Mortgage servicing valuation hits earnings in first quarter, with NewRez originations also slowing
Rithm Capital reported a steep drop in earnings at its mortgage and servicing business during the first quarter of 2025, as a significant mark-to-market loss on mortgage servicing rights (MSRs) hit the bottom line.
Income from Rithm’s mortgage and servicing operations fell 53.6% from the previous quarter to $146.7 million, largely due to a $180.1 million MSR valuation loss, including the impact of hedging. The company ended the quarter with a servicing portfolio of $533 billion in unpaid principal balance.
Meanwhile, mortgage originations at Rithm’s lending arm, NewRez, also slowed.
NewRez originated $11.8 billion in mortgages in the first quarter, down 31.8% from the previous quarter, with most production coming from the correspondent channel.
Despite the slowdown, NewRez’s gain-on-sale margin ticked up slightly to 1.37% from 1.31%, but pre-tax income still dropped to $65.1 million from $95.8 million.
Genesis Capital Expansion Genesis Capital, Rithm’s transitional lending platform, recorded $22.4 million in pre-tax income excluding portfolio valuation losses. Origination volume hit a first-quarter record of $895 million, up 7% year-over-year, as Genesis grew its sponsor base to 190, a 37% increase from a year earlier.
Sculptor Capital Management, Rithm’s alternative asset management business, grew assets under management to $35 billion. Sculptor raised $1.4 billion in new fundraising during the quarter, including $870 million for Real Estate Fund V and $420 million through a new European collateralized loan obligation (CLO). A subsequent closing for Sculptor’s Tactical Credit Fund added another $900 million in assets just after quarter-end.
Read more: Rithm Capital lands $639 million deal to buy Sculptor Capital Management
Overall, Rithm reported net income of $88 million for the first quarter, down sharply from $204 million at the end of 2024. Excluding mark-to-market impacts and other adjustments, the company’s pre-tax operating income stood at $255 million.
The company also highlighted several milestones during the quarter. Rithm completed a $878 million secured financing backed by MSRs, the largest MSR debt issuance to date. It also completed two non-qualified mortgage securitizations totaling $634 million in unpaid principal balance.
Additionally, the firm sponsored the $230 million initial public offering of Rithm Acquisition Corp., a special purpose acquisition company targeting real estate and financial services sectors.
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