ONITY GROUP INC.
For the period ended Sep 30, 2025. Filed Nov 6, 2025.
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A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Sep 30, 2025 · Filed Nov 6, 2025
ONIT$31.00-3.8%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2025-06-30; filed 2025-08-05.
0001628280-25-037847
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2025-09-30; filed 2025-11-06.
0001628280-25-050223
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 319 previous paragraphs and 355 current paragraphs.
190 unchanged; 99 reworded; 65 added; 28 removed; 2 previous and 1 current paragraphs rearranged.
Tables are not compared: 37 previous and 39 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (65)
Current report
(1) MSRs sold or transferred to Rithm, MAV and other MSR capital partners with subservicing retained and that do not qualify for derecognition / sale accounting. Reported as MSR at fair value on our consolidated balance sheet along with an associated Pledged MSR liability, economically deemed as subservicing relationship,
Current report
(2) Reverse mortgage loans and other servicing (including whole loans) carried on balance sheet.
Current report
The industry volume grew 3% quarter over quarter (Q3 2025 vs Q2 2025), led by a stronger increase in refinance activity, and grew 16% year over year (Q3 2025 vs Q3 2024), also driven by higher refinance originations as borrowers responded to favorable interest rates movements. On a year-to-date basis (YTD), the average industry volume grew 15% in the first nine months of 2025 as compared with the first nine months of 2024. Comparatively, our Originations volume growth (funded volume of Correspondent and Consumer Direct) outpaced the industry for all periods presented, as summarized below:
Current report
•Originations gain on sale of $31 million
Current report
•MSR investment of $2.8 billion
Current report
•Total liquidity of $221 million, and cash position of $173 million
Current report
•Total assets of $16.1 billion
Current report
The following chart displays income before income taxes by segment for the periods presented (also refer to the respective segment discussions):
Current report
Onity reported $18.7 million of net income in the third quarter of 2025, compared to $21.5 million in the second quarter of 2025, reflecting a steady income before income taxes and an additional $3.0 million income tax expense quarter over quarter. The following discusses certain notable changes:
Current report
•$33.7 million increase in revenue, mostly driven by a $23.7 million increase in Gain on loans held for sale, with higher margins and higher volumes in Originations (+$15.3 million gain) and favorable fair value changes of reverse buyouts. In addition, Servicing and subservicing fees increased $6.2 million with higher float earnings and a higher average servicing UPB.
Current report
•$17.7 million higher loss on MSR valuation adjustments, net largely driven by favorable assumption updates in the second quarter of 2025, higher MSR runoff expense in the third quarter of 2025, and the impact of interest rates, net of hedging.
Current report
The following chart displays total revenue by segment for the periods presented (also refer to the respective segment discussions):
Current report
Total revenue for the three months ended September 30, 2025 increased $33.7 million, or 14% compared to the three months ended June 30, 2025 due to a $16.0 million, or 7% increase, in Servicing revenue and a $17.6 million, or 60% increase, in Originations revenue.
Current report
•The $16.0 million increase in Servicing revenue is mostly attributed to higher Servicing and subservicing fees and higher Gain on loans held for sale. Servicing and subservicing fees increased $6.2 million driven by seasonally-increased float earnings and a higher average servicing UPB. Gain on loans held for sale improved $8.4 million largely due to losses in the prior quarter on new buyouts.
Current report
•The $17.6 million increase in Originations revenue is primarily attributed to a $15.3 million increase in Gain on loans held for sale, due to the combined effect of higher margins and higher loan production volume in both Consumer Direct and Correspondent channels.
Current report
•The $26.3 million increase in Originations revenue is primarily driven by an $18.7 million increase in Gain on loans held for sale, net in our Consumer Direct channel and a $6.2 million increase in fee revenue attributed to a 44% higher loan production volume.
Current report
•Servicing revenue remained overall stable, with three contributing factors. First, Servicing and subservicing fees increased $7.5 million driven by MSR growth. Second, Gain on reverse loans held for investment and HMBS-related borrowings, net increased $6.2 million with higher net interest income (due to the reverse portfolio acquisition from Waterfall in the fourth quarter of 2024) and a favorable change in rates and assumptions. Third, offsetting these increases was a $16.4 million unfavorable Gain on loans held for sale variance year-over-year, mostly driven by losses on reverse mortgage buyouts in 2025 (largely attributable to the acquired reverse portfolio from Waterfall) and gains in 2024 on previously acquired reverse mortgage buyouts.
Current report
The following chart displays operating expenses by segment for the periods presented (also refer to the respective segment discussions):
Current report
Servicing and origination expense for the three months ended September 30, 2025 increased $2.6 million compared to the three months ended June 30, 2025, with increases in both segments driven by higher production volume in Originations and higher provision expense in Servicing mostly attributable to our captive reinsurance business (CRL) that was exposed to higher property casualties.
Current report
Compared to the nine months ended September 30, 2024, Servicing and origination expenses for the nine months ended September 30, 2025 increased $1.6 million or 4% largely due to the same drivers described above, with some offsetting factors.
Current report
Technology and communication expense for the three months ended September 30, 2025 was flat as compared to the three months ended June 30, 2025. Compared to the nine months ended September 30, 2024, Technology and communication expenses for the nine months ended September 30, 2025 increased $7.5 million or 19% primarily driven by our technology initiatives (including robotic process automation, digitization and machine learning / artificial intelligence) and certain technology expenses previously reflected within Professional services.
Current report
Compared to the nine months ended September 30, 2024, Professional services expense for the nine months ended September 30, 2025 increased $9.3 million, mostly driven by an increase in legal expenses, primarily attributed to our accrual for probable losses in connection with the settlement of a legacy litigation matter in the first quarter of 2025 and an increase in legal fees related to other matters (also refer to certain technology expenses discussed above which partially offset the increase).
Current report
Historical trends
Current report
The following table displays historical trends of our financial performance by quarter. Past performance is not necessarily indicative of future results.
Current report
(a) Fair value changes of the reverse mortgage exposure (securitized reverse loans HFI and HMBS-related borrowings, net) due to interest rates are economically hedged along with the MSR fair value changes due to interest rates per our Risk Management policy, while reported in two separate line items above for GAAP presentation purposes.
Current report
(b) Servicing fee collection associated with MSR failed sales (transactions that do not meet sale accounting criteria) is presented gross, within Servicing fees and the associated remittance is presented within Pledged MSR liability expense (net of contractual subservicing fee retained).
Current report
Total revenue shows a generally upward trend, with a notable increase in 2025 driven by the growth of servicing fees on our owned MSR portfolio and Originations Gain on loans held for sale. The volatility in Gain on reverse loans held for investment is primarily due to fluctuations in interest rates and is partially offset by our MSR hedging program. The volatility in Servicing Gain on loans held for sale is mainly due to reverse mortgage buyouts.
Current report
MSR valuation adjustments, net, reflect the increasing MSR portfolio runoff expense, consistent with the portfolio growth, with fair value volatility due to interest rate and assumption changes, largely mitigated by an effective hedging program. Operating expenses are generally trending upward, following the growth of our operations while maintaining cost discipline. Quarterly fluctuations of operating expenses are driven by legal expenses and recoveries.
Current report
The decline in Net interest expense reflects the favorable impact of our corporate debt refinancing in the fourth quarter of 2024 with the associated recognition of a one-time charge within Other. Pledged MSR liability expenses (effectively the servicing fee remittances of MSRs) are relatively stable.
Current report
Income before income taxes shows Onity’s net profitability in all quarters except for the one-time debt refinancing charge in the fourth quarter of 2024. Net profitability overall was driven by revenue growth, cost management and effective MSR hedging.
Current report
Seasonality
Current report
Mortgage origination and servicing can be seasonal with typically higher home purchase activity in the spring and summer driving higher Originations volumes and Gain on loans held for sale and higher MSR runoff expense in the second and third quarters. Servicing revenue, specifically float income, is also impacted by the seasonality of escrow balances typically lower in the first quarter and increasing throughout the year. The seasonal trends may be offset or impacted by changes in our volumes and changes in interest rates, as reflected in the above table.
Current report
Financial performance drivers
Current report
The following table summarizes certain key drivers of our revenue in the quarter compared with the prior quarter, as disclosed in the segment discussions of this Management Discussion and Analysis. The table also provides certain considerations for, and may be read in conjunction with, the outlook discussed below.
Current report
(a) Average UPB (in $B)
Current report
(b) Average loan count (in 000’s)
Current report
(c) Average float balance (in $B) (information not disclosed in Servicing segment)
Current report
(d) Average forward servicing plus total forward and reverse subservicing UPB (in $B)
Current report
(e) Newly funded Originations UPB (in $B)
Current report
(f) Fair value loans held for sale (in $M)
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Removed paragraphs (28)
Previous report
In April 2025, capital markets experienced a sharp, temporary rise in volatility. Interest rate volatility spiked in early April 2025, as measured by the Intercontinental (ICE) Bank of America/Merrill Lynch Option Volatility Estimate (MOVE) Index, raising to 140 in April 2025 and returning in May-June 2025 to the 90-100 range or levels observed in the first quarter of 2025.
Previous report
•Originations gain on sale of $15.4 million
Previous report
•MSR investment of $2.6 billion, and $309.5 billion total servicing and subservicing UPB
Previous report
•Cash position of $194.3 million
Previous report
•Total assets of $16.5 billion
Previous report
Onity reported $21.5 million net income in the second quarter of 2025, flat compared to the $22.1 million net income in the first quarter of 2025, with the following considerations:
Previous report
•$3.2 million decrease in revenue, largely attributed to a $11.1 million decrease in gains on our reverse mortgage portfolio of loans held for investment and HMBS-related borrowings, net driven by an unfavorable change in market interest rates and assumptions that are part of our MSR hedging strategy (see below). Partially offsetting this decrease, Servicing and subservicing fees increased by $7.9 million mostly due to increased float earnings as well as higher servicing fees with a 3% higher average servicing UPB.
Previous report
•$11.7 million lower loss on MSR valuation adjustments, net largely driven by favorable assumption updates and the impact of interest rates, net of hedging derivatives. While separately presented in our consolidated financial statements, the change in fair value of our reverse mortgage portfolio attributable to interest rates discussed above is included as a partial offset to the change in fair value of our MSR portfolio attributable to interest rates, for hedging and risk management purposes.
Previous report
•$5.1 million increase in Other expense, net largely driven by higher net interest expense to finance the MSR growth.
Previous report
•$14.3 million Income tax expense variance, mostly due to the favorable resolution of a $13.3 million prior year uncertain tax position recognized in the first quarter of 2025.
Previous report
Total revenue for the three months ended June 30, 2025 decreased $3.2 million, or 1% compared to the three months ended March 31, 2025 due to a $4.1 million, or 2% decrease in Servicing revenue, partially offset by a $0.9 million, or 3% increase in Originations revenue.
Previous report
•The 2% decrease in Servicing revenue is primarily due to an $11.1 million decrease in Gain on reverse loans held for investment and HMBS-related borrowings, net largely driven by an unfavorable change in market interest rates vs. the prior quarter and certain unfavorable assumption updates in the second quarter of 2025. Such changes in fair value due to market rates are included as a partial offset to the change in fair value of our MSR portfolio attributable to interest rates, as part of our MSR hedging strategy. Servicing and subservicing fees increased by $7.9 million largely due to seasonally increased float earnings as well as higher servicing fees with a 3% higher average servicing UPB.
Previous report
•The 3% increase in Originations revenue is primarily attributed to higher fees (other revenue) due to higher funded volume. Gain on loans held for sale remained mostly flat with margins adversely impacted by market volatility in April 2025.
Previous report
•The increase in Servicing revenue is mostly due to an $11.4 million increase in Gain on reverse loans held for investment and HMBS-related borrowings, net largely offset by a $10.5 million decrease in Gain on loans held for sale. The increase in Gain on reverse loans held for investment and HMBS-related borrowings, net is mostly driven by a favorable decrease in market interest rates vs. an increase in the prior year period, partially offset by unfavorable assumption updates in the current year period (including less favorable yield spread tightening vs. the prior year period). The unfavorable variance in Gain on loans held for sale is mostly driven by losses on new buyouts (largely attributed to the reverse portfolio acquired from Waterfall in the fourth quarter of 2024), and gains recognized in the first quarter of 2024 on previously acquired reverse mortgage buyouts.
Previous report
•The increase in Originations revenue is primarily driven by an increase in Gain on loans held for sale, net in our Consumer Direct channel, attributed to our increased recapture operational capability. In our Correspondent channel, although loan production volume increased, the gain for the six months ended June 30, 2025 decreased mostly due to a margin decline attributed to the volatile market conditions at the beginning of the second quarter of 2025. In addition, fee revenue increased due to higher production volume in both our Consumer Direct and Correspondent channels.
Previous report
Servicing and origination expense for the three months ended June 30, 2025 was flat compared to the three months ended March 31, 2025, with some offset between the two segments. The higher Originations expense in the second quarter of 2025 driven by higher production volume, was offset by the lower provision expense on non-Agency servicing advances.
Previous report
Compared to the six months ended June 30, 2024, Servicing and origination expenses for the six months ended June 30, 2025 decreased $3.0 million largely due to a lower provision expense for Ginnie Mae claim receivables and servicing advances, partly offset by an increase in provision for indemnification obligations mostly driven by favorable resolutions in 2024, among other offsetting factors.
Previous report
Compared to the six months ended June 30, 2024, Professional services expense for the six months ended June 30, 2025 increased $8.3 million, mostly driven by an increase in litigation-related expenses recorded in the first quarter of 2025, as discussed above.
Previous report
(1)See MSR valuation adjustments, net within the Overview section of Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.
Previous report
(2)Excludes MSR valuations adjustments, net reported within the Originations Segment.
Previous report
(3)See “Other change in fair value of securitized loans held for investment and HMBS-related borrowings, net” in above table.
Previous report
Compensation and benefits expense for the three months ended June 30, 2025 remained flat (decreased 1%), compared to the three months ended March 31, 2025, consistent with headcount.
Previous report
Compared to the six months ended June 30, 2024, Servicing expense for the six months ended June 30, 2025 declined $2.2 million. The decline in servicing expenses is driven by a $1.3 million reduction in provision expenses for Ginnie Mae claim receivables and a $2.0 million decrease in provision expenses for forward servicing advances, partly offset by a $1.2 million increase in provision for indemnification obligations mostly driven by favorable resolutions in 2024, among other offsetting factors.
Previous report
(1)Includes $1.0 million ancillary fee income related to MSR acquisitions reported as Servicing and subservicing fees at the consolidated level for the six months ended June 30, 2024.
Previous report
Gain on loans held for sale, net for the three months ended June 30, 2025 was flat (decreased 1%) compared to the three months ended March 31, 2025, with a $1.8 million decrease in our Correspondent channel offset by a $1.6 million increase in Consumer Direct. The decrease in our Correspondent channel Gain on loans held for sale, net is largely due to a 51% decrease in margin, partly offset by a 40% increase in loan production volume, including Ginnie Mae loans, consistent with the seasonal industry volume trend (up 42% quarter over quarter, based on average of MBA and Fannie Mae data). The increase in our Consumer Direct channel Gain on loans held for sale, net is primarily driven by the 29% increase loan funded volume, partly offset by the 10% decrease in margin. The increase in volume is largely explained by the increase in our recapture capability despite elevated mortgage rates. The decline in margins of our Correspondent and Consumer Direct channels is mostly attributable to the volatile market conditions in April 2025.
Previous report
Interest expense for the three months ended June 30, 2025 was flat (decreased $0.1 million) as compared to the three months ended March 31, 2025.
Previous report
On October 21, 2024, Moody’s assigned a Caa1 rating to the new PHH Corporation Senior Notes due 2029. Moody’s also assigned a B3 corporate family rating to Onity and withdrew the B3 corporate family rating of PHH Mortgage Corporation. The entities’ outlooks are stable. Moody’s recognizes Onity's improving performance and return to profitability and adequate capitalization. At the same time, Moody’s explained the rating is constrained by Onity's modest scale compared to mortgage peers and history of uneven financial performance.
Previous report
Our operating cash flows are further summarized below:
Reworded paragraphs (99)
Previous wording
(Dollars in millions, except per share amounts and unless otherwise indicated. Amounts may not add in certain tables due to rounding.)
Current wording
(Dollars in millions, including for charts, except per share amounts and unless otherwise indicated. Amounts may not add in certain tables due to rounding.)
Previous wording
We are a leading non-bank mortgage servicer and originator providing solutions through our primary brands, PHH Mortgage and Liberty Reverse Mortgage. PHH is one of the largest non-bank servicers in the country based on UPB, focused on delivering a variety of servicing and lending programs. PHH is also one of the largest correspondent lenders in the U.S. based on origination UPB. Liberty is one of the nation’s largest reverse mortgage lenders and servicers based on origination and securitization UPB, dedicated to education and providing loans that help customers meet their personal and financial needs by drawing upon their home equity. We serviced or subserviced 1.4 million loans with a total UPB of $309.5 billion on behalf of more than 3,900 investors and 122 subservicing clients as of June 30, 2025. We service all mortgage loan classes, including conventional, government-insured, non-Agency, small-balance commercial and multi-family loans. Our Originations business is part of our balanced business model to generate gains on loan sales and profitable returns, and to support the replenishment and the growth of our servicing portfolio. Through our retail, correspondent and wholesale channels, we originate and purchase conventional and government-insured forward and reverse mortgage loans that we sell or securitize on a servicing retained basis. In addition, we grow our mortgage servicing volume through MSR flow purchase agreements, Agency Cash Window and co-issue programs, bulk MSR purchase transactions, and subservicing agreements.
Current wording
We are a leading non-bank mortgage servicer and originator providing solutions through our primary brands, PHH Mortgage and Liberty Reverse Mortgage. PHH is one of the largest non-bank servicers in the country based on UPB, focused on delivering a variety of servicing and lending programs. PHH is also one of the largest correspondent lenders in the U.S. based on origination UPB. Liberty is one of the nation’s largest reverse mortgage lenders and servicers based on origination and securitization UPB, dedicated to education and providing loans that help customers meet their personal and financial needs by drawing upon their home equity. We serviced or subserviced 1.4 million loans with a total UPB of $315.5 billion on behalf of more than 3,900 investors and 118 subservicing clients as of September 30, 2025. We service all mortgage loan classes, including conventional, government-insured, non-Agency, small-balance commercial and multi-family loans. Our Originations business is part of our balanced business model to generate gains on loan sales and profitable returns, and to support the replenishment and the growth of our servicing portfolio. Through our retail, correspondent and wholesale channels, we originate and purchase conventional and government-insured forward and reverse mortgage loans that we sell or securitize on a servicing retained basis. In addition, we grow our mortgage servicing volume through MSR flow purchase agreements, Agency Cash Window and co-issue programs, bulk MSR purchase transactions, and subservicing agreements.
Previous wording
The table below summarizes the volume of Originations by channel on a current and comparative basis. The volume of Originations is a key driver of the profitability of our Originations segment, along with margins, and also a key driver of the replenishment and growth of our Servicing segment. In the second quarter of 2025, we added $15.2 billion of new volume, with $5.5 billion of subservicing additions, $9.4 billion of new Originations production and $0.3 billion bulk acquisitions, as further detailed in the below table.
Current wording
The table below summarizes the new volume of Originations by channel on a current and comparative basis. The volume of Originations is a key driver of the profitability of our Originations segment, along with margins, and also a key driver of the replenishment and growth of our Servicing segment. In the third quarter of 2025, we added $24.1 billion of new volume, with $10.9 billion of subservicing additions, $11.9 billion of new Originations production and $1.3 billion bulk acquisitions, as further detailed in the below table.
Previous wording
The following table summarizes the average volume of our Servicing segment, on a current and comparative basis. The average servicing volume is a key driver of the profitability of our Servicing segment. The relative weight of performing and delinquent loans or servicing and subservicing also drive the amount and timing of gross revenue and expenses. Our average total servicing and subservicing UPB increased by $2.5 billion or 0.8% during the second quarter of 2025 compared to the prior quarter (3.3% annualized) and increased by $8.4 billion or 2.8% as compared to the prior year six months, net of runoff. For comparison purposes, the total industry mortgage debt outstanding increased 2.6% quarter over quarter (annualized) and 2.8% year over year (source: Mortgage Bankers Association (MBA) Mortgage Finance Forecast as of July 17, 2025).
Current wording
The following table summarizes the average volume of our Servicing segment, on a current and comparative basis. The average servicing volume is a key driver of the profitability of our Servicing segment. The relative weight of performing and delinquent loans or servicing and subservicing also drive the amount and timing of gross revenue and expenses. Our average total servicing and subservicing UPB increased by $4.5 billion or 1.5% during the third quarter of 2025 compared to the prior quarter (5.9% annualized) and increased by $8.3 billion or 2.8% as compared to the prior year nine months, net of runoff. For comparison purposes, the total estimated industry mortgage debt outstanding increased 2.5% quarter over quarter (annualized) and 2.7% year over year (source: Mortgage Bankers Association (MBA) Mortgage Finance Forecast as of October 19, 2025).
Previous wording
As of June 30, 2025 and March 31, 2025, the total servicing and subservicing UPB amounted to $309.5 billion and $304.6 billion, respectively, a net increase of $4.9 billion or 1.6% (6.4% annualized).
Current wording
As of September 30, 2025 and June 30, 2025, the total servicing and subservicing UPB amounted to $315.5 billion and $309.5 billion, respectively, a net increase of $6.0 billion or 1.9% (7.7% annualized).
Previous wording
The average 30-year fixed rate mortgage rate was mostly flat for all periods presented at elevated levels relative to the past decade, impacting borrower affordability and overall origination market volumes. The average 30-year fixed rate mortgage between 2015 to 2024 was 4.85% excluding the 2020 and 2021 years impacted by Covid 19.
Current wording
The 30-year fixed rate mortgage rate declined 47 basis points in the third quarter of 2025 driving higher refinancing and home purchase activity. The average 30-year fixed rate mortgage rate declined 20 basis points quarter over quarter and remained mostly flat when comparing the first nine months of 2025 and 2024. The 30-year fixed rate mortgage rate remains at elevated levels relative to the past decade, impacting borrower affordability and overall origination market volumes. The average 30-year fixed rate mortgage between 2015 to 2024 was 4.85% excluding the 2020 and 2021 years impacted by Covid 19.
Previous wording
In 2024, the Federal Reserve reduced its federal funds target rate a total of 1 percentage point between September and December 2024 (50-basis point reduction in September and two consecutive 25-basis point reductions in November and December). In the first half of 2025, the Federal Reserve kept the federal funds rate unchanged. The 1-month SOFR largely followed the Federal Reserve actions in 2024, as illustrated in the below graph, resulting in a 101 basis points decline year over year, and remained flat in its quarterly average in 2025.
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In 2024, the Federal Reserve reduced its federal funds target rate a total of 1 percentage point between September and December 2024 (50-basis point reduction in September and two consecutive 25-basis point reductions in November and December). On September 17, 2025 the Federal Reserve reduced its federal funds target rate 25-basis points, which was the first time it changed its target rate in 2025. The 1-month SOFR largely followed the federal fund rate, as illustrated in the below graph, resulting in an average rate mostly flat quarter over quarter and a 98 basis points decline year over year.
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As further illustrated in the below graph, the 10-year Treasury rate remained mostly flat in the second quarter 2025 and declined 35 basis points in the first quarter of 2025. The 10-year Treasury rate declined 34 basis points during the six months ended June 30, 2025 compared to an increase of 48 basis points during the same period of 2024.
Current wording
As further illustrated in the below graph, the 10-year Treasury rate declined slightly in the third quarter of 2025 (8 basis points) and declined 42 basis points during the nine months ended September 30, 2025 compared to a decrease of 7 basis points during the same period of 2024.
Previous wording
Another key driver of our Originations business is the overall mortgage origination market volume, that is sensitive to home sales and home prices and other macroeconomic conditions, such as gross domestic product and unemployment. We source a large part of our Originations volume from Correspondent lenders and the industry volume is a relevant benchmark. The following graphs present the average of industry volumes (in $ billions) released by the MBA and Fannie Mae in the current and comparative periods. The average industry volume grew 42% quarter over quarter (Q2’25 vs Q1’25), largely driven by seasonality, and 23% year over year (Q2’25 vs Q2’24), largely driven by the impact of interest rates on refinance. On a year-to-date basis, the average industry volume grew 16% in the first six months of 2025 as compared with the first six months of 2024. Comparatively, our Originations volumes (Correspondent and Consumer Direct channels) grew 39% in the second quarter of 2025 vs first quarter of 2025 and 32% vs second quarter of 2024, and 38% in the first six months of 2025 vs first six months of 2024.
Current wording
Another key driver of our Originations business is the overall mortgage origination market volume, that, in addition to interest rates, is sensitive to home sales and home prices and other macroeconomic conditions, such as gross domestic product and unemployment. We source a large part of our Originations volume from Correspondent lenders and the industry volume is a relevant benchmark. The following graphs present the industry origination volumes (in $ billions, average of the MBA and Fannie Mae data) in the current and comparative periods.
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Results of operations for the second quarter of 2025
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Results of operations for the third quarter of 2025
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•Net income attributable to common stockholders of $20 million, or $2.55 per share basic and $2.40 diluted
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•Net income attributable to common stockholders of $18 million, or $2.19 per share basic and $2.03 diluted
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•Servicing and subservicing fee revenue of $211.3 million
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•Servicing and subservicing fee revenue of $217 million, with $316 billion total servicing and subservicing UPB
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•$16.2 million MSR valuation gain attributable to input and assumption changes, net of hedging
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•$4 million MSR valuation gain attributable to input and assumption changes, net of hedging
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•Stockholders’ equity of $481.9 million, or $59.82 book value per common share
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•Stockholders’ equity of $501 million, or $62.21 book value per common share
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We established the following strategy to return to sustainable profitability and create long-term value for shareholders:
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We established the following strategy to deliver sustainable profitability and create long-term value for all stakeholders:
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•Prudent capital-light growth: Emphasize on capital-light subservicing to drive servicing portfolio UPB growth and expand higher margin products and origination channels to drive accretive MSR investments;
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•Prudent capital-light growth: Emphasize capital-light subservicing to drive servicing portfolio UPB growth and expand higher margin products and origination channels to drive accretive MSR investments;
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•$10.4 million decrease in Operating expenses, driven by litigation accruals recorded in the first quarter of 2025 in connection with the settlement of a legacy litigation matter, and reimbursements received in the second quarter of 2025 related to prior years’ legal expenses.
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•$16.2 million increase in Operating expenses, mostly explained by reimbursements received in the second quarter of 2025 related to prior years’ legal expenses.
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The below table presents revenue by type and segment:
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The below table presents revenue by type for the periods presented:
Previous wording
Compared to the six months ended June 30, 2024, total revenue for the six months ended June 30, 2025 was $10.9 million, or 2% higher due to a $2.1 million increase in Servicing revenue and an $8.8 million, or 18% increase in Originations revenue.
Current wording
Compared to the nine months ended September 30, 2024, total revenue for the nine months ended September 30, 2025 was $25.5 million, or 3% higher, due to a $26.3 million, or a 33% increase, in Originations revenue, and stable Servicing revenue.
Previous wording
The $27.3 million loss on MSR valuation adjustments, net for the three months ended June 30, 2025 is comprised of $43.4 million runoff expense, $21.7 million fair value gain attributed to input and assumption changes and $5.5 million loss on MSR hedging derivatives.
Current wording
The $45.0 million loss on MSR valuation adjustments, net for the three months ended September 30, 2025 is comprised of $48.8 million of runoff expense, a $6.8 million fair value loss attributable to input and assumption changes and $10.6 million gain on MSR hedging derivatives.
Previous wording
•MSRs are subject to runoff, a fair value decline due to the realization of expected cash flows and yield based on projected borrower behavior, including scheduled amortization of the loan UPB together with projected voluntary and involuntary prepayments. The unfavorable $2.3 million higher runoff quarter-over-quarter is mostly due to MSR portfolio growth.
Current wording
•MSRs are subject to runoff, a fair value decline due to the realization of expected cash flows and yield based on projected borrower behavior, including scheduled amortization of the loan UPB together with projected voluntary and involuntary prepayments. The unfavorable $5.4 million higher runoff quarter-over-quarter is mostly due to MSR portfolio growth.
Previous wording
•The $21.7 million fair value gain due to input and assumption changes is mostly attributed to favorable other input and assumption updates to reflect strong MSR market transaction prices. The change from an $18.6 million fair value loss in the three months ended March 31, 2025 to a $21.7 million fair value gain in the three months ended June 30, 2025 is also driven by changes in market interest rates, as the 10-year Treasury rate remained flat in the three months ended June 30, 2025 and declined 35 basis points in the three months ended March 31, 2025.
Current wording
•The $6.8 million fair value loss due to input and assumption changes is mostly attributed to an unfavorable change in market rates as the 10-year Treasury rate declined 8 basis points in the third quarter of 2025, partially offset by certain favorable assumption updates. The change from a $21.7 million fair value gain in the second quarter of 2025 to a $6.8 million fair value loss in the third quarter of 2025 is mainly driven by favorable input and assumption updates recognized in the second quarter of 2025 to reflect strong MSR market transaction prices.
Previous wording
•MSR hedging derivative fair value changes are designed to partially offset the expected fair value changes of the net MSR, MSR pledged liabilities and ESS exposure, commensurate with our target hedge coverage ratio. The $5.5 million derivative loss recognized in the three months ended June 30, 2025 and the variance from the prior quarter are driven by the rate changes discussed above and hedge costs. We maintained a high hedge coverage ratio in both quarters. Also refer to Item 3. Quantitative and Qualitative Disclosures about Market Risk for further detail on our hedging strategy and its effectiveness.
Current wording
•MSR hedging derivative fair value changes are designed to partially offset the expected fair value changes of the net MSR, MSR pledged liabilities and ESS exposure, commensurate with our target hedge coverage ratio. The $10.6 million derivative gain recognized in the three months ended September 30, 2025 and the variance from the prior quarter are driven by interest rate changes as we maintained a high hedge coverage ratio in both quarters. Also refer to Item 3. Quantitative and Qualitative Disclosures about Market Risk for further detail on our hedging strategy and its effectiveness.
Previous wording
The $66.2 million loss on MSR valuation adjustments, net for the six months ended June 30, 2025 is comprised of $84.6 million runoff expense and $18.4 million fair value gain attributed to input and assumption changes net of hedges. The $21.9 million higher loss in MSR valuation adjustments, net in the six months ended June 30, 2025 as compared to the six months ended June 30, 2024 is primarily driven by the impact of interest rate changes, net of hedge activity, and higher runoff mostly due to MSR portfolio growth.
Current wording
The $111.1 million loss on MSR valuation adjustments, net for the nine months ended September 30, 2025 is comprised of $133.3 million of runoff expense and a $22.2 million fair value gain attributed to input and assumption changes net of hedges. The $35.4 million higher loss in MSR valuation adjustments, net in the nine months ended September 30, 2025 as compared to the nine months ended September 30, 2024 is primarily driven by the impact of interest rate changes, net of hedge activity, and higher runoff mostly due to MSR portfolio growth.
Previous wording
•The unfavorable $6.7 million increase in runoff expense is mostly due to MSR portfolio growth.
Current wording
•The unfavorable $15.1 million increase in runoff expense is mostly due to MSR portfolio growth.
Previous wording
•The change from a $138.0 million fair value gain in the six months ended June 30, 2024 to a $3.1 million fair value gain in the six months ended June 30, 2025 is primarily driven by changes in market interest rates, as the 10-year Treasury rate declined 34 basis points during the six months ended June 30, 2025 compared to an increase of 48 basis points during the same period of 2024.
Current wording
•The change from a $92.4 million fair value gain in the nine months ended September 30, 2024 to a $3.7 million fair value loss in the nine months ended September 30, 2025 is primarily driven by changes in market interest rates, as the 10-year Treasury rate declined 42 basis points during the nine months ended September 30, 2025 compared to a decrease of 7 basis points during the same period of 2024, and assumption updates to reflect actual market trade pricing levels.
Previous wording
•The change from a $104.3 million loss from derivatives in the six months ended June 30, 2024 to a $15.3 million gain in the six months ended June 30, 2025 is mainly due to the market interest rate changes noted above.
Current wording
•The change from a $50.0 million loss from derivatives in the nine months ended September 30, 2024 to a $25.9 million gain in the nine months ended September 30, 2025 is mainly due to the market interest rate changes noted above.
Previous wording
Compensation and benefits expense for the three months ended June 30, 2025 increased $3.5 million, or 6% compared to the three months ended March 31, 2025, largely due to an increase in incentive compensation expenses (increase in the fair value of cash-settled share-based awards driven by our stock price increase) and higher commissions on higher Originations production volume.
Current wording
Compensation and benefits expense for the three months ended September 30, 2025 increased $2.3 million, or 4% compared to the three months ended June 30, 2025, due to an increase in salaries and benefits with a higher U.S. headcount. An increase in commissions on higher Originations production volume was offset by a decrease in incentive compensation expenses (mostly a decrease in the fair value of cash-settled share-based awards driven by our stock price decrease).
Previous wording
Compared to the six months ended June 30, 2024, Compensation and benefits expense for the six months ended June 30, 2025 increased $9.8 million, or 9% largely due to the same factors described above. Our total average headcount declined 4%, mostly due to a decrease in Servicing headcount attributed to efficiencies and runoff of our reverse subservicing portfolio, partially offset by an increase in Originations headcount mostly related to the growth of our Consumer Direct channel.
Current wording
Compared to the nine months ended September 30, 2024, Compensation and benefits expense for the nine months ended September 30, 2025 increased $13.5 million, or 8%, largely due to a $5.9 million increase in incentive compensation expenses (mostly an increase in the fair value of cash-settled share-based awards due to an increase in our stock price), a $4.9 million increase in commissions due to higher Originations production volume, and a $4.0 million increase in salaries and benefits primarily attributed to an increase in U.S. headcount. Our total average headcount declined 3%, mostly due to a decrease in Servicing headcount attributable to efficiencies and runoff of our reverse subservicing portfolio, partially offset by an increase in Originations headcount to support the growth of our Consumer Direct channel and an increase in our Corporate functions.
Previous wording
Professional services expense for the three months ended June 30, 2025 decreased $14.3 million compared to the three months ended March 31, 2025 primarily due to an increase in our accrual for probable losses during the three months ended March 31, 2025 in connection with the settlement of a legacy matter, and reimbursements received in the three months ended June 30, 2025 related to prior years’ legal expenses.
Current wording
Professional services expense for the three months ended September 30, 2025 increased $9.9 million compared to the three months ended June 30, 2025 with an increase in legal expenses due to significant reimbursements received in the second quarter of 2025 related to prior years’ legal expenses and an increase in litigation-related expenses in the third quarter of 2025.
Previous wording
During March 2024, we repurchased a total of $47.4 million of the PMC Senior Secured Notes and recognized a gain on debt extinguishment, net of the associated write-off of unamortized discount and debt issuance costs.
Current wording
During the nine months ended September 30, 2024, we repurchased a total of $70.9 million of the PMC Senior Secured Notes and recognized a $1.8 million gain on debt extinguishment, net of the associated write-off of unamortized discount and debt issuance costs.
Previous wording
Our income tax benefit for the six months ended June 30, 2025 is primarily driven by the favorable resolution of a prior-year uncertain tax position during the first quarter of 2025. The decrease in the effective tax rate for the six months ended June 30, 2025 compared to the same period of 2024 is primarily due to recognizing income tax benefit of $13.3 million related to the reversal of the uncertain tax liability.
Current wording
Our income tax benefit for the nine months ended September 30, 2025 is primarily driven by a $13.3 million favorable resolution of a prior-year uncertain tax position during the first quarter of 2025 partly offset by a $4.2 million Federal return-to-provision adjustment driven by tax planning strategies pursued by Onity at the time of filing the 2024 tax return. The decrease in the effective tax rate for the nine months ended September 30, 2025 compared to the same period of 2024 is primarily due to recognizing income tax benefit of $13.3 million related to the reversal of the uncertain tax liability.
Previous wording
We believe it is reasonably possible that by December 31, 2025, we could release some or all of our valuation allowance that currently offsets our net U.S. deferred tax asset. Any release of our valuation allowance requires significant judgment and is contingent on continued analysis of the positive and negative evidence and actual and expected future profitability. As such, the exact timing and amount of any valuation allowance release is subject to change. Refer to Note 17 - Income Taxes for additional information.
Current wording
We believe it is reasonably possible that by December 31, 2025, we could release some of our valuation allowance that currently offsets our net U.S. deferred tax asset. Any release of our valuation allowance requires significant judgment and is contingent on continued analysis of the positive and negative evidence and actual and expected future profitability. As such, the exact timing and amount of any valuation allowance release is subject to change. Refer to Note 17 - Income Taxes for additional information.
Previous wording
Total assets increased $96.0 million, or 1%, between December 31, 2024 and June 30, 2025 with a $758.1 million increase in our Loans held for sale portfolio driven by the growth of our Originations pipeline, and a $166.4 million increase in our MSR portfolio due to $290.2 million MSR additions, partially offset by runoff. The $654.5 million decrease in reverse Loans held for investment was driven by the runoff of the portfolio exceeding originations since the acquisition of the $2.9 billion portfolio of reverse mortgage loans from Waterfall in November 2024 that is relatively more aged (faster runoff). In addition, servicing advances declined $115.8 million largely driven by seasonal reduction of taxes and insurance (T&I) balances.
Current wording
Total assets decreased $328.0 million, or 2%, between December 31, 2024 and September 30, 2025 primarily due to the decline in reverse Loans held for investment, partly offset by the growth in MSR and Loans held for sale. The $1.0 billion decline in reverse Loans held for investment was driven by the runoff of the portfolio exceeding originations since the acquisition of the $2.9 billion portfolio of reverse mortgage loans from Waterfall in November 2024 that is relatively more aged (faster runoff). In addition, servicing advances declined $142.0 million largely driven by seasonal reduction of taxes and insurance (T&I) balances. Partly offsetting these declines, our portfolio of Loans held for sale increased $625.4 million driven by the growth of our Originations pipeline, predominantly with Ginnie Mae loans and the acquisition of reverse buyouts, and our MSR portfolio increased $296.7 million mostly due to $493.0 million MSR additions and $186.2 million runoff.
Previous wording
Total liabilities increased by $57.0 million compared to December 31, 2024, due largely to the factors described above. Our borrowings under Mortgage loan financing facilities increased $667.3 million due to the higher loans held for sale balance, and MSR financing facilities increased $260.7 million with the increase in our MSR portfolio. HMBS-related borrowings decreased by $619.1 million with repayments exceeding new securitizations after the $2.9 billion acquisition of reverse mortgage loans and assumption of HMBS-related borrowings in November 2024, and Advance match funded liabilities decreased $74.6 million consistent with the seasonal decline in servicing advances (mainly T&I). The $55.6 million decline in Other liabilities is mainly driven by the payment of annual bonuses, the reduction of the servicing float balance due to Rithm, and the favorable resolution of a prior-year uncertain tax position.
Current wording
Total liabilities decreased by $386.4 million compared to December 31, 2024, largely due to the factors described above. HMBS-related borrowings decreased by $947.6 million with repayments exceeding new securitizations after the $2.9 billion acquisition of reverse mortgage loans and assumption of HMBS-related borrowings in November 2024, and Advance match funded liabilities decreased $96.5 million consistent with the seasonal decline in servicing advances. Our borrowings under Mortgage loan financing facilities increased $534.1 million due to the higher loans held for sale balance and OLIT securitization, and MSR financing facilities increased $265.3 million with the increase in our MSR portfolio.
Previous wording
Total equity increased $38.9 million during the six months ended June 30, 2025 mainly due to $43.6 million net income for the period partially offset by the exercise of common stock warrants by Oaktree and the quarterly dividends on preferred stock.
Current wording
Total stockholders’ equity increased $58.4 million during the nine months ended September 30, 2025 mainly due to $62.3 million net income for the period partially offset by the exercise of common stock warrants by Oaktree and dividends on preferred stock.
Previous wording
The following discussion provides information regarding certain key drivers of our financial performance and includes certain forward-looking statements that are based on the current beliefs and expectations of Onity’s management and are subject to significant risks and uncertainties. Refer to Forward-Looking Statements beginning on page 2 of this Form 10-Q and Part I, Item 1.A. of our Annual Report on Form 10-K for the year ended December 31, 2024, for discussion of certain of those risks and uncertainties and other factors that could cause Onity’s actual results to differ materially because of those risks and uncertainties. There is no assurance that actual results will be in line with the outlook information set forth below, and Onity does not undertake to update any forward-looking statements. Refer to the Segment results of operations section for further detail, the description of our business environment, initiatives and risks.
Current wording
The following discussion provides additional information regarding certain key drivers of our financial performance and includes certain forward-looking statements that are based on the current beliefs and expectations of Onity’s management and are subject to significant risks and uncertainties. Refer to Forward-Looking Statements beginning on page 2 of this Form 10-Q and Part I, Item 1.A. of our Annual Report on Form 10-K for the year ended December 31, 2024, for discussion of certain of those risks and uncertainties and other factors that could cause Onity’s actual results to differ materially because of those risks and uncertainties. There is no assurance that actual results will be in line with the outlook information set forth below, and Onity does not undertake to update any forward-looking statements. Refer to the Segment results of operations section for further detail, the description of our business environment, initiatives and risks.
Previous wording
Gain on sale of loans held for sale- Our gain on sale is driven by both Originations volume and margin, and is channel-sensitive. The updated industry forecasts (average of MBA, July 2025 and Fannie Mae, July 2025) suggest a 14% increase in loan origination in 2025 as compared to 2024, with the 30-year fixed rate mortgage expected to end 2025 mostly flat at 6.6%. However, macroeconomic conditions and their impact on the housing and capital markets remain highly uncertain. We anticipate growth in our Consumer Direct channel driven by our increased recapture capabilities that may be curtailed if interest rates remain at the current levels or increase. If this should occur, we expect home equity lending products will be more attractive to consumers and will be a more important product. We expect to continue to prudently grow year-over-year our Correspondent volume at margins that are accretive to the business as part of our MSR replenishment and growth strategy after the opportunistic MSR bulk sales in 2024. We also expect continued competitive pressure on margins across all channels and volatility of gain on sale associated with GSE pricing dependency and volatile interest rates. We expect some further volatility of gain (loss) on sale on loans held for sale related to reverse mortgage buyouts (mostly inactive loans) due to the increased size of the portfolio.
Current wording
Gain on sale of loans held for sale- Our gain on sale is driven by both Originations volume and margin, and is channel-sensitive. The updated industry forecasts (average of MBA, October 2025 and Fannie Mae, October 2025) suggest an estimated 16% increase in loan origination in 2026 as compared to 2025, with the 30-year fixed rate mortgage expected to end 2026 mostly flat at 6.2%. However, macroeconomic conditions and their impact on the housing and capital markets remain highly uncertain. We anticipate growth in our Consumer Direct channel driven by our increased recapture capabilities that may be curtailed if interest rates remain at the current levels or increase. We expect to continue to prudently grow year-over-year our Correspondent volume at margins that are accretive to the business as part of our MSR replenishment and growth strategy. We also expect continued competitive pressure on margins across all channels and volatility of gain on sale associated with GSE pricing dependency and volatile interest rates. We expect some further volatility of gain (loss) on sale on loans held for sale related to reverse mortgage buyouts (mostly inactive loans) due to the increased size of the portfolio.
Previous wording
Gain on reverse loans held for investment and HMBS-related borrowings, net- The reverse mortgage origination gain is driven by the same factors as gain on sale of loans held for sale, with smaller volumes in the reverse mortgage market and generally larger margins. With our experience and brand in the marketplace, we expect our origination volume to largely follow the industry growth albeit with some channel mix changes. We expect continued uncertain market interest rate and spread conditions. The fair value of the net reverse servicing asset is expected to continue to follow market conditions, with fair value gains or losses generally associated with declining or increasing interest rates and spread, respectively, and is part of our forward MSR hedging strategy. Refer to Item 3. Quantitative and Qualitative Disclosures About Market Risk for further detail on our hedge strategy.
Current wording
Gain on reverse loans held for investment and HMBS-related borrowings, net- The reverse mortgage origination gain is driven by the same factors as gain on sale of loans held for sale, with smaller volumes in the reverse mortgage market and generally larger margins. With our experience and brand in the marketplace, we expect our origination volume to largely follow the industry growth albeit with some channel mix changes. We expect continued uncertain market interest rate and spread conditions. The fair value of the net reverse servicing asset is expected to continue to follow market conditions, with fair value gains or losses generally associated with declining or increasing interest rates and spread, respectively, and is part of our forward MSR hedging strategy. Refer to Item 3. Quantitative and Qualitative Disclosures About Market Risk for further detail.
Previous wording
MSR valuation adjustments, net -Our net MSR fair value changes include multiple components. First, amortization of our investment is a function of the UPB, capitalized value of the MSR relative to the UPB, and prepayments. We expect the MSR realization of expected cash flows to generally follow the growth or size of our MSR portfolio net of ESS financing liabilities and pledged MSR liabilities with our MSR capital partners. Second, MSR fair value changes are driven by changes in interest rates and assumptions, such as forecasted prepayments. Third, the MSR fair value changes due to changes in interest rates are partially offset by derivative fair value changes that economically hedge the MSR portfolio to the extent of our hedge coverage ratio and hedge performance. We expect increased uncertainties related to hedge performance and higher hedge cost in an environment of higher economic and capital market volatility. Refer to the sensitivity analysis in Item 3. Quantitative and Qualitative Disclosures About Market Risk for further detail.
Current wording
MSR valuation adjustments, net -Our net MSR fair value changes include two main components. First, amortization of our investment is a function of the UPB and fair value of the MSR. We expect the MSR realization of expected cash flows to generally follow the growth or size of our MSR portfolio net of ESS financing liabilities and pledged MSR liabilities with our MSR capital partners, and associated prepayments. Second, MSR fair value changes net of hedging are driven by changes in interest rates and assumptions, such as forecasted prepayments, our hedge coverage ratio and hedge performance. We expect MSR fair value changes due to interest rates to be largely offset by hedging derivatives to the extent of our hedge coverage ratio, with increased uncertainties related to assumption updates, hedge performance and hedge cost in an environment of higher economic and capital market volatility. Refer to the sensitivity analysis in Item 3. Quantitative and Qualitative Disclosures About Market Risk for further detail.
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Rearranged current paragraphs (1)
Current report — wording carried from elsewhere
•In September 2025, we issued variable-rate notes (Series 2025-VF1) with a maximum borrowing capacity of $350.0 million and an Expected Repayment Date of September 2027. These notes replaced the Series 2015-VF5 notes with the same borrowing capacity and an Expected Repayment Date of September 2025.
Rearranged previous paragraphs (2)
Previous report — wording carried elsewhere
Mae MSR financing facilities maturing in the next 12 months, and $63.9 million outstanding under a new MSR financing (repurchase) agreement.
Previous report — wording carried elsewhere
MSRs, and $6 million of capital distributions received, net of contributions, from our equity method investee MAV Canopy. Offsetting cash outflows include $62 million to purchase MSRs and $12 million to purchase real estate primarily in connection with our reverse mortgage buyout transaction.