New Residential already seeing the benefits of Caliber deal

NRIC's earnings rose to $177.5 million in Q3, up 136% from Q2.


Powerhouse lender/servicer New Residential Investment Corp. had an impressive third quarter, with reported earnings of $177.5 million from July to September, up 136% quarter-over-quarter.

According to NRIC’s third quarter earnings released on Tuesday, the growth was spurred mainly by the REITs acquisition of mortgage lender Caliber Home Loans in August.

The acquisition of Caliber cost NRIC approximately $1.68 billion. But the deal is already paying off, helping push the real estate investment trust’s total gain on sale margin to 1.61% in the third quarter, up from 1.31% in the second quarter.

NRIC noted in their earnings that channel diversification and the combination of Caliber and Newrez LLC, the REITs other mortgage arm, propelled gain-on-sale margins by 30 basis points.

Michael Nierenberg, who heads New Residential, gave the industry a glimpse of where things stand after the acquisition, noting in a statement that the “integration of Caliber and Newrez mortgage platforms is well underway.”

“We are thrilled to be working together as a united group to drive positive outcomes for borrowers and have already made significant progress in combining our teams, strategies and technologies to further position ourselves as a leader within the industry,” he said. ”We continue to believe that the combination of these two companies will allow our business to increase scale, efficiency, recapture, servicing and origination leadership.”

On the origination side of things, NRIC funded $34.5 billion mortgages in Q3, up 47% quarter-over-quarter and up 91% year-over-year. The company added that their third quarter earnings include Caliber’s financial results from Aug. 23 through Sept. 30.

Meanwhile, the REIT’s servicing portfolio also fared well, growing to $476 billion in UPB, up 56% quarter-over-quarter, buoyed by the addition of $156 billion UPB of full mortgage servicing rights (MRSs) from the Caliber acquisition.

Overall, the company’s MSR portfolio totaled close to $635 billion as of Sept. 30, up from $489 billion the previous quarter.

“Our performance in the third quarter demonstrated the strength of our overall platform across complementary strategies,” said Nierenberg. “Third quarter earnings were supported by the addition of the Caliber Home Loans, Inc. platform, strength in our investment portfolio, slowing MSR amortization and higher recapture.”

NRIC announced in mid-October that it was not done with acquisitions, entering into an agreement to buy Genesis Capital LLC, a fix-and-flip lender, from Goldman Sachs.

New Residential said that it expects Genesis to originate close to $2 billion of loans in 2021 and that the fix-and-flip lender has originated over 12,000 loans since 2014.

“Over the last few years, we have evolved into a true asset creator, and, with the recently announced agreement to acquire Genesis Capital LLC, we plan to further our ability to create, retain and manage strong assets for our balance sheet,” the company’s CEO added.

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