ONITY GROUP INC.

General

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 $328.3 billion on behalf of more than 3,900 investors and 119 subservicing clients as of December 31, 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.

Volume Overview

The table below summarizes the new volume of Originations by channel during 2025, compared with the volume of the two preceding years. 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 2025, we added $84.8 billion of new volume, with $33.3 billion of subservicing additions, $42.7 billion of new Originations production and $8.8 billion bulk acquisitions, as further detailed in the below table.

(1)Represents the UPB of loans that have been originated or purchased (funded) during the respective periods and for which we recognize a new MSR on our consolidated balance sheets upon sale or securitization.

(2)Represents the UPB of loans for which the MSR is purchased.

(3)Represents the UPB of reverse mortgage loans that have been securitized on a servicing retained basis. The loans are recognized on our consolidated balance sheets under GAAP without any separate recognition of MSRs.

(4)Includes interim subservicing, including the volume of UPB associated with short-term interim subservicing for certain clients as a support to their originate-to-sell business.

The following table summarizes the average volume of our Servicing segment in 2025, compared with the two preceding years. 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. In 2025, our average total servicing and subservicing UPB increased $12.2 billion, or 4.1%, net of runoff and sales, primarily driven by an $19.2 billion increase in our Owned MSR, partly offset by a $6.0 billion decline in subservicing. For comparison purposes, the total estimated industry mortgage debt outstanding increased 2.2% in 2025 as compared to the prior year (source: Mortgage Bankers Association (MBA) Mortgage Finance Forecast as of January 21, 2026).

(1)MSRs sold or transferred to 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,

(2)Reverse mortgage loans and other servicing (including whole loans) carried on balance sheet.

As of December 31, 2025 and 2024, the total servicing and subservicing UPB amounted to $328.3 billion and $301.7 billion, respectively, a net increase of $26.6 billion or 9%.

Market Update

The following table presents key market interest rates which are important drivers of our businesses. As further discussed, the 30-year fixed rate mortgage is a key driver of Originations volume and prepayments in Servicing, the 10-year Treasury rate is a key benchmark for MSR valuation and hedging activities, and the 1-month SOFR is a key benchmark for the profitability of our Servicing segment (including float earnings and asset-backed financing cost).

(1)Source: Freddie Mac PMMS - Primary Mortgage Market Survey

Our three benchmark rates above have followed the decline in the federal funds rate in 2025, as displayed in the below graph. The Federal Reserve reduced its federal funds target rate a total of 50 basis points in the later part of 2025 (25 basis points in September and 25 basis points in December). The 30-year fixed rate mortgage declined 70 basis points (end of period) and average 30-year fixed rate mortgage rate declined by 12 basis points in 2025 vs 2024 resulting in increased activity in the origination market. Similarly, the 10-year Treasury rate declined by 40 basis points year over year, driving MSR fair values down. The average 1-month term SOFR declined by 90 basis points vs. 2024.

In 2024, the average 30-year fixed rate mortgage rate remained mostly flat (down 8 basis points vs. 2023) resulting in a continued depressed origination market due to borrower affordability. 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). Despite the Federal Reserve actions the 10-year Treasury rate increased by 70 basis points year over year, driving MSR fair values up. The average 1-month term SOFR remained flat (up 4 basis points vs. 2023) following the Federal Reserve respective actions in 2023 and 2024, as illustrated in the below graph.

The following graph compares market interest rates over the current and comparative periods:

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:

Source: MBA Mortgage Finance Forecast as of January 21, 2026 and Fannie Mae Housing Forecast as of January 13, 2026. In $ billions.

The average industry volume grew 18% in 2025 as compared to the prior year, driven by higher refinance originations as borrowers responded to favorable interest rates movements. Comparatively, our Originations volume growth (funded volume of Correspondent and Consumer Direct) outpaced the industry for the years presented, as summarized below:

Financial Highlights

Results of operations for 2025

•Net income attributable to common stockholders of $185 million, or $23.07 per share basic and $21.46 diluted

•Servicing and subservicing fee revenue of $857 million, with $328 billion total servicing and subservicing UPB

•Originations gain on sale of $97 million

•$13 million MSR valuation gain attributable to input and assumption changes, net of hedging

Financial condition at the end of the year 2025

•Stockholders’ equity of $628 million, or $73.69 book value per common share

•MSR investment of $2.8 billion

•Total liquidity of $205 million, with cash position of $181 million

•Total assets of $16.2 billion

Business Strategy

We established the following strategy to deliver sustainable profitability and create long-term value for all stakeholders:

•Balance and diversification: Maintain a scale position in origination and servicing to address market-cycle opportunities;

•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;

•Industry-leading cost structure: Achieve industry cost leadership through continuous cost and process improvement, optimizing global operations and technology, and drive innovation, including artificial intelligence based solutions;

•Top-tier operating performance and capabilities: Deliver industry top-tier servicing operational performance and increase borrower and client satisfaction;

•Dynamic asset management: Optimize investment returns and liquidity through dynamic and opportunistic asset purchases and sales.

Our growth and asset management strategy includes purchasing assets and/or operations of complementary businesses, by means of acquisition, merger or other transaction forms. Our strategy may also include pursuing large transactions, including bulk purchases or sales of MSRs. We have engaged in such transactions in the past, and we continue to explore opportunities that may be accretive to our business and stockholders’ value.

In November 2025, PHH agreed to sell at book value its HECM loan portfolio and HMBS related borrowings to Finance of America Reverse LLC (“FAR”) and subservice the sold portfolio and additional loans from FAR for an initial three-year term. FAR agreed to acquire PHH’s originations pipeline of reverse mortgage loans and assume some of PHH’s U.S. based reverse originations employees. PHH agreed to discontinue its reverse originations business upon closing. As of the filing date of this Form 10-K, the closing of the transaction remains contingent on Ginnie Mae's approval.

Results of Operations and Financial Condition

The following discussion and analysis of our results of operations and financial condition should be read in conjunction with our audited consolidated financial statements and the related notes appearing elsewhere in this Annual Report on Form 10-K. The segment information presented below is prepared under GAAP, consistent with the amounts included in our consolidated financial statements.

(1)Before preferred stock dividend

The following chart displays income (loss) before income taxes by segment for the years presented (also refer to the respective segment discussions):

Onity reported $189.5 million of net income in 2025, as compared to a $33.9 million in 2024, an improvement of $155.6 million, reflecting an increase in income before income taxes of $23.5 million and an increase in income tax benefit of $132.1 million. As interest rates declined in 2025, the relative profitability contribution of the Servicing and Originations segments changed, with higher volumes and gains in Originations, and higher MSR fair value losses in Servicing. The following discusses certain notable changes:

•A $90.7 million increase in revenue with a $42.9 million, or 5% increase in Servicing revenue and a $47.8 million, or 44% increase in Originations revenue, largely consistent with the growth of the respective businesses.

•A $73.7 million higher loss on MSR valuation adjustments, net, with $26.6 million higher runoff due to portfolio growth and $47.1 million unfavorable change in input and assumption updates, net of hedges, largely driven by prepayment speeds.

•A $55.3 million, or 13%, increase in operating expenses driven by the growth of the business, a $16.0 million increase in legal expenses, primarily attributed to our accrual for a legacy litigation matter, and an increase in technology expenses in connection with our innovation initiatives.

•A $61.7 million improvement in Other expense, net mostly driven by the net losses recognized on our corporate debt refinancing in November 2024 ($49.4 million loss on debt extinguishment and $13.7 million net gain on the sale of our investment in MAV Canopy) and a $22.4 million net financing cost reduction driven by lower short-term rates despite higher debt balances.

•A $120.1 million reversal of valuation allowance on our net deferred tax asset in the fourth quarter 2025 driven by Onity’s return to sustained profitability.

Total Revenue

The below table presents revenue by type for the years presented:

The following chart displays total revenue by segment for the years presented (also refer to the respective segment discussions):

Total revenue for 2025 was $90.7 million, or 9%, higher as compared to 2024 due to a $42.9 million, or 5% increase in Servicing revenue and a $47.8 million, or 44% increase in Originations revenue, largely consistent with the growth of the respective businesses.

•The $42.9 million increase in Servicing revenue is mainly due to three contributing factors. First, Servicing and subservicing fees increased $26.7 million driven by MSR growth. Second, Gain on reverse loans and HMBS-related borrowings, net increased $17.9 million driven by portfolio fair value gains in a declining market interest rate environment and the growth of the portfolio with the acquisition of the reverse portfolio from Waterfall in the fourth quarter of 2024. Third, offsetting these increases was a $5.5 million unfavorable Gain on loans held for sale variance, mostly driven by losses on reverse mortgage buyouts in 2025, largely attributable to the acquired reverse portfolio from Waterfall.

•The $47.8 million increase in Originations revenue is primarily driven by a $39.5 million increase in Gain on loans held for sale, net and a $10.0 million increase in fee revenue, mainly due to a 42% increase in total loan production volume attributed to our MSR replenishment and growth strategy and our increased recapture.

The table below presents the key components of MSR valuation adjustments, net which include MSRs, MSR pledged liabilities and ESS financing liabilities at fair value, together with MSR hedging derivatives:

(1)Excludes fair value changes of reverse mortgage loans and HMBS related borrowing due to rates and assumptions that are part of the MSR hedging strategy through September 2025. Refer to the MSR Hedging Strategy section of Item 7A. Quantitative and Qualitative Disclosures About Market Risk for further detail and the discussion below within Servicing.

The $169.8 million loss on MSR valuation adjustments, net in 2025 is comprised of $183.2 million runoff, $1.2 million fair value gain attributed to input and assumption changes and $12.2 million gain on MSR hedging derivatives. MSR valuation adjustments, net increased by $73.7 million (higher loss) in 2025 compared to 2024 with $26.6 million higher runoff due to portfolio growth and $47.1 million unfavorable change in input and assumption updates, net of hedges, largely driven by prepayment speeds, as discussed below.

•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 $26.6 million, or 17%, increase in runoff year-over-year is mostly due to the owned MSR portfolio growth.

•The $1.2 million fair value gain due to input and assumption changes in 2025 is attributed to the offsetting impact of unfavorable rate update and favorable other input and assumption update to reflect market participant perspectives on MSRs and actual market trade pricing levels. The change from a $173.3 million fair value gain in 2024 to a $1.2 million fair value gain in 2025 is mostly driven by changes in market interest rates as the 10-year Treasury rate declined 40 basis points in 2025 compared to an increase of 70 basis points in 2024 and less favorable input and assumption updates in 2025 including prepayment speeds.

•MSR hedging derivative fair value gains or losses 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 $12.2 million derivative gain is primarily driven by the changes in market interest rates discussed above. The $125.1 million year-over-year decrease in hedging losses is mainly due to market interest rates changes noted above, also considering our hedge coverage ratio. Also refer to Item 7A. Quantitative and Qualitative Disclosures about Market Risk for further detail on our hedging strategy and its effectiveness.

The table below presents the key components of operating expenses:

(1) 2023 included the reversal of our loss contingency accrual related to the CFPB and other matters resolved in our favor, reported in our Corporate segment.

The following chart displays operating expenses by segment for the years presented (also refer to the respective segment discussions):

Compensation and benefits expense for 2025 increased $20.1 million, or 9%, as compared to 2024 largely consistent with our growth, with three main drivers. First, commissions increased $8.2 million due to higher Originations loan production volume. Second, salaries and benefits increased $6.6 million with an increase in headcount within the Originations and Corporate segments to support and accelerate the growth of the business, partly offset by a decrease in the Servicing segment attributable to an effective cost discipline. While our total average headcount declined 3%, driven by a 4% decrease offshore, our U.S. headcount increased 2%. And third, incentive compensation, mostly in Corporate, increased $5.7 million driven by an increase in the fair value of cash-settled share-based awards due to an increase in our stock price, partly offset by a year over year decline in annual incentive compensation.

Servicing and origination expense for 2025 increased $6.6 million, or 13%, as compared to 2024, mostly driven by a $4.7 million increase in Servicing expense and $3.6 million higher Originations expense. The increase in Servicing expense is primarily due to higher losses in our reinsurance business and other offsetting factors. The increase in Originations expense was driven by higher production volume with a partial offset from the release of the provision for representation and warranty indemnification obligations during 2025 due to favorable demand resolutions.

Technology and communication expenses for 2025 increased $11.2 million or 21%, as compared to 2024, primarily driven by our technology initiatives (including robotic process automation, digitization and machine learning / artificial intelligence).

Professional services expense for 2025 increased $15.2 million, or 29%, mostly in Corporate, as compared to 2024, primarily attributed to our accrual for probable losses in 2025 in connection with a legacy litigation matter and an increase in legal fees related to other matters.

Refer to the segments for discussion and analysis of Interest income and Interest expense. Refer to the Servicing segment for discussion and analysis of Pledged MSR liability expense and Earnings of equity method investee, including the gain on sale of our investment in MAV Canopy in the fourth quarter of 2024.

Loss on extinguishment of debt for 2024 includes the recognition of a $53.4 million loss on our redemption in November 2024 of all of the outstanding PMC Senior Secured Notes due 2026 and Onity Senior Secured Notes due 2027, comprised of the accelerated write-off of $36.8 million unamortized discount and debt issuance costs, the payment of an $11.6 million make-whole redemption premium and a $5.0 million transaction fee to Oaktree. In addition, during 2024, we repurchased and extinguished a portion of the PMC Senior Secured Notes and recognized a gain of $4.1 million (prior to their redemption). During 2024, we repurchased $15.0 million of PMC Senior Secured Notes at a discount and recognized a $1.3 million gain on debt extinguishment, net of the respective write-off of unamortized discount and debt issuance costs.

Other, net expense for 2025 decreased $6.8 million as compared to 2024 primarily due to early payoff protection expense recognized in 2024 in connection with our MSR opportunistic sale transactions.

Income Tax Expense (Benefit)

The income tax benefit of $126.8 million for the year ended December 31, 2025 was primarily due to the $120.1 million release of valuation allowances against U.S. federal and certain state deferred tax assets based on our evaluation of the realizability of these deferred tax assets as of December 31, 2025 (see further discussion below). In addition, we recognized a $13.3 million benefit due to the favorable resolution of a prior-year uncertain tax position during the year, 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 and $1.9 million income tax expense on our foreign operations.

Our effective tax rate for the years indicated in the table above was lower than the 21% federal statutory income tax rate primarily due to the full valuation allowance recorded on our net U.S. federal and state deferred tax assets at December 31, 2024 and 2023 and the release of a significant portion of that valuation allowance at December 31, 2025. We conduct periodic evaluations of positive and negative evidence to determine whether it is more likely than not that the deferred tax asset can be realized in future periods. In these evaluations, we give more significant weight to objective evidence, such as our actual financial condition and historical results of operations, as compared to subjective evidence, such as projections of future taxable income or losses. As of December 31, 2025, we believe that the weight of the positive evidence outweighs the negative evidence regarding the realization of our U.S. federal and certain state deferred tax assets, resulting in the release of the corresponding valuation allowance. The release of the valuation allowance resulted in a material income tax benefit in 2025. As of December 31, 2025, for certain U.S. state net operating losses and interest expense disallowance carryforwards, we believe the weight of the negative evidence continues to outweigh the positive evidence regarding the realization of these state deferred tax assets and as a result are not considered to be more likely than not realizable; therefore, we have maintained a valuation allowance against these assets. Refer to Note 21 — Income Taxes for further details on deferred tax assets.

Under our transfer pricing agreements, our operations in India and Philippines are compensated on a cost-plus basis for the services they provide, such that even when we have a consolidated pre-tax loss from operations these foreign operations have taxable income, which is subject to statutory tax rates in these jurisdictions that are higher than the U.S. statutory rate of 21%.