies with weak financial conditions, poor operating results, substantial financial needs, negative net worth and/or special competitive problems or that are involved in bankruptcy or reorganization proceedings.
Holders of such term notes may have or may take positions – for example, “short” positions in our stock or the stock of our servicers – that could be benefited by adverse events with respect to us or our Servicing Partners.
Holders of such term notes may have or may take positions – for example, “short” positions in our stock or the stock of our servicers – that could be benefited by adverse events with respect to us.
So long as we are in compliance with our obligations under our servicing agreements and purchase agreements, if we or one of our Servicing Partners is terminated as servicer, we may have the right to receive an indemnification payment from the applicable Servicing Partner, even if such termination related to servicer termination events or events of default existing at the time of any transaction with such Servicing Partner.
So long as we are in compliance with our obligations under our servicing agreements and purchase agreements, if we or the applicable servicer is terminated as servicer, we may have the right to receive an indemnification payment from the applicable servicer, even if such termination related to servicer termination events or events of default existing at the time of any transaction with such servicer.

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Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

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Biggest changeSpecifically, the Audit Committee of the board, in conjunction with the Regulatory Committee (the “Regulatory Committee”), which focuses on the risk structure and governance related to regulatory risk throughout all lines of business, oversees the Company’s risk management program, which focuses on the most significant risks the Company faces in the short-, intermediate-, and long-term timeframe.
Biggest changeThe Audit Committee, together with the Regulatory Committee, which focuses on regulatory risk structure and governance across all lines of business, oversees the Company’s risk management framework and the most significant risks facing the Company over the short-, intermediate- and long-term. These committees receive regular updates and engage in periodic discussions regarding key risk areas, including cybersecurity.
Additionally, we have protocols by which certain cybersecurity incidents are escalated in a timely manner to the Audit Committee and the board of directors. The Company takes a risk-based approach to cybersecurity and has implemented cybersecurity policies throughout its operations that are designed to address cybersecurity threats and incidents.
The Company has established escalation protocols pursuant to which certain cybersecurity incidents are reported in a timely manner to the Audit Committee and, as appropriate, the full board of directors. The Company employs a risk-based approach to cybersecurity, supported by policies, standards and controls designed to address cybersecurity threats and incidents across its operations.
Our independent testing includes both (i) periodic testing and evaluations performed by our internal audit team and (ii) annual network penetration testing conducted through independent third parties. Our processes for assessing, identifying and managing material risks from cybersecurity threats have been integrated into our overall risk management system and processes.
Independent testing includes periodic evaluations performed by our internal audit function and annual network penetration testing conducted by third-party specialists. Our processes for identifying and managing material cybersecurity risks are embedded within our overall risk management processes.
To date, cybersecurity risks, including those resulting from any previous cybersecurity incidents, have not materially affected us, our business strategy, results of operations or financial condition. We do not believe that cybersecurity risks resulting from any previous cybersecurity incidents, of which we are aware, are reasonably likely to materially affect us.
To date, cybersecurity risks, including those arising from known prior cybersecurity incidents, have not materially affected our business strategy, results of operations or financial condition, and we are not aware of any cybersecurity incidents that are reasonably likely to have a material impact on the Company. For additional discussion of cybersecurity-related risks, see Item 1A.
Our dedicated cybersecurity personnel supervise and monitor our controls, technologies, systems and other processes utilized to mitigate any data loss, theft, exploitation, unauthorized access or other vulnerabilities that may affect our information or data.
Dedicated cybersecurity personnel oversee and monitor the controls, technologies, systems and processes designed to reduce the risk of data loss, theft, unauthorized access, system disruption or other cybersecurity incidents.
Audit Committee meetings and Regulatory Committee meetings include discussions of specific risk areas throughout the year, including, among others, those relating to cybersecurity, and reports from the CISO and Chief Information Officer (“CIO”) on the Company’s enterprise risk profile and the Company’s risk treatment policies and processes on a quarterly basis or as needed.
The Audit Committee and Regulatory Committee receive reports from the CISO and the Chief Information Officer (“CIO”) regarding the Company’s cybersecurity posture, enterprise risk profile and risk management policies and processes.
Refer to the risk factor captioned “Cybersecurity incidents and technology disruptions or failures could damage our business operations and reputation, increase our costs and subject us to potential liability” in Item 1A. “Risk Factors” for additional description of cybersecurity risks and potential related impacts on the Company.
“Risk Factors—General Risks—Cybersecurity incidents and technology disruptions or failures could damage our business operations and reputation, increase our costs and subject us to potential liability.” Governance Our board of directors oversees the Company’s enterprise risk management program, including cybersecurity risk, both directly and through its committees.
ITEM 1C. CYBERSECURITY Risk Management and Strategy We prioritize the management of cybersecurity risk and regularly assess any risk of cybersecurity threats. In doing so, we continuously monitor and test our information systems for potential vulnerabilities pursuant to our cybersecurity program.
ITEM 1C. CYBERSECURITY Risk Management and Strategy We consider cybersecurity risk management to be an important component of our enterprise risk management program and regularly assess and manage the risks posed by cybersecurity threats. We maintain a cybersecurity program designed to identify, assess, manage and mitigate risks to our information systems, data and operations.
Our cybersecurity program, led by our interim Chief Information Security Officer (“CISO”), is part of our overall enterprise risk management program, along with other significant risks that we face.
This program includes ongoing monitoring, testing and evaluation of our information technology environment for potential vulnerabilities and threats. Our cybersecurity program is led by the Chief Information Security Officer (“CISO”) and is integrated into our broader enterprise risk management framework, alongside other significant operational, financial and regulatory risks.
Specifically, our cybersecurity program consists of incident response procedures, information security and vendor management due diligence, as well as participation in industry consortiums, ongoing monitoring, internal and independent testing of information systems and continuous employee education and simulations.
Key elements of our cybersecurity program include incident response and recovery planning; information security policies and standards; vendor and third-party risk management; employee training and awareness programs, including simulated phishing exercises; participation in industry information-sharing forums; and ongoing internal and external testing of our information systems.
Each service provider is assigned a tiered risk rating, which determines the frequency and extent of evaluation for the service provider. Furthermore, we collect and evaluate SIG, SOC 1 reports and Business Continuity and Disaster Recovery documents for our key service providers.
Service providers are assigned tiered risk ratings that determine the frequency and scope of ongoing assessments. For key service providers, we obtain and review materials such as System and Organization Control (“SOC”) reports, including SOC 1 reports, standard information gathering (SIG) questionnaires and business continuity and disaster recovery documentation .
Removed
As part of these processes, we monitor the privacy and cybersecurity laws, regulations and guidance applicable to us in the regions where we do business (including, but not limited to, 67 SEC rules, the CCPA and the Gramm-Leach-Bliley Act, as further described under the caption “Business—Regulations”), as well as proposed privacy and cybersecurity laws, regulations, guidance and emerging risks.
Added
We also monitor developments in applicable privacy and cybersecurity laws, regulations and guidance in the jurisdictions in which we operate, including, among others, SEC rules, the CCPA and the Gramm-Leach-Bliley Act, as well as emerging regulatory requirements and evolving cybersecurity threats. 71 To address cybersecurity risks associated with third-party service providers, we maintain a third-party risk management program that includes contractual requirements for appropriate data protection and cybersecurity controls and risk-based due diligence during onboarding.
Removed
Additionally, in order to reduce cybersecurity risks related to our use of third-party service providers, we (i) obligate our service providers to adhere to strict privacy and cybersecurity measures and (ii) perform risk assessments of each new service provider during onboarding based on, among other things, the nature of their business and the type of information we provide to such service providers.
Added
Responsibility for cybersecurity risk management is led by the CISO, who oversees the design and implementation of the Company’s information security program and works to enhance the security posture of the Company and its subsidiaries. The CISO coordinates closely with other members of senior management, including the CIO and the Chief Legal Officer, in managing cybersecurity risks.
Removed
Governance Our board of directors oversees the Company’s risk management program, including our cybersecurity program, both directly and through several committees created as part of our risk governance program.
Added
The CISO receives regular reports from cybersecurity personnel regarding threat intelligence, vulnerabilities and incidents and continuously evaluates the effectiveness of cybersecurity controls and risk mitigation measures. The CISO has over 20 years of experience in information technology and information security, including experience at large financial institutions, mortgage companies and banks, and brings expertise in managing complex and regulated security environments.
Removed
In particular, the CISO is focused on assessing, managing, mitigating and reporting on cybersecurity threats and risks and is tasked with overseeing and enhancing the security posture of the Company and it subsidiaries. This role involves prioritizing and implementing security initiatives across all organizational units.
Removed
The CISO plays a critical role in protecting the Company’s assets, data and reputation by developing a robust security strategy and security awareness. Our current CISO brings over 20 years of experience in IT operations and information security with a proven track record working in large financial institutions, mortgage companies and banks, with expertise in managing complex security environments.
Removed
The CISO, in conjunction with other executive leaders such as the CIO and the Chief Legal Officer, manages the Company’s cybersecurity posture. In doing so, the CISO receives regular reports prepared by our experienced cybersecurity personnel on cybersecurity threats and continuously reviews risk management measures implemented by the Company to help identify and mitigate data protection and cybersecurity risks.

Item 2. Properties

Properties — owned and leased real estate

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Biggest changeITEM 2. PROPERTIES Our principal executive and administrative offices are located in leased space at 799 Broadway, 8 th Fl., New York, New York 10003. The information required by this Item is included in a separate section in this Annual Report on Form 10-K. See Part II. Item 7.
Biggest changeITEM 2. PROPERTIES Our principal executive and administrative offices are located in leased space at 799 Broadway, 8 th Fl., New York, New York 10003. Refer to Schedule III included in Item 15 of this Form 10-K for a listing of investment properties owned as of December 31, 2025.
“Management’s Discussion and Analysis of Financial Condition and Results of Operations—Our Portfolio,” which is incorporated herein by reference.
The information required by this Item is included in a separate section in this Annual Report on Form 10-K. See Part II. Item 7. “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Our Portfolio,” which is incorporated herein by reference.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

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Biggest changeGiven the inherent unpredictability of these types of proceedings, it is possible that future adverse outcomes could have a material adverse effect on our business, financial position or results of operations. 68 Rithm Capital is, from time to time, subject to inquiries by government entities.
Biggest changeGiven the inherent unpredictability of these types of proceedings, it is possible that future adverse outcomes could have a material adverse effect on our business, financial position or results of operations. Rithm Capital is, from time to time, subject to inquiries by government entities.
Rithm Capital currently does not believe any of these inquiries would result in a material adverse effect on Rithm Capital’s business.
Rithm Capital currently does not believe any of these inquiries would result in a material adverse effect on Rithm Capital’s business. 72

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeYear Ended December 31, Index 2019 2020 2021 2022 2023 2024 Rithm Capital Corp. $ 100.0 $ 65.6 $ 76.8 $ 65.6 $ 95.4 $ 106.0 NAREIT All REIT 100.0 94.9 134.1 100.8 112.2 116.6 Russell 2000 100.0 119.9 137.7 109.5 128.0 142.7 NAREIT Mortgage REIT 100.0 81.4 94.0 69.3 79.8 78.6 S&P 500 100.0 118.4 152.3 124.7 157.5 196.8 See Note 24 to our consolidated financial statements for further information regarding distributions on our common stock.
Biggest changeYear Ended December 31, Index 2020 2021 2022 2023 2024 2025 Rithm Capital Corp. $ 100.0 $ 117.0 $ 99.9 $ 145.4 $ 161.5 $ 177.5 NAREIT All REIT 100.0 141.3 106.2 118.2 122.9 127.9 Russell 2000 100.0 114.8 91.3 106.7 119.0 134.2 NAREIT Mortgage REIT 100.0 115.6 85.1 98.0 96.6 113.7 S&P 500 100.0 128.7 105.4 133.0 166.3 196.0 74 See Note 24 to our consolidated financial statements for further information regarding distributions on our common stock.
No assurance, however, can be given that any future distributions will be made or, if made, as to the amounts or timing of any future distributions as such distributions are subject to our earnings, financial condition, liquidity, capital requirements, REIT requirements and such other factors as our board of directors deems 70 relevant.
No assurance, however, can be given that any future distributions will be made or, if made, as to the amounts or timing of any future distributions as such distributions are subject to our earnings, financial condition, liquidity, capital requirements, REIT requirements and such other factors as our board of directors deems relevant.
“Management’s Discussion and Analysis of Financial Condition and Results of Operations—Liquidity and Capital Resources—Stockholders’ Equity—Common Stock.” 71 ITEM 6. [RESERVED]
“Management’s Discussion and Analysis of Financial Condition and Results of Operations—Liquidity and Capital Resources—Stockholders’ Equity—Common Stock.” 75 ITEM 6. [RESERVED]
ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS, AND ISSUER PURCHASES OF EQUITY SECURITIES We have one class of common stock, which is listed on the NYSE under the symbol “RITM”. As of February 18, 2025, there were 22 holders of record of our common stock.
ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES We have one class of common stock, which is listed on the NYSE under the symbol “RITM”. As of February 13, 2026, there were 19 holders of record of our common stock.
The graph assumes an investment of $100 in our common stock and in each of the indices on December 31, 2019 through December 31, 2024. The past performance of our common stock is not an indication of future performance.
The graph assumes an investment of $100 in our common stock and in each of the indices on December 31, 2020 through December 31, 2025. The past performance of our common stock is not an indication of future performance.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

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Biggest changeYear Ended December 31, Increase (Decrease) 2024 2023 Amount % Revenues Servicing fee revenue, net and interest income from MSRs and MSR financing receivables $ 1,993,319 $ 1,859,357 $ 133,962 7.2 % Change in fair value of MSRs and MSR financing receivables (includes realization of cash flows of $(602,241) and $(518,978), respectively) (167,574) (565,684) 398,110 70.4 % Servicing revenue, net 1,825,745 1,293,673 532,072 41.1 % Interest income 1,949,790 1,616,189 333,601 20.6 % Gain on originated residential mortgage loans, HFS, net 682,535 533,477 149,058 27.9 % Other revenues 227,472 236,167 (8,695) (3.7) % Asset management revenues 520,294 82,681 437,613 529.3 % 5,205,836 3,762,187 1,443,649 38.4 % Expenses Interest expense and warehouse line fees 1,835,325 1,401,327 433,998 31.0 % General and administrative 868,484 761,102 107,382 14.1 % Compensation and benefits 1,134,768 787,092 347,676 44.2 % 3,838,577 2,949,521 889,056 30.1 % Other Income (Loss) Realized and unrealized losses, net (215,705) (19,456) (196,249) (1008.7) % Other income (loss), net 57,255 (40,377) 97,632 241.8 % (158,450) (59,833) (98,617) (164.8) % Income before Income Taxes 1,208,809 752,833 455,976 60.6 % Income tax expense 267,317 122,159 145,158 118.8 % Net Income 941,492 630,674 310,818 49.3 % Noncontrolling interests in income of consolidated subsidiaries 9,989 8,417 1,572 18.7 % Dividends on preferred stock 96,456 89,579 6,877 7.7 % Net Income Attributable to Common Stockholders $ 835,047 $ 532,678 $ 302,369 56.8 % Percentage changes in the table above deemed “n/m” are not meaningful. 93 Servicing Revenue, Net Servicing revenue, net consists of the following: Year Ended December 31, Increase (Decrease) (dollars in thousands) 2024 2023 Amount % Servicing fee revenue, net and interest income from MSRs and MSR financing receivables $ 1,833,221 $ 1,735,060 $ 98,161 5.7 % Ancillary and other fees 160,098 124,297 35,801 28.8 % Servicing fee revenue, net and fees 1,993,319 1,859,357 133,962 7.2 % Change in fair value due to: Realization of cash flows (602,241) (518,978) (83,263) (16.0) % Change in valuation inputs and assumptions, net of realized gains (losses) (A) 434,667 (46,706) 481,373 1030.6 % Servicing Revenue, Net $ 1,825,745 $ 1,293,673 $ 532,072 41.1 % (A) The following table summarizes the components of servicing revenue, net related to changes in valuation inputs and assumptions: Year Ended December 31, Increase (Decrease) (dollars in thousands) 2024 2023 Amount % Changes in interest rates and prepayment rates $ 929,830 $ 206,970 $ 722,860 349.3 % Changes in discount rates 28,189 11,122 17,067 153.5 % Changes in other factors (523,352) (264,798) (258,554) (97.6) % Change in Valuation and Assumptions $ 434,667 $ (46,706) $ 481,373 1030.6 % The table below summarizes the UPB of our MSRs, MSR financing receivables and third-party servicing: Unpaid Principal Balance as of December 31, Increase (Decrease) (dollars in millions) 2024 2023 Amount % GSE $ 454,430 $ 360,340 $ 94,090 26.1 % Non-Agency 246,313 151,250 95,063 62.9 % Ginnie Mae 143,097 127,864 15,233 11.9 % Total $ 843,840 $ 639,454 $ 204,386 32.0 % The table below summarizes the total UPB of our servicing portfolio (owned MSRs and third-party servicing) by Performing Servicing, Special Servicing and serviced by third-parties: Unpaid Principal Balance as of December 31, Increase (Decrease) (dollars in millions) 2024 2023 Amount % Performing Servicing $ 514,044 $ 445,838 $ 68,206 15.3 % Special Servicing 264,375 122,155 142,220 116.4 % Serviced by third-parties 65,421 71,461 (6,040) (8.5) % Total Servicing Portfolio $ 843,840 $ 639,454 $ 204,386 32.0 % Servicing revenue, net increased $0.5 billion, primarily driven by a $0.4 billion increase in fair value of our MSRs portfolio and increased servicing fee revenue due to a larger servicing portfolio during the year ended December 31, 2024.
Biggest changeYear Ended December 31, Increase (Decrease) 2025 2024 Amount % Revenues Servicing fee revenue, net and interest income from MSRs and MSR financing receivables $ 2,294,969 $ 1,993,319 $ 301,650 15.1 % Change in fair value of MSRs and MSR financing receivables, net of economic hedges (includes realization of cash flows of $(746,006) and $(602,241), respectively) (1,174,549) (455,918) (718,631) (157.6) % Servicing revenue, net 1,120,420 1,537,401 (416,981) (27.1) % Interest income 1,874,315 1,949,790 (75,475) (3.9) % Gain on originated residential mortgage loans, HFS, net 729,526 682,535 46,991 6.9 % Other revenues 238,927 227,472 11,455 5.0 % Asset management revenues 627,040 520,294 106,746 20.5 % 4,590,228 4,917,492 (327,264) (6.7) % Expenses Interest expense and warehouse line fees 1,662,433 1,835,325 (172,892) (9.4) % General and administrative 1,011,564 868,484 143,080 16.5 % Compensation and benefits 1,318,879 1,134,768 184,111 16.2 % 3,992,876 3,838,577 154,299 4.0 % Other Income (Loss) Realized and unrealized gains, net 125,867 72,639 53,228 (73.3) % Other income, net 83,164 57,255 25,909 (45.3) % 209,031 129,894 79,137 (60.9) % Income before Income Taxes 806,383 1,208,809 (402,426) (33.3) % Income tax expense 88,291 267,317 (179,026) (67.0) % Net Income 718,092 941,492 (223,400) (23.7) % Non-controlling interests in income of consolidated subsidiaries 8,820 9,989 (1,169) (11.7) % Redeemable non-controlling interests in income of consolidated subsidiaries 12,215 — 12,215 100.0 % Net Income Attributable to Rithm Capital Corp. 697,057 931,503 (234,446) (25.2) % Change in redemption value of redeemable non-controlling interests 15,611 — 15,611 100.0 % Dividends on preferred stock 114,246 96,456 17,790 18.4 % Net Income Attributable to Common Stockholders $ 567,200 $ 835,047 $ (267,847) (32.1) % 100 Servicing Revenue, Net Servicing revenue, net consists of the following: Year Ended December 31, Increase (Decrease) (dollars in thousands) 2025 2024 Amount % Servicing fee revenue, net and interest income from MSRs and MSR financing receivables $ 2,099,987 $ 1,833,221 $ 266,766 14.6 % Ancillary and other fees 194,982 160,098 34,884 21.8 % Servicing fee revenue, net and fees 2,294,969 1,993,319 301,650 15.1 % Change in Fair Value due to: Realization of cash flows (746,006) (602,241) (143,765) (23.9) % Change in valuation inputs and assumptions, net of realized gains (losses) (A) (873,379) 434,667 (1,308,046) (300.9) % Gains (losses) on MSR economic hedges 444,836 (288,344) 733,180 254.3 % Servicing Revenue, Net $ 1,120,420 $ 1,537,401 $ (416,981) (27.1) % (A) The following table summarizes the components of servicing revenue, net related to changes in valuation inputs and assumptions: Year Ended December 31, Increase (Decrease) (dollars in thousands) 2025 2024 Amount % Changes in interest rates and prepayment speeds $ (640,259) $ 929,830 $ (1,570,089) (168.9) % Changes in discount rates 133,525 28,189 105,336 373.7 % Changes in other factors (366,645) (523,352) 156,707 29.9 % Change in Valuation and Assumptions $ (873,379) $ 434,667 $ (1,308,046) 300.9 % The table below summarizes the UPB of our MSRs, MSR financing receivables and third-party servicing: UPB as of December 31, Increase (Decrease) (dollars in millions) 2025 2024 Amount % GSE $ 412,978 $ 454,430 $ (41,452) (9.1) % Non-Agency 284,234 246,313 37,921 15.4 % Ginnie Mae 154,535 143,097 11,438 8.0 % Total $ 851,747 $ 843,840 $ 7,907 0.9 % The table below summarizes the total UPB of our servicing portfolio (owned MSRs and third-party servicing) by Performing Servicing, Special Servicing and serviced by third-parties: UPB as of December 31, Increase (Decrease) (dollars in millions) 2025 2024 Amount % Performing Servicing $ 529,123 $ 514,044 $ 15,079 2.9 % Special Servicing 268,508 264,375 4,133 1.6 % Serviced by third-parties 54,116 65,421 (11,305) (17.3) % Total Servicing Portfolio $ 851,747 $ 843,840 $ 7,907 0.9 % 101 Servicing revenue, net decreased $417.0 million, driven by (i) a $574.9 million increase in unrealized loss, net of economic hedges, on our MSRs and (ii) a $143.8 million increase in realization of cash flows, partially offset by (iii) a $301.7 million increase in servicing fee revenue, net and fees.
Source of Funds Our primary sources of funds are cash provided by operating activities (primarily income from loan originations and servicing, as well as management and incentive fees), sales of and repayments from our investments, potential debt financing sources, including securitizations, and the issuance of equity securities, when feasible and appropriate.
Source of Funds Our primary sources of funds are cash provided by operating activities (primarily income from loan originations and servicing, as well as management fees and incentive income), sales of and repayments from our investments, potential debt financing sources, including securitizations, and the issuance of equity securities, when feasible and appropriate.
Set forth below is a summary of what we believe to be our most critical accounting policies and estimates. Fair Value of Investments MSRs and MSR Financing Receivables An MSR can be created or acquired through a variety of means, including explicitly through a contract or implicitly through the origination and sale of a loan with servicing retained.
Set forth below is a summary of what we believe to be our most critical accounting policies and estimates. 95 Fair Value of Investments MSRs and MSR Financing Receivables An MSR can be created or acquired through a variety of means, including explicitly through a contract or implicitly through the origination and sale of a loan with servicing retained.
Any such change (i) is recorded in the consolidated statements of operations, as impairment that impacts net income and (ii) impacts our total Rithm Capital 91 stockholders’ equity (net book value). In the case of residential mortgage loans, HFS, at lower of cost or fair value, any reductions in value are considered impairment.
Any such change (i) is recorded in the consolidated statements of operations as impairment that impacts net income and (ii) impacts our total Rithm Capital stockholders’ equity (net book value). In the case of residential mortgage loans, HFS, at lower of cost or fair value, any reductions in value are considered impairment.
If classified under the fair value option, changes in fair value are recorded as a component of realized and unrealized gains (losses), net in the consolidated statements of operations. We generally categorize Agency RMBS under Level 2 and Non-Agency residential and other securities as Level 3 of the GAAP hierarchy.
If classified under the fair value option, changes in fair value are recorded as a component of realized and unrealized gains (losses), net in the consolidated statements of operations. We generally categorize Agency RMBS and corporates under Level 2 and non-Agency residential and other securities as Level 3 of the GAAP hierarchy.
If this value declines by more than a de minimis threshold, the counterparty 99 could require us to post additional collateral, or margin, in order to maintain the initial haircut on the collateral. This margin is typically required to be posted in the form of cash and cash equivalents.
If this value declines by more than a de minimis threshold, the counterparty could require us to post additional collateral, or margin, in order to maintain the initial haircut on the collateral. This margin is typically required to be posted in the form of cash and cash equivalents.
The use of TBAs’ dollar roll transactions generally increases our funding diversification, expands our available pool of assets and increases our overall liquidity position, as TBA contracts typically have lower implied haircuts relative to Agency RMBS pools funded with repurchase financing.
The use of TBA dollar roll transactions generally increases our funding diversification, expands our available pool of assets and increases our overall liquidity position, as TBA contracts typically have lower implied haircuts relative to Agency RMBS pools funded with repurchase financing.
Many of the REIT requirements, however, are highly technical and complex. If we were to fail to meet the REIT requirements, we would be subject to U.S. federal, state and local income and franchise taxes, and we would face a variety of adverse consequences.
Many of the REIT requirements, however, are highly technical and complex. If we were to fail to meet the REIT 98 requirements, we would be subject to U.S. federal, state and local income and franchise taxes, and we would face a variety of adverse consequences.
Our ability to recognize interest income on non-accrual loans as cash interest 90 payments are received rather than as a reduction of the carrying value of the loans is based on the recorded loan balance being deemed fully collectible.
Our ability to recognize interest income on non-accrual loans as cash interest payments are received rather than as a reduction of the carrying value of the loans is based on the recorded loan balance being deemed fully collectible.
Consolidated Financial Statements—Note 20, Variable Interest Entities.” Income Taxes We intend to operate in a manner that allows us to qualify for taxation as a REIT. As a result of our expected REIT qualification, we do not generally expect to pay U.S. federal or state and local corporate level taxes on income earned outside of our TRSs.
Consolidated Financial Statements—Note 19, Variable Interest Entities.” Income Taxes We intend to operate in a manner that allows us to qualify for taxation as a REIT. As a result of our expected REIT qualification, we do not generally expect to pay U.S. federal or state and local corporate level taxes on income earned outside of our TRSs.
Impairment on loans and REO, as well as securities, is subject to reversal if values subsequently increase. All of Rithm Capital’s liabilities, with the exception of derivatives, residential mortgage loan repurchase liability, notes payable of consolidated CFEs and certain debt accounted for under the fair value option, are recorded at their amortized cost basis.
Impairment on loans and REO, as well as securities, is subject to reversal if values subsequently increase. All of Rithm Capital’s liabilities, with the exception of derivatives, residential mortgage loan repurchase liability, notes payable of consolidated entities and certain debt accounted for under the fair value option, are recorded at their amortized cost basis.
Net proceeds from the issuance of the 2029 Senior Notes were Proceeds from the issuance were approximately $759 million, net of discount and commissions and estimated offering expenses payable by the Company.
Net proceeds from the issuance of the 2029 Senior Notes were approximately $759.0 million, net of discount and commissions and estimated offering expenses payable by the Company.
We believe that these off-balance sheet structures presented the most efficient and least expensive form of financing for these assets at the time they were entered and represented the most common market-accepted method for financing such assets. Our exposure to credit losses related to these non-recourse, off-balance sheet financings is limited to $0.5 billion.
We believe that these off-balance sheet structures presented the most efficient and least expensive form of financing for these assets at the time they were entered and represented the most common market-accepted method for financing such assets. Our exposure to credit losses related to these non-recourse, off-balance sheet financings is limited to $0.6 billion.
If the initial accounting for a business combination is incomplete by the end of the reporting period in which the combination occurs, we will recognize a measurement-period adjustment during the period in which we determine the amount of the adjustment, including the effect on earnings of any amounts we would have recorded in previous periods if the accounting had been completed at the acquisition date.
If the initial accounting for a business combination is incomplete by the end of the reporting period in which the combination occurs, we recognize a measurement-period adjustment during the period in which we determine the amount of the adjustment, including the effect on earnings of any amounts that would have been recorded in previous periods if the accounting had been completed at the acquisition date.
In some cases, such collateral is not available to other creditors of ours. In particular, the obligations and liabilities of CFEs may only be satisfied with the assets of the respective CFE, and creditors do not have recourse to Rithm Capital Corp. We have margin exposure on $16.8 billion of secured financing agreements.
In some cases, such collateral is not available to other creditors of ours. In particular, the obligations and liabilities of CFEs may only be satisfied with the assets of the respective CFE, and creditors do not have recourse to Rithm Capital Corp. We have margin exposure on $13.8 billion of secured financing agreements.
We believe the estimates and assumptions underlying our consolidated financial statements are reasonable and supportable based on the information available as of December 31, 2024; however, uncertainty over the current macroeconomic conditions makes any estimates and assumptions as of December 31, 2024 inherently less certain than they would be absent the current economic environment.
We believe the estimates and assumptions underlying our consolidated financial statements are reasonable and supportable based on the information available as of December 31, 2025; however, uncertainty over the current macroeconomic conditions makes any estimates and assumptions as of December 31, 2025 inherently less certain than they would be absent the current economic environment.
These inputs are primarily based on current market data obtained from servicers and other third parties, which may be adjusted based on our expectations for the future, and requires significant judgement. The determination of estimated cash flows used in pricing models is inherently subjective and imprecise.
These inputs are primarily based on current market data obtained from servicers and other third parties, which may be adjusted based on our expectations for the future, and requires significant judgment. The determination of estimated cash flows used in pricing models is inherently subjective and imprecise.
Our loans are generally categorized as Level 2 or 3 under the GAAP fair value hierarchy, as described in Note 19 to our consolidated financial statements. The fair value of loans is affected by, among other things, changes in interest rates, credit performance, prepayments, and market liquidity.
Our loans are generally categorized as Level 2 or 3 under the GAAP fair value hierarchy, as described in Note 18 to our consolidated financial statements. The fair value of loans is affected by, among other things, changes in interest rates, credit performance, prepayments, and market liquidity.
Our MSRs are categorized as Level 3 under the GAAP fair value hierarchy, as described in Note 19 to our consolidated financial statements. The inputs used in the valuation of MSRs include prepayment rate, delinquency rate, mortgage servicing amount, discount rate, and estimated market level future costs to service.
Our MSRs are categorized as Level 3 under the GAAP fair value hierarchy, as described in Note 18 to our consolidated financial statements. The inputs used in the valuation of MSRs include prepayment rate, delinquency rate, mortgage servicing amount, discount rate, and estimated market level future costs to service.
In addition, $5.8 billion face amount of our MSR financing is subject to mandatory monthly repayment to the extent that the outstanding balance exceeds the market value (as defined in the related agreement) of the financed asset multiplied by the contractual maximum LTV ratio.
In addition, $6.8 billion face amount of our MSR financing is subject to mandatory monthly repayment to the extent that the outstanding balance exceeds the market value (as defined in the related agreement) of the financed asset multiplied by the contractual maximum LTV ratio.
(C) Performing loans are generally placed on non-accrual status when principal or interest is 90 days or more past due. (D) As of December 31, 2024, Rithm Capital has placed non-performing loans, HFS on non-accrual status except, as described in (E) below.
(C) Performing loans are generally placed on non-accrual status when principal or interest is 90 days or more past due. (D) As of December 31, 2025, Rithm Capital has placed non-performing loans, HFS on non-accrual status except, as described in (E) below.
(B) Includes loan origination fees of $0.9 billion and $0.4 billion for the years ended December 31, 2024 and 2023, respectively . (C) Represents gain on originated residential mortgage loans, HFS, net related to the origination business within the Origination and Servicing segment (Note 4 and Note 7 to our consolidated financial statements).
(B) Includes loan origination fees of $1.0 billion and $0.9 billion for the years ended December 31, 2025 and 2024, respectively . (C) Represents gain on originated residential mortgage loans, HFS, net related to the origination business within the Origination and Servicing segment (Note 4 and Note 7 to our consolidated financial statements).
Summary of Results of Operations The following table summarizes the changes in our results of operations for the year ended December 31, 2024 compared to the year ended December 31, 2023 (dollars in thousands). Our results of operations are not necessarily indicative of our future performance.
Summary of Results of Operations The following table summarizes the changes in our results of operations for the year ended December 31, 2025 compared to the year ended December 31, 2024. Our results of operations are not necessarily indicative of our future performance (dollars in thousands).
Current tax expense is driven primarily by income from foreign operations. LIQUIDITY AND CAPITAL RESOURCES Overview Liquidity is a measurement of our ability to meet potential cash requirements, including ongoing commitments to repay borrowings, fund and maintain investments and other general business needs.
Current tax expense is driven primarily by income from foreign operations and return to provision adjustments. LIQUIDITY AND CAPITAL RESOURCES Overview Liquidity is a measurement of our ability to meet potential cash requirements, including ongoing commitments to repay borrowings, fund and maintain investments and other general business needs.
Treasury rate 4.6 % 3.8 % 4.4 % 4.2 % 3.9 % 30-year fixed mortgage rate 6.9 % 6.1 % 6.9 % 6.8 % 6.6 % We believe the estimates and assumptions underlying our consolidated financial statements are reasonable and supportable based on the information available as of December 31, 2024; however, uncertainty related to market volatility, the path of the federal funds rate, various regional conflicts and trade and fiscal policies makes any estimates and assumptions as of December 31, 2024, inherently less certain than they would be absent the current environment.
Treasury rate 4.2 % 4.2 % 4.2 % 4.2 % 4.6 % 30-year fixed mortgage rate 6.3 % 6.4 % 6.8 % 6.7 % 6.9 % We believe the estimates and assumptions underlying our consolidated financial statements are reasonable and supportable based on the information available as of December 31, 2025; however, uncertainty related to market volatility, the path of the federal funds rate, various regional conflicts and global trade and fiscal policies makes any estimates and assumptions as of December 31, 2025, inherently less certain than they would be absent the current environment.
Treasury rate according to the Federal Reserve and the 30-year fixed mortgage rate according to Freddie Mac: December 31, 2024 September 30, 2024 June 30, 2024 March 31, 2024 December 31, 2023 10-year U.S.
Treasury rate according to the Federal Reserve and the 30-year fixed mortgage rate according to Freddie Mac: December 31, 2025 September 30, 2025 June 30, 2025 March 31, 2025 December 31, 2024 10-year U.S.
Moreover, our ability to access and utilize cash generated from our regulated entities is an important part of our dividend paying ability. As of December 31, 2024, approximately $1.2 billion of available liquidity was held at NRM and Newrez, of which $0.6 billion were in excess of the new regulatory liquidity requirements made effective during 2023.
Moreover, our ability to access and utilize cash generated from our regulated entities is an important part of our dividend paying ability. As of December 31, 2025, approximately $1.2 billion of available liquidity was held at NRM and Newrez, of which $0.6 billion was in excess of the regulatory liquidity requirements made effective during 2023.
Loans, other than purchase credit deteriorated loans, are placed on non-accrual status and considered non-performing when full payment of principal and interest is in doubt, which generally occurs when principal or interest is 90 days or more past due unless the loan is both well secured and in the process of collection. Loans held-for-sale are subject to the non-accrual policy.
Loans, other than purchase credit deteriorated loans, are placed on non-accrual status and considered non-performing when full payment of principal and interest is in doubt, which generally occurs when principal or interest is 90 days or more past due unless the loan is both well secured and in the process of collection. Loans HFS are subject to the non-accrual policy.
Our total cash and cash equivalents at December 31, 2024 was $1.5 billion. Currently, our primary sources of financing are secured financing agreements and secured notes and bonds payable, although we have in the past and may in the future also pursue one or more other sources of financing such as securitizations and other secured and unsecured forms of borrowing.
Our total cash and cash equivalents at December 31, 2025 was $1.8 billion. Currently, our primary sources of financing are secured financing agreements and secured notes and bonds payable, although we have in the past and may in the future also pursue one or more other sources of financing such as securitizations and other secured and unsecured forms of borrowing.
(F) Represents the annualized rate of the involuntary prepayments (defaults) during the quarter as a percentage of the total principal balance of the pool. (G) Represents the percentage of the total principal balance of the pool that corresponds to loans that are delinquent by 90 or more days.
(F) The conditional default rate (“CDR”) represents the annualized rate of the involuntary prepayments (defaults) during the quarter as a percentage of the total principal balance of the pool. (G) Represents the percentage of the total principal balance of the pool that corresponds to loans that are delinquent by 90 or more days.
(E) Effective August 15, 2024, dividends on each of the Company’s 7.50% Series A Fixed-to-Floating Rate Cumulative Redeemable Preferred Stock (the “Series A”) and the Company’s 7.125% Series B Fixed-to-Floating Rate Cumulative Redeemable Preferred Stock (the “Series B”) accrue at a floating rate.
(F) Fixed-rate cumulative redeemable preferred. (G) Effective August 15, 2024, dividends on each of the Company’s 7.50% Series A Fixed-to-Floating Rate Cumulative Redeemable Preferred Stock (the “Series A”) and the Company’s 7.125% Series B Fixed-to-Floating Rate Cumulative Redeemable Preferred Stock (the “Series B”) accrue at a floating rate.
As of December 31, 2024, we had outstanding secured financing agreements with an aggregate face amount of approximately $16.8 billion to finance our investments. The financing of our entire Agency RMBS portfolio, which generally has 30- to 90-day terms, is subject to margin calls.
As of December 31, 2025, we had outstanding secured financing agreements with an aggregate face amount of approximately $13.8 billion to finance our investments. The financing of our entire Agency RMBS portfolio, which generally has 30- to 90-day terms, is subject to margin calls.
As of December 31, 2024, Rithm Capital maintained compliance with the required capital and liquidity standards. Noncompliance with the capital and liquidity requirements can result in the FHFA and Ginnie Mae taking various remedial actions up to and including removing our ability to sell loans to and service loans on behalf of the FHFA and Ginnie Mae.
As of December 31, 2025, Rithm Capital maintained compliance with the required capital and liquidity standards. Non-compliance with the capital and liquidity requirements can result in the FHFA and Ginnie Mae taking various remedial actions up to and including removing our ability to sell loans to and service loans on behalf of the FHFA and Ginnie Mae.
(B) Based on the weighted average of information provided by the loan servicer on a monthly basis. The loan servicer generally updates the FICO score when loans are refinanced or become delinquent. (C) Represents the percentage of the total principal balance of the pool that corresponds to adjustable rate mortgages.
(B) Based on the weighted average of information provided by the loan servicer on a monthly basis. The loan servicer generally updates the Fair Isaac Corporation (“FICO”) score when loans are refinanced or become delinquent. (C) Represents the percentage of the total principal balance of the pool that corresponds to adjustable rate mortgages.
(B) Includes secured financing agreements, secured notes and bonds payable, unsecured notes net of issuance costs, and notes payable of consolidated CFEs of $16.2 billion, $6.6 billion, $1.1 billion, and $0.0 billion, respectively.
(B) Includes secured financing agreements, secured notes and bonds payable, unsecured notes net of issuance costs, and notes payable of consolidated CFEs of $12.2 billion, $6.0 billion, $1.3 billion and $0.0 billion, respectively.
In connection with the issuance of the 2029 Senior Notes, the Company tendered for and repurchased $275.0 million of its 2025 Senior Notes for cash in a total amount of $282.4 million, leaving $275.0 million aggregate principal amount of the 2025 Senior Notes outstanding.
During the first quarter of 2024 and in connection with the issuance of the 2029 Senior Notes, the Company tendered for and repurchased $275.0 million of its 2025 Senior Notes for cash in a total amount of $282.4 million, leaving $275.0 million aggregate principal amount of the 2025 Senior Notes outstanding.
For more information regarding our indebtedness, refer to Note 18 of the consolidated financial statements.
For more information regarding our indebtedness, refer to Note 17 of the consolidated financial statements.
We were in compliance with all of our debt covenants as of December 31, 2024.
We were in compliance with all of our debt covenants as of December 31, 2025.
This section generally discusses 2024 and 2023 items and year-to-year comparisons between 2024 and 2023.
This section generally discusses 2025 and 2024 items and year-to-year comparisons between 2025 and 2024.
The 2025 Senior Notes mature on October 15, 2025 and became redeemable at any time and from time to time on October 15, 2022. Starting in 2024, the Company may redeem the 2025 Senior Notes at par.
The 2025 Senior Notes became redeemable at any time and from time to time on October 15, 2022, and, starting in October 2024, the Company was able to redeem the 2025 Senior Notes at par.
The difference between the collateral coverage percentage and the collateral trigger is referred to as a “margin holiday.” See Note 18 to our consolidated financial statements for further information regarding financing of our residential mortgage loans, including a summary of activity related to financing from December 31, 2023 to December 31, 2024.
The difference between the collateral coverage percentage and the applicable trigger is referred to as a “margin holiday.” See Note 17 to our consolidated financial statements for additional information regarding the financing of our residential mortgage loans, including a summary of related activity from December 31, 2024 to December 31, 2025.
Discussions of 2022 items and year-to-year comparisons between 2023 and 2022 that are not included in this Form 10-K can be found in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in Part II, Item 7. of our Amendment No. 1 on Form 10-K/A (the “Amended 2023 Form 10-K/A”) to our Annual Report on Form 10-K for the fiscal year ended December 31, 2023.
Discussions of 2023 items and year-to-year comparisons between 2024 and 2023 that are not included in this Form 10-K can be found in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in Part II, Item 7. of our Annual Report on Form 10-K for the fiscal year ended December 31, 2024.
Treasury securities include $24.8 million of short-term Treasury bills held-to-maturity at amortized cost with the remaining held at fair value under the FVO. (B) Represents the annualized rate of the prepayments during the quarter as a percentage of the total amortized cost basis.
Treasury securities include $24.8 million of short-term Treasury bills held-to-maturity at amortized cost. (B) Represents the annualized rate of the prepayments during the quarter as a percentage of the total amortized cost basis.
Stockholders’ Equity Preferred Stock Pursuant to our certificate of incorporation, we are authorized to designate and issue up to 100.0 million shares of preferred stock, par value of $0.01 per share, in one or more classes or series. 100 The following table summarizes our preferred shares outstanding (dollars in thousands, except share and per share amounts): Number of Shares Liquidation Preference (A) Dividends Declared per Share December 31, Year Ended December 31, Series (F) 2024 2023 2024 2023 Issuance Discount Carrying Value (B) 2024 2023 2022 Series A, issued July 2019 (C)(E) 6,200,068 6,200,068 $ 155,002 $ 155,002 3.15 % $ 149,822 $ 2.33 $ 1.88 $ 1.88 Series B, issued August 2019 (C)(E) 11,260,712 11,260,712 281,518 281,518 3.15 % 272,654 2.26 1.78 1.78 Series C, 6.375% issued February 2020 (C) 15,903,342 15,903,342 397,584 397,584 3.15 % 385,289 1.59 1.59 1.59 Series D, 7.00% issued September 2021 (D) 18,600,000 18,600,000 465,000 465,000 3.15 % 449,489 1.75 1.75 1.75 Total 51,964,122 51,964,122 $ 1,299,104 $ 1,299,104 $ 1,257,254 $ 7.93 $ 7.00 $ 7.00 (A) Each series has a liquidation preference or par value of $25.00 per share.
Stockholders’ Equity Preferred Stock Pursuant to our certificate of incorporation, we are authorized to designate and issue up to 100.0 million shares of preferred stock, par value of $0.01 per share, in one or more classes or series. 108 The following table summarizes our preferred shares outstanding (dollars in thousands, except share and per share amounts): Number of Shares Liquidation Preference (A) Carrying Value (C) Dividends Declared per Share December 31, December 31, December 31, Year Ended December 31, Series (B) 2025 2024 2025 2024 Issuance Discount 2025 2024 2025 2024 2023 Series A, issued July 2019 (D)(G)(I) 4,200,068 6,200,068 $ 105,002 $ 155,002 3.15 % $ 99,822 $ 149,822 $ 2.60 $ 2.33 $ 1.88 Series B, issued August 2019 (D)(G) 11,260,712 11,260,712 281,518 281,518 3.15 % 272,654 272,654 2.55 2.26 1.78 Series C, issued February 2020 (D)(H) 15,903,342 15,903,342 397,584 397,584 3.15 % 385,289 385,289 2.38 1.59 1.59 Series D, 7.00% issued September 2021 (E) 18,600,000 18,600,000 465,000 465,000 3.15 % 449,489 449,489 1.75 1.75 1.75 Series E, 8.75% issued September 2025 (F) 7,600,000 — 190,000 — 3.15 % 183,536 — 0.85 — — Total 57,564,122 51,964,122 $ 1,439,104 $ 1,299,104 $ 1,390,790 $ 1,257,254 $ 10.13 $ 7.93 $ 7.00 (A) Each series has a liquidation preference or par value of $25.00 per share.
Dividends for the Series A, Series B, Series C and Series D are payable quarterly in arrears on or about the 15th day of each February, May, August and November. Preferred dividends declared for the year ended December 31, 2024 were $96.5 million.
Dividends for the Series A, Series B, Series C, Series D and Series E are payable quarterly in arrears on or about the 15th day of each February, May, August and November. Preferred dividends declared for the year ended December 31, 2025 were $114.2 million.
The following tables summarize the terms of our Excess MSRs: MSR Component (A) Excess MSR Direct Excess MSRs Current UPB (billions) (B) Weighted Average MSR (bps) Weighted Average Excess MSR (bps) Interest in Excess MSR (%) Carrying Value (millions) Total / Weighted Average $ 53.5 32 20 65.0% – 80% $ 369.2 (A) The MSR is a weighted average as of December 31, 2024 and the Excess MSR represents the difference between the weighted average MSR and the base fee (which fee remains constant).
The following tables summarize the terms of our Excess MSRs: MSR Component (A) Excess MSR Direct Excess MSRs Current UPB (billions) (B) Weighted Average MSR (bps) Weighted Average Excess MSR (bps) Interest in Excess MSR (%) Carrying Value (millions) Total / Weighted Average $ 47.9 32 20 65.0% – 80.0% $ 323.6 (A) The MSR is a weighted average as of December 31, 2025 and the Excess MSR represents the difference between the weighted average MSR and the base fee (which fee remains constant).
Financing Activities Net cash provided by (used in) financing activities were approximately $4.8 billion and $(0.8) billion for the years ended December 31, 2024 and 2023, respectively.
Financing Activities Net cash provided by (used in) financing activities was approximately $(0.5) billion and $4.8 billion for the years ended December 31, 2025 and 2024, respectively.
The 12-month increase in the overall Consumer Price Index (“CPI”) was 2.9% in December 2024 versus 2.4% in September 2024 and 3.4% in December 2023, while core CPI price inflation (i.e., excluding food and energy prices) for December 2024 stood at 3.2%, only slightly lower than the 3.3% core CPI inflation rate reported for September 2024, but down from 3.9% for December 2023.
The 12-month increase in the overall Consumer Price Index (“CPI”) was 2.7% in December 2025 versus 3.0% in September 2025 and 2.9% in December 2024, while core CPI price inflation (i.e., excluding food and energy prices) for December 2025 stood at 2.6%, lower than the 3.0% core CPI inflation rate reported for September 2025, and down from 3.2% for December 2024.
When we have the intent and ability to hold loans for the foreseeable future or to maturity/payoff, such loans are classified as held-for-investment. When we have the intent to sell loans, such loans are classified as held-for-sale.
When we have the intent and ability to hold loans for the foreseeable future or to maturity/payoff, such loans are classified as HFI. When we have the intent to sell loans, such loans are classified as HFS.
The assets are measured based on the fair value of the more observable liabilities of such trusts under the CFE election. The 83 obligations and liabilities of CFEs may only be satisfied with the assets of the respective consolidated CFEs, and creditors of the CFE do not have recourse to Rithm Capital Corp.
Under the CFE election, these assets are measured based on the fair value of the more observable liabilities of the consolidated CFEs. The assets of the consolidated CFEs may be used only to settle the obligations of the respective CFEs, and creditors of the CFEs do not have recourse to Rithm Capital Corp.
As of December 31, 2024, our maximum exposure to loss of $830.9 million represents the potential loss of current investments or income and fees receivables from these entities, as well as the obligation to repay unearned revenues, primarily incentive income subject to clawback, in the event of any future fund losses, as well as unfunded commitments to certain funds.
As of December 31, 2025, our maximum exposure to loss of $1.4 billion represents the potential loss of current investments or income and fees receivable from these entities, as well as the obligation to repay unearned revenues, primarily incentive income subject to clawback, in the event of any future fund losses, as well as unfunded commitments to certain funds.
The table below summarizes Rithm Capital’s assets by category as of December 31, 2024: MTM Assets OCI Assets Cost Assets MSRs and MSR financing receivables Government and government-backed securities, available-for-sale Residential mortgage loans, HFS, at lower of cost or fair value Government and government-backed securities, at fair value SFR properties Residential mortgage loans, HFI, at fair value Treasury securities, held-to-maturity Residential mortgage loans, HFS, at fair value Servicer advances receivable Consumer loans, at fair value Reverse repurchase agreements Residential transition loans, at fair value Certain Assets Included in Other Assets, Primarily: Residential mortgage loans subject to repurchase Deferred tax asset Certain Assets Included in Other Assets, Primarily: Income and fees receivable CLOs, at fair value Trade receivables Derivative and hedging assets REO Equity investments, at fair value Other assets, except as noted otherwise Excess MSRs, at fair value Non-Agency RMBS, at fair value Notes receivable, at fair value Servicer advance investments Investments of consolidated CFEs, at fair value RECENT ACCOUNTING PRONOUNCEMENTS See Note 2 to our consolidated financial statements. 92 RESULTS OF OPERATIONS Factors Impacting Comparability of Our Results of Operations Our net income is primarily generated from net interest income, servicing fee revenue less cost and gain on sale of loans less cost to originate.
The table below summarizes Rithm Capital’s assets by category as of December 31, 2025: MTM Assets OCI Assets Cost Assets MSRs and MSR financing receivables Government and government-backed securities, available-for-sale Residential mortgage loans, HFS, at lower of cost or fair value Government and government-backed securities, at fair value Real estate, net Residential mortgage loans, HFI, at fair value Treasury securities, held-to-maturity Residential mortgage loans, HFS, at fair value Servicer advances receivable Consumer loans, at fair value Reverse repurchase agreements Residential transition loans, at fair value Certain Assets Included in Other Assets, Primarily: Residential mortgage loans subject to repurchase Deferred tax asset Insurance company investments, at fair value Income and fees receivable Certain Assets Included in Other Assets, Primarily: Trade receivables CLOs, at fair value Other assets, except as noted otherwise Derivative and hedging assets Equity investments, at fair value Excess MSRs, at fair value Non-Agency securities, at fair value Notes receivable, at fair value Servicer advance investments Investments of consolidated entities, at fair value RECENT ACCOUNTING PRONOUNCEMENTS See Note 2 to our consolidated financial statements in this Annual Report on Form 10-K. 99 RESULTS OF OPERATIONS Factors Impacting Comparability of Our Results of Operations Our net income is primarily generated from net interest income, servicing fee revenue less cost to service, gain on sale of loans less cost to originate, asset management fees less expenses, and property rental revenue less operating costs.
The difference between the collateral coverage percentage and the collateral trigger is referred to as a “margin holiday.” See Note 18 to our consolidated financial statements for further information regarding financing of our Non-Agency RMBS, including a summary of activity related to financing from December 31, 2023 to December 31, 2024.
The difference between the collateral coverage percentage and the collateral trigger is commonly referred to as a “margin holiday.” See Note 17 to our consolidated financial statements for additional information regarding our non-Agency securities financing arrangements, including a summary of related activity from December 31, 2024 to December 31, 2025.
(D) Represents the annualized rate of the prepayments during the quarter as a percentage of the total principal balance of the pool. (E) Represents the annualized rate of the voluntary prepayments during the quarter as a percentage of the total principal balance of the pool.
(D) The conditional prepayment rate (“CPR”) represents the annualized rate of the prepayments during the quarter as a percentage of the total principal balance of the pool. (E) The conditional repayment rate (“CRR”) represents the annualized rate of the voluntary prepayments during the quarter as a percentage of the total principal balance of the pool.
Quantitative and Qualitative Disclosures About Market Risk.” 102 OFF-BALANCE SHEET ARRANGEMENTS We have material off-balance sheet arrangements related to our non-consolidated securitizations of residential mortgage loans treated as sales in which we retained certain interests.
These risks are further described under “Quantitative and Qualitative Disclosures About Market Risk.” OFF-BALANCE SHEET ARRANGEMENTS We have material off-balance sheet arrangements related to our non-consolidated securitizations of residential mortgage loans treated as sales in which we retained certain interests.
On August 5, 2022, we entered into a Distribution Agreement to sell shares of our common stock, par value $0.01 per share, having an aggregate offering price of up to $500.0 million, from time to time, through an “at-the-market” equity offering program (the “ATM Program”).
On August 5, 2022, we entered into a Distribution Agreement (as amended by that Amendment No. 1 to the Distribution Agreement, dated August 1, 2025) to sell shares of our common stock, par value $0.01 per share, having an aggregate offering price of up to $500.0 million, from time to time, through an “at-the-market” equity offering program (the “2022 ATM Program”).
INFLATION Virtually all of our assets and liabilities are financial in nature. As a result, interest rates and other factors affect our performance more so than inflation, although inflation rates can often have a meaningful influence over the direction of interest rates.
As a result, interest rates and other factors affect our performance more so than inflation, although inflation rates can often have a meaningful influence over the direction of interest rates.
Our loan offerings include residential mortgage loans conforming to the underwriting standards of the GSEs and Ginnie Mae, government-insured residential mortgage loans which are insured by the FHA, VA and USDA, Non-Agency securities and Non-QM loans through our SMART Loan Series.
Our loan offerings include residential mortgage loans that conform to the underwriting standards of the GSEs and Ginnie Mae, government-insured residential mortgage loans insured by the FHA, the VA and the USDA, Non-QM loans originated through our SMART Loan Series, and certain non-Agency loan products.
(D) Excludes MSR revenue on recaptured loan volume reported in the servicing segment. Total gain on originated residential mortgage loans, HFS, net increased $205.3 million to $688.8 million for the year ended December 31, 2024 compared to the year ended December 31, 2023.
(D) Excludes MSR revenue on recaptured loan volume reported in the servicing segment. Total gain on originated residential mortgage loans, HFS, net increased $5.6 million to $694.4 million for the year ended December 31, 2025 compared to the year ended December 31, 2024.
Effective September 30, 2023, FHFA and Ginnie Mae capital and liquidity standards require all loan sellers and servicers to maintain a minimum tangible net worth of $2.5 million plus 25 bps for Fannie Mae, Freddie Mac and private label servicing UPB plus 35 bps for Ginnie Mae servicing UPB, a tangible net worth to tangible asset ratio of 6% or greater and a base liquidity of 3.5 bps of Fannie Mae, Freddie Mac and private label servicing UPB plus 10 bps for Ginnie Mae servicing UPB.
NRM and Newrez are expected to maintain compliance with applicable liquidity and net worth requirements. 104 The FHFA and Ginnie Mae capital and liquidity standards require all loan sellers and servicers to maintain a minimum tangible net worth of $2.5 million plus 25 bps for Fannie Mae, Freddie Mac and private label servicing UPB plus 35 bps for Ginnie Mae servicing UPB, a tangible net worth to tangible asset ratio of 6% or greater and a base liquidity of 3.5 bps of Fannie Mae, Freddie Mac and private label servicing UPB plus 10 bps for Ginnie Mae servicing UPB.
The following tables summarize the collateral characteristics of the loans underlying our direct Excess MSRs and the Excess MSRs held in a joint venture with Sculptor non-consolidated funds as of December 31, 2024 (dollars in thousands): Collateral Characteristics Current Carrying Amount Current Principal Balance Number of Loans WA FICO Score (A) WA Coupon WA Maturity (months) Average Loan Age (months) Three Month Average CPR (B) Three Month Average CRR (C) Three Month Average CDR (D) Three Month Average Recapture Rate Total / Weighted Average $ 369,162 $ 53,494,378 429,903 720 4.7 % 226 161 6.6 % 6.1 % 0.5 % 14.8 % Collateral Characteristics Delinquency Loans in Foreclosure REO Loans in Bankruptcy 90+ Days (E) Total / Weighted Average (F) 0.8 % 1.7 % 0.6 % 0.2 % (A) Based on the weighted average of information provided by the loan servicer on a monthly basis.
The following tables summarize the collateral characteristics of the loans underlying our direct Excess MSRs and the Excess MSRs held in a joint venture with Sculptor non-consolidated funds as of December 31, 2025 (dollars in thousands): Collateral Characteristics Current Carrying Amount Current Principal Balance Number of Loans WA FICO Score (A) WA Coupon WA Maturity (Months) Average Loan Age (Months) Three Month Average CPR (B) Three Month Average CRR (C) Three Month Average CDR (D) Three Month Average Recapture Rate Total / Weighted Average $ 323,564 $ 47,862,469 396,485 719 4.6 % 220 170 6.6 % 6.3 % 0.4 % 12.1 % Collateral Characteristics Delinquency Loans in Foreclosure REO Loans in Bankruptcy 90+ Days (E) Weighted Average (F) 0.8 % 1.5 % 0.2 % 0.6 % (A) Based on the weighted average of information provided by the loan servicer on a monthly basis.
For the third and fourth quarter 2024 dividends, the Series A accrued dividends at a percentage of the $25.00 liquidation preference per share of the Series A equal to, prior to September 30, 2024, a floating rate of a three-month London Interbank Offered Rate (“LIBOR”) plus a spread of 5.802% and, after September 30, 2024, a three-month Chicago Mercantile Exchange (“CME”) SOFR, plus a spread adjustment of 0.261%, plus a spread adjustment of 5.802%, respectively, and dividends on the Series B accumulated at a percentage of the $25.00 liquidation preference per share of the Series B preferred shares equal to, prior to September 30, 2024, a floating rate of a three-month LIBOR plus a spread of 5.640% and, after September 30, 2024, a three-month CME SOFR, plus a spread adjustment of 0.261%, plus a spread of 5.640%, respectively.
For the fourth quarter 2025 dividends, the Series A accrued dividends at a percentage of the $25.00 liquidation preference per share of the Series A equal to a three-month Chicago Mercantile Exchange (“CME”) SOFR, plus a spread adjustment of 0.261%, plus a spread of 5.802%, respectively, and dividends on the Series B accumulated at a percentage of the $25.00 liquidation preference per share of the Series B preferred shares equal to a three-month CME SOFR, plus a spread adjustment of 0.261%, plus a spread of 5.640%, respectively.
As described in Note 26, we have committed to purchase certain future servicer advances. The actual amount of future advances is subject to significant uncertainty. However, we currently expect that net recoveries of servicer advances will exceed net fundings for the foreseeable future. This expectation is based on judgments, estimates and assumptions, all of which are subject to significant uncertainty.
However, we currently expect that net recoveries of servicer advances will exceed net fundings for the foreseeable future. This expectation is based on judgments, estimates and assumptions, all of which are subject to significant uncertainty.
(B) Represents Excess MSRs serviced by Mr. Cooper. We also invested in related servicer advance investments, including the base fee component of the related MSR (Note 14) on $13.3 billion UPB underlying these Excess MSRs.
(B) Represents Excess MSRs serviced by Rocket. We also invested in related servicer advance investments, including the base fee component of the related MSR on $11.9 billion UPB underlying these Excess MSRs.
Lastly, each of Genesis and Rithm Capital had commitments to fund up to $1.3 billion and $0.2 million, respectively, of additional advances on existing mortgage loans as of December 31, 2024. 103 These commitments are generally subject to loan agreements with covenants regarding the financial performance of the customer and other terms regarding advances that must be met before Genesis and Rithm Capital fund the commitment.
Genesis had commitments to fund up to $1.8 billion of additional advances on existing mortgage loans as of December 31, 2025. These commitments are generally subject to loan agreements with covenants regarding the financial performance of the customer and other terms regarding advances that must be met before Genesis funds the commitment.
We recognize income from investment in MSRs and MSR financing receivables as servicing revenue, net which comprises (i) income from the MSRs, plus or minus (ii) the mark-to-market on the MSRs including change in fair value due to realization of cash flows. 89 Government-Backed Securities, Non-Agency RMBS and Other Securities Our securities portfolio primarily consists of Agency RMBS and Non-Agency residential and other securities.
We recognize income from investment in MSRs and MSR financing receivables as servicing revenue, net which comprises (i) income from the MSRs, plus or minus (ii) the mark-to-market on the MSRs including change in fair value due to realization of cash flows.
As of December 31, 2024, our total outstanding debt obligations amounted to $32.8 billion and are comprised of secured financing agreements, secured notes and bonds payable, unsecured notes and notes payable of consolidated CFEs. Certain debt obligations are the obligations of our consolidated subsidiaries, which own the related collateral.
As of December 31, 2025, our total outstanding debt obligations amounted to $35.4 billion and are comprised of secured financing agreements, secured notes and bonds payable, Senior Unsecured Notes (as defined below) and notes payable of consolidated entities. Certain debt obligations are the obligations of our consolidated subsidiaries, which own the related collateral.
In addition, the Consumer Loan Companies have invested in loans with an aggregate of $150.2 million of unfunded and available revolving credit privileges as of December 31, 2024. However, under the terms of these loans, requests for draws may be denied and unfunded availability may be terminated at management’s discretion.
In addition, those certain limited liability companies which hold certain of our consumer loan portfolios have invested in loans with an aggregate of $131.4 million of unfunded and available revolving credit privileges as of December 31, 2025. However, under the terms of these loans, requests for draws may be denied and unfunded availability may be terminated at management’s discretion.
See Note 8 to our consolidated financial statements for additional information including a summary of activity related to consumer loans from December 31, 2023 to December 31, 2024. Single-Family Rental Properties We continue to invest in our SFR portfolio by acquiring and maintaining a geographically diversified portfolio of high-quality single-family homes and leasing them to high-quality residents.
See Note 8 to our consolidated financial statements for additional information, including a summary of activity related to consumer loans from December 31, 2024 to December 31, 2025. Single-Family Rental Properties We invest in and manage a geographically diversified portfolio of SFR properties.
Although available financing is uncommitted, Rithm Capital’s unused borrowing capacity is available if it has additional eligible collateral to pledge and meets other borrowing conditions as set forth in the applicable agreements, including any applicable advance rate.
Although available financing is uncommitted, Rithm Capital’s unused borrowing capacity is available if Rithm Capital has additional eligible collateral to pledge and meets other borrowing conditions as set forth in the applicable agreements, including any applicable advance rate. See “Risk Factors—Risks Related to Our Financing Arrangements” for further discussion.
Department of Labor: December 31, 2024 September 30, 2024 June 30, 2024 March 31, 2024 December 31, 2023 Unemployment rate 4.1 % 4.1 % 4.1 % 3.9 % 3.8 % The following table summarizes the annualized 10-year U.S.
The following table summarizes the annualized U.S. unemployment rate according to the U.S. Department of Labor: December 31, 2025 September 30, 2025 June 30, 2025 March 31, 2025 December 31, 2024 Unemployment rate 4.4 % 4.4 % 4.1 % 4.2 % 4.1 % 79 The following table summarizes the annualized 10-year U.S.
As of December 31, 2024, we did not have any other commitments or obligations, including contingent obligations, arising from arrangements with unconsolidated entities or persons that have or are reasonably likely to have a material current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, cash requirements or capital resources.
As of December 31, 2025, we did not have any other commitments or obligations, including contingent obligations, arising from arrangements with unconsolidated entities or persons that have or are reasonably likely to have a material current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, cash requirements or capital resources. 111 CONTRACTUAL OBLIGATIONS As of December 31, 2025, we had the following material contractual obligations: Contract Terms Debt Obligations: Secured Financing Agreements Described under Note 17 to our consolidated financial statements.
We finance a significant portion of our investments in residential mortgage loans with borrowings under repurchase agreements. These recourse borrowings generally bear variable interest rates offered by the counterparty for the term of the proposed repurchase transaction, generally less than one year, of a specified margin over SOFR.
We finance a significant portion of our residential mortgage loan investments through repurchase agreements. These recourse borrowings generally bear variable interest rates for the term of the applicable repurchase transaction (typically less than one year) at a specified margin over SOFR.
The remaining collateral is not subject to daily margin calls unless the collateral coverage percentage, a quotient expressed as a percentage equal to the current carrying value of outstanding debt divided by the market value of the underlying collateral, becomes greater than or equal to a collateral trigger.
The remaining collateral generally is not subject to daily margin calls unless the collateral coverage percentage—calculated as the current carrying value of outstanding debt divided by the market value of the underlying collateral—reaches or exceeds a specified collateral trigger.
Agency RMBS are securities issued or guaranteed as to principal and/or interest by a federally chartered corporation, such as the GSEs, or an agency of the U.S. Government, such as Ginnie Mae. Non-Agency securities are not issued or guaranteed by the GSEs or Ginnie Mae and are therefore subject to credit risk.
Government-Backed Securities, Non-Agency Securities and Other Securities Our securities portfolio primarily consists of Agency RMBS and non-Agency residential and other securities. Agency RMBS are securities issued or guaranteed as to principal and/or interest by a federally chartered corporation, such as the GSEs, or an agency of the U.S. Government, such as Ginnie Mae.
As of December 31, 2024, we had approximately $4.7 billion outstanding face amount of loans included in residential mortgage loans, HFS and residential mortgage loans, HFI, at fair value on the consolidated balance sheets (see below). These investments were financed with secured financing agreements with an aggregate face amount of approximately $4.2 billion.
As of December 31, 2025, we held approximately $5.8 billion of outstanding face amount of residential mortgage loans classified as residential mortgage loans, HFS and residential mortgage loans, HFI, at fair value on our consolidated balance sheets (see below). These investments were financed in part through secured financing agreements with an aggregate face amount of approximately $5.1 billion.
(E) Includes $245.8 million and $281.6 million UPB of Ginnie Mae early buyout options performing and non-performing loans, respectively, on accrual status as contractual cash flows are guaranteed by the FHA. We consider the delinquency status, LTV ratios and geographic area of residential mortgage loans as our credit quality indicators.
(E) Includes $152.0 million and $317.1 million UPB of Ginnie Mae early buyout options of performing and non-performing loans, respectively, on accrual status as contractual cash flows are guaranteed by the FHA. We evaluate the credit quality of our residential mortgage loan portfolio using indicators that include delinquency status, LTV ratios and geographic concentration.
As of December 31, 2024, our total borrowing capacity under our secured financing arrangements was $23.9 billion with $8.8 billion of available financing under these arrangements.
As of December 31, 2025, our total borrowing capacity under our secured financing arrangements was $25.2 billion with $7.7 billion of available financing under these arrangements.
During the year ended December 31, 2024, 6.1 million shares of common stock were issued under the ATM Program. Additionally, Rithm Capital’s stock repurchase program provides for flexibility to return capital when deemed accretive to shareholders. During the year ended December 31, 2024, we did not repurchase any shares of our common stock or our preferred stock.
During the year ended December 31, 2025, 32.9 million shares of common stock were issued under the ATM Program. Additionally, Rithm Capital’s stock repurchase program provides flexibility to return capital when deemed accretive to shareholders.
We seek to maintain adequate cash reserves and other sources of available liquidity to meet any margin calls or related requirements resulting from decreases in value related to a reasonably possible (in our opinion) change in interest rates.
We seek to maintain adequate cash reserves and other sources of available liquidity to meet any margin calls or related requirements resulting from decreases in value related to a reasonably possible (in our opinion) change in interest rates. 107 Our ability to obtain borrowings and to raise future equity capital is dependent on our ability to access borrowings and the capital markets on attractive terms.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

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Biggest changeA portion of these assets may be subject to legal and other restrictions on resale or otherwise be less liquid than publicly-traded securities. The illiquidity of our assets may make it difficult for us to sell such assets if the need or desire arises, including in response to changes in economic and other conditions.
Biggest changeThe illiquidity of our assets may make it difficult for us to sell such assets if the need or desire arises, including in response to changes in economic and other conditions. See Note 18 to our consolidated financial statements for a sensitivity analysis for MSRs and MSR financing receivables.
For a further discussion of how market risk may affect our financial position or results of operations, please refer to “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Critical Accounting Policies and Use of Estimates.” Interest Rate Risk Changes in interest rates, including changes in expected interest rates or “yield curves,” affect our investments in various ways, the most significant of which are discussed below.
For a further discussion of how market risk may affect our financial position or results of operations, please refer to “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Critical Accounting Policies and Use of Estimates.” 112 Interest Rate Risk Changes in interest rates, including changes in expected interest rates or “yield curves,” affect our investments in various ways, the most significant of which are discussed below.
The effects of such a decrease in values on our financial position, results of operations and liquidity are discussed below under “—Prepayment Rate Exposure.” 104 Changes in the value of our assets could affect our ability to borrow and access capital.
The effects of such a decrease in values on our financial position, results of operations and liquidity are discussed below under “—Prepayment Rate Exposure.” Changes in the value of our assets could affect our ability to borrow and access capital.
With respect to a significant portion of our MSRs and Excess MSRs, we have recapture agreements, as described in Note 5 and Note 13 to our consolidated financial statements. These recapture agreements help to protect these investments from the impact of increasing prepayment rates.
With respect to a significant portion of our MSRs and Excess MSRs, we have recapture agreements, as described in Note 5 to our consolidated financial statements. These recapture agreements help to protect these investments from the impact of increasing prepayment rates.
We seek to enter into such recapture agreements in order to protect our returns in the event of a rise in voluntary prepayment rates. Credit Risk We are subject to varying degrees of credit risk in connection with our assets.
We seek to enter into such recapture agreements in order to protect our returns in the event of a rise in voluntary prepayment rates. 114 Credit Risk We are subject to varying degrees of credit risk in connection with our assets.
Generally, in a declining interest rate environment, residential mortgage loan prepayment rates increase which in turn would cause the value of MSRs, MSR financing receivables, Excess MSRs and the rights to the base fee components of MSRs to decrease, because the duration of the cash flows we are entitled to receive becomes shortened, and the value of loans and Non-Agency RMBS to increase, because we generally acquired these investments at a discount whose recovery would be accelerated.
Generally, in a declining interest rate environment, residential mortgage loan prepayment rates increase which in turn would cause the value of MSRs, MSR financing receivables, Excess MSRs and the rights to the base fee components of MSRs to decrease, because the duration of the cash flows we are entitled to receive becomes shortened, and the value of loans and non-Agency securities to increase, because we generally acquired these investments at a discount whose recovery would be accelerated.
These impacts could be at least partially offset by potential declines in the value of Non-Agency RMBS related to the call rights, which could then be acquired more cheaply, and in credit spreads, which could offset the impact of rising market interest rates on the value of fixed-rate loans to some degree.
These impacts could be at least partially offset by potential declines in the value of non-Agency securities related to the call rights, which could then be acquired more cheaply, and in credit spreads, which could offset the impact of rising market interest rates on the value of fixed-rate loans to some degree.
We do not expect to encounter credit risk in our Agency RMBS, and we do anticipate credit risk related to Non-Agency RMBS, residential mortgage loans and consumer loans.
We do not expect to encounter credit risk in our Agency RMBS, and we do anticipate credit risk related to non-Agency securities, residential mortgage loans and consumer loans.
We may also invest in loans and Non-Agency RMBS which represent “first loss” pieces; in other words, they do not benefit from credit support although we believe they predominantly benefit from underlying collateral value in excess of their carrying amounts.
We may also invest in loans and non-Agency securities which represent “first loss” pieces; in other words, they do not benefit from credit support although we believe they predominantly benefit from underlying collateral value in excess of their carrying amounts.
Conversely, in an increasing interest rate environment, prepayment rates decrease which in turn would cause the value of MSRs, MSR financing receivables, Excess MSRs and the rights to the base fee components of MSRs to increase and the value of loans and Non-Agency RMBS to decrease.
Conversely, in an increasing interest rate environment, prepayment rates decrease which in turn would cause the value of MSRs, MSR financing receivables, Excess MSRs and the rights to the base fee components of MSRs to increase and the value of loans and non-Agency securities to decrease.
Prepayment Rate Exposure Prepayment rates significantly affect the value of MSRs and MSR financing receivables, Excess MSRs, the base fee component of MSRs (which we own as part of our servicer advance investments), Non-Agency RMBS and loans, including consumer loans.
Prepayment Rate Exposure Prepayment rates significantly affect the value of MSRs and MSR financing receivables, Excess MSRs, the base fee component of MSRs (which we own as part of our servicer advance investments), non-Agency securities and loans, including consumer loans.
For our Non-Agency RMBS and loans, higher default rates can lead to greater loss of principal. For our call rights, higher delinquencies and defaults could reduce the value of the underlying loans, therefore reducing or eliminating the related potential profit.
For our non-Agency securities and loans, higher default rates can lead to greater loss of principal. For our call rights, higher delinquencies and defaults could reduce the value of the underlying loans, therefore reducing or eliminating the related potential profit.
The table below provides comparative estimated changes in our book value based on a parallel shift in the yield curve (assuming an unchanged mortgage basis) including changes in our book value resulting from potential related changes in discount rates: Estimated Change in Book Value (in $ millions) (A) Interest rate change (bps) December 31, 2024 December 31, 2023 +50bps +27.4 +339.3 +25bps +24.5 +171.2 -25bps -46.3 -171.2 -50bps -114.3 -347.4 (A) Amounts shown are pre-tax.
The table below provides comparative estimated changes in our book value based on a parallel shift in the yield curve (assuming an unchanged mortgage basis), including changes in our book value resulting from potential related changes in discount rates: Estimated Change in Book Value (in $ millions) (A) Interest Rate Change (bps) December 31, 2025 December 31, 2024 +50bps -41.2 +27.4 +25bps +7.7 +24.5 -25bps -64.5 -46.3 -50bps -185.6 -114.3 (A) Amounts shown are pre-tax.
Market factors that could influence the degree of the impact of credit risk on our investments include (i) unemployment levels and the general economy, which impact borrowers’ ability to make payments on their loans, (ii) home prices, which impact the value of collateral underlying residential mortgage loans, (iii) the availability of credit, which impacts borrowers’ ability to refinance and (iv) other factors, all of which are beyond our control. 106 Liquidity Risk The assets that comprise our asset portfolio are generally not publicly traded.
Market factors that could influence the degree of the impact of credit risk on our investments include (i) unemployment levels and the general economy, which impact borrowers’ ability to make payments on their loans, (ii) home prices, which impact the value of collateral underlying residential mortgage loans, (iii) the availability of credit, which impacts borrowers’ ability to refinance and (iv) other factors, all of which are beyond our control.
We believe our consumer loan investments generally have limited interest rate sensitivity given that our portfolio is mostly composed of seasoned loans with credit-impaired borrowers who are paying fixed-rates, who we believe are relatively unlikely to change their prepayment patterns based on changes in interest rates.
We believe our consumer loan investments generally have limited interest rate sensitivity given that our portfolio is mostly composed of seasoned loans with credit-impaired borrowers who are paying fixed-rates, who we believe are relatively unlikely to change their prepayment patterns based on changes in interest rates. 113 Interest rates are highly sensitive to many factors, including fiscal and monetary policies and domestic and international economic and political considerations, as well as other factors beyond our control.
The mortgage basis is also correlated with other spread products such as corporate credit. 105 The table below provides comparative estimated changes in our book value based on changes in mortgage basis: Estimated Change in Book Value (in $ millions) (A) Mortgage basis change (bps) December 31, 2024 December 31, 2023 +20bps -2.8 +31.2 +10bps -1.4 +15.7 -10bps +1.4 -15.7 -20bps +2.8 -32 (A) Amounts shown are pre-tax.
The table below provides comparative estimated changes in our book value based on changes in mortgage basis: Estimated Change in Book Value (in $ millions) (A) Mortgage Basis Change (bps) December 31, 2025 December 31, 2024 +20bps +66.8 -2.8 +10bps +33.4 -1.4 -10bps -33.4 +1.4 -20bps -66.8 +2.8 (A) Amounts shown are pre-tax.
Removed
Interest rates are highly sensitive to many factors, including fiscal and monetary policies and domestic and international economic and political considerations, as well as other factors beyond our control.
Added
The mortgage basis is also correlated with other spread products such as corporate credit.
Removed
The recent transition from LIBOR to SOFR involves operational risks, including, but not limited to, reduced experience understanding and modeling SOFR-based assets and liabilities which in turn increases the difficulty of investing, hedging and risk management.
Added
Liquidity Risk The assets that comprise our asset portfolio are generally not publicly traded. A portion of these assets may be subject to legal and other restrictions on resale or otherwise be less liquid than publicly-traded securities.
Removed
See Note 19 to our consolidated financial statements for a sensitivity analysis for MSRs and MSR financing receivables. 107
Added
Real Estate Risk Residential and commercial property values are subject to volatility and may be affected adversely by a number of factors, including, but not limited to, national, regional and local economic conditions (which may be adversely affected by industry slowdowns, public health crises and other factors); local real estate conditions (such as an oversupply of housing and commercial and residential vacancies and corresponding impacts on market rents); construction quality, age and design; demographic factors; and retroactive changes to building or similar codes.
Added
Increases in interest rates will result in lower refinancing volume and home price increases will slow. Decreases in property values may cause us to suffer losses. 115

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