Core Insights - The company reported record earnings and significant growth in origination volume, with a 44% year-over-year increase in 2025, outperforming the industry average of 18% [2][6][4] - A partial release of a $120 million deferred tax valuation allowance positively impacted equity, increasing book value per share by more than $11 quarter-over-quarter [4][13] - Management anticipates stabilization of delinquencies by Q2 2026, following a rise due to FHA loan modification rule changes and a government shutdown [3][11] Financial Performance - Onity's fourth-quarter revenue increased by 25% year-over-year and 6% sequentially, with adjusted return on equity (ROE) at 7% for the quarter and 17% when adjusted for governmental actions [12][21] - The company experienced a $14 million incremental MSR runoff in Q4, attributed to higher delinquencies from FHA changes and a government shutdown [3][9] - Liquidity at year-end 2025 stood at $205 million, including $181 million in unrestricted cash [15] Strategic Initiatives - The company plans to focus on organic growth, technology investments, and simplification actions in 2026, including transitioning from the legacy Rithm subservicing relationship [17] - Management is evaluating opportunistic bulk acquisitions and M&A when favorable economic conditions arise [17] - The introduction of new products and expansion in both B2B and Consumer Direct channels contributed to record origination volume [6][7] Market Conditions - The FHA loan modification program changes and a six-week government shutdown led to an increase in the overall delinquency rate for FHA borrowers by approximately 80 basis points in Q4 [10][9] - Management expects the effective tax rate for 2026 to be between 28% and 30% due to certain permanent expense disallowances [21] - The anticipated restructuring and indemnification costs related to Rithm and Finance of America are expected to be between $19 million and $20 million [21]