Company: RITM-PC
Filing Date: 2025-02-18
Form Type: 10-K
Source: 0001556593-25-000007
Chunk: 8

Company: Rithm Capital Corp.
Filing Date: 2025-02-18
Form: 10-K
Item: Item 1
Chunk 8
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 away from lower-yielding agency mortgage-backed securities and problematic commercial real estate assets, toward National Association of Insurance Commissioners favorably rated mortgage loans, which offer more attractive risk-adjusted returns.

Non-Agency RMBS

Corporate credit spreads are currently at multi-year lows, reflecting strong demand for spread products across the private-label sector. This demand has been supported by the expansion of real estate loan products, including closed-end seconds, home equity lines of credit, home improvement loans and more. Despite high mortgage rates, this diversification has facilitated the issuance of additional private-label securitizations (“PLS”). These instruments provide locked-in borrowers with opportunities to monetize their home equity, further driving activity in the RMBS sector.

SFR Properties

We believe the fundamental long-term shortage of affordable housing in the U.S. has also contributed to the increased popularity of SFR properties. Our expectation is that the demand for SFR will continue, and we therefore believe there are attractive opportunities in the SFR sector. Using our established experience with residential real estate and our consumer-facing expertise, we believe we are well positioned to benefit from these compelling trends in SFR properties.

Consumer Loans

Consumer loans delinquencies are generally returning to pre-pandemic levels or are largely confined to recent loan originations with higher interest rates, limiting their broader impact on consumer stability. However, the overall financial position of consumers remains strong, but there has been a noticeable rise in delinquencies across both secured and unsecured consumer loans, particularly among recent originations. Contributing to this shift is the post-pandemic inflation of Fair Isaac Corporation (“FICO”) scores, driven by stimulus payments and excess savings, which temporarily masked underlying credit risks.

Rithm Capital believes it has the necessary experience and in-house capabilities to favorably position itself across specific product offerings and origination platforms in efforts to withstand an ever-changing macroeconomic backdrop.

Our Strategy 

Rithm Capital has grown from solely a manager of MSRs into a diverse and opportunistic platform that includes its operating companies, investment portfolio and management of third-party products. Rithm Capital seeks to draw on its expertise in origination, servicing, asset valuation, structured finance and mergers and acquisitions, as well as in operations and restructuring in the financial services, credit and real estate sectors, to source, acquire, manage and seek to enhance the value of its investments. While we continue to grow and diversify our global asset management business, our legacy business lines remain important components of the Company, and we expect to continue