ONITY GROUP INC.
For the period ended Mar 31, 2026. Filed May 5, 2026.
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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.
Mar 31, 2026 · Filed May 5, 2026
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 2025-09-30; filed 2025-11-06.
0001628280-25-050223
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2026-03-31; filed 2026-05-05.
0001628280-26-030753
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 355 previous paragraphs and 376 current paragraphs.
149 unchanged; 142 reworded; 83 added; 62 removed; 2 previous and 2 current paragraphs rearranged.
Tables are not compared: 39 previous and 38 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 (83)
Current report
(1)Includes MSRs related to ESS financing liabilities.
Current report
The 30-year fixed rate mortgage rate increased 23 basis points (end of period) in the first quarter of 2026 driving lower refinancing and home purchase activity in the latter part of the quarter, however rate declines earlier in the quarter drove increased refinancing activity (see market interest rates graph below). The average 30-year fixed rate mortgage rate declined 12 basis points quarter over quarter and declined 72 basis points year over year.
Current report
Our three benchmark rates above followed the decline in the federal funds rate in 2025, as displayed in the graph below. 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) resulting in increased activity in the origination market. In the first quarter of 2026, the Federal Reserve kept the federal funds rate unchanged. The 1-month SOFR largely followed the federal funds rate, as illustrated in the graph below, resulting in a 2 basis point decline (end of period) in the first quarter of 2026 as compared to a 44 basis point decline in the fourth quarter of 2025. The average 1-month SOFR declined 24 basis points quarter over quarter and declined 65 basis points year over year.
Current report
As further illustrated in the below graph, the 10-year Treasury rate increased (12 basis points) in the first quarter of 2026 compared to an increase of 2 basis points in the fourth quarter of 2025, and a decrease of 35 basis points during the first quarter of 2025. The 30-year fixed rate mortgage rate and the 10-year Treasury rate do not necessarily move in parallel. If the 10-year Treasury rate remains flat and the 30-year fixed mortgage rates decline this is referred to as mortgage spread tightening, and may stimulate mortgage activity beyond the 10-year Treasury rate.
Current report
•Originations gain on sale of $37 million
Current report
•MSR investment of $3.0 billion
Current report
•Total assets of $17.7 billion
Current report
In November 2025, OMC agreed to sell at book value its entire HECM loan portfolio and HMBS related borrowings to FAR and subservice the sold portfolio and additional loans from FAR for an initial three-year term. FAR agreed to acquire OMC’s originations pipeline of reverse mortgage loans and assume some of OMC’s U.S. based reverse originations employees. OMC agreed to discontinue its reverse originations business upon closing. On April 30, 2026, OMC and FAR entered into an amendment of the November 2025 sale agreements whereby OMC has agreed to sell reverse MSRs comprised of approximately 20,000 Ginnie Mae HECM loans with UPB of $5.1 billion ($5.5 billion fair value) as of March 31, 2026. Under the amended agreements, OMC will discontinue its reverse originations business upon closing with the exception of activities relating to the recapture of existing HECM borrowers for any HECM MSRs not transferred to FAR. FAR expects to assume certain of OMC’s US-based reverse originations employees in May 2026 and additional employees in July 2026. The closing of the amended transaction is expected to occur in the third quarter of 2026, subject to Ginnie Mae's approval and customary closing conditions. See Note 5 - Reverse Mortgages and Note 23 – Subsequent Events for additional information.
Current report
(1)Before preferred stock dividend
Current report
•$10.3 million higher loss on MSR valuation adjustments, net with a $6.8 million unfavorable change in input and assumption updates, net of hedges, largely driven by higher prepayment speeds caused by significant intra-quarter market interest rate decline, and $3.6 million higher runoff due to portfolio growth.
Current report
•$4.4 million decrease in operating expenses driven by a $3.6 million decline in professional services, including a $2.8 million decline in legal expenses, primarily attributed to our accrual for a legacy litigation matter in the fourth quarter of 2025, as well as some offsetting factors as discussed below.
Current report
•A $120.1 million reversal of valuation allowance on our net deferred tax asset in the fourth quarter of 2025 driven by Onity’s return to sustained profitability.
Current report
Total Revenue
Current report
•The $2.2 million increase in Servicing revenue is mostly due to largely offsetting factors. Gain on reverse loans and HMBS-related borrowings, net increased $9.1 million mostly driven by yield spread tightening. Offsetting this increase, Gain on loans held for sale, net declined $4.0 million largely due to losses on reverse mortgage buyouts, and Servicing and subservicing fees decreased $2.7 million driven by lower float earnings partly offset by higher servicing fees due to MSR growth (4% increase in average servicing UPB).
Current report
•The $19.2 million increase in Servicing revenue is mostly due to a $19.1 million increase in Servicing and subservicing fees driven by MSR growth (13% increase in average servicing UPB), with some offsetting factors.
Current report
The $69.0 million loss on MSR valuation adjustments, net for the three months ended March 31, 2026 is comprised of $53.4 million runoff, $12.5 million fair value gain attributable to input and assumption changes and $28.1 million loss on MSR hedging derivatives. The $10.3 million higher loss in MSR valuation adjustments, net as compared to the three months ended December 31, 2025 is primarily due to an unfavorable change in input and assumption updates, net of hedges, largely driven by higher prepayment speeds caused by significant intra-quarter market interest rate decline, and higher runoff due to portfolio growth.
Current report
Effective in the fourth quarter of 2025, HECM MSR is hedged with dedicated third-party derivative instruments and the related gain/loss is reported in Gain on reverse loans and HMBS-related borrowings, net.
Current report
Compared to the three months ended March 31, 2025, Compensation and benefits expense for the three months ended March 31, 2026 increased $12.2 million, or 21%, largely due to a $5.2 million increase in salaries and benefits with an increase in headcount within the Originations and Corporate segments to support and accelerate business growth, partly offset by a decrease in the Servicing segment attributable to an effective cost discipline, and a $4.4 million increase in commissions due to higher Originations production volume in both the Consumer Direct and Correspondent channels. In addition, severance expense increased $2.7 million as discussed above. While our total average headcount declined 2%, driven by a 4% decrease in offshore average headcount, our U.S. average headcount increased 5%.
Current report
Servicing and origination expense for the three months ended March 31, 2026 increased $1.2 million compared to the three months ended December 31, 2025, primarily due to higher provision expense on servicing receivables and higher satisfaction and interest on payoff expense in the Servicing segment, partly offset by lower provision for indemnification in Originations.
Current report
Compared to the three months ended March 31, 2025, Servicing and origination expense for the three months ended March 31, 2026 increased $5.5 million or 42% due to a $3.5 million increase in Servicing expense and $2.2 million higher Originations expense. The increase in Servicing expense is primarily driven by a $3.3 million increase in satisfaction and interest on payoff expense due to higher payoff volume. The $2.2 million increase in Originations expense is primarily due to higher production volume.
Current report
Professional services expense for the three months ended March 31, 2026 decreased $3.6 million compared to the three months ended December 31, 2025 with a $2.8 million decline in legal expenses primarily attributed to our accrual for probable losses in connection with the settlement of a legacy litigation matter in the fourth quarter of 2025.
Current report
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 March 31, 2026, 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. The release of a significant portion of the valuation allowance against our U.S jurisdiction deferred tax assets at December 31, 2025 resulted in a $120.1 million income tax benefit in the fourth quarter of 2025. As of March 31, 2026, 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.
Current report
Our income tax expense for the three months ended March 31, 2026 is primarily driven by the jurisdictional mix of our earnings, and includes a full quarter of income tax expense attributed to the U.S. jurisdiction whereas in the prior year first quarter no such U.S. jurisdiction income tax expense was recognized due to a full valuation allowance against U.S. federal deferred tax assets. The income tax benefit of $119.5 million for the three months ended December 31, 2025 primarily resulted from the $120.1 million release of valuation allowances against U.S. federal and certain state deferred tax assets. The increase in the effective tax rate for the three months ended March 31, 2026 compared to the same period of 2025 is primarily due to recognizing income tax benefit of $13.3 million related to the reversal of the uncertain tax liability during the first quarter of 2025.
Current report
Balance Sheet and Cash Flow Overview
Current report
Interest paid ($55 million, excluding interest collections) increased $9 million period over period, primarily due to higher interest on our mortgage warehouse facilities and MSR financing facilities in 2026 due to volume growth, offset in part by lower average short-term market interest rates.
Current report
Our investing activities provided $390 million of cash during the period. Net cash inflows primarily include $560 million cash received in connection with our HECM reverse mortgages, These collections are mostly attributed to the runoff of the reverse portfolio. $173 million of HECM reverse mortgage originations are reported within operating activities (see discussion above). Loans are repurchased from HMBS pools once they reach 98% of maximum claim amount and collections are generally received from assignment to HUD or liquidation. Our investing activities also reflect a $167 million net cash outflow related to MSR investments, through bulk acquisitions or purchases in Co-issue and Agency programs. Our net MSR investments during three months ended March 31, 2026 increased $73 million when compared with the three months ended March 31, 2025 due to our growth strategy. As discussed above, these MSR investments need to be combined with the $105 million MSR originations presented within operating cash flows (vs. $61 million during three months ended March 31, 2025) when assessing financing needs discussed below.
Current report
Our financing activities provided $1,243 million of cash during the period. Net cash inflows primarily include $968 million net from borrowings under our mortgage warehouse facilities to finance our Originations pipeline, $418 million net from the issuance of OLIT securitization for reverse mortgage buyouts, $207 million from issuance of 9.875% Senior Notes due 2029 in January 2026, and $86 million net proceeds from our MSR financing facilities, reflecting the growth of our different portfolios. Offsetting cash outflows primarily included $342 million net cash repaid in connection with our reverse HMBS related borrowings, with $556 million of repayments of HMBS-related borrowings partly offset by $214 million securitization of new reverse loan originations and tail advancing. The net financing cash outflows indicates a runoff of the HECM reverse mortgages portfolio that largely exceeded originations in three months ended March 31, 2026, partly attributed to the runoff of the relatively aged portfolio acquired from Waterfall in November 2024. Other cash outflows include $51 million of net repayments on advance match funded liabilities due to the decline in servicing advances.
Current report
Our operating activities used $148 million of cash during the period with $159 million net cash paid on loans held for sale and $11 million other operating cash inflows, net. The $159 million net cash paid on loans held for sale is attributed to the growth of the pipeline with loan production volume exceeding sales and $61 million originated MSRs. Operating cash outflows also include the payment of annual bonuses, the reduction of servicing float balances and margin calls on derivatives. Operating cash inflows included $54 million net collections of servicing advances mostly driven by seasonality.
Current report
(1)Average UPB (in billions)
Current report
(8)Includes HECM hedging derivative gains of $2.4 million and $1.6 million, respectively.
Current report
Gain on reverse loans and HMBS-related borrowings, net- In November 2025, we entered into a series of agreements with FAR, including the sale of our reverse mortgage servicing portfolio, at book value, with subservicing retained, and the discontinuance of our reverse origination activities. On April 30, 2026, OMC and FAR entered into an amendment of the November 2025 sale agreements whereby OMC has agreed to sell reverse MSRs comprised of approximately 20,000 Ginnie Mae HECM loans with UPB of $5.1 billion UPB. The closing of the transaction is contingent on Ginnie Mae’s approval and is expected to occur in the third quarter of 2026 (refer to Note 5 - Reverse Mortgages and Note 23 – Subsequent Events). Through closing, we expect reverse mortgage origination gain with lower volumes and generally consistent margins compared to 2025. Through closing, we expect the fair value of the net reverse servicing asset to continue to follow market conditions, with fair value gains or losses generally associated with declining or increasing interest rates and spreads. Upon closing, we would not record any further gain on the sold reverse loans and HMBS related borrowings, net, and we would begin to recognize subservicing fee revenue.
Current report
Income tax expense- As a result of the partial release of the valuation allowance on deferred tax assets at December 31, 2025, we expect recognizing an income tax expense in 2026 and 2027 that tracks income before income taxes at an effective tax rate moderately higher than the U.S. combined Federal and state statutory tax rate.
Current report
We strive to diversify our revenue sources by maintaining a balanced portfolio of owned servicing and subservicing, and by extending our subservicing client base. The below graph displays the distribution of our serviced loans by relationship at March 31, 2026 (percentage of total loan count). We also measure and monitor concentration risk of our subservicing clients by their relative profitability contribution.
Current report
Rithm is our largest subservicing client. On October 31, 2025, we were notified by Rithm of its intent to not renew its subservicing agreements effective January 31, 2026. The servicing transfers began in 2026 with the transfer of $1.2 billion RMSR UPB and $0.6 billion subservicing UPB on March 1, 2026. Upon transfer, we have downsized and expect to further downsize certain aspects of our servicing business as well as the related corporate support functions.
Current report
MAV is our second largest subservicing client. As of March 31, 2026, OMC subserviced a total $37.9 billion UPB, or 11% of the UPB and 10% of the loan count of our total servicing and subservicing portfolio, on behalf of MAV. OMC recognized servicing and subservicing fees (excluding ancillary income) of $14.0 million and the related remittances to MAV presented as Pledged MSR liability expense of $10.8 million in the three months ended March 31, 2026. MAV is a GSE MSR investment vehicle formed by Onity subsequently sold to Oaktree (85% sold in 2021, the remaining 15% in 2024). Through November 2029, OMC has the right to be the exclusive subservicer of MAV of all MSRs that MAV owned upon MAV sale in 2024, for all future MSRs that MAV acquires from OMC, and for the majority of MAV’s MSR portfolio overall. In addition, the parties agreed to lockout restrictions where MAV is restricted to sell or otherwise transfer MSRs owned by MAV at the MAV sale date in 25% increments through September 30, 2027. MAV may freely sell or transfer any MSRs thereafter.
Current report
In November 2025, OMC agreed to sell its entire HECM loan portfolio and HMBS related borrowings to FAR and subservice the sold portfolio and additional loans from FAR. On April 30, 2026, OMC and FAR entered into an amendment of the November 2025 sale agreements whereby OMC has agreed to sell reverse MSRs comprised of approximately 20,000 Ginnie Mae HECM loans with UPB of $5.1 billion. The closing of the transaction is contingent on Ginnie Mae’s approval and is expected to occur in the third quarter of 2026. Refer to Note 5 - Reverse Mortgages and Note 23 – Subsequent Events for additional information.
Current report
In addition to servicer ratings, each of the agencies will from time to time assign an outlook (or a ratings watch such as Moody’s review status) to the rating status of a mortgage servicer. A negative outlook is generally used to indicate that a rating “may be lowered,” while a positive outlook is generally used to indicate a rating “may be raised.”
Current report
On October 11, 2024, S&P affirmed the Above Average ratings and Stable outlook citing the company’s experienced management and team, effective systems and technology, sound control framework and good servicing performance metrics, among other factors.
Current report
(2)Includes MSRs sold in the first quarter of 2026 with a UPB of $1.3 billion for which we started performing subservicing.
Current report
(3)Includes MSRs acquired in the first quarter of 2026 with a UPB of $2.5 billion for which we were previously performing the subservicing.
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Removed paragraphs (62)
Previous report
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 report
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.
Previous report
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 report
•Originations gain on sale of $31 million
Previous report
•MSR investment of $2.8 billion
Previous report
•Total assets of $16.1 billion
Previous 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.
Previous report
•$16.2 million increase in Operating expenses, mostly explained by reimbursements received in the second quarter of 2025 related to prior years’ legal expenses.
Previous report
Revenue
Previous 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.
Previous 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.
Previous report
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 report
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 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.
Previous 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.
Previous report
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 report
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 report
Our annual effective tax rate is generally 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 ($179.8 million as of December 31, 2024). We evaluated all positive and negative evidence to determine whether it is more likely than not that the deferred tax asset can be realized in future periods, and due primarily to our history of cumulative operating losses, we determined that a full valuation allowance at September 30, 2025 remains appropriate.
Previous report
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 report
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 report
Financial Condition
Previous report
(a) Average UPB (in $B)
Previous report
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 report
Subsequent event - Notice of non-renewal of servicing agreements by Rithm
Previous report
On October 31, 2025, we were notified by one of our largest subservicing clients, Rithm, of its intent to not renew its subservicing agreements effective January 31, 2026. The termination is for convenience and not for cause.
Previous report
The servicing transfer to Rithm’s own servicing platform is expected to occur in the first and second quarters of 2026. The transfer of $8.5 billion of UPB of these agreements is subject to the receipt of necessary consents from trustees and others, the timing and success of which are uncertain. Refer to Note 23 – Subsequent Events.
Previous report
The servicing transfer will result in the reduction of Servicing and subservicing fees and associated Pledged MSR liability expense. We expect a reduction of Operating expenses after downsizing certain aspects of our servicing and support functions. We further expect the recognition of a restructuring obligation upon transfer. We are evaluating the impact of the servicing transfer on future results of operations.
Previous report
(3)Includes $18.6 billion UPB subserviced and $20.3 billion UPB of MSRs sold to MAV that did not achieve sale accounting treatment at September 30, 2025.
Previous report
(1)Securitized loans only; excludes unsecuritized loans.
Previous report
We recognized a $5.4 million loss on loans held for sale, net for the nine months ended September 30, 2025, compared to an $11.0 million gain recognized in the nine months ended September 30, 2024. The $16.4 million unfavorable variance year-over-year is mostly driven by $8.3 million losses on reverse mortgage buyouts in 2025 (largely attributed to the reverse portfolio acquired from Waterfall in the fourth quarter of 2024) and $11.3 million gains recognized in 2024 on previously acquired reverse mortgage buyouts.
Previous report
Gain (Loss) on Reverse Loans Held for Investment and HMBS-Related Borrowings, Net
Previous report
Compared to the nine months ended September 30, 2024, Gain on reverse loans held for investment and HMBS-related borrowings, net for the nine months ended September 30, 2025 increased $6.2 million mostly driven by a more favorable decline in market interest rates vs. the decrease in the prior year period, partly offset by changes in spreads (less favorable tightening vs. the prior year period) and certain unfavorable assumption updates in the second quarter of 2025. 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 nine months ended September 30, 2024. Net interest income increased $5.9 million (or 32%), consistent with the portfolio growth due to the acquisition of the previously subserviced portfolio of Waterfall in the fourth quarter of 2024.
Previous report
Compensation and benefits expense for the three months ended September 30, 2025 remained flat (increased 2%), compared to the three months ended June 30, 2025 largely consistent with headcount.
Previous report
Compared to the nine months ended September 30, 2024, Servicing expense for the nine months ended September 30, 2025 were mostly flat (increased $1.0 million or 3%) with additional provision expense in our captive reinsurance business (CRL) due to higher property casualties, partially offset by lower provision expense for servicing advances and other factors.
Previous report
Compared to the nine months ended September 30, 2024, Other operating expenses for the nine months ended September 30, 2025 increased $8.0 million mostly due to a $6.6 million increase in Corporate overhead allocations primarily driven by higher Corporate services to support our growth initiatives and a $4.1 million increase in Technology and communications 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.
Previous report
Interest expense for the three months ended September 30, 2025 increased $5.7 million, or 11% compared to the three months ended June 30, 2025. The increase is primarily driven by a $3.4 million increase due to the acquisition and securitization (OLIT) of reverse mortgage buyouts in July 2025 and a $1.4 million increase on MSR financing facilities due to our owned MSR portfolio growth.
Previous report
Compared to the nine months ended September 30, 2024, Pledged MSR liability expense for the nine months ended September 30, 2025 decreased $6.7 million mostly driven by MAV’s sale of MSRs (previously sold by Onity to MAV in a transaction which did not qualify for sale accounting) which resulted in the derecognition of the Pledged MSR liability during the nine months ended September 30, 2024, partially offset by the increase in the portfolio of MSRs sold to MSR capital partners.
Previous report
Earnings of equity method investee for the nine months ended September 30, 2024 represents our previously owned 15% share of MAV Canopy which we sold in November 2024.
Previous report
Other, net for the nine months ended September 30, 2024 included $6.2 million expense related to early payment and payoff protections on our MSR bulk sales.
Previous report
Gain on loans held for sale, net for the three months ended September 30, 2025 nearly doubled (increased 99%) compared to the three months ended June 30, 2025, with a $10.0 million increase in our Correspondent channel and a $5.3 million increase in our Consumer Direct channel. For both channels, the increase in Gain on loans held for sale, net is due to the combined effect of higher margins and higher loan production volume. The Correspondent volume increase largely exceeded the estimated industry volume trend (up 3% quarter over quarter, based on average of MBA and Fannie Mae data) and our increase is mostly driven by a robust execution against our growth objectives within our network of Correspondent sellers. The Consumer Direct volume increase is largely explained by lower mortgage rates in the third quarter with additional refinancing activity. The increase in margins is mostly attributable to relatively lower margins in the second quarter of 2025 due to volatile market conditions. Capital markets experienced a temporary spike in interest rate volatility in early April 2025. Higher margins are also attributable to execution gains in our securitization/sale and hedging activities in the current quarter.
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Reworded paragraphs (142)
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 $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.
Current wording
We are a leading non-bank mortgage servicer and originator providing solutions through our primary brand, Onity Mortgage (formerly PHH Mortgage). On March 23, 2026, PHH Mortgage Corporation changed its name to Onity Mortgage Corporation (OMC). Our reverse mortgage product brand, Liberty Reverse Mortgage, has also been rebranded under the Onity Mortgage name. Onity is one of the largest non-bank servicers in the country based on UPB, focused on delivering a variety of servicing and lending programs. Onity is also one of the largest correspondent lenders in the U.S. based on origination UPB. Onity Mortgage (formerly Liberty Reverse Mortgage) 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. Across the forward and reverse portfolio we serviced or subserviced 1.4 million loans with a total UPB of $338.4 billion on behalf of more than 3,900 investors and 113 subservicing clients as of March 31, 2026. 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 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.
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 first quarter of 2026, we added $28.5 billion of new volume, with $14.3 billion of new Originations production, $8.5 billion of subservicing additions, and $5.7 billion bulk acquisitions, as further detailed in the below table.
Previous wording
(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.
Current wording
(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. Excludes additions related to sales of MSRs with subservicing retained.
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 $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).
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 $11.5 billion or 3.6% during the first quarter of 2026 compared to the preceding quarter (14.2% annualized), and increased by $29.5 billion or 9.7% as compared to the prior year three months, net of runoff and sales, primarily driven by increases in our owned MSR and in subservicing. For comparison purposes, the total estimated industry mortgage debt outstanding increased 3.1% quarter over quarter (annualized) and 3.3% year over year (source: Mortgage Bankers Association (MBA) Mortgage Finance Forecast as of April 20, 2026).
Previous wording
(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 wording
(2)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.
Previous wording
(2) Reverse mortgage loans and other servicing (including whole loans) carried on balance sheet.
Current wording
(3)Reverse mortgage loans and other servicing (including whole loans) carried on balance sheet.
Previous 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).
Current wording
As of March 31, 2026 and December 31, 2025, the total servicing and subservicing UPB amounted to $338.4 billion and $328.3 billion, respectively, a net increase of $10.1 billion or 3.1% (12.3% annualized).
Previous wording
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).
Current wording
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) and our Originations segment (mortgage loan financing cost).
Previous wording
Source: MBA Mortgage Finance Forecast as of October 19, 2025 and Fannie Mae Housing Forecast as of October 13, 2025. Most recent current period volumes are forecasts. In $ billions.
Current wording
Source: MBA Mortgage Finance Forecast as of April 20, 2026 and Fannie Mae Housing Forecast as of April 13, 2026. In $ billions.
Previous wording
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 wording
The average industry volume declined 7% quarter over quarter (Q1 2026 vs Q4 2025), led by a reduction in purchase activity (vs. flat refinance activity), and grew 44% year over year (Q1 2026 vs Q1 2025) 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 year over year, as summarized below:
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Results of operations for the third quarter of 2025
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Results of operations for the first quarter of 2026
Previous wording
•Net income attributable to common stockholders of $18 million, or $2.19 per share basic and $2.03 diluted
Current wording
•Net income attributable to common stockholders of $7 million, or $0.78 per share basic and $0.74 diluted
Previous wording
•Servicing and subservicing fee revenue of $217 million, with $316 billion total servicing and subservicing UPB
Current wording
•Servicing and subservicing fee revenue of $222 million, with $338 billion total servicing and subservicing UPB
Previous wording
•$4 million MSR valuation gain attributable to input and assumption changes, net of hedging
Current wording
•$16 million MSR valuation loss attributable to input and assumption changes, net of hedging
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•Stockholders’ equity of $501 million, or $62.21 book value per common share
Current wording
•Stockholders’ equity of $629 million, or $74.81 book value per common share
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•Total liquidity of $221 million, and cash position of $173 million
Current wording
•Total liquidity of $277 million, with a cash position of $182 million
Previous wording
The following chart displays income before income taxes by segment for the periods presented (also refer to the respective segment discussions):
Current wording
The following chart displays income (loss) before income taxes by segment for the periods presented (also refer to the respective segment discussions):
Previous wording
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 wording
Onity reported $7.6 million of net income in the first quarter of 2026, compared to net income of $127.2 million in the fourth quarter of 2025, reflecting a steady income before income taxes and a $119.8 million decline in income tax benefit quarter over quarter. The following discusses certain notable changes:
Previous wording
•$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 wording
•$4.3 million increase in revenue with a $2.2 million, or 1% increase in Servicing revenue and a $2.0 million, or 4% increase in Originations revenue. Gain on reverse loans and HMBS-related borrowings, net increased $8.6 million mostly due to yield spread tightening in Servicing, offset in part by a $2.6 million net decrease in Gain on loans held for sale, with unfavorable fair value changes of reverse buyouts in Servicing and higher margins and lower volumes in Originations ($1.4 million gain). In addition, Servicing and subservicing fees decreased $2.7 million with lower float earnings offset by a higher average servicing UPB.
Previous wording
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 wording
Total revenue for the three months ended March 31, 2026 increased $4.3 million, or 1% compared to the three months ended December 31, 2025 due to a $2.2 million, or 1% increase in Servicing revenue and a $2.0 million, or 4% increase in Originations revenue.
Previous wording
•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 wording
•The $2.0 million increase in Originations revenue is primarily attributed to a $1.4 million increase in Gain on loans held for sale, due to increased loan production volume in our Consumer Direct channel, largely offset by lower margins and volume in our Correspondent channel, as well as higher fees (other revenue).
Previous 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.
Current wording
Compared to the three months ended March 31, 2025, total revenue for the three months ended March 31, 2026 was $44.5 million, or 18% higher, due to a $25.3 million, or a 88% increase in Originations revenue, and a $19.2 million, or 9% increase in Servicing revenue.
Previous wording
•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 wording
•The $25.3 million increase in Originations revenue is primarily driven by a $17.8 million increase in Gain on loans held for sale, net in our Consumer Direct channel and a $6.4 million increase in fee revenue attributed to a 71% increase in total loan production volume attributed to our MSR replenishment and growth strategy and our increased recapture.
Previous wording
(1)Excludes fair value changes of reverse mortgage loans held for investment and HMBS related borrowing due to rates and assumptions that are part of the MSR hedging strategy. Refer to MSR Hedging Strategy section of Item 3. Quantitative and Qualitative Disclosures about Market Risk for further detail and the discussion below within Servicing.
Current wording
(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 3. Quantitative and Qualitative Disclosures About Market Risk for further detail and the discussion below within Servicing.
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 $5.4 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 $3.6 million higher runoff quarter-over-quarter is mostly due to the owned MSR portfolio growth.
Previous 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.
Current wording
•The $12.5 million fair value gain due to input and assumption changes is mostly attributed to a favorable change in market rates as the 10-year Treasury rate increased 12 basis points in the first quarter of 2026 and assumption updates to reflect market trade pricing levels, partially offset by certain unfavorable assumption updates to reflect increased prepayment speeds in the current quarter caused by significant intra-quarter market rate decline. The increase from a $4.9 million fair value gain in the fourth quarter of 2025 to a $12.5 million fair value gain in the first quarter of 2026 is mainly driven by a more favorable change in market rates and a less unfavorable impact of change in delinquency, partially offset by more unfavorable input and assumption updates recognized in the first quarter of 2026 to reflect increased prepayment speeds.
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 $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.
Current wording
•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 $28.1 million derivative loss recognized in the three months ended March 31, 2026 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 $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.
Current wording
The $30.1 million higher loss in MSR valuation adjustments, net in the three months ended March 31, 2026 as compared to the three months ended March 31, 2025 is primarily driven by unfavorable assumption updates recognized in the first quarter of 2026 to reflect increased prepayment speeds and higher realization of cash flows mostly due to MSR portfolio growth, partly offset by the favorable impact of interest rate changes, net of hedge activity, compared to an unfavorable impact in the three months ended March 31, 2025.
Previous wording
•The unfavorable $15.1 million increase in runoff expense is mostly due to MSR portfolio growth.
Current wording
•The unfavorable $12.3 million increase in runoff expense is mostly due to owned MSR portfolio growth.
Previous 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.
Current wording
•The change from an $18.6 million fair value loss in the three months ended March 31, 2025 to a $12.5 million fair value gain in the three months ended March 31, 2026 is primarily driven by changes in market interest rates, as the 10-year Treasury rate increased 12 basis points during the three months ended March 31, 2026 compared to a decrease of 35 basis points during the same period of 2025, and assumption updates to reflect actual market trade pricing levels, partially offset by the impact of increased prepayment speeds in the current quarter.
Previous 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.
Current wording
•The change from a $20.8 million gain from derivatives in the three months ended March 31, 2025 to a $28.1 million loss in the three months ended March 31, 2026 is mainly due to the market interest rate changes noted above. During the three months ended March 31, 2025, our HECM MSR was part of the overall interest-rate sensitive MSR portfolio.
Previous 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).
Current wording
Compensation and benefits expense for the three months ended March 31, 2026 decreased $1.2 million, or 2% compared to the three months ended December 31, 2025, due to a $5.3 million decrease in incentive compensation expense (mostly a decrease in the fair value of cash-settled share-based awards driven by our stock price decrease). The decrease in incentive compensation was partly offset by a $2.7 million increase in severance, including in our Servicing segment in connection with Rithm’s decision to not renew its subservicing agreements effective January 31, 2026, and higher commissions in our Originations segment mostly due to higher Consumer Direct production volume.
Previous wording
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 wording
Technology and communication expense for the three months ended March 31, 2026 was flat as compared to the three months ended December 31, 2025. Compared to the three months ended March 31, 2025, Technology and communication expenses for the three months ended March 31, 2026 increased $2.5 million or 17% primarily driven by our technology initiatives (including robotic process automation, digitization and machine learning / artificial intelligence).
Previous wording
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 wording
Compared to the three months ended March 31, 2025, Professional services expense for the three months ended March 31, 2026 decreased $7.9 million, mostly driven by a $10.7 million decline 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.
Previous wording
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 our former equity method investee, MAV Canopy, sold in the fourth quarter of 2024.
Current wording
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.
Previous 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.
Current wording
Total assets increased $1,565 million, or 10%, between December 31, 2025 and March 31, 2026 primarily due to the growth in Loans held for sale and MSRs, partly offset by the decline in Reverse loans held for sale, pooled into HMBS. Our portfolio of Loans held for sale increased $1,258 million mostly driven by the growth of our Originations pipeline, and our MSR portfolio increased $201 million mostly due to $298 million MSR additions and partly offset by $72 million runoff. The $211 million decline in reverse loans was driven by the runoff of the portfolio exceeding fair value gains and 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 $52 million largely driven by seasonal reduction of taxes and insurance (T&I) balances and lower delinquencies. Receivables, net increased $175 million due to a temporary increase in government-insured loan claims (reverse mortgages) to facilitate a change in our financing strategy, and Contingent loan repurchase asset increased $106 million due to higher Ginnie Mae delinquencies driven by changes to the FHA modifications program and by the government shutdown in 2025.
Previous 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.
Current wording
Total liabilities increased by $1,563 million compared to December 31, 2025, largely due to the factors described above. Mortgage warehouse facilities increased $968 million due to the higher Originations pipeline loans held for sale balance at March 31, 2026. Reverse mortgage securitization notes, net increased $422 million due to the issuance of additional OLIT Notes in 2026 to finance the acquisition of reverse mortgage loan buyouts. Senior notes, net increased $203 million due to our issuance of an additional $200 million aggregate principal amount of 9.875% Senior Notes due 2029 at 103.25% on January 30, 2026. Contingent loan repurchase liability increased $106 million as discussed above, and MSR financing facilities increased $86 million with the increase in our MSR portfolio. Partly offsetting these increases, HMBS-related borrowings decreased by $174 million with repayments exceeding fair value losses and new securitizations after the $2.9 billion acquisition of reverse mortgage assets and assumption of HMBS-related borrowings in November 2024, and Advance match funded liabilities decreased $51 million consistent with the decline in servicing advances, as discussed above.
Previous 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.
Current wording
Total stockholders’ equity increased $1.3 million during the three months ended March 31, 2026 mostly due to $7.6 million net income for the period and $0.8 million compensation related to equity-classified awards, largely offset by $6.1 million repurchases of our common stock and $1.0 million dividends on preferred stock.
Previous wording
(1) Loan acquisitions are servicing released, i.e., cash outflows include the servicing right component of the acquired loans, and most of the loan sales are servicing retained, i.e., the cash proceeds we receive exclude the value of the servicing right component that we retain, resulting in a net $259 million and $164 million operating cash outflow for originated MSRs (OMSRs) in the nine months ended September 30, 2025 and nine months ended September 30, 2024, respectively. We generally finance these new OMSRs along with purchased MSRs (those reflected as investing cashflows) with MSR financing facilities at advance rates up to 70%.
Current wording
(1) Loan acquisitions are generally servicing released, meaning cash outflows include the servicing rights component of the acquired loans. Most of our loan sales, however, are servicing retained, meaning the cash proceeds we receive exclude the value of the servicing rights we retain. As a result, originated MSRs (OMSRs) generated operating cash outflows of $105 million and $61 million in the three months ended March 31, 2026 and 2025, respectively. We generally finance these new OMSRs along with purchased MSRs (those reflected as investing cashflows) with MSR financing facilities at advance rates up to 70%.
Previous wording
Cash flows for the nine months ended September 30, 2025
Current wording
Cash flows for the three months ended March 31, 2026
Showing the first 40 of 142 pairs. Open the source sections for the rest.
Rearranged current paragraphs (2)
Current report — wording carried from elsewhere
Gain (Loss) on Reverse Loans and HMBS-Related Borrowings, Net
Current report — wording carried from elsewhere
We believe that we are in compliance with the covenants in our debt agreements and associated regulatory requirements as of March 31, 2026.
Rearranged previous paragraphs (2)
Previous report — wording carried elsewhere
These agreements accounted for approximately $33.0 billion, or 10% of the UPB and 20% of the loan count of our total servicing and subservicing portfolio, and approximately 55% of all delinquent loans that Onity services, as of September 30, 2025.
Previous report — wording carried elsewhere
The following table provides the components of Pledged MSR liability expense: