[PART I - FINANCIAL INFORMATION](index=4&type=section&id=PART%20I%20-%20FINANCIAL%20INFORMATION) [Item 1. Unaudited Consolidated Financial Statements](index=4&type=section&id=Item%201.%20Unaudited%20Consolidated%20Financial%20Statements) Unaudited consolidated financial statements for Q2 2025 and 2024, covering balance sheets, income, equity, cash flows, and detailed accounting notes [Consolidated Balance Sheets](index=5&type=section&id=Consolidated%20Balance%20Sheets) | Metric | June 30, 2025 (Millions $) | December 31, 2024 (Millions $) | Change ($) | Change (%) | | :-------------------------------- | :-------------------------- | :----------------------------- | :--------- | :--------- | | Total Assets | 16,531.3 | 16,435.4 | 95.9 | 0.6 | | Total Liabilities | 15,999.5 | 15,942.5 | 57.0 | 0.4 | | Total Stockholders' Equity | 481.9 | 442.9 | 39.0 | 8.8 | - Total assets increased by **$95.9 million**, or **0.6%**, from December 31, 2024, to June 30, 2025, primarily driven by a **$758.1 million** increase in Loans held for sale and a **$166.4 million** increase in MSRs, partially offset by a **$654.5 million** decrease in Loans held for investment[11](index=11&type=chunk)[258](index=258&type=chunk) - Total liabilities increased by **$57.0 million**, or **0.4%**, mainly due to a **$667.3 million** increase in Mortgage loan financing facilities and a **$260.7 million** increase in MSR financing facilities, partially offset by a **$619.1 million** decrease in HMBS-related borrowings[11](index=11&type=chunk)[259](index=259&type=chunk) [Consolidated Statements of Operations](index=6&type=section&id=Consolidated%20Statements%20of%20Operations) | Metric | 3 Months Ended June 30, 2025 (Millions $) | 3 Months Ended June 30, 2024 (Millions $) | Change ($) | Change (%) | | :----------------------------------- | :------------------------------------ | :------------------------------------ | :--------- | :--------- | | Total Revenue | 246.6 | 246.4 | 0.2 | 0.1 | | MSR valuation adjustments, net | (27.3) | (32.7) | 5.4 | -16.5 | | Total Operating Expenses | 109.5 | 104.0 | 5.5 | 5.3 | | Income before income taxes | 22.8 | 13.5 | 9.3 | 68.9 | | Net income attributable to common stockholders | 20.5 | 10.5 | 10.0 | 95.2 | | Basic EPS | 2.55 | 1.34 | 1.21 | 90.3 | | Diluted EPS | 2.40 | 1.33 | 1.07 | 80.5 | | Metric | 6 Months Ended June 30, 2025 (Millions $) | 6 Months Ended June 30, 2024 (Millions $) | Change ($) | Change (%) | | :----------------------------------- | :------------------------------------ | :------------------------------------ | :--------- | :--------- | | Total Revenue | 496.4 | 485.5 | 10.9 | 2.2 | | MSR valuation adjustments, net | (66.2) | (44.3) | -21.9 | 49.4 | | Total Operating Expenses | 229.4 | 208.4 | 21.0 | 10.1 | | Income before income taxes | 32.0 | 45.3 | -13.3 | -29.4 | | Net income attributable to common stockholders | 41.6 | 40.6 | 1.0 | 2.5 | | Basic EPS | 5.23 | 5.23 | 0.00 | 0.0 | | Diluted EPS | 4.90 | 5.09 | -0.19 | -3.7 | - Net income attributable to common stockholders increased by **$10.0 million** (**95.2%**) for the three months ended June 30, 2025, compared to the same period in 2024, primarily due to higher income before income taxes and lower MSR valuation adjustments[13](index=13&type=chunk) [Consolidated Statements of Comprehensive Income](index=7&type=section&id=Consolidated%20Statements%20of%20Comprehensive%20Income) | Metric | 3 Months Ended June 30, 2025 (Millions $) | 3 Months Ended June 30, 2024 (Millions $) | Change ($) | Change (%) | | :----------------------- | :------------------------------------ | :------------------------------------ | :--------- | :--------- | | Net income | 21.5 | 10.5 | 11.0 | 104.8 | | Comprehensive income | 21.6 | 11.8 | 9.8 | 83.1 | | Metric | 6 Months Ended June 30, 2025 (Millions $) | 6 Months Ended June 30, 2024 (Millions $) | Change ($) | Change (%) | | :----------------------- | :------------------------------------ | :------------------------------------ | :--------- | :--------- | | Net income | 43.6 | 40.6 | 3.0 | 7.4 | | Comprehensive income | 43.8 | 42.0 | 1.8 | 4.3 | [Consolidated Statements of Changes in Equity](index=8&type=section&id=Consolidated%20Statements%20of%20Changes%20in%20Equity) | Metric | June 30, 2025 (Millions $) | December 31, 2024 (Millions $) | Change ($) | Change (%) | | :-------------------------------- | :-------------------------- | :----------------------------- | :--------- | :--------- | | Total Stockholders' Equity | 481.9 | 442.9 | 39.0 | 8.8 | | Accumulated Deficit | (74.0) | (117.6) | 43.6 | -37.1 | | Common Stock Shares Outstanding | 8,055,222 | 7,873,053 | 182,169 | 2.3 | - Total stockholders' equity increased by **$39.0 million**, or **8.8%**, from December 31, 2024, to June 30, 2025, primarily due to **$43.6 million** in net income, partially offset by preferred stock dividends and the exercise of common stock warrants[19](index=19&type=chunk)[260](index=260&type=chunk) - The accumulated deficit improved by **$43.6 million**, moving from **$(117.6) million** at December 31, 2024, to **$(74.0) million** at June 30, 2025, reflecting the net income generated during the period[19](index=19&type=chunk) [Consolidated Statements of Cash Flows](index=10&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows) | Cash Flow Activity | 6 Months Ended June 30, 2025 (Millions $) | 6 Months Ended June 30, 2024 (Millions $) | Change ($) | | :----------------------------------- | :------------------------------------ | :------------------------------------ | :--------- | | Net cash used in operating activities | (746.9) | (375.0) | (371.9) | | Net cash provided by investing activities | 886.5 | 128.4 | 758.1 | | Net cash provided by (used in) financing activities | (148.6) | 240.8 | (389.4) | | Net decrease in cash, cash equivalents and restricted cash | (9.0) | (5.7) | (3.3) | | Cash, cash equivalents and restricted cash at end of period | 256.6 | 249.4 | 7.2 | - Operating activities used **$746.9 million** in cash for the six months ended June 30, 2025, a significant increase from **$375.0 million** used in the prior year, primarily due to higher net cash paid on loans held for sale and increased originated MSRs[22](index=22&type=chunk)[395](index=395&type=chunk) - Investing activities provided **$886.5 million** in cash, a substantial increase from **$128.4 million** in the prior year, mainly driven by **$1,018 million** net cash received from HECM reverse mortgages, partially offset by MSR investments[22](index=22&type=chunk)[396](index=396&type=chunk) - Financing activities used **$148.6 million** in cash, a shift from providing **$240.8 million** in the prior year, largely due to net repayments on HMBS-related borrowings and advance match funded liabilities, despite drawdowns on MSR and mortgage loan financing facilities[22](index=22&type=chunk)[397](index=397&type=chunk) [Notes to Unaudited Consolidated Financial Statements](index=12&type=section&id=Notes%20to%20Unaudited%20Consolidated%20Financial%20Statements) [Note 1 - Organization and Basis of Presentation](index=12&type=section&id=Note%201%20-%20Organization%20and%20Basis%20of%20Presentation) - Onity Group Inc. is a non-bank mortgage servicer and originator, operating through its primary subsidiary PHH Mortgage Corporation, with approximately **4,200 employees** globally, including significant operations in India and the Philippines[24](index=24&type=chunk)[28](index=28&type=chunk) - The company performs primary and subservicing activities for its MSR portfolio and on behalf of other servicers and investors, including GSEs and Ginnie Mae, and originates various types of mortgage loans[26](index=26&type=chunk)[27](index=27&type=chunk) - Onity completed the sale of its **15%** equity interest in MAV Canopy HoldCo I, LLC, effective November 27, 2024[25](index=25&type=chunk) [Note 2 – Securitizations and Variable Interest Entities](index=13&type=section&id=Note%202%20%E2%80%93%20Securitizations%20and%20Variable%20Interest%20Entities) - Onity securitizes and sells forward loans, generally retaining MSRs, and accounts for these as sales. For reverse mortgages, transfers are accounted for as secured financings, with HECM loans classified as Loans held for investment[37](index=37&type=chunk)[43](index=43&type=chunk) | Metric | June 30, 2025 (Millions $) | December 31, 2024 (Millions $) | | :----------------------------------- | :-------------------------- | :----------------------------- | | Carrying value of MSRs (forward loans) | 819.7 | 734.2 | | UPB of loans transferred (forward loans) | 55,313.1 | 49,641.2 | | Maximum exposure to loss (forward loans) | 56,234.5 | 50,505.0 | - The company consolidates various Special Purpose Entities (SPEs) or Variable Interest Entities (VIEs) for financing loans held for sale, advances, and MSRs, where recourse is generally limited to the assets of the respective SPEs[44](index=44&type=chunk)[46](index=46&type=chunk)[48](index=48&type=chunk)[50](index=50&type=chunk) [Note 3 – Fair Value](index=15&type=section&id=Note%203%20%E2%80%93%20Fair%20Value) - Fair value measurements are categorized into a three-level hierarchy, with Level 3 inputs reflecting unobservable assumptions. A significant portion of Onity's financial instruments, including MSRs, Loans held for investment, and HMBS-related borrowings, are classified as Level 3[52](index=52&type=chunk)[53](index=53&type=chunk)[91](index=91&type=chunk)[403](index=403&type=chunk) | Asset/Liability | June 30, 2025 (Millions $) | December 31, 2024 (Millions $) | | :------------------------------------------ | :-------------------------- | :----------------------------- | | Loans held for sale, at fair value | 2,048.3 | 1,290.2 | | Loans held for investment, at fair value | 10,470.8 | 11,125.3 | | MSRs, at fair value | 2,632.6 | 2,466.3 | | HMBS-related borrowings, at fair value | 10,253.1 | 10,872.1 | | Other financing liabilities, at fair value | 818.1 | 846.9 | - Key unobservable assumptions for Level 3 assets and liabilities include conditional prepayment rates, discount rates, delinquency rates, and cost to service, with changes in these assumptions potentially leading to significant fair value changes[57](index=57&type=chunk)[58](index=58&type=chunk)[59](index=59&type=chunk)[64](index=64&type=chunk)[65](index=65&type=chunk)[68](index=68&type=chunk)[69](index=69&type=chunk)[72](index=72&type=chunk)[73](index=73&type=chunk) [Note 4 – Loans Held for Sale - Fair Value](index=21&type=section&id=Note%204%20%E2%80%93%20Loans%20Held%20for%20Sale%20-%20Fair%20Value) | Metric | June 30, 2025 (Millions $) | December 31, 2024 (Millions $) | | :-------------------------------- | :-------------------------- | :----------------------------- | | Total fair value | 2,048.3 | 1,290.2 | | UPB of Originations and purchases | 10,162.0 | 7,409.4 | | Proceeds from sales | (9,215.6) | (6,837.4) | | Fair value gain (loss) on loans held for sale, at fair value | (108.9) | (82.2) | - The fair value of Loans held for sale increased by **$758.1 million** to **$2,048.3 million** at June 30, 2025, driven by higher originations and purchases, with a net fair value loss of **$108.9 million** for the six months ended June 30, 2025[75](index=75&type=chunk)[77](index=77&type=chunk) | Component of Gain (Loss) | 6 Months Ended June 30, 2025 (Millions $) | 6 Months Ended June 30, 2024 (Millions $) | | :----------------------------------------- | :------------------------------------ | :------------------------------------ | | MSRs retained on transfers | 142.9 | 102.4 | | Gain (loss) on sale of forward mortgage loans | (116.6) | (77.8) | | Change in fair value of loans held for sale | 9.5 | (3.4) | | Gain on loans held for sale, at fair value | 34.0 | 20.2 | | Gain (loss) on economic hedge derivatives | (28.2) | 9.7 | | Change in fair value of IRLCs | 17.8 | (1.6) | | Total Gain on loans held for sale, net | 22.2 | 27.4 | [Note 5 - Reverse Mortgages](index=22&type=section&id=Note%205%20-%20Reverse%20Mortgages) | Metric | June 30, 2025 (Millions $) | December 31, 2024 (Millions $) | | :------------------------------------------ | :-------------------------- | :----------------------------- | | Fair value of reverse mortgage loans held for investment | 10,470.8 | 11,125.3 | | HECM loans - securitized, pledged to HMBS-related borrowings | 10,341.3 | 10,950.8 | | New HECM loan originations and HECM loan tails - unsecuritized | 129.5 | 174.5 | - The fair value of reverse mortgage loans held for investment decreased by **$654.5 million** to **$10,470.8 million** at June 30, 2025, primarily due to repayments exceeding new originations and securitizations[80](index=80&type=chunk)[82](index=82&type=chunk)[258](index=258&type=chunk) | Component of Gain (Loss) | 6 Months Ended June 30, 2025 (Millions $) | 6 Months Ended June 30, 2024 (Millions $) | | :---------------------------------------------------------------- | :------------------------------------ | :------------------------------------ | | Fair value gains (losses) of Reverse loans held for investment | 374.6 | 334.4 | | Fair value gains (losses) of HMBS related borrowings | (340.7) | (312.0) | | Total fair value gains (losses) included in earnings | 33.9 | 22.4 | | Gain on new originations | 11.1 | 11.0 | | Net interest income (servicing fee) | 16.4 | 12.0 | | Total Gain on Reverse Loans Held for Investment and HMBS related Borrowings, Net | 35.7 | 23.9 | [Note 6 – Advances](index=24&type=section&id=Note%206%20%E2%80%93%20Advances) | Advance Type | June 30, 2025 (Millions $) | December 31, 2024 (Millions $) | | :-------------------------------- | :-------------------------- | :----------------------------- | | Principal and interest | 131.2 | 150.1 | | Taxes and insurance | 211.9 | 314.2 | | Foreclosures, bankruptcy, REO and other | 124.6 | 120.3 | | Total advances, before allowance for losses | 467.8 | 584.6 | | Allowance for losses | (6.4) | (7.4) | | Advances, net | 461.4 | 577.2 | - Net servicing advances decreased by **$115.8 million**, or **20%**, to **$461.4 million** at June 30, 2025, primarily due to a seasonal reduction in taxes and insurance (T&I) balances and lower delinquencies in the non-Agency MSR portfolio[86](index=86&type=chunk)[258](index=258&type=chunk)[395](index=395&type=chunk) | Investor | June 30, 2025 (Millions $) | December 31, 2024 (Millions $) | | :--------- | :-------------------------- | :----------------------------- | | GSE | 43.9 | 94.0 | | Ginnie Mae | 51.6 | 70.6 | | Non-Agency | 365.9 | 412.6 | | Total, net | 461.4 | 577.2 | [Note 7 – Mortgage Servicing](index=25&type=section&id=Note%207%20%E2%80%93%20Mortgage%20Servicing) | MSR Type | June 30, 2025 (Millions $) | December 31, 2024 (Millions $) | | :------------------------------------------------ | :-------------------------- | :----------------------------- | | Owned MSRs | 2,051.8 | 1,869.6 | | Total transferred MSR, subject to Pledged MSR liability | 580.8 | 596.7 | | Total MSRs (Fair Value) | 2,632.6 | 2,466.3 | | Total MSRs (UPB in billions) | 181.5 | 170.3 | - The fair value of the total MSR portfolio increased by **$166.4 million**, or **6.7%**, to **$2,632.6 million** at June 30, 2025, driven by **$278.6 million** in net additions (including recognized MSRs on loan sales and purchases), partially offset by fair value losses recognized in earnings[89](index=89&type=chunk)[91](index=91&type=chunk)[258](index=258&type=chunk) | Servicing Revenue Component | 6 Months Ended June 30, 2025 (Millions $) | 6 Months Ended June 30, 2024 (Millions $) | | :------------------------------------ | :------------------------------------ | :------------------------------------ | | Servicing fee | 199.3 | 182.1 | | Subservicing fee | 46.5 | 54.3 | | MAV - Servicing fee / Transferred MSR | 26.7 | 35.8 | | Rithm and Others-Servicing fee/Transferred MSR | 38.2 | 37.8 | | Custodial accounts (float earnings) | 59.4 | 59.1 | | Total Servicing and subservicing fees | 414.6 | 415.3 | [Note 8 — Other Financing Liabilities, at Fair Value](index=28&type=section&id=Note%208%20%E2%80%94%20Other%20Financing%20Liabilities%2C%20at%20Fair%20Value) | Liability Type | June 30, 2025 (Millions $) | December 31, 2024 (Millions $) | | :------------------------------------ | :-------------------------- | :----------------------------- | | Pledged MSR liability, at fair value | 569.6 | 583.5 | | ESS financing liability, at fair value | 248.6 | 263.3 | | Total Other financing liabilities, at fair value | 818.1 | 846.9 | - Other financing liabilities, at fair value, decreased by **$28.8 million** to **$818.1 million** at June 30, 2025, primarily due to derecognition of financing liabilities and realization of expected cash flows, partially offset by MSR transfers[97](index=97&type=chunk)[100](index=100&type=chunk) | Pledged MSR Liability Expense | 6 Months Ended June 30, 2025 (Millions $) | 6 Months Ended June 30, 2024 (Millions $) | | :------------------------------------------ | :------------------------------------ | :------------------------------------ | | Rithm and others net servicing fee remittance | 36.0 | 34.3 | | MAV net servicing fee remittance | 22.8 | 30.7 | | ESS servicing spread remittance | 26.1 | 26.1 | | Total Pledged MSR liability expense | 84.9 | 91.0 | [Note 9 – MSR Valuation Adjustments, Net](index=30&type=section&id=Note%209%20%E2%80%93%20MSR%20Valuation%20Adjustments%2C%20Net) | Component | 6 Months Ended June 30, 2025 (Millions $) | 6 Months Ended June 30, 2024 (Millions $) | | :------------------------------------------ | :------------------------------------ | :------------------------------------ | | Total MSRs | (112.2) | 79.2 | | Pledged MSR liabilities | 15.9 | (17.5) | | ESS financing liabilities | 14.8 | (1.7) | | Derivative fair value gain (loss) (MSR economic hedges) | 15.3 | (104.3) | | MSR valuation adjustments, net | (66.2) | (44.3) | - MSR valuation adjustments, net, resulted in a **$66.2 million** loss for the six months ended June 30, 2025, an increase from a **$44.3 million** loss in the prior year, primarily driven by the impact of interest rate changes, net of hedge activity, and higher runoff due to MSR portfolio growth[110](index=110&type=chunk)[244](index=244&type=chunk) - The total changes in fair value due to rates and assumptions resulted in a **$18.4 million** gain for the six months ended June 30, 2025, compared to a **$33.7 million** gain in the prior year, reflecting less favorable input and assumption updates[110](index=110&type=chunk)[245](index=245&type=chunk) [Note 10 – Receivables](index=31&type=section&id=Note%2010%20%E2%80%93%20Receivables) | Receivable Type | June 30, 2025 (Millions $) | December 31, 2024 (Millions $) | | :------------------------------------ | :-------------------------- | :----------------------------- | | Government-insured loan claims - Reverse | 112.5 | 83.3 | | Government-insured loan claims - Forward | 25.2 | 31.5 | | Income taxes receivable | 29.2 | 28.2 | | Total Receivables, net | 204.6 | 176.4 | | Allowance for losses | (15.3) | (18.1) | - Net receivables increased by **$28.2 million**, or **16%**, to **$204.6 million** at June 30, 2025, primarily due to an increase in government-insured loan claims for reverse mortgages[114](index=114&type=chunk)[258](index=258&type=chunk) - The allowance for losses decreased by **$2.8 million** to **$15.3 million** at June 30, 2025, reflecting net charge-offs exceeding provision expense[115](index=115&type=chunk) [Note 11 – Other Assets](index=31&type=section&id=Note%2011%20%E2%80%93%20Other%20Assets) | Asset Type | June 30, 2025 (Millions $) | December 31, 2024 (Millions $) | | :------------------------------------ | :-------------------------- | :----------------------------- | | REO | 48.3 | 43.9 | | Derivatives, at fair value | 41.2 | 15.4 | | Prepaid expenses | 23.1 | 26.1 | | Deferred tax assets, net | 3.7 | 3.2 | | Total Other assets | 129.1 | 111.3 | - Other assets increased by **$17.9 million**, or **16%**, to **$129.1 million** at June 30, 2025, largely driven by an increase in derivatives at fair value[116](index=116&type=chunk)[258](index=258&type=chunk) [Note 12 – Borrowings](index=32&type=section&id=Note%2012%20%E2%80%93%20Borrowings) | Borrowing Type | June 30, 2025 (Millions $) | December 31, 2024 (Millions $) | | :------------------------------------ | :-------------------------- | :----------------------------- | | Advance match funded liabilities | 342.5 | 417.1 | | Mortgage loan financing facilities, net | 2,195.5 | 1,528.2 | | MSR financing facilities, net | 1,218.6 | 957.9 | | Senior notes, net | 488.5 | 487.4 | | Total Borrowings | 4,245.1 | 3,390.6 | - Mortgage loan financing facilities, net, increased by **$667.3 million** to **$2,195.5 million**, and MSR financing facilities, net, increased by **$260.7 million** to **$1,218.6 million**, reflecting growth in the Originations pipeline and MSR portfolio[121](index=121&type=chunk)[126](index=126&type=chunk)[259](index=259&type=chunk) - Advance match funded liabilities decreased by **$74.6 million** to **$342.5 million**, consistent with the seasonal decline in servicing advances[117](index=117&type=chunk)[259](index=259&type=chunk) - Onity issued **$500.0 million** aggregate principal amount of **9.875%** Senior Notes due November 1, 2029, on November 6, 2024, which are guaranteed by Onity and certain subsidiaries[131](index=131&type=chunk) [Note 13 – Other Liabilities](index=37&type=section&id=Note%2013%20%E2%80%93%20Other%20Liabilities) | Liability Type | June 30, 2025 (Millions $) | December 31, 2024 (Millions $) | | :------------------------------------ | :-------------------------- | :----------------------------- | | Servicing-related obligations | 61.4 | 65.1 | | Checks held for escheat | 56.0 | 54.1 | | Other accrued expenses | 54.8 | 78.4 | | Due to Rithm - Advance collections and servicing fees | 49.2 | 63.4 | | Derivatives, at fair value | 26.8 | 27.6 | | Total Other liabilities | 365.0 | 420.6 | - Other liabilities decreased by **$55.6 million**, or **13%**, to **$365.0 million** at June 30, 2025, mainly due to the payment of annual bonuses, reduction of servicing float balance due to Rithm, and favorable resolution of a prior-year uncertain tax position[144](index=144&type=chunk)[259](index=259&type=chunk) [Note 14 – Stockholders' Equity](index=37&type=section&id=Note%2014%20%E2%80%93%20Stockholders'%20Equity) - On February 13, 2025, Oaktree exercised warrants to purchase **261,248 shares** of common stock, settled in cash for **$3.5 million**, which reduced stockholders' equity without changing the number of issued and outstanding shares[147](index=147&type=chunk) - The warrants, originally issued in 2021, were amended in October 2024 to allow Oaktree to elect a cash exercise option only with Onity's consent, otherwise requiring net share settlement[145](index=145&type=chunk)[146](index=146&type=chunk) [Note 15 – Derivative Financial Instruments and Hedging Activities](index=37&type=section&id=Note%2015%20%E2%80%93%20Derivative%20Financial%20Instruments%20and%20Hedging%20Activities) | Derivative Type | June 30, 2025 (Millions $) | December 31, 2024 (Millions $) | | :------------------------------------ | :-------------------------- | :----------------------------- | | Total Derivative Assets | 41.2 | 15.4 | | Total Derivative Liabilities | (26.8) | (27.6) | | Net Derivative Position | 14.4 | (12.2) | | Gain (Loss) | 6 Months Ended June 30, 2025 (Millions $) | 6 Months Ended June 30, 2024 (Millions $) | | :------------------------------------------ | :------------------------------------ | :------------------------------------ | | Forward loans IRLCs | 17.8 | (1.6) | | TBA trades (economic hedge) | (25.4) | 9.7 | | Interest rate futures, TBA trades (MSR valuation adjustments) | 15.3 | (104.3) | | Total Net Gain (Loss) | 5.3 | (96.0) | - Onity uses derivative instruments, including forward sales of MBS/Agency TBAs, exchange-traded interest rate futures, and options, to economically hedge MSR and loan pipeline interest rate risk, with changes in fair value reported in MSR valuation adjustments, net or gain on loans held for sale, net[155](index=155&type=chunk)[157](index=157&type=chunk) - The targeted MSR hedge coverage ratio was adjusted to **85%** with a range of **80%** to **100%** in May 2025, aiming to protect shareholders' equity and earnings against fair value volatility[153](index=153&type=chunk) [Note 16 – Interest Expense](index=40&type=section&id=Note%2016%20%E2%80%93%20Interest%20Expense) | Interest Expense Type | 6 Months Ended June 30, 2025 (Millions $) | 6 Months Ended June 30, 2024 (Millions $) | | :------------------------------------ | :------------------------------------ | :------------------------------------ | | Mortgage loan financing facilities | 57.9 | 43.5 | | MSR financing facilities | 40.2 | 37.5 | | Senior Notes Due 2029 | 25.7 | — | | Advance match funded liabilities | 15.7 | 19.8 | | Onity Senior Secured Notes | — | 22.6 | | PMC Senior Secured Notes | — | 13.9 | | Total Interest Expense | 142.7 | 140.5 | - Total interest expense increased by **$2.2 million**, or **1.6%**, for the six months ended June 30, 2025, compared to the prior year, primarily due to higher interest on mortgage loan and MSR financing facilities, partially offset by the redemption of prior corporate debt[159](index=159&type=chunk)[252](index=252&type=chunk)[323](index=323&type=chunk) [Note 17 - Income Taxes](index=40&type=section&id=Note%2017%20-%20Income%20Taxes) | Metric | 6 Months Ended June 30, 2025 (Millions $) | 6 Months Ended June 30, 2024 (Millions $) | | :----------------------- | :------------------------------------ | :------------------------------------ | | Income before income taxes | 32.0 | 45.3 | | Income tax expense (benefit) | (11.7) | 4.7 | | Effective tax rate | (36.6)% | 10.3% | - Onity recognized an income tax benefit of **$11.7 million** for the six months ended June 30, 2025, compared to an expense of **$4.7 million** in the prior year, primarily due to the favorable resolution of a **$13.3 million** prior-year uncertain tax position[160](index=160&type=chunk)[255](index=255&type=chunk) - The company maintains a full valuation allowance on its net U.S. federal and state deferred tax assets (**$179.8 million** as of December 31, 2024) due to a history of cumulative operating losses, but believes it is reasonably possible to release some or all of this allowance by December 31, 2025, contingent on continued profitability[161](index=161&type=chunk)[162](index=162&type=chunk)[254](index=254&type=chunk)[257](index=257&type=chunk) [Note 18 – Basic and Diluted Earnings (Loss) per Share](index=41&type=section&id=Note%2018%20%E2%80%93%20Basic%20and%20Diluted%20Earnings%20(Loss)%20per%20Share) | Metric | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | | :------------------------------------------ | :--------------------------- | :--------------------------- | | Net income attributable to common stockholders (Millions $) | 41.6 | 40.6 | | Basic EPS | 5.23 | 5.23 | | Diluted EPS | 4.90 | 5.09 | | Weighted average common shares outstanding (Basic) | 7,947,992 | 7,766,331 | | Dilutive weighted average shares of common stock (Diluted) | 8,486,158 | 7,982,429 | - Basic EPS remained flat at **$5.23** for the six months ended June 30, 2025, compared to the prior year, while diluted EPS decreased slightly to **$4.90** from **$5.09**, despite an increase in net income attributable to common stockholders[165](index=165&type=chunk) [Note 19 – Business Segment Reporting](index=41&type=section&id=Note%2019%20%E2%80%93%20Business%20Segment%20Reporting) - Onity operates through three reportable segments: Servicing, Originations, and Corporate, with performance evaluated based on pre-tax income[167](index=167&type=chunk)[270](index=270&type=chunk) | Segment | 6 Months Ended June 30, 2025 (Millions $) | 6 Months Ended June 30, 2024 (Millions $) | | :---------------- | :------------------------------------ | :------------------------------------ | | Servicing Revenue | 438.3 | 436.2 | | Originations Revenue | 58.1 | 49.3 | | Corporate Revenue | — | — | | Servicing Income (loss) before taxes | 73.5 | 86.7 | | Originations Income (loss) before taxes | 18.6 | 10.5 | | Corporate Income (loss) before taxes | (60.2) | (51.9) | - Servicing segment income before income taxes decreased by **15%** for the six months ended June 30, 2025, while Originations segment income before income taxes increased by **76%** for the same period[170](index=170&type=chunk)[171](index=171&type=chunk) [Note 20 – Regulatory Requirements](index=45&type=section&id=Note%2020%20%E2%80%93%20Regulatory%20Requirements) - Onity is subject to extensive federal, state, local, and foreign regulations, including capital and liquidity requirements from agencies like GSEs, HUD, FHA, VA, and Ginnie Mae[172](index=172&type=chunk)[173](index=173&type=chunk)[175](index=175&type=chunk)[177](index=177&type=chunk) | Entity | Required Net Worth (Millions $) | Reported Net Worth (Millions $) | Required Liquidity (Millions $) | Reported Liquidity (Millions $) | | :----- | :---------------------------- | :------------------------------ | :------------------------------ | :------------------------------ | | PHH | 300.0 | 354.3 | 65.8 (FHFA), 71.5 (Ginnie Mae) | 151.2 (FHFA), 523.1 (Ginnie Mae) | | PAS | 256.6 | 301.0 | 80.7 (FHFA) | 221.9 (FHFA) | - PHH received a waiver from Ginnie Mae extending the deadline to meet risk-based capital ratio (RBCR) requirements to October 1, 2025, and transferred certain GSE MSR investment activities to PAS to achieve compliance[179](index=179&type=chunk)[384](index=384&type=chunk) [Note 21 — Commitments](index=47&type=section&id=Note%2021%20%E2%80%94%20Commitments) - As a servicer, Onity is obligated to advance loan principal and interest, property taxes, and insurance premiums, with recovery mechanisms varying by loan type (PLS, Ginnie Mae, GSE)[184](index=184&type=chunk)[185](index=185&type=chunk)[186](index=186&type=chunk)[187](index=187&type=chunk) - Onity has unfunded lending commitments of **$3.0 billion** for floating-rate reverse mortgage loans and **$2.0 billion** for forward and reverse mortgage loan IRLCs at June 30, 2025[190](index=190&type=chunk) - Rithm, a major subservicing client, represented **11%** of total serviced UPB and **20%** of loan count, and **59%** of all delinquent loans at June 30, 2025, with **$5.7 billion** in UPB transferred to another subservicer in Q1 2025[196](index=196&type=chunk) [Note 22 – Contingencies](index=48&type=section&id=Note%2022%20%E2%80%93%20Contingencies) - Onity is involved in numerous legal proceedings, including class actions and regulatory investigations, primarily related to mortgage servicing and lending activities, with an accrual for probable and estimable legal and regulatory matters of **$24.5 million** at June 30, 2025[199](index=199&type=chunk)[200](index=200&type=chunk)[202](index=202&type=chunk)[212](index=212&type=chunk)[213](index=213&type=chunk) - The company is in ongoing litigation with the USVI regarding income tax refunds and a new lawsuit alleging non-compliance with Economic Development Commission Certificate conditions[207](index=207&type=chunk) - Onity has exposure to representation, warranty, and indemnification obligations from lending and loan sales, with outstanding repurchase demands of **$37.8 million** UPB (**122 loans**) at June 30, 2025[214](index=214&type=chunk)[215](index=215&type=chunk) [Note 23 – Subsequent Events](index=52&type=section&id=Note%2023%20%E2%80%93%20Subsequent%20Events) - On July 10, 2025, Onity purchased a portfolio of government-insured reverse mortgage loan buyouts for **$100.4 million**, financed through a private placement securitization (OLIT 2025-HB1) with total proceeds of **$309.5 million**[219](index=219&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=52&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Detailed analysis of Onity's Q2 2025 financial condition and results, including overall performance, segment results, and key trends [Overview](index=52&type=section&id=OVERVIEW) - Onity is a leading non-bank mortgage servicer and originator, servicing **1.4 million loans** with a total UPB of **$309.5 billion** as of June 30, 2025, and aims for sustainable profitability through a balanced business model[220](index=220&type=chunk)[237](index=237&type=chunk) | Metric | 3 Months Ended June 30, 2025 (Millions $) | 3 Months Ended March 31, 2025 (Millions $) | Change ($) | Change (%) | | :----------------------------------- | :------------------------------------ | :------------------------------------ | :--------- | :--------- | | Net income attributable to common stockholders | 20.5 | 22.1 | (1.6) | -7.2 | | Servicing and subservicing fee revenue | 211.3 | 203.3 | 8.0 | 3.9 | | Originations gain on sale | 15.4 | 15.6 | (0.2) | -1.3 | | MSR valuation gain (net of hedging) | 16.2 | (18.6) | 34.8 | -187.1 | - The company's strategy focuses on capital-light growth, industry-leading cost structure, top-tier operating performance, and dynamic asset management, including opportunistic MSR purchases and sales[237](index=237&type=chunk) [Segment Results of Operations](index=64&type=section&id=SEGMENT%20RESULTS%20OF%20OPERATIONS) - The Servicing segment's income before income taxes decreased by **15%** for the six months ended June 30, 2025, compared to the prior year, while the Originations segment's income before income taxes increased by **76%**[170](index=170&type=chunk)[171](index=171&type=chunk) - The Corporate segment's loss before income taxes increased by **16%** for the six months ended June 30, 2025, primarily due to higher professional services and compensation and benefits expenses[170](index=170&type=chunk)[171](index=171&type=chunk)[356](index=356&type=chunk) [Servicing Segment](index=64&type=section&id=SERVICING) - The Servicing segment is primarily comprised of mortgage servicing and subservicing, earning fees and incurring costs based on loan delinquency status and MSR ownership. It serviced **1.4 million loans** with an aggregate UPB of **$309.5 billion** as of June 30, 2025[271](index=271&type=chunk) | Metric | June 30, 2025 (Billions $) | March 31, 2025 (Billions $) | Change ($) | Change (%) | | :------------------------------------ | :-------------------------- | :-------------------------- | :--------- | :--------- | | Performing loans UPB | 299.0 | 293.8 | 5.2 | 1.8 | | Non-performing loans UPB | 10.1 | 10.4 | (0.3) | -2.9 | | Total Servicing and Subservicing UPB | 309.5 | 304.6 | 4.9 | 1.6 | - Servicing and subservicing fees for the six months ended June 30, 2025, remained flat compared to the prior year, with an **$8.6 million** decrease in subservicing fees offset by an **$8.6 million** increase in servicing fees due to portfolio growth[301](index=301&type=chunk) [Originations Segment](index=77&type=section&id=ORIGINATIONS) - The Originations segment originates and purchases loans and MSRs through Consumer Direct, Correspondent Lending, Reverse Originations, and Co-Issue Programs, generating gain on sale and fee revenue[330](index=330&type=chunk)[331](index=331&type=chunk)[332](index=332&type=chunk)[333](index=333&type=chunk)[335](index=335&type=chunk) | Metric | 6 Months Ended June 30, 2025 (Billions $) | 6 Months Ended June 30, 2024 (Billions $) | Change ($) | Change (%) | | :------------------------------------ | :------------------------------------ | :------------------------------------ | :--------- | :--------- | | Forward loans funded UPB | 9.78 | 7.09 | 2.69 | 37.9 | | Reverse loans funded UPB | 0.34 | 0.35 | (0.01) | -2.9 | | UPB of MSR Purchases | 11.46 | 5.18 | 6.28 | 121.2 | | Total Originations UPB | 21.57 | 12.62 | 8.95 | 70.9 | - Gain on loans held for sale, net, increased by **$5.2 million** for the six months ended June 30, 2025, driven by a **121%** increase in Consumer Direct channel gain, partially offset by a **40%** decrease in Correspondent channel gain due to margin decline[343](index=343&type=chunk) [Corporate Segment](index=82&type=section&id=CORPORATE) - The Corporate segment includes expenses for corporate support services not directly related to other segments, with certain expenses and corporate debt interest allocated to Servicing and Originations[351](index=351&type=chunk)[353](index=353&type=chunk) | Metric | 6 Months Ended June 30, 2025 (Millions $) | 6 Months Ended June 30, 2024 (Millions $) | Change ($) | Change (%) | | :------------------------------------ | :------------------------------------ | :------------------------------------ | :--------- | :--------- | | Total operating expenses before corporate overhead allocations | 83.7 | 63.6 | 20.1 | 31.6 | | Total operating expenses (after allocations) | 50.4 | 33.7 | 16.7 | 49.6 | | Loss before income taxes | (60.2) | (51.9) | (8.3) | 16.0 | - Operating expenses before corporate overhead allocations increased by **$20.2 million**, or **32%**, for the six months ended June 30, 2025, primarily due to higher professional services and compensation and benefits expenses[356](index=356&type=chunk) [Liquidity and Capital Resources](index=84&type=section&id=LIQUIDITY%20AND%20CAPITAL%20RESOURCES) - Onity actively manages its debt agreements and completed several key transactions in H1 2025, including increasing borrowing capacity for GSE MSR and GNMA MSR facilities and entering a new PLS MSR financing agreement[359](index=359&type=chunk)[361](index=361&type=chunk) | Borrowing Capacity | June 30, 2025 (Millions $) | December 31, 2024 (Millions $) | | :------------------------------------ | :-------------------------- | :----------------------------- | | Total Borrowing Capacity | 4,996 | 4,467 | | Remaining Borrowing Capacity - Committed | 671 | 681 | | Remaining Borrowing Capacity - Uncommitted | 1,020 | 1,413 | - Total liquidity at June 30, 2025, was **$218.1 million**, comprising **$194.3 million** of unrestricted cash and **$23.8 million** in available borrowing capacity, a decrease from **$248.5 million** at December 31, 2024, mainly due to originations growth in owned MSRs[362](index=362&type=chunk) - The company's licensed entities are adequately capitalized and comply with regulatory requirements, with a high leverage ratio due to securitized reverse mortgage loans being reported on the balance sheet but risk-weighted at zero percent by Ginnie Mae[376](index=376&type=chunk)[377](index=377&type=chunk)[384](index=384&type=chunk) [Critical Accounting Policies and Estimates](index=91&type=section&id=CRITICAL%20ACCOUNTING%20POLICIES%20AND%20ESTIMATES) - Onity's critical accounting policies and estimates involve significant judgments related to fair value measurements, income taxes, allowance for losses, and loss contingencies, with **92%** of assets and **69%** of liabilities reported at fair value at June 30, 2025, primarily classified as Level 3 instruments[403](index=403&type=chunk) [Recent Accounting Developments](index=91&type=section&id=RECENT%20ACCOUNTING%20DEVELOPMENTS) - The adoption of ASU 2023-05 (Business Combinations - Joint Venture Formations) did not have a material impact on Onity's consolidated financial statements[33](index=33&type=chunk) - ASU 2023-09 (Improvements to Income Tax Disclosures) is effective for Onity in the 2025 annual period and 2026 interim periods, requiring disaggregated information on effective tax rate reconciliation and income taxes paid[34](index=34&type=chunk)[35](index=35&type=chunk) [Item 3. Quantitative and Qualitative Disclosures about Market Risk](index=91&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20about%20Market%20Risk) Details Onity's market risk exposure, primarily from interest rate changes, and its management strategies through MSR, pipeline hedging, and sensitivity analyses [Interest Rates](index=91&type=section&id=Interest%20Rates) - Onity's primary market risk is the impact of interest rate changes on mortgage-related assets (MSRs, loans held for sale/investment, IRLCs) and commitments, as well as on float income and variable-rate borrowings[405](index=405&type=chunk) - The Market Risk Committee establishes policies for risk appetite and hedging programs, including duration, interest rate sensitivity measures, limits, and targeted hedge coverage ratios[406](index=406&type=chunk) [MSR Hedging Strategy](index=92&type=section&id=MSR%20Hedging%20Strategy) - The MSR hedging policy aims to protect shareholders' equity and earnings from fair value volatility of the interest-rate sensitive MSR portfolio exposure, which includes Agency MSRs, expected bulk transactions, and reverse MSRs[409](index=409&type=chunk)[416](index=416&type=chunk) - A new targeted hedge coverage ratio of **85%** (range **80%**-**100%**) was established in May 2025, acknowledging that partial coverage means hedging instruments may not fully offset MSR fair value changes due to various market factors[410](index=410&type=chunk)[411](index=411&type=chunk) - Derivative instruments used for MSR hedging, such as forward trades of MBS/Agency TBAs, interest rate futures, and options, are not designated as accounting hedges and are subject to daily margin requirements[413](index=413&type=chunk)[414](index=414&type=chunk) [Loans Held for Investment and HMBS-related Borrowings](index=92&type=section&id=Loans%20Held%20for%20Investment%20and%20HMBS-related%20Borrowings) - The fair value of reverse mortgage loans held for investment (HECM) generally decreases with rising market interest rates and increases with falling rates, as higher rates accelerate loan balance accrual to the maximum claim amount[415](index=415&type=chunk) - The net fair value of securitized HECM loans and HMBS-related borrowings (reverse mortgage economic MSR or HMSR) is used as a partial offset to forward MSR exposure and managed within the overall MSR hedging strategy[416](index=416&type=chunk)[417](index=417&type=chunk) [Pipeline Hedging Strategy - Loans Held for Sale and IRLCs](index=93&type=section&id=Pipeline%20Hedging%20Strategy%20-%20Loans%20Held%20for%20Sale%20and%20IRLCs) - Onity hedges interest rate and price risk in its Originations business from interest rate lock commitment (IRLC) through loan sale/securitization using derivative instruments like forward sales of Agency TBAs[418](index=418&type=chunk) - The objective is to reduce fair value volatility of IRLCs and loans, preserving the initial gain on sale margin, with daily monitoring of net market risk position and a daily limit of **+/- 5%**[418](index=418&type=chunk) [EBO and Loan Modification Hedging – Loans Held for Sale, at fair value](index=93&type=section&id=EBO%20and%20Loan%20Modification%20Hedging%20%E2%80%93%20Loans%20Held%20for%20Sale%2C%20at%20fair%20value) - In its Servicing business, Onity hedges certain Ginnie Mae EBO loans repurchased for modification and reperformance with TBAs to manage interest rate risk while these loans await redelivery[419](index=419&type=chunk) [Advance Match Funded Liabilities](index=93&type=section&id=Advance%20Match%20Funded%20Liabilities) - Onity monitors the impact of interest rate changes on the interest paid on its variable-rate advance financing debt, with earnings on cash and float balances providing a partial offset to this exposure[420](index=420&type=chunk) [Sensitivity Analysis](index=93&type=section&id=Sensitivity%20Analysis) - Onity uses daily sensitivity analyses to assess the impact of hypothetical instantaneous parallel shifts in the yield curve (**+/- 25 basis points**) on the fair value of MSRs, HECM loans, loans held for sale, and related derivatives[421](index=421&type=chunk)[422](index=422&type=chunk) | Asset/Liability | Down 25 bps (Millions $) | Up 25 bps (Millions $) | | :------------------------------------------------ | :----------------------- | :--------------------- | | Asset value of securitized HECM loans, net of HMBS-related borrowing | 5 | (5) | | Loans held for sale | 19 | (23) | | Derivative instruments | 14 | (11) | | Total MSRs - Agency and non-Agency | (40) | 39 | | IRLCs | (2) | 2 | | Total, net | (5) | 2 | - A hypothetical **100 bps** decrease in interest rates is estimated to have a net positive impact of approximately **$4.7 million** on profitability, resulting from a **$28.3 million** decrease in annual interest income and a **$33.0 million** decrease in annual interest expense on variable-rate debt[425](index=425&type=chunk) [Item 4. Controls and Procedures](index=94&type=section&id=Item%204.%20Controls%20and%20Procedures) Management evaluated disclosure controls and procedures as effective as of June 30, 2025, with no material changes to internal control over financial reporting during the quarter - Disclosure controls and procedures were evaluated as effective and functioning as of June 30, 2025, ensuring material information is communicated and reported timely[427](index=427&type=chunk) - No material changes to internal control over financial reporting occurred during the fiscal quarter ended June 30, 2025[428](index=428&type=chunk) [PART II - OTHER INFORMATION](index=94&type=section&id=PART%20II%20-%20OTHER%20INFORMATION) [Item 1. Legal Proceedings](index=94&type=section&id=Item%201.%20Legal%20Proceedings) Material legal proceedings are incorporated by reference from Note 22 to the Unaudited Consolidated Financial Statements - Material legal proceedings are detailed in Note 22 – Contingencies, which is incorporated by reference[430](index=430&type=chunk) [Item 1A. Risk Factors](index=94&type=section&id=Item%201A.%20Risk%20Factors) Significant risks are referenced from the 2024 Annual Report on Form 10-K, with no material changes since that filing - Significant risks are detailed in the Annual Report on Form 10-K for the year ended December 31, 2024, and no material changes have occurred since that filing[431](index=431&type=chunk)[432](index=432&type=chunk) [Item 6. Exhibits](index=94&type=section&id=Item%206.%20Exhibits) Lists exhibits filed with Form 10-Q, including organizational documents, certifications, and supplemental information - Exhibits include Amended and Restated Articles of Incorporation and Bylaws, certifications from principal executive and financial officers (Sections 302 and 906 of Sarbanes-Oxley Act), and supplemental information pursuant to the Senior Notes Indenture[433](index=433&type=chunk)[436](index=436&type=chunk)

For the quarter ended June 2025, Onity Group (ONIT) reported revenue of $246.6 million, up 0.1% over the same period last year. EPS came in at $1.87, compared to $4.07 in the year-ago quarter. Shares of Onity have returned -0.6% over the past month versus the Zacks S&P 500 composite's +1% change. The stock currently has a Zacks Rank #3 (Hold), indicating that it could perform in line with the broader market in the near term. Other revenues: $13 million versus $12.3 million estimated by two analysts on avera ...

Financial Data and Key Metrics Changes - For the second quarter, the company reported GAAP net income attributable to common shareholders of $20 million, or $2.4 per share fully diluted, reflecting an annualized ROE of 17% [6][23] - Adjusted pretax income was $16 million, with an annualized adjusted ROE of 14%, impacted by $4 million from market volatility on originations revenue and margins [7][26] - Book value increased to $60 per share, up 5% year over year [7] Business Line Data and Key Metrics Changes - The servicing segment contributed $31 million to adjusted pretax income for the quarter, with forward servicing experiencing growth in average UPB [30] - Originations team delivered 35% year-over-year growth, compared to the industry's 23% growth [14] - Consumer Direct's funded volume was up 2.4 times versus the previous year, indicating strong recapture performance [15][17] Market Data and Key Metrics Changes - The Mortgage Bankers Association Refinance Application Index was up 43% over the prior year, indicating strong origination volumes despite market volatility [9] - Industry originations volume growth estimates have been lowered to 14% year over year due to interest rate expectations and slower home sales [10] Company Strategy and Development Direction - The company is focused on maintaining agility to find opportunities for shareholder value creation amid market volatility [10][36] - Continued investment in technology and process optimization is aimed at enhancing customer experience and improving scalability [14][20] - The company is increasing its owned MSR portfolio to grow book earnings and book value, while also pursuing new subservicing clients [12][31] Management's Comments on Operating Environment and Future Outlook - Management expects continued interest rate volatility and uncertainty, but believes the balanced business model is well-positioned for the dynamic market environment [10][36] - The company is optimistic about its potential for growth and shareholder returns, reaffirming its annual adjusted ROE guidance [35][34] Other Important Information - The company has been recognized for its industry-leading servicing performance by Fannie Mae, Freddie Mac, and HUD [19] - The MSR hedge strategy has been effective in minimizing the impact of interest rates on MSR valuation [33] Q&A Session Summary Question: Inquiry about professional services expenses - Management noted that professional expenses can vary based on financing structures and legal fees, with no significant issues in the current quarter [38] Question: Clarification on deferred tax assets - Management explained that counterparties generally view the increase in deferred tax assets as an improvement in total equity, and detailed the components that affect the valuation allowance [39][40] Question: M&A activity in servicing - Management indicated that M&A activity in servicing is influenced by supply and demand dynamics in the marketplace, with potential consolidation expected due to prolonged high interest rates [44][46]

Onity Group (ONIT) came out with quarterly earnings of $1.87 per share, missing the Zacks Consensus Estimate of $2.08 per share. This compares to earnings of $4.07 per share a year ago. These figures are adjusted for non-recurring items.This quarterly report represents an earnings surprise of -10.10%. A quarter ago, it was expected that this mortgage servicer would post earnings of $1.79 per share when it actually produced earnings of $2.84, delivering a surprise of +58.66%.Over the last four quarters, the ...

Financial Performance - Onity Group Inc delivered strong second quarter results in 2025, with sustained robust net income driving book value growth[9, 10] - Diluted EPS increased by 35% year-over-year to $2.40, and book value per share increased by $2.94 year-over-year to $60[12] - The company reaffirmed its annual Adjusted ROE guidance of 16-18%, demonstrating a commitment to strong shareholder returns[10] - Adjusted Pre-Tax Income was $16 million in Q2'25[12] Servicing Portfolio - Total Servicing Average UPB grew to $307 billion[12, 21] - Owned Servicing Average UPB increased from $147 billion in Q1'25 to $153 billion in Q2'25[21] - MSR originations increased by 35% year-over-year, exceeding industry growth of 23%[23] Originations - Originations volume reached $9.4 billion in Q2'25[12, 24] - Consumer Direct funded volume increased by 2.4x year-over-year[26] - The company achieved a top-tier refinance recapture rate, 1.5x the industry average in Q2'25[26] Technology and Efficiency - The company is expanding its AI-powered platform to grow revenue, reduce costs, and drive service excellence[32] - Robotic Process Automation (RPA) is performing over 190 processes, completing the work of approximately 400 FTE[35]

[Executive Summary & Business Highlights](index=1&type=section&id=Executive%20Summary%20%26%20Business%20Highlights) [Q2 2025 Performance Highlights](index=1&type=section&id=Second%20Quarter%202025) Onity Group reported a strong second quarter in 2025, demonstrating sustained profitability and growth across key financial and operational metrics, including significant increases in net income, EPS, and originations volume Q2 2025 Key Financial Highlights | Metric | Value | | :--- | :--- | | Net income attributable to common stockholders | $20 million | | Diluted EPS | $2.40 | | ROE | 17% | | Adjusted pre-tax income* | $16 million | | Annualized adjusted ROE* | 14% | | Book value per share (as of June 30, 2025) | $60 (up $2.94 YoY) | Q2 2025 Key Operational Highlights | Metric | Value | | :--- | :--- | | Originations volume | $9.4 billion (up 35% YoY, exceeding 23% industry growth) | | Average servicing UPB | $307 billion (up $2 billion YoY) | | Funded recapture volume | Up 2.4x YoY | | Refinance recapture rate | 1.5x industry average | | Average owned servicing UPB | $153 billion (up 16% YoY) | | Total liquidity (unrestricted cash + available credit) | $218 million (as of June 30, 2025) | - The company maintained an effective MSR hedge strategy, resulting in minimal MSR fair value volatility during the quarter[9](index=9&type=chunk) - Fitch Ratings upgraded all of the Company's residential primary servicer ratings and affirmed its commercial small balance servicer ratings[9](index=9&type=chunk) [2025 Business Outlook](index=1&type=section&id=2025%20Outlook) Onity Group confirmed its previously issued guidance for 2025, including its target range for adjusted ROE and the potential release of a significant deferred tax valuation allowance - Confirmed previous guidance including 2025 adjusted ROE* range of **16% - 18%**[8](index=8&type=chunk) - ROE and adjusted ROE* were **18%** for the first half of 2025[8](index=8&type=chunk) - Some or all of the **$180 million** deferred tax valuation allowance (US) as of December 31, 2024, could be released by year-end 2025[8](index=8&type=chunk) [CEO Commentary](index=1&type=section&id=CEO%20Commentary) CEO Glen Messina highlighted a strong quarter with sustained profitability and steady growth, attributing success to a resilient business model, sound strategy, and high-caliber execution, particularly in Servicing and Originations - The company reported another strong quarter with sustained profitability and steady growth, demonstrating the resilience of its business model, sound strategy, and high-caliber execution[5](index=5&type=chunk) - Achieved results in Servicing and Originations, with a growing servicing portfolio, originations volume exceeding industry growth, and a high-performing recapture platform[5](index=5&type=chunk) - Committed to delivering strong shareholder returns and navigating the future with agility, believing the balanced and diversified business is built to perform through market cycles, driven by a technology-enabled, low-cost platform[5](index=5&type=chunk) [Company Information](index=3&type=section&id=Company%20Information) [About Onity Group](index=3&type=section&id=About%20Onity%20Group) Onity Group Inc. is a leading non-bank financial services company specializing in mortgage servicing and originations solutions through its primary brands, PHH Mortgage and Liberty Reverse Mortgage, serving customers since 1988 - Onity Group Inc. is a leading non-bank financial services company providing mortgage servicing and originations solutions[11](index=11&type=chunk) - Primary brands include PHH Mortgage, one of the largest servicers, and Liberty Reverse Mortgage, one of the nation's largest reverse mortgage lenders[11](index=11&type=chunk) - Headquartered in West Palm Beach, Florida, with operations in the United States, U.S. Virgin Islands, India, and the Philippines, serving customers since 1988[11](index=11&type=chunk) [Financial Results](index=6&type=section&id=Financial%20Results) [Condensed Consolidated Balance Sheets (Unaudited)](index=6&type=section&id=Condensed%20Consolidated%20Balance%20Sheets%20(Unaudited)) Onity Group's balance sheet as of June 30, 2025, shows an increase in total assets and stockholders' equity compared to prior periods, driven by growth in mortgage servicing rights (MSRs) and loans held for sale Total Assets (Dollars in millions) | Date | Amount | | :--- | :--- | | June 30, 2025 | $16,531.3 | | March 31, 2025 | $16,259.3 | | June 30, 2024 | $13,084.7 | Mortgage Servicing Rights (MSRs), at fair value (Dollars in millions) | Date | Amount | | :--- | :--- | | June 30, 2025 | $2,632.6 | | March 31, 2025 | $2,547.4 | | June 30, 2024 | $2,327.7 | Stockholders' Equity (Dollars in millions) | Date | Amount | | :--- | :--- | | June 30, 2025 | $481.9 | | March 31, 2025 | $460.2 | | June 30, 2024 | $446.2 | [Condensed Consolidated Statements of Operations (Unaudited)](index=7&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations%20(Unaudited)) For Q2 2025, Onity Group reported total revenue of $246.6 million, with net income attributable to common stockholders of $20.5 million and diluted EPS of $2.40, showing an increase in profitability compared to Q2 2024 Total Revenue (Dollars in millions) | Period | Amount | | :--- | :--- | | Q2 2025 | $246.6 | | Q1 2025 | $249.8 | | Q2 2024 | $246.4 | Net Income (Loss) attributable to common stockholders (Dollars in millions) | Period | Amount | | :--- | :--- | | Q2 2025 | $20.5 | | Q1 2025 | $21.1 | | Q2 2024 | $10.5 | Diluted EPS | Period | Amount | | :--- | :--- | | Q2 2025 | $2.40 | | Q1 2025 | $2.50 | | Q2 2024 | $1.33 | Servicing and subservicing fees (Dollars in millions) | Period | Amount | | :--- | :--- | | Q2 2025 | $211.3 | | Q1 2025 | $203.3 | | Q2 2024 | $210.8 | [Non-GAAP Financial Measures & Reconciliations](index=4&type=section&id=Non-GAAP%20Financial%20Measures%20%26%20Reconciliations) [Note Regarding Non-GAAP Financial Measures](index=4&type=section&id=Note%20Regarding%20Non-GAAP%20Financial%20Measures) This section explains the use of non-GAAP financial measures, specifically adjusted pre-tax income and adjusted ROE, which management uses to assess financial performance by removing the impact of MSR fair value changes due to market interest rates and assumptions, while acknowledging their limitations - Adjusted pre-tax income and adjusted ROE are non-GAAP financial measures used by management to assess financial performance and allocate resources[14](index=14&type=chunk)[15](index=15&type=chunk) - These measures remove fair value changes of net MSR exposure due to market interest rates and assumptions to provide a clearer view of underlying business trends, independent of market volatility[15](index=15&type=chunk) - A methodology change was implemented in Q4 2024 for 'Other Income Statement Notables' to include fair value changes due to interest rates for reverse loan buyouts, aligning with the company's risk management approach[18](index=18&type=chunk)[19](index=19&type=chunk) [Adjusted Pre-Tax Income (Loss) Reconciliation](index=5&type=section&id=Adjusted%20Pre-Tax%20Income%20(Loss)%20Reconciliation) The company provides a detailed reconciliation of GAAP pre-tax income to adjusted pre-tax income, outlining specific adjustments for MSR valuation, legal/regulatory settlements, severance, LTIP stock price changes, and other notable income statement items Adjusted Pre-Tax Income (Dollars in millions) | Period | Amount | | :--- | :--- | | 1H 2025 | $42 | | Q2 2025 | $16 | | Q1 2025 | $25 | | Q2 2024 | $32 | Total Notables (Adjustments) (Dollars in millions) | Period | Amount | | :--- | :--- | | 1H 2025 | $(10) | | Q2 2025 | $6 | | Q1 2025 | $(16) | | Q2 2024 | $(19) | [Adjusted ROE Calculation](index=6&type=section&id=Adjusted%20ROE%20Calculation) The adjusted ROE calculation provides a measure of the company's return on equity after accounting for notable items, offering a supplemental view of operational performance compared to GAAP ROE Adjusted ROE (Percentage) | Period | Percentage | | :--- | :--- | | 1H 2025 | 18% | | Q2 2025 | 14% | | Q1 2025 | 22% | | Q2 2024 | 29% | GAAP ROE (after tax) (Percentage) | Period | Percentage | | :--- | :--- | | 1H 2025 | 18% | | Q2 2025 | 17% | | Q1 2025 | 19% | | Q2 2024 | 10% | [Other Disclosures](index=1&type=section&id=Other%20Disclosures) [Forward Looking Statements](index=3&type=section&id=Forward%20Looking%20Statements) This section contains standard forward-looking statements, cautioning readers about inherent uncertainties and risks that could cause actual results to differ materially from projections, including market disruptions, policy changes, and regulatory compliance - The press release contains forward-looking statements identified by future-oriented terminology, addressing matters that are inherently uncertain[12](index=12&type=chunk) - Actual results could differ materially due to various assumptions, risks, and uncertainties, including ongoing disruption in financial markets, changes in monetary and fiscal policy, impacts of inflation, and regulatory requirements[13](index=13&type=chunk) - Readers are cautioned not to place undue reliance on these statements and should review the company's SEC filings for detailed risks[12](index=12&type=chunk)[13](index=13&type=chunk) [Webcast and Conference Call](index=1&type=section&id=Webcast%20and%20Conference%20Call) Onity Group will host a conference call on August 5, 2025, to discuss its second quarter 2025 operating results and provide a business update, with access available via dial-in or live audio webcast - A conference call will be held on Tuesday, August 5, 2025, at 8:30 a.m. (ET) to review Q2 2025 operating results and provide a business update[7](index=7&type=chunk) - Participants can access the call by dialing (800) 245-3047 or (203) 518-9765 (Conference ID: "Onity") or via a live audio webcast on onitygroup.com[7](index=7&type=chunk) - A replay of the conference call will be available via the website and telephonically until August 19, 2025[7](index=7&type=chunk)[10](index=10&type=chunk) [Contact Information](index=7&type=section&id=Contact%20Information) This section provides contact details for investor relations and media inquiries - For investor inquiries, contact Valerie Haertel, VP, Investor Relations, at (561) 570-2969 or shareholderrelations@onitygroup.com[24](index=24&type=chunk) - For media inquiries, contact Dico Akseraylian, SVP, Corporate Communications, at (856) 917-0066 or mediarelations@onitygroup.com[24](index=24&type=chunk)

WEST PALM BEACH, Fla., Aug. 05, 2025 (GLOBE NEWSWIRE) -- Onity Group Inc. (NYSE: ONIT) ("Onity" or the "Company") today announced its second quarter 2025 results and provided a business update. Funded recapture volume up 2.4x YoY; refinance recapture rate is 1.5x industry average based on ICE Mortgage Monitor report as of June 2025 Average owned servicing UPB of $153 billion, up 16% YoY Effective MSR hedge strategy resulting in minimal MSR fair value volatility in the quarter and continued alignment with op ...

Onity Group (ONIT) is expected to deliver a year-over-year decline in earnings on higher revenues when it reports results for the quarter ended June 2025. This widely-known consensus outlook gives a good sense of the company's earnings picture, but how the actual results compare to these estimates is a powerful factor that could impact its near-term stock price.The earnings report, which is expected to be released on August 5, might help the stock move higher if these key numbers are better than expectation ...

Core Viewpoint - Onity Group Inc. will hold a conference call on August 5, 2025, to discuss its second quarter 2025 operating results and provide a business update [1]. Group 1: Conference Call Details - The conference call is scheduled for August 5, 2025, at 8:30 a.m. (ET) [1]. - Interested parties can participate by dialing (800) 245-3047 or (203) 518-9765, referencing the conference ID "Onity" [2]. - A live audio webcast will also be available on the Shareholder Relations page of Onity's website [2]. Group 2: Investor Presentation and Replay - An investor presentation will accompany the conference call and will be available on the Shareholder Relations page prior to the call [3]. - A replay of the conference call will be accessible on the website approximately two hours after the call concludes [3]. - A telephonic replay will be available approximately three hours after the call's completion until August 19, 2025, by dialing (844) 512-2921 or (412) 317-6671, referencing access code 11159308 [3]. Group 3: Company Overview - Onity Group Inc. is a leading non-bank financial services company providing mortgage servicing and originations solutions through its primary brands, PHH Mortgage and Liberty Reverse Mortgage [4]. - PHH Mortgage is one of the largest servicers in the country, offering a variety of servicing and lending programs [4]. - Liberty is one of the nation's largest reverse mortgage lenders, focusing on loans that help customers meet personal and financial needs [4]. - The company is headquartered in West Palm Beach, Florida, with operations in the United States, U.S. Virgin Islands, India, and the Philippines, serving customers since 1988 [4].

Core Viewpoint - PHH Mortgage has received an upgrade in its residential primary servicer ratings from Fitch Ratings, indicating a Stable Rating Outlook, reflecting the company's strong business model and operational discipline [1][2]. Group 1: Ratings Upgrade Details - Fitch Ratings upgraded the prime product to 'RPS2-' from 'RPS3+', the subprime product to 'RPS2-' from 'RPS3+', the Alt-A product to 'RPS2-' from 'RPS3', and special servicing to 'RSS2-' from 'RSS3' [5]. - Closed-End Second Lien and HELOC products were upgraded to 'RPS3+' from 'RPS3' [5]. Group 2: Company Strengths and Strategies - The ratings upgrade reflects the strength of PHH's balanced and diversified business model, commitment to operational and financial discipline, and growth across multiple channels [2][6]. - The company has been recognized for servicing excellence by Fannie Mae STAR and Freddie Mac SHARP programs and is rated as a Tier 1 servicer by HUD [6]. - PHH is focusing on its growth strategy through increased MSR retention, expanded product offerings, and improved recapture rates in its Consumer Direct channel [6]. - The company utilizes enhanced technology for increased customer engagement and personalized services [6]. - PHH has a highly tenured management team and employs a multi-layered enterprise risk management framework with a three lines of defense approach [6].