ONITY GROUP INC.

Previous report

If we do not restructure our servicing operations in a timely and cost-effective manner following the non-renewal of our servicing-related agreements with Rithm, it may negatively impact our business, liquidity, financial condition and results of operations.

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 with us effective January 31, 2026. These agreements accounted for approximately $33.0 billion total servicing and subservicing UPB as of September 30, 2025. The servicing transfer to Rithm’s own servicing platform is expected to occur in the first and second quarters of 2026, subject to the receipt of necessary consents applicable to approximately $8.5 billion of UPB. See Note 8 — Other Financing Liabilities, at Fair Value, Rithm Transactions and Note 23 – Subsequent Events for information regarding renewal of our agreements with Rithm.

Previous report

The servicing transfer will result in the reduction of servicing and subservicing fees and associated pledged MSR liability expense. While we continue to evaluate the impact of the servicing transfer on future results of operations, 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. If we are unable to timely reduce operating expenses by appropriately downsizing certain aspects of our servicing and corporate support functions, our liquidity, financial condition and results of operations may be negatively impacted. If not properly implemented, it is also possible that our restructuring activities may disrupt our ongoing servicing business and operations, including through the diversion of management attention or employee attrition.

Previous report

The non-renewal of the Rithm servicing agreements will result in the reduction of Servicing and subservicing fees and associated Pledged MSR liability expense. For the nine months ended September 30, 2025, servicing and subservicing fees from Rithm amounted to $60.2 million (excluding ancillary income) and the related Rithm Pledged MSR liability expense amounted to $27.6 million. We continuously seek to replenish and profitably grow our servicing and subservicing business with our enterprise sales force and diversify our relationships. There is no assurance that we will be able to replace the lost revenue or contribution to profitability with new or existing servicing or subservicing clients in a timely manner and at comparable margins.

Previous report

In addition, the float amount associated with the advance collections and servicing fees of the servicing portfolio will be repaid to Rithm in cash based on the amount due upon transfer (refer to Note 13 – Other Liabilities, Due to Rithm). The amount due varies daily. If we are unable to adjust our liquidity management practices due to the reduction of servicing float balances associated with the Rithm agreements and take additional actions required to appropriately manage our liquidity, such as the sale of MSR on a subservicing retained basis, we may experience a strain on our liquidity and cash resources which could negatively impact our ability to meet the liquidity requirements of regulators and the covenants in our financing and other contractual agreements. In addition, we may be required to reduce or abstain from investing resources in alternative income-generating activities or sell MSR or other assets, negatively impacting our ability to grow our business and improve returns for shareholders.