Loan Servicing and Originations - As of September 30, 2025, the company serviced or subserviced 1.4 million loans with a total UPB of $315.5 billion[236]. - In Q3 2025, the company added $24.1 billion of new volume, including $10.9 billion from subservicing additions and $11.9 billion from new Originations production[237]. - The average total servicing and subservicing UPB increased by $4.5 billion or 1.5% during Q3 2025 compared to the prior quarter[240]. - The company serviced all mortgage loan classes, including conventional, government-insured, non-Agency, small-balance commercial, and multi-family loans[236]. - The company's Originations volume growth outpaced the industry, with a 23% increase compared to Q2 2025 and a 53% increase compared to Q3 2024[252]. - The total servicing and subservicing UPB amounted to $315.5 billion as of September 30, 2025, reflecting a net increase of $6.0 billion or 1.9% from the previous quarter[242]. - The company plans to continue growing its servicing and subservicing portfolio through multi-channel originations and MSR bulk acquisitions[299]. - The company expects a 16% increase in loan origination in 2026 compared to 2025, driven by macroeconomic conditions and market dynamics[300]. Financial Performance - Net income attributable to common stockholders was $18 million, or $2.19 per share basic and $2.03 diluted[255]. - Total revenue for the three months ended September 30, 2025 increased by $33.7 million, or 14%, compared to the previous quarter, driven by a $16.0 million increase in Servicing revenue and a $17.6 million increase in Originations revenue[260]. - Total revenue increased to $280.3 million in Q3'25, up from $246.6 million in Q2'25, reflecting a growth of approximately 13.0%[297]. - The company reported a $31 million gain on originations sale[255]. - The nine months ended September 30, 2025 saw total revenue increase by $25.5 million, or 3%, compared to the same period in 2024[261]. - The company reported a total of $24.5 billion UPB of subserviced loans on behalf of Rithm as of September 30, 2025[333]. - The company reported a gain of $3.4 million on loans held for sale for the three months ended September 30, 2025, a significant improvement from a loss of $5.0 million in the previous quarter[348]. Operating Expenses and Income - Operating expenses for the three months ended September 30, 2025 were $125.8 million, a 15% increase from the previous quarter[267]. - Operating expenses for the three months ended September 30, 2025, increased by 19% to $74.7 million compared to $62.6 million in the previous quarter[339]. - The company experienced a 38% decline in income before income taxes, reporting $25.2 million for the three months ended September 30, 2025, down from $40.4 million in the previous quarter[339]. - Operating expenses for the nine months ended September 30, 2025, increased by $12.8 million, with a 24% increase in compensation and benefits driven by higher commissions[393]. - Compensation and benefits expense for the three months ended September 30, 2025 increased by 2% to $23.4 million compared to $22.9 million in Q2 2025, while for the nine months ended September 30, 2025, it decreased by $6.3 million or 8% compared to the same period in 2024[356][357]. Market Conditions and Interest Rates - The 30-year fixed rate mortgage average declined to 6.58% in Q3 2025, down 20 basis points from the previous quarter[244]. - The average 30-year fixed rate mortgage rate remains elevated compared to the past decade, impacting borrower affordability[244]. - The industry mortgage origination volume grew 3% quarter over quarter and 16% year over year in Q3 2025, driven by increased refinance activity[251]. - The fair value volatility of the MSR portfolio was reduced due to a high targeted hedge coverage ratio, resulting in losses of $1.0 million in Q3 2025 and gains of $9.8 million in Q2 2025, with a $22.6 million decrease in gains for the nine months ended September 30, 2025 compared to the same period in 2024[355]. Client Relationships and Servicing Agreements - Rithm, a major subservicing client, will not renew its servicing agreements effective January 31, 2026, which accounted for approximately $33.0 billion, or 10% of the total UPB[307][308]. - Servicing and subservicing fees from Rithm amounted to $60.2 million, or 13% of total fees for the nine months ended September 30, 2025[329]. - Rithm accounted for 55% of all delinquent loans serviced by the company as of September 30, 2025[308][329]. - The company has relationships with 732 approved correspondent sellers as of September 30, 2025, which supports the replenishment and growth of the MSR portfolio[377]. - As of September 30, 2025, the company has relationships with 521 approved sellers through the Agency Cash Window co-issue programs[379]. Assets and Liabilities - Total assets decreased by $328.0 million or 2% from December 31, 2024 to September 30, 2025, primarily due to a decline in reverse loans held for investment[284]. - Total liabilities decreased by $386.4 million compared to December 31, 2024, largely due to a $947.6 million decrease in HMBS-related borrowings[285]. - Total stockholders' equity increased to $501 million at September 30, 2025, compared to $443 million at December 31, 2024[422]. - The company holds $16.1 billion in total assets, with $9.9 billion in securitized HECM loans reported on the balance sheet[422]. Future Outlook and Strategy - The company aims for prudent capital-light growth by emphasizing capital-light subservicing to drive servicing portfolio UPB growth[255]. - The company expects to generate net income and increase stockholders' equity by 2026, barring any adverse impacts from interest rates or regulatory changes[306]. - The company has been acquiring reverse mortgage assets since 2023, financing these acquisitions through on-balance sheet private placement securitizations[325]. - The company regularly evaluates financing structure options, including asset-backed financing, to support investment plans and reduce funding costs[420].

Core Insights - The company reported strong third quarter results, demonstrating effective strategy execution and a balanced business model that adapts well to changing market conditions [5][30]. - Adjusted pretax income reached $31 million, with an annualized adjusted return on equity (ROE) of 25%, exceeding guidance for the quarter and year to date [6][22]. - The company experienced record origination volume and steady servicing profitability, contributing to book value growth, which increased to $62 per share, up 5% year over year [7][29]. Financial Performance - Revenue grew by double digits year over year and over the trailing quarter, driven by both servicing and origination units [22]. - The adjusted ROE for the year-to-date was 20%, above the upper end of guidance, with expectations to exceed the full year adjusted ROE guidance of 16% to 18% [23][28]. - GAAP net income was reported at $2.03 per share, reflecting a tax provision expense of $4 million related to tax planning strategies [6][22]. Business Segments - The origination segment saw a significant increase in adjusted pretax income, driven by strong recapture execution and improved performance in the B2B channel [24]. - The servicing segment contributed $31 million to adjusted pretax income, with growth in average UPB and revenue, although offset by higher runoff [25]. - The company’s Consumer Direct team achieved a recapture performance rate of 85%, indicating strong customer retention and growth potential [13][24]. Market Conditions and Strategy - The company is well-positioned to capitalize on both high and low interest rate environments, with a focus on maintaining agility in asset management [8][30]. - The servicing portfolio grew by $17 billion or 6% year over year, driven by double-digit origination growth [9]. - The company anticipates continued interest in subservicing options, with expectations for subservicing additions in the second half of the year to exceed $32 billion [14]. Technology and Innovation - The company has invested in AI and technology to enhance operational efficiency, customer experience, and competitive positioning [19][21]. - The focus on integrating robotics and machine learning aims to optimize processes and improve decision-making across operations [20][21]. - The technology investments have resulted in improved cycle times, processing costs, and customer access, contributing to overall business performance [20].

Financial Performance - Onity reported a strong third quarter in 2025, with an Adjusted Return on Equity (ROE) of 25%[12], exceeding the 16-18% guidance[10, 12] - The company's book value per share increased by $2 QoQ and $2.71 YoY, reaching $62.21[12] - Onity achieved $31 million in Adjusted Pre-Tax Income (PTI) for the third quarter of 2025[12] - The company's GAAP Diluted Earnings Per Share (EPS) was $2.03, resulting in a GAAP ROE of 14%[12] Servicing Portfolio - The total servicing Unpaid Principal Balance (UPB) reached $316 billion in Q3 2025[12, 77] - Owned Mortgage Servicing Rights (MSR) UPB grew QoQ and YoY, reinforcing the company's focus on growth[19] - The company is actively managing its MSR portfolio, with client deboarding primarily driven by opportunistic MSR sales due to favorable market pricing[22, 23] Originations - Originations volume increased by 39% YoY, exceeding the industry growth of 16%[12, 24, 25] - Onity's multi-channel strategy in Originations focuses on B2B and customer retention[27] - The company's refinance recapture rate is 1.9x the industry average[30] Subservicing - Onity has a robust pipeline of subservicing opportunities, with 9 new clients signed in FY'25 and 6 agreements under contract negotiation[35] - The company is capitalizing on commercial expansion opportunities, with UPB +9% QoQ and +32% YoY[35] AI and Technology - Onity is expanding its AI-powered platform to grow revenue, reduce costs, and drive service excellence[36] - Robotic Process Automation (RPA) in 200+ processes saves 85,000+ manual work hours per month[40]

Financial Performance - Net income attributable to common stockholders was $18 million, with diluted EPS of $2.03 and ROE of 14%[7] - Net income attributable to common stockholders for Q3'25 was $18 million, a decrease of 14.3% from $21 million in Q3'24[23] - Total revenue for Q3'25 increased to $280.3 million, up 5.8% from $265.7 million in Q3'24[26] - Adjusted pre-tax income was $31 million, resulting in an annualized adjusted ROE of 25%[7] - Adjusted pre-tax income for Q3'25 was $31 million, consistent with Q3'24, despite notable items impacting earnings[24] - The company reported a GAAP return on equity (ROE) of 14% for Q3'25, down from 19% in Q3'24[24] - Basic earnings per share (EPS) for Q3'25 was $2.19, down from $2.72 in Q3'24[26] Originations and Servicing - Originations volume reached $12 billion, up 39% year-over-year, exceeding the industry growth rate[7] - Average servicing UPB increased to $312 billion, up $7 billion year-over-year[7] - Funded recapture volume increased 1.8 times year-over-year, with a refinance recapture rate of 1.9 times the industry average[8] - Nine new subservicing clients were added year-to-date[8] - Mortgage servicing rights (MSRs) at fair value rose to $2,762.9 million in Q3'25, compared to $2,223.6 million in Q3'24, reflecting a significant increase of 24.2%[25] Liquidity and Assets - Total liquidity stood at $221 million as of September 30, 2025[8] - Cash and cash equivalents decreased to $172.8 million in Q3'25 from $201.6 million in Q3'24, a decline of 14.3%[25] - Total assets as of September 30, 2025, were $16,107.4 million, an increase from $13,226.7 million in the previous year[25] Future Expectations - The company expects to exceed the 2025 adjusted ROE guidance range of 16% - 18%[7] - The company anticipates releasing a significant portion of the $180 million deferred tax asset valuation allowance by year-end 2025[7] - The company plans to recognize changes in fair value due to interest rates for reverse loan buyouts as notable items starting Q4'24, which may impact future earnings reporting[23] Subservicing Agreements - The Rithm subservicing agreements, representing approximately $33 billion or 10% of total servicing UPB, will not be renewed effective January 31, 2026[9] Valuation Adjustments - The company experienced a net loss of $45 million in MSR valuation adjustments for Q3'25, compared to a loss of $31.5 million in Q3'24[26]

Core Insights - Onity Group Inc. reported exceptional performance in Q3 2025, with record originations and robust servicing earnings, driven by a multi-channel strategy and technological advancements [4][7]. Financial Performance - Net income attributable to common stockholders was $18 million, with diluted EPS of $2.03 and an ROE of 14% [7]. - Adjusted pre-tax income was $31 million, leading to an annualized adjusted ROE of 25% [7]. - Book value per share increased to $62, up $2.71 year-over-year [7]. - Originations volume reached $12 billion, a 39% increase year-over-year, surpassing the industry growth rate [7]. - Average servicing UPB rose to $312 billion, an increase of $7 billion year-over-year [7]. Business Highlights - Funded recapture volume increased 1.8 times year-over-year, with a year-to-date refinance recapture rate of 1.9 times the industry average [8]. - The company added 9 new subservicing clients year-to-date [8]. - Commercial servicing UPB grew by 32% year-over-year [8]. - Average owned servicing UPB was $159 billion, up 21% year-over-year [8]. - Total liquidity stood at $221 million as of September 30, 2025 [8]. Rithm Subservicing Agreements Update - Rithm Capital Corp. will not renew its subservicing agreements effective January 31, 2026, which represented approximately $33 billion, or 10%, of Onity's total servicing UPB as of September 30, 2025 [6]. - The company does not anticipate a material financial impact from this termination for the full year of 2026 [6]. - The Rithm portfolio was primarily composed of pre-2008 subprime loans and was one of the least profitable portfolios in Onity's servicing business [9]. Future Outlook - The company expects to exceed its adjusted ROE guidance for 2025, which is set between 16% and 18% [7]. - Onity plans to release a significant portion of a $180 million deferred tax asset valuation allowance by year-end 2025 [7].

Core Points - Onity Group Inc. will hold a conference call on November 6, 2025, at 8:30 a.m. (ET) to discuss its third quarter 2025 operating results and provide a business update [1] - The conference call can be accessed by dialing (833) 316-1983 or (785) 838-9310, with a conference ID "Onity" [2] - An investor presentation will be available on the Shareholder Relations page prior to the call, and a replay will be accessible approximately two hours after the call [3] Company Overview - Onity Group Inc. is a leading non-bank financial services company that provides 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 U.S., offering various servicing and lending programs [4] - Liberty Reverse Mortgage is among the largest reverse mortgage lenders in the nation, focusing on loans that assist customers with personal and financial needs [4]

Core Viewpoint - Onity Group Inc. will hold a conference call on November 6, 2025, to discuss its third quarter 2025 operating results and provide a business update [1]. Group 1: Conference Call Details - The conference call is scheduled for 8:30 a.m. (ET) on November 6, 2025 [1]. - Interested parties can participate by dialing (833) 316-1983 or (785) 838-9310, referencing the conference ID "Onity" [2]. - A live audio webcast will also be available on the Shareholder Relations page of the company's website [2]. Group 2: Investor Presentation and Replay - An investor presentation 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, lasting until November 20, 2025, by dialing (844) 512-2921 or (412) 317-6671 with access code 11160252 [3]. Group 3: Company Overview - Onity Group Inc. is a leading non-bank financial services company, providing mortgage servicing and originations solutions through its brands, PHH Mortgage and Liberty Reverse Mortgage [4]. - PHH Mortgage is one of the largest servicers in the U.S., offering various servicing and lending programs [4]. - Liberty is among the largest reverse mortgage lenders in the nation, focusing on loans that assist customers with personal and financial needs [4]. - The company is headquartered in West Palm Beach, Florida, with operations in the U.S., U.S. Virgin Islands, India, and the Philippines, serving customers since 1988 [4].

Core Insights - PHH Mortgage is set to launch a new suite of proprietary non-qualified mortgage (non-QM) products called FlexIQ on October 20, 2025, through its Correspondent Lending channel [1][2] - FlexIQ aims to provide a streamlined process and flexible product offerings to meet the increasing demand for non-QM products, reflecting the company's commitment to its clients [2] Product Details - FlexIQ will replace the previously offered Gold/Silver/Bronze non-QM programs, enhancing the company's product offerings [3] - The FlexIQ suite includes three product categories: Full Documentation, Alternative Documentation, and Debt Service Coverage Ratio (DSCR) [6] Company Overview - Onity Group Inc. is a leading non-bank financial services company, with PHH Mortgage being one of the largest servicers in the U.S., providing various mortgage servicing and origination solutions [4]

Core Points - Onity Group Inc. has appointed Robert S. Welborn to its Board of Directors effective October 1, 2025, as DeForest B. Soaries Jr. will not stand for re-election at the 2026 Annual Meeting of Shareholders [1][2][3] Group 1: Board Changes - Robert S. Welborn brings extensive experience in data science and analytics from his previous roles at Meta, General Motors, and USAA, which will support Onity's technology innovation agenda [2][3] - DeForest B. Soaries Jr. has been a board member since 2015 and will continue to serve until the 2026 Annual Meeting, where he will step down [2][3] Group 2: Company Overview - Onity Group Inc. is a leading non-bank financial services company specializing in mortgage servicing and originations through its brands, PHH Mortgage and Liberty Reverse Mortgage [4] - PHH Mortgage is one of the largest servicers in the U.S., while Liberty is a major reverse mortgage lender, helping customers meet personal and financial needs [4]

Summary of Onity Group Conference Call Company Overview - **Company Name**: Onity Group - **Ticker**: O-N-I-T - **Business Model**: Independent non-bank mortgage servicer and originator, involved in servicing and originating mortgages, with a balanced business model that reacts favorably to interest rate changes [2][3][4] Key Financial Metrics - **Servicing Portfolio**: Approximately $307 billion in Unpaid Principal Balance (UPB) [4] - **Adjusted Return on Equity (ROE)**: Year-to-date at 18%, with guidance of 16% to 18% [4][20] - **Earnings Per Share**: GAAP-diluted earnings per share and book value per share were discussed, but specific figures were not provided [5] Market Position and Strategy - **Industry Rank**: Top ten correspondent lender and significant player in the reverse originations market [4] - **Growth Strategy**: Focus on capital-like growth through partnerships, retaining Mortgage Servicing Rights (MSRs), and enhancing customer experience [5][6] - **Market Dynamics**: The mortgage market has fluctuated between $1.7 trillion to $2 trillion recently, with a total servicing market of approximately $14 trillion [7][8] Operational Performance - **Recapture Rate**: Improved recapture rate of 88% for consumer direct and low 40s blended rate, indicating strong performance compared to peers [29][30] - **Technology Utilization**: Emphasis on using technology such as machine learning and robotics to enhance operational efficiency and customer experience [17][18] Financial Health and Leverage - **Current Leverage**: Approximately 3.2 to 1, improved from over 4 to 1 in 2024 [23] - **Debt Management**: Restructured debt, reduced total debt by $140 million, and focused on organic growth to improve leverage [23][24] Transformation and Regulatory History - **Company Transformation**: Significant changes since the merger of Ocwen and PHH Mortgage, including management upgrades and technology improvements [25][26] - **Regulatory Challenges**: Past regulatory issues have been resolved, leading to a more favorable outlook for the company [11][25] Investment Thesis - **Valuation**: Currently trading at a 65% to 70% discount to book value, presenting a potential value investment opportunity [10][34] - **Market Opportunities**: M&A activity in the industry could create opportunities for Onity, especially as competitors consolidate [31][32] Future Outlook - **Guidance for 2025**: Continued strong performance expected, with a focus on growing the servicing book by 10% or more and maintaining high hedge effectiveness [20][21] - **Market Resilience**: Confidence in the business model's performance across varying interest rate environments [21] Additional Insights - **Customer Experience**: High net promoter scores indicate strong customer satisfaction, comparable to leading retail brands [16] - **M&A Impact**: Increased M&A activity in the sector may lead to shifts in subservicing relationships, providing competitive advantages [32][33] This summary encapsulates the key points discussed during the Onity Group conference call, highlighting the company's operational strategies, financial metrics, market position, and future outlook.