Rithm Capital reported $315.3 million in third-quarter earnings available for distribution, or $0.55 per diluted common share, as a $121.3 million gain in the fair value of mortgage servicing rights and MSR financing receivables, net of economic hedges, helped lift net servicing revenue above the previous quarter. Investing.com reported that the per-share result topped analysts’ $0.49 consensus.
Net servicing revenue reached $716.6 million, up from $221.8 million in the second quarter. The total includes servicing fees and interest income, as well as changes in the fair value of mortgage servicing rights (MSRs) and MSR financing receivables, net of economic hedges. Those fair-value changes produced a $121.3 million gain in the third quarter, compared with a $392.9 million loss in the second quarter. Servicing fees and interest income totaled $595.4 million, down from $614.6 million. The increase in the total came as the fair-value component shifted to a gain while fees and interest income declined.
Total revenue rose to $1.76 billion from $1.28 billion in the second quarter. Net income attributable to common stockholders under generally accepted accounting principles (GAAP) was $217.1 million, or $0.38 per diluted common share, compared with $20.2 million, or $0.04 per diluted common share, in the prior quarter. Earnings available for distribution, a non-GAAP measure, fell from $338.9 million, or $0.60 per diluted common share. The two profit measures therefore moved in opposite directions from the second quarter: GAAP net income increased, while distribution earnings declined.
Newrez LLC (Newrez), Rithm’s mortgage origination and servicing platform, funded $12.9 billion in loan production. That was down 19% from the second quarter and 21% from a year earlier. At quarter-end, Rithm reported $878.9 billion in total servicing unpaid principal balance (UPB), including $282.8 billion of third-party servicing. The results combine higher revenue and GAAP net income with lower distribution earnings and loan production.
