Company: RITM-PC
Filing Date: 2025-02-18
Form Type: 10-K
Source: 0001556593-25-000007
Chunk: 72

Company: Rithm Capital Corp.
Filing Date: 2025-02-18
Form: 10-K
Item: Item 1A
Chunk 72
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 other financing sources if it were to become uneconomical to roll our TBA contracts into future months. The REIT provisions of the Internal Revenue Code limit our ability to hedge. In managing our hedge instruments, we consider the effect of the expected hedging income on the REIT qualification tests that limit the amount of gross income that a REIT may receive from hedging. We need to carefully monitor, and may have to limit, our hedging strategy to assure that we do not realize hedging income, or hold hedges having a value, in excess of the amounts that would cause us to fail the REIT gross income and asset tests. See “—Risks Related to Our Taxation as a REIT—Complying with the REIT requirements may limit our ability to hedge effectively.”

Accounting for derivatives under GAAP is complicated. Any failure by us to account for our derivatives properly in accordance with GAAP in our financial statements could adversely affect us. In addition, under applicable accounting standards, we may be required to treat some of our investments as derivatives, which could adversely affect our results of operations.

Market conditions could negatively impact our business, results of operations, cash flows and financial condition.

The market in which we operate is affected by a number of factors that are largely beyond our control but can nonetheless have a potentially significant, negative impact on us. These factors include, among other things:

•interest rates, including increases thereof and credit spreads;

•the availability of credit, including the price, terms and conditions under which it can be obtained;

•the quality, pricing and availability of suitable investments;

•liquidity in the credit markets;

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•the ability to obtain accurate market-based valuations;

•volatility associated with asset valuations and margin calls;

•the ability of securities dealers to make markets in relevant securities and loans;

•loan values relative to the value of the underlying real estate assets;

•default rates on the loans underlying our investments and the amount of the related losses and credit losses with respect to our investments;

•prepayment and repayment rates, delinquency rates and legislative/regulatory changes with respect to our investments and the timing and amount of servicer advances;

•the availability and cost of quality Servicing Partners, and advance, recovery and recapture rates;

•competition;

•the actual and perceived state of the real estate markets, bond markets, market for dividend-paying stocks and public capital markets generally;

•uncertainty related to U.S. federal fiscal, tax, trade or regulatory policy; 

•