Key Takeaways:
– Rithm Capital Corp. has acquired Computershare Mortgage Services Inc. for $720 million, which includes the purchase of Specialized Loan Servicing LLC (SLS).
– The acquisition allows Rithm to improve its fee-based income and expand its third-party business.
– The deal adds a mortgage servicing rights (MSR) portfolio of approximately $136 billion to Rithm, including $85 billion in third-party servicing and the SLS MSR portfolio.
– SLS will operate under NewRez, a subsidiary of Rithm, after the transaction’s closing in the first quarter of 2024.
– Rithm has been focused on building its servicing portfolio and adding origination capabilities through acquisitions.
– The integration of Caliber Home Loans, a previous acquisition, is complete and the distributed retail division has been rebranded as NewRez.
– Acquisitions can be complex, and it is important to make integrations simple and quick to adapt to market shifts and create efficiencies.
HousingWire:
CEDAR CREEK, Texas — Real estate investment trust Rithm Capital Corp.’s $720 million acquisition of Computershare Mortgage Services Inc. allows the company to improve its fee-based income as the deal includes the purchase of Specialized Loan Servicing LLC (SLS).
“The SLS platform for us is very much the focus as to how we think about fee-based income and third-party business,” Baron Silverstein, president at NewRez, a subsidiary of Rithm, said on Wednesday afternoon during the HousingWire Annual conference, held Oct. 10-12 at the Hyatt Lost Pines.
The deal will add a mortgage servicing rights (MSR) portfolio of about $136 billion in unpaid principal balance to Rithm. It includes $85 billion in third-party servicing and the SLS MSR portfolio.
Following the transaction’s closing, which is expected to happen in the first quarter of 2024, SLS will operate under NewRez, the eighth-largest U.S. mortgage lender in the first half of 2023, with a production of $17 billion in loans, per Inside Mortgage Finance data.
“When we think about the market that we’re today, then to the extent that we can diversify versus utilizing our capital to continue to grow our platform; doing fee-based business on a sub-servicing perspective; helping customers stay in their homes; and helping MSR owners or MSR investors service the asset that they own. That’s our core strategy from a growth perspective,” Silverstein added.
According to Silverstein, Rithm has focused on building its servicing portfolio and adding origination capabilities through acquisitions over the last few years.
For example, the Caliber Home Loans $1.675 billion deal in April 2021 brought in a large servicing portfolio, expanding the company’s direct-to-consumer and wholesale businesses and the distributed retail platform.
Silverstein said the integration of Caliber is “completely done,” with the company recently rebranding the distributed retail division into NewRez.
He also noted that acquisitions can be complicated. That’s why acquirers should make integrations as simple and quick as possible. The market can shift, and it could be challenging to add new products or create efficiencies amid legacy structures, he said.
In July, Rithm struck a deal to acquire Sculptor Capital Management Inc. for $639 million, leading to a dispute among the shareholders at the asset management firm.
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Property Chomp’s Take:
Hey there! Let’s talk about the recent acquisition made by Rithm Capital Corp. If you haven’t heard, they’ve acquired Computershare Mortgage Services Inc. in a deal worth $720 million. This acquisition is significant for Rithm as it allows them to enhance their fee-based income. One of the main attractions of this deal is the inclusion of Specialized Loan Servicing LLC (SLS), which is a key platform for Rithm in terms of fee-based income and third-party business.
During the HousingWire Annual conference, Baron Silverstein, President of NewRez, a subsidiary of Rithm, emphasized the importance of the SLS platform. He mentioned that it plays a crucial role in their strategy of diversifying their business, helping customers stay in their homes, and servicing assets for MSR owners or investors. This aligns with Rithm’s core growth strategy.
With this deal, Rithm will gain a mortgage servicing rights (MSR) portfolio of around $136 billion in unpaid principal balance. This includes $85 billion in third-party servicing and the SLS MSR portfolio. The transaction is expected to be completed in the first quarter of 2024, after which SLS will operate under NewRez.
Rithm has been actively building its servicing portfolio and expanding its origination capabilities through acquisitions. In April 2021, they closed a $1.675 billion deal to acquire Caliber Home Loans, which brought in a substantial servicing portfolio and expanded their direct-to-consumer and wholesale businesses. The integration of Caliber is now complete, with the distributed retail division rebranded as NewRez.
Silverstein emphasized the importance of making integrations as simple and quick as possible. Acquisitions can be complex, and it’s essential to streamline the process to adapt to market shifts and create efficiencies. Legacy structures can sometimes hinder the addition of new products or the implementation of improvements.
In July, Rithm also made headlines with its agreement to acquire Sculptor Capital Management Inc. for $639 million. However, this deal led to a dispute among shareholders at the asset management firm.
In conclusion, Rithm’s acquisition of Computershare Mortgage Services Inc., including the SLS platform, is a significant move that will bolster their fee-based income and expand their servicing portfolio. With a focus on growth and strategic acquisitions, Rithm aims to strengthen its position in the market and provide valuable services to customers and investors alike.
