Company: RITM-PC
Filing Date: 2025-02-18
Form Type: 10-K
Source: 0001556593-25-000007
Chunk: 197

Company: Rithm Capital Corp.
Filing Date: 2025-02-18
Form: 10-K
Item: Item 7
Chunk 197
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8 million in the prior year. The increase in loss year over year was primarily due to an increase in realized and unrealized losses, net, including a $272.2 million increase in losses relating to MSRs portfolio hedges including real estate and other securities and derivative and hedging instruments. The increase in loss was partially offset by (i) a $79.6 million increased gain recognized on consolidated CFEs, primarily related to securitized residential mortgage loans, (ii) a $51.1 million change related to decrease in contingency reserves year over year and a loss taken on an equity investment in a commercial redevelopment project in 2023 and (iii) a $27.4 million bargain purchase gain recognized in 2024 from the Computershare Acquisition (Note 3 to our consolidated financial statements).

Income Tax Expense (Benefit)

Income tax expense increased $145.2 million, of which $7.1 million and $138.1 million relate to current and deferred tax expense, respectively. The increase in deferred tax expense was primarily driven by increase in fair value of MSRs and loans held within taxable entities, as well as income generated by the Asset Management business segment. Current tax expense is driven primarily by income from foreign operations.

LIQUIDITY AND CAPITAL RESOURCES

Overview

Liquidity is a measurement of our ability to meet potential cash requirements, including ongoing commitments to repay borrowings, fund and maintain investments and other general business needs. 

We must distribute annually at least 90% of our REIT taxable income to maintain our status as a REIT under the Internal Revenue Code. A portion of this requirement may be able to be met through stock dividends, rather than cash, subject to limitations based on the value of our stock. Our ability to utilize funds generated by the MSRs held in our servicer subsidiaries, NRM and Newrez, is subject to and limited by regulatory requirements established by the FHFA and Ginnie Mae for Fannie Mae and Freddie Mac private label servicing and Ginnie Mae servicing, respectively, as summarized below. Moreover, our ability to access and utilize cash generated from our regulated entities is an important part of our dividend paying ability. As of December 31, 2024, approximately $1.2 billion of available liquidity was held at NRM and Newrez, of which $0.6 billion were in excess of the new regulatory liquidity requirements made effective during 2023. NRM and Newrez are expected to maintain compliance with applicable liquidity and net worth requirements