Rithm Capital buys $1.4B in consumer loans from Goldman Sachs

Rithm is looking to move into direct lending as banks face tightening regulations

Rithm Capital, the Michael Nierenberg-headed real estate investment trust, appears to be getting into direct lending. The REIT bought $1.4 billion worth of unsecured personal loans from Goldman Sachs‘ Marcus business unit, Bloomberg reported Thursday.

Rithm bought the loans at a discount, Nierenberg told the outlet. The portfolio of loans Rithm purchased were to borrowers with an average FICO score of 735 and Nierenberg said he’s assuming losses between 8% and 10%.

“They’re pretty healthy borrowers who were just consolidating debt,” said Nierenberg. “It’s an opportunistic acquisition; we don’t see pools like this come across very often.”

Nierenberg told Bloomberg that Rithm is also looking to move into the direct lending space as banks face tightening regulations from Basel III.

“If the regional banks continue to pull back, it could be an opportunity,” he said.

Rithm, the REIT that operates mortgage lenders and servicers NewRezCaliber and several other businesses, said in May that it was considering spinning off the mortgage division to aid its flagging stock, which company executives described as “extremely undervalued.”

Meanwhile, Goldman Sachs has had to eat hundreds of millions of dollars on its consumer unit Marcus. A week ago the bank sold $1 billion of personal loans to alternative investment firm Varde Partners. Goldman also sold a $1 billion tranche in the first quarter, the investment bank disclosed in regulatory filings.

If it does get into direct consumer lending, Rithm will find some familiar faces in the independent mortgage bank world. Guaranteed Rate last year announced that it would be offering unsecured personal loans to qualifying customers at competitive rates.

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