ONITY GROUP INC.
For the period ended Sep 30, 2026. Filed Nov 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.
Sep 30, 2026 · Filed Nov 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 2026-06-30; filed 2026-08-06.
0001628280-26-054426
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2026-09-30; filed 2026-11-05.
0001628280-26-071166
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 386 previous paragraphs and 391 current paragraphs.
219 unchanged; 129 reworded; 39 added; 36 removed; 2 previous and 4 current paragraphs rearranged.
Tables are not compared: 39 previous and 39 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (39)
Current report
Generally, a rising interest rate environment will negatively impact our Originations business as we expect a reduction in volumes and an increase in short-term mortgage loan financing costs, while our Servicing segment is positively impacted through lower expected prepayment speed, lower refinance activity, longer term realization of MSR cash flows and higher float earnings, partially offset by higher servicing-related financing costs and the impact of MSR hedging activities.
Current report
•Originations gain on sale of $24.5 million
Current report
•MSR investment of $3.4 billion
Current report
•Total assets of $11.3 billion
Current report
Onity reported a $4.5 million net income during the three months ended September 30, 2026, compared to net loss of $11.9 million during the three months ended June 30, 2026, reflecting a $24.4 million increase in income before income taxes and an $8.0 million increase in income tax expense quarter over quarter. The improvement was driven primarily by Servicing, where a higher rate environment reduced runoff and pre-tax income improved $20.0 million quarter over quarter, and by continued actions to adapt our cost structure to the current environment, including lower staffing and increased automation. The following discusses certain notable changes:
Current report
•$4.8 million decrease in revenue with an $8.9 million, or 18%, decrease in Originations revenue partially offset by a $4.1 million, or 2%, increase in Servicing revenue. Originations revenue declined primarily due to higher rates which drove lower lock volume, as well as margin compression as market volatility decreased pipeline hedge effectiveness and adversely impacted loan sales execution. Servicing revenue increased due to higher gains on reverse buyout loans largely driven by more favorable valuation assumption updates partially offset by lower servicing and subservicing fees due to the Rithm portfolio deboarding and reduced float earnings.
Current report
•$21.1 million decrease in operating expenses driven by a $14.3 million decrease in Compensation and benefits, primarily attributed to lower incentive compensation and lower commissions due to lower origination volume in our Consumer Direct channel. In addition, Servicing and origination expense declined $7.2 million primarily in our Servicing segment attributable to non-recurring indemnification provision expense related to the FAR transaction during the three months ended June 30, 2026, and a decrease in satisfaction and interest on payoff expense due to lower payoff volume.
Current report
Total revenue decreased $4.8 million, or 2%, for the three months ended September 30, 2026 compared to the three months ended June 30, 2026 due to a $8.9 million, or 18%, decrease in Originations revenue partially offset by a $4.1 million, or 2%, increase in Servicing revenue.
Current report
•Originations revenue decreased $8.9 million, primarily due to an $8.5 million decrease in Gain on loans held for sale, net and a $1.6 million decrease in Gain on reverse loans and HMBS-related borrowings, net. The decrease in Gain on loans held for sale, net reflected a $5.5 million decline in our Correspondent channel, driven by margin compression as market volatility decreased pipeline hedge effectiveness and lower lock volume, partially offset by higher funded volume. It also reflected a $3.0 million decline in our Consumer Direct channel, driven by lower lock volume as higher interest rates reduced borrower demand, partially offset by higher margins. The decrease in Gain on reverse loans and HMBS-related borrowings, net was due to our agreement with FAR to no longer originate reverse mortgages for five years, effective with the June 30, 2026 closing.
Current report
•Servicing revenue increased $4.1 million, primarily due to increases in Gain (loss) on loans held for sale, net and Gain on reverse loans and HMBS-related borrowings, net, driven by favorable input and assumption changes including the non-recurrence of unfavorable input and assumption updates during the three months ended June 30, 2026. These increases were partially offset by lower Servicing and subservicing fees and lower float earnings. The decline in Servicing and subservicing fees reflects the deboarding of Rithm loans ($4.0 billion total UPB during the three months ended September 30, 2026 and $21.2 billion subservicing UPB during the three months ended June 30, 2026), partially offset by higher servicing volume .
Current report
Total revenue increased $78.7 million, or 10%, for the nine months ended September 30, 2026 compared to the nine months ended September 30, 2025, due to a $40.4 million, or 6% increase in Servicing revenue and a $38.3 million, or 37% increase in Originations revenue.
Current report
•Servicing revenue increased $40.4 million primarily due to an increase in servicing fees driven by MSR growth (12% increase in average servicing UPB) partially offset by the deboarding of Rithm loans during the nine months ended September 30, 2026 ($27.0 billion total UPB).
Current report
MSR valuation adjustments, net loss decreased $3.2 million for the three months ended September 30, 2026 compared to the three months ended June 30, 2026 due to $9.1 million attributed to favorable valuation input and assumption updates and $5.0 million attributed to the favorable impact of interest rate changes, net of hedge activity, significantly offset by $10.9 million higher runoff.
Current report
•The $160.9 million increase in fair value gains due to input and assumption changes during the three months ended September 30, 2026 as compared to the second quarter of 2026 is driven by the $151.8 million favorable effect of an increase in market rates as the 10-year Treasury rate increased 85 basis points in the third quarter of 2026 compared to an increase of 14 basis points during the second quarter of 2026, and the $9.1 million impact from favorable input and assumption updates, including to reflect slower prepayment speeds in the current quarter.
Current report
Servicing and origination expense decreased $7.2 million, or 31%, for the three months ended September 30, 2026 compared to the three months ended June 30, 2026, primarily in our Servicing segment due to a $2.7 million lower indemnification provision expense primarily driven by the recognition of non-recurring loan put-back and related contingencies related to the FAR transaction in the three months ended June 30, 2026, and a $2.7 million decrease in satisfaction and interest on payoff expense due to lower payoff volume.
Current report
We generated $357.1 million of other net operating cash flows, that include collections of servicing fees, ancillary income, and other revenue, payment of employees and vendors, and other cash receipts and disbursements. The $357.1 million net cash inflow generated by our business, mostly the servicing business, was primarily redeployed to invest in MSRs along with other sources of cash, after payment of interest.
Current report
(2)Average UPB (in billions)
Current report
Gain on reverse loans and HMBS-related borrowings, net- Effective with the June 30, 2026 closing of the sale of a portion of our reverse MSRs to FAR, we no longer originate reverse mortgages, except for recapture activities (see “Business Strategy” above and Note 5 - Reverse Mortgages). Subsequent to closing, we no longer record any gain on the sold reverse loans and HMBS related borrowings, net, and we began recognizing subservicing fee revenue.
Current report
On June 30, 2026, OMC completed the sale to FAR of a portion of its reverse MSRs, comprised of approximately 20,000 Ginnie Mae HECM loans, and the associated HMBS-related borrowings, and began subservicing the sold portfolio and additional loans from FAR for an initial three-year term. See “Business Strategy” above and Note 5 - Reverse Mortgages.
Current report
(1)Date of Last action for all ratings was May 29, 2025, except for the CMBS Loan Level Special Servicer, Master Servicer and Primary Servicer ratings which occurred on August 28, 2025.
Current report
(6)Related to our forward residential servicing and subservicing portfolio.
Current report
(1)Excludes unsecuritized HECM loan tails and the balance at September 30, 2025 also excludes unsecuritized HECM loan originations reported within the Originations segment. See Note 5 - Reverse Mortgages.
Current report
Servicing fees for the three months ended September 30, 2026 increased $1.1 million, or 1%, compared to the three months ended June 30, 2026. The increase was driven primarily by a 3% increase in average servicing fee due to a higher average fee rate on loans as a result of the change in portfolio mix partially offset by a 2% decrease in average servicing UPB, as volume added through originations, recapture and selective bulk MSR acquisitions was more than offset by the deboarding of $3.4 billion UPB Rithm loans during the three months ended September 30, 2026 as a result of Rithm’s decision to not renew its agreements effective January 31, 2026, the sale of MSRs during the three months ended September 30, 2026 and derecognition of MSRs related to MAV and other MSR capital partners where previously MSR sales or transfers did not meet sale accounting criteria.
Current report
Servicing fees for the nine months ended September 30, 2026 increased $47.1 million, or 12%, compared to the prior year period. The 12% increase was driven primarily by an increase in average servicing UPB due to robust originations and recapture, selective bulk MSR acquisitions as part of our replenishment and growth initiative, partially offset by the deboarding of $4.6 billion UPB Rithm loans in 2026 as a result of Rithm’s decision to not renew its agreements effective January 31, 2026, sale of MSRs in 2026, and derecognition of MSRs related to MAV and other MSR capital partners where previously MSR sales or transfers did not meet sale accounting criteria.
Current report
Subservicing fees for the three months ended September 30, 2026 decreased $3.1 million, or 12%, compared to the three months ended June 30, 2026. The decrease is primarily driven by a 6% decrease in subservicing volume (loan count) and 6% decrease in average monthly fee per loan, primarily due to deboarding of $21.2 billion UPB Rithm loans during the three months ended June 30, 2026, partially offset by an increase in reverse subservicing fees due to the FAR transaction.
Current report
Ancillary income for the three months ended September 30, 2026 decreased $2.6 million, or 5%, compared to the three months ended June 30, 2026. The 5% decline is primarily due to lower float earnings of $1.8 million due to lower average float balances attributed to the derecognition of certain MSRs for which sale accounting criteria were met in second quarter of 2026, partially offset by higher average interest rates.
Current report
We recognized a $2.1 million gain on loans held for sale, net for the three months ended September 30, 2026, compared to a $3.6 million loss in the three months ended June 30, 2026, a favorable variance of $5.7 million. The favorable variance is driven primarily by favorable market rate change, with increases in market rates resulting in higher hedging derivative gains in the current quarter and the non-recurrence of unfavorable input and assumption updates made during the three months ended June 30, 2026.
Current report
Compensation and benefits expense decreased $2.3 million, or 11%, for the three months ended September 30, 2026 compared to the three months ended June 30, 2026 primarily due to a $1.4 million decrease in incentive compensation (annual incentive awards and cash-settled share-based awards) and a 5% reduction in average headcount primarily in connection with Rithm’s decision to not renew its subservicing agreements effective January 31, 2026.
Current report
Servicing expense declined $6.9 million, or 39% for the three months ended September 30, 2026 compared to the three months ended June 30, 2026, largely driven by a $2.7 million decrease in satisfaction and interest on payoff expense due to lower payoff volume and $2.7 million lower indemnification provision expense, primarily driven by the recognition of non-recurring loan put-back and related contingencies related to the FAR transaction during the three months ended June 30, 2026.
Current report
(1)Effective average interest rates include the effect of amortization of any discount, debt issuance costs, and prepaid lender fees.
Current report
Pledged MSR liability expense decreased $8.3 million, or 22%, for the three months ended September 30, 2026 compared to the three months ended June 30, 2026 and $15.9 million, or 13%, for the nine months ended September 30, 2026 compared to the prior year period primarily due to a decrease in volume serviced, including Rithm.
Current report
Other, net decreased $5.2 million for the nine months ended September 30, 2026, compared to the prior year period primarily due to favorable net liquidation performance on REOs acquired in the prior year compared to unfavorable liquidation losses on acquired assets during the current year.
Current report
Effective with the June 30, 2026 closing of the amended FAR transaction, FAR acquired OMC’s reverse mortgage originations pipeline and, for a period of five years thereafter, OMC no longer originates reverse mortgages, except for recapture activities. See “Business Strategy” above and Note 5 - Reverse Mortgages for additional information.
Current report
Gain on loans held for sale, net decreased $8.5 million, or 26% for the three months ended September 30, 2026 compared to the three months ended June 30, 2026, with a $5.5 million decrease in our Correspondent channel and a $3.0 million decrease in our Consumer Direct channel. The Correspondent decrease was primarily driven by a 41% decline in gain on sale on funded volume margin due to continued market volatility which decreased pipeline hedge effectiveness and a 9% decline in lock volume, partially offset by a 7% increase in funded volume. The Consumer Direct decrease was primarily driven by a 42% decline in lock volume (41% lower funded volume) as higher interest rates reduced borrower demand, partially offset by a 41% increase in margins on funded volume. Our total forward loan origination volume was essentially flat (down less than 1%) due to lower lock volumes and continued market volatility. Estimated industry volume was down 8% quarter over quarter based on an average of MBA and Fannie Mae data.
Current report
Gain on reverse loans and HMBS-related borrowings, net decreased $1.6 million, or 100%, for the three months ended September 30, 2026 compared to the three months ended June 30, 2026, due to the closing of the FAR transaction on June 30, 2026, in which we no longer originate reverse mortgages with the exception of activities relating to the recapture of existing HECM borrowers for HECM MSRs not sold to FAR.
Current report
Operating expenses decreased $5.3 million, or 14%, for the three months ended September 30, 2026 compared to the three months ended June 30, 2026 primarily due to a $4.7 million decrease in Compensation and benefits largely due to a $2.8 million decrease in commissions due to lower Consumer Direct volume (loan count) and a $1.1 million decrease in salaries and benefits primarily due to a 3% reduction in average headcount (predominantly in the U.S.).
Current report
Operating expenses before corporate overhead allocations declined by $8.3 million, or 19%, for the three months ended September 30, 2026 compared to the three months ended June 30, 2026, primarily due to a $7.3 million reduction in Compensation and benefits. This decrease was mainly attributable to a $7.5 million reduction in incentive compensation, reflecting a lower fair value of cash-settled share-based awards driven by our stock price (29% decrease in our stock price vs. a 1% increase in the comparative period), lower estimated annual incentive awards expense and lower equity-settled awards expense.
Current report
•In July 2026, the total borrowing capacity under the OMART advance facility was reduced from $350.0 million to $250.0 million to lower servicing advances.
Current report
In addition to the above transactions, on June 30, 2026, OMC completed the sale to FAR of a portion of its reverse MSRs and the associated HMBS-related borrowings. See “Business Strategy” above, Note 5 - Reverse Mortgages and Note 10 – Receivables. Excluding the $7.0 million holdback, cash proceeds from the FAR transaction were $117.5 million less repayment of certain warehouse financing and transaction and other costs of $41 million, resulting in $77 million net proceeds.
Removed paragraphs (36)
Previous report
•Originations gain on sale of $33 million
Previous report
•MSR investment of $3.2 billion
Previous report
•Total assets of $12.4 billion
Previous report
Onity reported an $11.9 million net loss in the second quarter of 2026, compared to net income of $7.6 million in the first quarter of 2026, reflecting a $23.0 million decline in income before income taxes and a $3.5 million increase in income tax benefit quarter over quarter. The following discusses certain notable changes:
Previous report
•$11.4 million decrease in revenue with a $6.7 million, or 3% decrease in Servicing revenue and a $4.6 million, or 9% decrease in Originations revenue. Gain on reverse loans and HMBS-related borrowings, net decreased $14.8 million mostly in Servicing due to less favorable yield spread tightening and unfavorable assumption updates in the second quarter of 2026, including related to the FAR transaction, and in Originations to a lesser extent due to lower originations of reverse mortgages in anticipation of the closing of the amended sale agreement with FAR and lower margins driven by less favorable tightening of yield spreads. Gain on loans held for sale, net decreased $4.7 million mostly in Originations due to a lower gain in our Consumer Direct channel primarily due to volume headwinds as higher rates drove lower lock volumes and margins, offset in part by a higher gain in our Correspondent channel with higher volumes, higher margins, improved loan origination pipeline hedge effectiveness, and favorable loan sale execution. Partly offsetting these decreases, Servicing and subservicing fees increased $6.9 million mostly attributed to higher float earnings and to a lesser extent a 4% increase in average servicing UPB.
Previous report
•$1.5 million higher loss on MSR valuation adjustments, net with a $1.2 million unfavorable change in input and assumption updates, net of hedges, primarily driven by the unfavorable impact from interest rate changes, net of hedging, largely offset by less unfavorable valuation input and assumption updates attributed to reflect slower prepayment speeds.
Previous report
•$6.8 million increase in operating expenses driven by a $4.6 million increase in Servicing and origination expense, primarily attributed to higher indemnification provision expense in Servicing related to the FAR transaction, and increased indemnification provision in Originations attributed to unfavorable demand and resolution activities as well as higher loan count. In addition, Professional services increased $1.9 million primarily related to certain corporate development initiatives.
Previous report
•$3.3 million increase in Other expense, net primarily due to an increase in net financing cost in Servicing driven by asset growth, including MSRs, partly offset by a decrease in Pledged MSR liability expense consistent with the decline in volume serviced, including Rithm.
Previous report
Total revenue for the three months ended June 30, 2026 decreased $11.4 million, or 4% compared to the three months ended March 31, 2026 mostly due to the $4.6 million, or 9% decrease in Originations revenue and a $6.7 million, or 3% decrease in Servicing revenue.
Previous report
•The $4.6 million decrease in Originations revenue is primarily attributed to a $3.9 million reduction in Gain on loans held for sale, net with a decrease in gain in our Consumer Direct channel due to volume headwinds as higher rates drove lower lock volumes and margins, partly offset by an increase in gains in our Correspondent channel due to higher volumes, higher margins, improved MSR hedge effectiveness, and favorable execution. A decrease in Gain on reverse loans and HMBS-related borrowings, net due to lower originations of reverse mortgages in anticipation of the closing of the amended sale agreement with FAR and lower margins driven by less favorable tightening of yield spreads was largely offset by higher fees (other revenue) on higher volume.
Previous report
•The $6.7 million decrease in Servicing revenue is primarily due a $12.0 million decrease in Gain on reverse loans and HMBS-related borrowings, net, mostly driven by less favorable yield spread tightening and unfavorable input and assumption changes, including related to the FAR transaction. Partly offsetting this decrease, Servicing and subservicing fees increased $6.9 million driven by increased float earnings and higher servicing fees due to MSR growth (4% increase in average servicing UPB).
Previous report
Compared to the six months ended June 30, 2025, total revenue for the six months ended June 30, 2026 was $80.8 million, or 16% higher, due to a $45.0 million, or a 77% increase in Originations revenue, and a $35.8 million, or 8% increase in Servicing revenue.
Previous report
•The $35.8 million increase in Servicing revenue is mostly due to a $37.2 million increase in Servicing and subservicing fees driven by MSR growth (14% increase in average servicing UPB), with some offsetting factors.
Previous report
The $70.5 million loss on MSR valuation adjustments, net for the three months ended June 30, 2026 is comprised of $53.7 million runoff, $17.2 million fair value gain attributable to input and assumption changes and $34.0 million loss on MSR hedging derivatives. The $1.5 million higher loss in MSR valuation adjustments, net as compared to the three months ended March 31, 2026 is primarily due to $10.1 million from the unfavorable impact of interest rate changes, net of hedge activity, compared to a favorable impact in the first quarter of 2026, largely offset by less unfavorable valuation input and assumption updates to reflect slower prepayment speeds in the current quarter.
Previous report
•The $17.2 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 14 basis points in the second quarter of 2026 and revaluation gains in our Originations segment, partially offset by certain unfavorable assumption updates to reflect continued increased prepayment speeds in the current quarter caused by significant intra-quarter market rate decline in the first and second quarters of the current year. The $4.7 million increase in the gain as compared to the first quarter of 2026 is mainly driven by less unfavorable input and assumption updates attributed to reflect market trade pricing levels.
Previous report
Servicing and origination expense for the three months ended June 30, 2026 increased $4.6 million compared to the three months ended March 31, 2026, primarily due to higher indemnification provision expense for loan put-back and related contingencies in Servicing related to the FAR transaction, and increased indemnification provision attributed to unfavorable demand and resolution activities as well as higher loan count in Originations compared to the three months ended March 31, 2026, offset in part by higher provision expense on servicing receivables in the first quarter of 2026 related to MSR sales.
Previous report
Professional services expense for the three months ended June 30, 2026 increased $1.9 million compared to the three months ended March 31, 2026 primarily attributed to certain corporate development initiatives.
Previous report
(1)Average UPB (in billions)
Previous 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 entire reverse mortgage servicing portfolio, at book value, with subservicing retained for an initial three-year term. On April 30, 2026, OMC and FAR entered into an amendment of the November 2025 sale agreements whereby OMC agreed to sell a portion of its reverse MSRs comprised of approximately 20,000 Ginnie Mae HECM loans. FAR agreed to acquire OMC’s originations pipeline of reverse mortgage loans, and for a period of five years, OMC will no longer originate reverse mortgages upon closing with the exception of activities relating to the recapture of existing HECM borrowers for HECM MSRs not sold to FAR. We received Ginnie Mae’s approval of the sale on May 28, 2026 and the transaction closed on June 30, 2026 (refer to Note 5 - Reverse Mortgages). Subsequent to closing, we will not record any further gain on the sold reverse loans and HMBS related borrowings, net, and we will begin to recognize subservicing fee revenue.
Previous report
(1)Excludes unsecuritized loans reported within the Originations segment. Classified as loans held for sale, at fair value at March 31, 2026 and December 31, 2025, and previously classified as loans held for investment. See Note 5 - Reverse Mortgages.
Previous report
(6) Includes reverse mortgage loan subservicing.
Previous report
Servicing fees for the three months ended June 30, 2026 increased $1.1 million or 1% compared to the three months ended March 31, 2026, driven by a 4% increase in average servicing UPB. The increase in average servicing UPB is primarily due to robust originations and recapture, and selective bulk MSR acquisitions as part of our replenishment and growth initiative, partly offset by deboarding of $1.2 billion UPB Rithm loans in the first quarter of 2026 as a result of Rithm’s decision to not renew its agreements effective January 31, 2026. Subservicing fees remained flat quarter over quarter, with a 7% decrease in subservicing volume (loan count), primarily due to deboarding of $21.2 billion UPB Rithm loans in the second quarter of 2026, largely offset by an increase in our forward subservicing volume due to our successful enterprise sale efforts to grow our residential and commercial subservicing portfolio by 10%, net of portfolio runoff.
Previous report
Ancillary income for the three months ended June 30, 2026 increased by $6.1 million, or 13% compared to the three months ended March 31, 2026 primarily due to a $6.4 million increase in float earnings attributable to seasonally higher average float balances.
Previous report
We recognized a $3.6 million loss on loans held for sale, net for the three months ended June 30, 2026, compared to a $2.7 million loss in the three months ended March 31, 2026. The $0.8 million unfavorable variance is mostly driven by reverse mortgage buyouts, with unfavorable input and assumption updates in the second quarter of 2026, partly offset by higher liquidation gains. During the three months ended June 30, 2026, we recorded higher redelivery gains on Ginnie Mae forward loan repurchases and modifications, mostly driven by volume.
Previous report
Compensation and benefits expense for the three months ended June 30, 2026 decreased $1.4 million, or 6%, compared to the three months ended March 31, 2026 largely consistent with the 7% reduction in headcount. Salaries and benefits expense decreased $1.0 million and severance expense decreased $1.2 million, mostly due to 7% lower headcount in forward servicing primarily in connection with Rithm’s decision to not renew its subservicing agreements effective January 31, 2026. These decreases were partially offset by an increase in incentive compensation of $0.8 million.
Previous report
Servicing expense increased $2.6 million in the three months ended June 30, 2026 compared to the three months ended March 31, 2026, largely driven by $3.5 million higher indemnification provision expense, primarily driven by loan put-back and related contingencies related to the FAR transaction, offset in part by $1.0 million higher provision expense on receivables in the first quarter of 2026 related to MSR sales.
Previous report
Pledged MSR liability expense for the three months ended June 30, 2026 decreased $4.5 million, or 10% as compared to the three months ended March 31, 2026 consistent with the lower volume serviced, including Rithm.
Previous report
Compared to the six months ended June 30, 2025, Pledged MSR liability expense for the six months ended June 30, 2026 decreased $4.0 million, or 5%, consistent with the lower volume serviced, including Rithm.
Previous report
Other, net is mostly driven by the increase in reverse mortgage REO assets in connection with reverse mortgage loan buyouts.
Previous report
In November 2025, OMC agreed to sell its entire HECM loan portfolio and HMBS related borrowings to FAR and subservice the sold portfolio. FAR agreed to acquire OMC’s originations pipeline of reverse mortgage loans and, for a period of five years, OMC will no longer originate reverse mortgages effective upon closing with the exception of activities relating to the recapture of existing HECM borrowers for HECM MSRs not sold to FAR. On April 30, 2026, OMC and FAR entered into an amendment of the November 2025 sale agreements whereby OMC has agreed to sell a portion of its reverse MSRs comprised of approximately 20,000 Ginnie Mae HECM loans with UPB of $5.1 billion. We received Ginnie Mae’s approval of the amended sale on May 28, 2026 and the transaction closed on June 30, 2026. Refer to Note 5 - Reverse Mortgages for additional information.
Previous report
Gain on loans held for sale, net for the three months ended June 30, 2026 decreased $3.9 million, or 11% compared to the three months ended March 31, 2026, with a $9.4 million decrease in our Consumer Direct channel, partly offset by a $5.6 million increase in our Correspondent channel. The decrease in Consumer Direct gain is primarily driven by volume headwinds as higher rates drove 30% lower lock volumes and 35% lower margins. The increase in Correspondent gain is primarily driven by improved loan origination pipeline hedge effectiveness, higher margins, and favorable loan sale execution. Our total forward loan origination volume increased 9% consistent with our business growth strategy, exceeding estimated industry volume trend (up 4% quarter over quarter, based on average of MBA and Fannie Mae data).
Previous report
Gain on reverse loans and HMBS-related borrowings, net for the three months ended June 30, 2026 decreased $2.9 million compared to the three months ended March 31, 2026, with lower origination volume across our channels and lower margins in our wholesale and retail channels. Lower originations during the three months ended June 30, 2026 were in anticipation of the closing of the amended sale agreement with FAR. Lower margins were predominantly driven by less favorable tightening of yield spreads in the three months ended June 30, 2026 as compared to the three months ended March 31, 2026.
Previous report
Operating expenses for the three months ended June 30, 2026 increased $2.6 million, or 7% compared to the three months ended March 31, 2026 primarily due to higher Consumer Direct volume (loan count) and increased provision for indemnification attributed to unfavorable demand and resolution activities, compared to the three months ended March 31, 2026, as well as an increase in commissions, partly offset by lower reverse originations related expenses due to the FAR transaction, as discussed above.
Previous report
Operating expenses before corporate overhead allocations increased by $3.9 million, or 10% for the three months ended June 30, 2026 compared to the three months ended March 31, 2026, primarily driven by a $2.0 million increase in Professional services and a $1.2 million increase in Compensation and benefits. The increase in Professional services is mostly due to certain corporate development initiatives. The increase in Compensation and benefits is mostly attributed to higher incentive compensation partly offset by lower severance expense. The increase in incentive compensation is primarily driven by an increase in the fair value of cash-settled share-based awards driven by our stock price (1% increase in our stock price vs. a 14% decrease in the comparative period) and an increase in equity-settled awards expense.
Previous report
In addition to the above transactions, on April 30, 2026, OMC and FAR entered into an amendment to the parties’ November 2025 agreements for the sale of Onity’s reverse mortgage servicing portfolio and certain reverse originations assets. Under the amendment, OMC has agreed to sell a portion of its reverse MSRs comprised of approximately 20,000 Ginnie Mae HECM loans, subject to Ginnie Mae approval and customary closing conditions. Effective as of the transaction closing date, FAR also agreed to acquire OMC’s pipeline of reverse mortgage loans as of the transaction closing date, and for a period of five years, OMC will no longer originate reverse mortgages with the exception of activities relating to the recapture of existing HECM borrowers for HECM MSRs not sold to FAR. The amended transaction was approved by Ginnie Mae on May 28, 2026 and closed on June 30, 2026. Refer to Note 5 - Reverse Mortgages and Note 10 – Receivables. Excluding the $6.8 million holdback, net cash related to the FAR transaction is approximately $77 million, net of repayment of certain warehouse financings, transaction costs, impact of removing the reverse MSR hedge, mortgage insurance premium, and post-closing items.
Previous report
As disclosed in Note 8 — MSR Related Financing Liabilities, at Fair Value, on October 31, 2025, we were notified by Rithm of its intent not to renew its subservicing agreements effective January 31, 2026 with transfers to Rithm’s own servicing platform beginning on March 1, 2026. 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. Also refer to Note 13 – Other Liabilities (Due to Rithm - Advance collections and servicing fees - See Note 21). Based on quarter-end liquidity and ongoing business cash flows, we expect to meet the Rithm payable when due while maintaining adequate cash resources.
Reworded paragraphs (129)
Previous 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). 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. Prior to the sale to FAR as disclosed in Note 5 - Reverse Mortgages and below under “Business Strategy”, Onity Mortgage (formerly Liberty Reverse Mortgage) has been one of the nation’s largest reverse mortgage lenders based on origination and securitization UPB. On April 30, 2026, OMC and FAR entered into an amendment of the November 2025 sale agreements whereby OMC agreed to sell a portion of its reverse MSRs comprised of approximately 20,000 Ginnie Mae HECM loans 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 for a period of five years, OMC will no longer originate reverse mortgages upon closing with the exception of activities relating to the recapture of existing HECM borrowers for HECM MSRs not sold to FAR. We received Ginnie Mae’s approval of the sale on May 28, 2026 and the transaction closed on June 30, 2026.
Current wording
We are a leading non-bank mortgage servicer and originator providing solutions through our primary brand, Onity Mortgage Corporation (formerly PHH Mortgage Corporation). On March 23, 2026, PHH Mortgage Corporation changed its name to Onity Mortgage Corporation (OMC). 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. Effective with the June 30, 2026 closing of the sale of a portion of our reverse MSRs to FAR, we no longer originate reverse mortgages, except for recapture activities (see “Business Strategy” above and Note 5 - Reverse Mortgages). Subsequent to closing, we no longer record any gain on the sold reverse loans and HMBS related borrowings, net, and we began recognizing subservicing fee revenue. Onity is also one of the largest correspondent lenders in the U.S. based on origination UPB. Prior to the sale to FAR, Onity Mortgage (formerly Liberty Reverse Mortgage) had been one of the nation’s largest reverse mortgage lenders based on origination and securitization UPB.
Previous wording
Across the forward and reverse portfolios, we serviced or subserviced 1.3 million loans with a total UPB of $341.4 billion on behalf of more than 2,600 investors and 114 subservicing clients as of June 30, 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.
Current wording
Across the forward and reverse portfolios, we serviced or subserviced 1.3 million loans with a total UPB of $343.0 billion on behalf of more than 2,500 investors and 112 subservicing clients as of September 30, 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 second quarter of 2026, we added $42.2 billion of new volume, with $15.5 billion of new Originations production, $23.7 billion of subservicing additions, and $3.0 billion bulk acquisitions, as further detailed in the below table.
Current wording
The table below summarizes the new volume of Originations by channel on a current and comparative basis. The volume of Originations is a key driver of the profitability of our Originations segment, along with margins, and also a key driver of the replenishment and growth of our Servicing segment. In the third quarter of 2026, we added $24.7 billion of new volume, with $15.6 billion of new Originations production, $9.0 billion of subservicing additions, and $0.1 billion bulk acquisitions, as further detailed in the below table.
Previous wording
(5)Excludes $5.2 billion subservicing additions in connection with the FAR transaction. We began subservicing these loans effective with the closing of the amended sale transaction on June 30, 2026.
Current wording
(4)Excludes $5.2 billion subservicing additions in connection with the FAR transaction. We began subservicing these loans effective with the closing of the amended sale transaction on June 30, 2026.
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. Excludes additions related to sales of MSRs with subservicing retained.
Current wording
(5)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 $7.4 billion or 2.2% during the second quarter of 2026 compared to the preceding quarter (8.9% annualized), net of runoff and sales, mostly driven by an increase in owned MSRs. For the six months, our average total servicing and subservicing UPB increased $31.6 billion or 10.3% as compared to the prior year six months, primarily driven by increases in our owned MSRs and in subservicing. For comparison purposes, the total estimated industry mortgage debt outstanding increased 2.7% quarter over quarter (annualized) and 3.1% year over year (source: Mortgage Bankers Association (MBA) Mortgage Finance Forecast as of July 22, 2026).
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 $2.5 billion or 0.7% during the third quarter of 2026 compared to the preceding quarter (3.0% annualized), net of runoff and sales. For the nine months, our average total servicing and subservicing UPB increased $31.9 billion or 10.4% as compared to the prior year period. For comparison purposes, the total estimated industry mortgage debt outstanding increased 1.5% quarter over quarter (annualized) and 2.5% year over year (source: Mortgage Bankers Association (MBA) Mortgage Finance Forecast as of October 11, 2026).
Previous wording
As of June 30, 2026 and March 31, 2026, the total servicing and subservicing UPB amounted to $341.4 billion and $338.4 billion, respectively, a net increase of $3.0 billion or 0.9% (3.6% annualized).
Current wording
As of September 30, 2026 and June 30, 2026, the total servicing and subservicing UPB amounted to $343.0 billion and $341.4 billion, respectively, a net increase of $1.6 billion or 0.5% (2.0% annualized).
Previous wording
Another key driver of our Originations business is the overall mortgage origination market volume, that, in addition to interest rates, is sensitive to home sales and home prices and other macroeconomic conditions, such as gross domestic product and unemployment. We source a large part of our Originations volume from Correspondent lenders, and the industry volume is a relevant benchmark. The following graphs present the industry origination volumes (in $ billions, average of the MBA and Fannie Mae data) in the current and comparative periods.
Current wording
A 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.
Previous wording
The average industry volume grew 4% quarter over quarter (Q2 2026 vs Q1 2026), led by an increase in purchase activity offset by a reduction in refinance activity, and grew 12% year over year (Q2 2026 vs Q2 2025) driven by higher refinance originations as borrowers responded to a favorable interest rate environment. On a year-to-date basis (YTD), the average industry volume grew 26% in the six months ended June 30, 2026 as compared to the same period of 2025. 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 8% quarter over quarter (Q3 2026 vs. Q2 2026), led by a reduction in refinance activity. On a year-to-date basis (YTD), the average industry volume grew 16% in the nine months ended September 30, 2026 as compared to the prior year period. Comparatively, our Originations volume growth (funded volume of Correspondent and Consumer Direct) was more resilient than the industry quarter over quarter and has outpaced the industry in the prior periods presented, as summarized below:
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) and our Originations segment (mortgage loan financing cost).
Current wording
Another important driver in our business are key market interest rates displayed in the following table. 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
The average 30-year fixed rate mortgage rate increased 30 basis points quarter over quarter and declined 55 basis points year over year. Home refinance activity declined 23% quarter over quarter driven by the increase in the 30 year fixed rate mortgage. Home purchase activity increased 25% quarter over quarter driven by the seasonality of home buying activity. Refer to our discussion of seasonality in Key Trends and Outlook below. On a year-to-date basis (YTD), home purchase and refinance activity increased in the six months ended June 30, 2026 as compared to the same period of 2025 as homebuyers took advantage of lower rates compared to the prior year (see market interest rates graph below).
Current wording
The average 30-year fixed rate mortgage rate increased 26 basis points quarter over quarter and declined 33 basis points during the nine months ended September 30, 2026 compared to the prior year period. Industry home refinance activity declined 24% quarter over quarter driven by the increase in the 30 year fixed rate mortgage. Industry home purchase activity remained consistent quarter over quarter reflecting seasonally higher home purchase activity in the spring and summer, partially offset by the impact of rising interest rates. On a year-to-date basis (YTD), industry home purchase and refinance activity increased during the nine months ended September 30, 2026 compared to the prior year period as homebuyers took advantage of lower rates compared to the prior year (see market interest rates graph below).
Previous wording
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 second 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 1 basis point decline (end of period) in the second quarter of 2026 as compared to a 2 basis points decline in the first quarter of 2026. The average 1-month SOFR declined 3 basis points quarter over quarter and declined 67 basis points year over year.
Current wording
Our three benchmark rates above followed the decline in the federal funds rate in 2025. The 1-month SOFR largely followed the federal funds rate and therefore we use the 1-month SOFR rate as a proxy. The Federal Reserve reduced its federal funds target rate a total of 50 basis points in the latter part of 2025 (25 basis points in September and 25 basis points in December) resulting in increased activity in the origination market. In the third quarter of 2026, the Federal Reserve increased the federal funds rate by 25 basis points. The 1-month SOFR largely followed the federal funds rate, resulting in a 26 basis point increase (end of period) during the three months ended September 30, 2026 as compared to a 1 basis point decline during the three months ended June 30, 2026, as illustrated in the graph below. The average 1-month SOFR increased 9 basis points quarter over quarter and declined 63 basis points during the nine months ended September 30, 2026 compared to the prior year period.
Previous wording
As further illustrated in the below graph, the 10-year Treasury rate increased (14 basis points) in the second quarter of 2026 compared to an increase of 12 basis points in the first quarter of 2026, and increased 26 basis points for the six months ended June 30, 2026 compared to a decrease of 34 basis points during the same period 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 wording
As further illustrated in the below graph, the 10-year Treasury rate increased 85 basis points during the three months ended September 30, 2026 compared to an increase of 14 basis points during the three months ended June 30, 2026, and increased 111 basis points for the nine months ended September 30, 2026 compared to a decrease of 42 basis points during the prior year period.
Previous wording
Results of operations for the second quarter of 2026
Current wording
Results of operations for the third quarter of 2026
Previous wording
•Net loss attributable to common stockholders of $13 million, or $1.53 per share basic and diluted
Current wording
•Net income attributable to common stockholders of $3.5 million, or $0.42 per share basic and $0.41 diluted
Previous wording
•Servicing and subservicing fee revenue of $229 million, with $341 billion total servicing and subservicing UPB
Current wording
•Servicing and subservicing fee revenue of $224.7 million, with $343.0 billion total servicing and subservicing UPB
Previous wording
•$17 million MSR valuation loss attributable to input and assumption changes, net of hedging
Current wording
•$2.7 million MSR valuation loss attributable to input and assumption changes, net of hedging
Previous wording
•Stockholders’ equity of $610 million, or $72.55 book value per common share
Current wording
•Stockholders’ equity of $608.6 million, or $73.82 book value per common share
Previous wording
•Total liquidity of $230 million, with a cash position of $197 million
Current wording
•Total liquidity of $283.9 million, with a cash position of $176.0 million
Previous wording
•Balance and diversification: Maintain a scale position in origination and servicing to address market-cycle opportunities;
Current wording
•Balance and diversification: Maintain a scale position in servicing and origination to address market-cycle opportunities;
Previous wording
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 for a period of five years, OMC will no longer originate reverse mortgages upon closing with the exception of activities relating to the recapture of existing HECM borrowers for HECM MSRs not sold to FAR. On April 30, 2026, OMC and FAR entered into an amendment of the November 2025 sale agreements whereby OMC agreed to sell a portion of its reverse MSRs comprised of approximately 20,000 Ginnie Mae HECM loans. The amended transaction was approved by Ginnie Mae on May 28, 2026 and closed on June 30, 2026. As of the closing date, the sold balances included $5.6 billion securitized assets ($5.2 billion UPB), the associated $5.5 billion HMBS-related borrowings (or net $70 million reverse MSR), and approximately $57 million newly originated reverse loans and tails pending securitization. The final purchase price is subject to a 60-day adjustment period, following the closing date of the transaction. See Note 5 - Reverse Mortgages for additional information.
Current wording
In November 2025, OMC agreed to sell its entire HECM loan portfolio and associated HMBS-related borrowings to FAR at book value. On April 30, 2026, OMC and FAR amended the November 2025 sale agreements whereby OMC agreed to sell a portion of its reverse MSRs, comprised of approximately 20,000 HECM loans, and the associated HMBS-related borrowings, and FAR agreed to acquire OMC’s reverse mortgage originations pipeline as of the closing date. OMC subservices the sold portfolio and additional loans from FAR for an initial three-year term effective on the closing date, subject to an automatic one-year renewal unless FAR provides notice of non-renewal 180 days prior to the expiration of the initial term, and thereafter to renewal upon mutual agreement of the parties. For a period of five years following the closing date, OMC no longer originates reverse mortgages, except for activities relating to the recapture of existing HECM borrowers for HECM MSRs not sold to FAR. The amended transaction was approved by Ginnie Mae on May 28, 2026 and closed on June 30, 2026. As of September 30, 2026, including post-closing adjustments, the sold balances included $5.6 billion securitized assets ($5.2 billion UPB), the associated $5.5 billion HMBS-related borrowings (or net $70 million reverse MSR), and approximately $57 million newly originated reverse loans and tails pending securitization.
Previous wording
•$3.5 million increase in income tax benefit due to the loss before income taxes in the second quarter of 2026 (vs. income in the first quarter) and the discrete tax impact of certain current year MSR fair value changes and hedging gains.
Current wording
•$8.0 million increase in income tax expense due to a return to profitability during the three months ended September 30, 2026 and the discrete tax impact of certain current year MSR fair value changes and hedging gains and losses.
Previous wording
•The $45.0 million increase in Originations revenue is primarily due to a $38.8 million increase in Gain on loans held for sale, net with higher gains in both our Consumer Direct and Correspondent channels. The increase is mostly driven by higher funded loan volume in both channels (50% increase in total loan production volume) and an increase in margins in our Correspondent channel primarily due to improved execution, partly offset by lower margins in our Consumer Direct channel due to the competitive pricing environment. A $13.1 million increase in fee revenue due to higher volume was partially offset by a $6.9 million decrease in Gain on reverse loans and HMBS-related borrowings, net due to lower origination volume partly offset by a higher aggregate margin driven by yield spread tightening.
Current wording
•Originations revenue increased $38.3 million primarily due to an increase in Gain on loans held for sale, net with an increase in both our Consumer Direct and Correspondent channels due to higher loan volume in both channels (33% increase in total funded loan production volume) and an increase in margins in our Correspondent channel primarily due to improved execution, partially offset by lower margins in our Consumer Direct channel due to a competitive pricing environment. The increases in loan volumes also drove an increase in Other revenue, net which was partially offset by decreased Gain on reverse loans and HMBS-related borrowings, net due to lower origination volume largely due to the FAR transaction.
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. Runoff was mostly flat as compared to the preceding quarter ($0.2 million higher) as the impact of owned MSR portfolio growth was offset by the favorable impact of market rates.
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 change in MSR fair value due to realization of cash flows reflects modeled fair value amortization for the periods presented. The difference between actual runoff and modeled runoff is included in changes due to inputs and assumptions. While actual portfolio UPB runoff decreased in the third quarter versus the second quarter, the increase of $10.9 million in realization of cash flows versus the second quarter is due to an increase in model projected runoff resulting from the recalibration of our prepayment model to incorporate actual prepayment experience in the first half of 2026.
Previous 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 $34.0 million derivative loss recognized in the three months ended June 30, 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.
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 $180.8 million derivative loss recognized in the three months ended September 30, 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
Previous wording
The $139.5 million loss on MSR valuation adjustments, net for the six months ended June 30, 2026 is comprised of $107.1 million runoff, $29.6 million fair value gain attributable to input and assumption changes and $62.0 million loss on MSR hedging derivatives. The $73.3 million higher loss in MSR valuation adjustments, net as compared to the six months ended June 30, 2025 is primarily driven by unfavorable assumption updates recognized in the first half of 2026 (vs. favorable updates in the same period of 2025) and higher realization of cash flows, partly offset by $28.2 million in favorable impact of interest rate changes, net of hedge activity in the first half of 2026 as compared to the same period for the prior year.
Current wording
MSR valuation adjustments, net loss increased $95.7 million for the nine months ended September 30, 2026 compared to the prior year period primarily driven by an $87.8 million impact attributed to unfavorable assumption updates recognized in the nine months ended September 30, 2026 vs. favorable updates in the same period of 2025 and $38.3 million higher runoff, partially offset by a $30.5 million favorable impact of interest rate changes, net of hedge activity.
Previous wording
•The unfavorable $22.5 million increase in runoff expense is mostly due to owned MSR portfolio growth.
Current wording
•The unfavorable $38.3 million higher runoff expense is mostly due to owned MSR portfolio growth.
Previous wording
•The $29.6 million fair value gain due to input and assumption changes is mostly attributed to a favorable change in market rates and revaluation gains in our Originations segment, significantly offset by unfavorable assumption updates to reflect increased prepayment speeds, higher realization of cash flows, and change in delinquency in the first half of 2026. The $26.5 million increase in the gain as compared to the six months ended June 30, 2025 is primarily driven by changes in market interest rates, as the 10-year Treasury rate increased 26 basis points during the six months ended June 30, 2026 compared to a decrease of 34 basis points during the same period of 2025, and higher valuation gains in our Originations segment, partially offset by unfavorable assumption updates described above (vs. favorable assumption updates in the first half of 2025).
Current wording
•The $211.4 million increase in the gain due to input and assumption changes during the nine months ended September 30, 2026 compared to the nine months ended September 30, 2025 is primarily driven by the $299.3 million effect of a favorable change in market interest rates as the 10-year Treasury rate increased 111 basis points during the nine months ended September 30, 2026 compared to a decrease of 42 basis points during the same period of 2025, partially offset by the $87.8 million impact due to unfavorable assumption updates in the nine months ended September 30, 2026 vs. favorable assumption updates in the same period of 2025 primarily due to increased prepayment speeds, increased FHA delinquency due to changes in HUD modification guidelines, and certain other assumption updates in the nine months ended September 30, 2026 as compared to the same period of the prior year.
Previous wording
•The change from a $15.3 million gain from derivatives in the six months ended June 30, 2025 to a $62.0 million loss in the six months ended June 30, 2026 is mainly due to the market interest rate changes noted above. During the six months ended June 30, 2025, our HECM MSR was part of the overall interest-rate sensitive MSR portfolio. Effective in the fourth quarter of 2025, our 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 wording
•The change from a $25.9 million gain from derivatives in the nine months ended September 30, 2025 to a $242.9 million loss in the nine months ended September 30, 2026 is mainly due to the market interest rate changes noted above. During the nine months ended September 30, 2025, our HECM MSR was part of the overall interest-rate sensitive MSR portfolio. Effective in the fourth quarter of 2025, our 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.
Previous wording
Compensation and benefits expense for the three months ended June 30, 2026 was flat as compared to the three months ended March 31, 2026, due to a $2.5 million increase in incentive compensation expense, mostly driven by an increase in the fair value of cash-settled share-based awards driven by our stock price (1% increase in our stock price during the three months ended June 30, 2026 vs. a 14% decrease in the comparative period), as well as an increase in equity-settled awards expense. The increase in incentive compensation was largely offset by a $1.9 million decrease in severance and $1.0 million decrease in salaries and benefits, mostly in our Servicing segment in connection with Rithm’s decision to not renew its subservicing agreements effective January 31, 2026.
Current wording
Compensation and benefits expense decreased $14.3 million, or 20% for the three months ended September 30, 2026 compared to the three months ended June 30, 2026, primarily due to a $9.5 million decrease in incentive compensation expense, driven by a decrease in the fair value of cash-settled share-based awards impacted by our stock price (29% decrease in our stock price during the three months ended September 30, 2026 vs. a 1% increase in the comparative period) as well as a decrease in equity-settled awards expense. In addition, commissions declined $2.7 million primarily due to lower Consumer Direct volume (loan count) in our Originations segment.
Previous wording
Compared to the six months ended June 30, 2025, Compensation and benefits expense for the six months ended June 30, 2026 increased $21.1 million, or 18%, largely due to an $8.6 million increase in commissions due to higher Originations production volume in both channels, and an $8.2 million increase in salaries and benefits with an increase in headcount in the Originations and Corporate segments to support and accelerate business growth, partly offset by a decrease in the Servicing segment attributable to the Rithm subservicing agreements termination, runoff of our reverse subservicing portfolio, lower delinquencies, and further efficiency gains within forward servicing. In addition, severance expense increased $3.7 million, including related to the termination of our subservicing agreements with Rithm as discussed above and the FAR transaction. While our total average headcount declined 3%, driven by a 5% decrease in offshore average headcount, our U.S. average headcount increased 4%.
Current wording
Compensation and benefits expense increased $13.2 million, or 7%, for the nine months ended September 30, 2026 compared to the nine months ended September 30, 2025, primarily due to a $9.2 million increase in commissions due to higher Originations production volume in both channels, and a $7.2 million increase in salaries and benefits with an increase in headcount in the Originations and Corporate segments to support and accelerate business growth, partially offset by a decrease in the Servicing segment attributable to a headcount reduction driven by the Rithm subservicing agreements termination, runoff of our reverse subservicing portfolio, lower delinquencies, and further efficiency gains within forward servicing. In addition, severance expense increased $3.8 million, related to the expected downsizing of certain aspects of our servicing business associated with the termination of our subservicing agreements with Rithm. These increases were partially offset by a $6.9 million decrease in incentive compensation expense, primarily due to a decrease in fair value of cash-settled share-based awards mostly driven by our stock price (38% decrease in our stock price vs. a 30% increase in the comparative period), and lower estimated annual incentive awards.
Previous wording
Compared to the six months ended June 30, 2025, Servicing and origination expense for the six months ended June 30, 2026 increased $15.6 million or 60% due to a $10.8 million increase in Servicing expense and $4.9 million higher Originations expense. The increase in Servicing expense is primarily driven by a $6.8 million increase in satisfaction and interest on payoff expense due to higher payoff volume, and increased indemnification provision expense as discussed above. The increase in Originations expense is primarily due to higher production volume and unfavorable demand and resolution activities compared to six months ended June 30, 2025.
Current wording
Servicing and origination expense increased $15.9 million or 38%, for the nine months ended September 30, 2026 compared to the nine months ended September 30, 2025, due to a $9.6 million increase in Servicing expense and $6.3 million higher Originations expense. The increase in Servicing expense is primarily driven by a $7.8 million increase in satisfaction and interest on payoff expense due to higher payoff volume, and increased indemnification provision expense. The increase in Originations expense is primarily due to higher production volume and lower favorable demand and resolution activities compared to nine months ended September 30, 2025.
Previous wording
Technology and communication expense for the three months ended June 30, 2026 was flat as compared to the three months ended March 31, 2026. Compared to the six months ended June 30, 2025, Technology and communication expenses for the six months ended June 30, 2026 increased $4.9 million or 16% primarily driven by higher Servicing and Originations volume and our technology initiatives (including robotic process automation, digitization and machine learning / artificial intelligence).
Current wording
Technology and communication expenses increased $7.5 million or 16%, for the nine months ended September 30, 2026 compared to the nine months ended September 30, 2025, primarily driven by higher Servicing and Originations volume and our technology initiatives (including robotic process automation, digitization and machine learning / artificial intelligence).
Previous wording
Compared to the six months ended June 30, 2025, Professional services expense for the six months ended June 30, 2026 was flat driven by a $4.3 million increase in other professional services primarily driven by an increase in call center volume in connection with the Rithm servicing transfer largely offset by a $3.9 million decline in legal expenses. The decline in legal expenses is primarily attributed to our accrual for probable losses in connection with the settlement of a legacy litigation matter in the first quarter of 2025, offset in part by lower recoveries of prior years’ legal expenses in the first half of 2026.
Current wording
Professional services expense decreased $1.5 million, or 3%, for the nine months ended September 30, 2026 compared to the nine months ended September 30, 2025, primarily driven by a $6.1 million decline in legal expenses (legal fees and settlements) partially offset by a $4.6 million increase in other professional services. The decline in legal expenses is 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 the increase in other professional services is primarily driven by an increase in call center expenses in connection with the Rithm servicing transfer.
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.
Current wording
Refer to the segments for discussion and analysis of Interest income and Interest expense and the Servicing segment for discussion and analysis of Pledged MSR liability expense.
Previous wording
Our income tax provision or benefit for the interim period is determined based on an estimated annual effective tax rate, adjusted for discrete items. Our income tax benefit for the six months ended June 30, 2026 is primarily driven by the jurisdictional mix of our earnings and includes income tax expense attributed to the U.S. jurisdiction whereas in the six months ended June 30, 2025 no such U.S. jurisdiction income tax expense was recognized due to a full valuation allowance against U.S. federal deferred tax assets. The increase in the effective tax rate for the six months ended June 30, 2026 compared to the same period of 2025 is primarily due to the accrual of taxes in 2026 in the U.S. jurisdiction due to the removal of a significant portion of our U.S. valuation allowance at December 31, 2025 as well as the $13.3 million of income tax benefit recognized during the six months ended June 30, 2025 from the favorable resolution of an uncertain tax position.
Current wording
Our income tax provision or benefit for the interim period is determined based on an estimated annual effective tax rate, adjusted for discrete items. Our income tax expense for the nine months ended September 30, 2026 is primarily driven by the jurisdictional mix of our earnings and includes income tax expense attributed to the U.S. jurisdiction whereas in the nine months ended September 30, 2025 no such U.S. jurisdiction income tax expense was recognized due to a full valuation allowance against U.S. federal and state deferred tax assets. The increase in the effective tax rate for the nine months ended September 30, 2026 compared to the same period of 2025 is primarily due to the accrual of taxes in 2026 in the U.S. jurisdiction due to the removal of a significant portion of our U.S. valuation allowance at December 31, 2025 as well as the $13.3 million of income tax benefit recognized during the nine months ended September 30, 2025 from the favorable resolution of an uncertain tax position during the first quarter of 2025.
Previous wording
Total assets decreased $3,820 million, or 24%, between December 31, 2025 and June 30, 2026 primarily due to the decline in Reverse loans, pooled into HMBS, partly offset by the growth in Loans held for sale and MSRs. Total Reverse loans, pooled into HMBS declined $6,167 million mostly in connection with the sale of reverse MSRs comprised of approximately 20,000 Ginnie Mae HECM loans and the HMBS related borrowings to FAR in a transaction which closed on June 30, 2026. The sold loans, which had a carrying value of $5,630 million were classified as Reverse loans held for sale, pooled into HMBS. The reverse loans not sold in the amended FAR transaction were reclassified as Reverse loans held for investment, pooled into HMBS. In addition to the sale, reverse loans declined due to 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). See Note 5 - Reverse Mortgages for additional information. In addition, servicing advances declined $114 million largely driven by seasonal reduction of taxes and insurance (T&I) balances and lower delinquencies. Our portfolio of Loans held for sale increased $1,710 million mostly driven by the growth of our Originations pipeline and the acquisition of reverse mortgage buyouts. Our MSR portfolio increased $383 million mostly due to $598 million MSR additions, partly offset by $144 million runoff and the derecognition of $106 million of MSRs and the related Pledged MSR liability associated with other MSR capital partners with a UPB of $5.9 billion as MSR sale accounting criteria were met on June 30, 2026. Restricted cash increased $112 million primarily attributed to debt service accounts related to OLIT Notes. Contingent loan repurchase asset increased $103 million due to higher Ginnie Mae delinquencies driven by changes to the FHA modifications program and by the government shutdown in 2025, and Other assets increased $91 million mostly due to an increase in REO in connection with reverse mortgage buyouts.
Current wording
Total assets decreased $4,849.7 million, or 30%, between December 31, 2025 and September 30, 2026 primarily due to the decline in Reverse loans held for sale and held for investment, pooled into HMBS, at fair value and Advances, net, partly offset by the growth in Loans held for sale, at fair value and MSRs, at fair value. Total Reverse loans held for sale and held for investment, pooled into HMBS, at fair value declined $6,444.9 million primarily in connection with the sale of reverse MSRs comprised of approximately 20,000 Ginnie Mae HECM loans and the HMBS related borrowings to FAR which closed on June 30, 2026. The sold loans, which had a carrying value of $5,629.8 million were classified as Reverse loans held for sale, pooled into HMBS, at fair value. The reverse loans not sold in the amended FAR transaction were reclassified as Reverse loans held for investment, pooled into HMBS, at fair value. In addition to the sale, reverse loans declined due to 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 $108.3 million largely driven by seasonal reduction of taxes and insurance (T&I) balances and lower delinquencies. Our portfolio of Loans held for sale, at fair value increased $855.6 million mostly driven by the acquisition of reverse mortgage buyouts and the growth of our Originations pipeline. Our MSRs, at fair value increased $535.3 million primarily due to $898.6 million MSR additions and a $266.7 million favorable change in valuation inputs or assumptions, partially offset by $222.9 million runoff, the derecognition of $249.9 million of MSRs and the related Pledged MSR liability associated with Rithm and other MSR capital partners as MSR sale accounting criteria were met, and $157.2 million in sales and transfers. Contingent loan repurchase asset increased $96.2 million due to the increase in our Ginnie Mae servicing portfolio, partly offset by lower Ginnie Mae delinquencies. Other assets increased $125.7 million primarily driven by an increase in REO in connection with reverse mortgage buyouts, and Receivables, net increased $80.2 million mostly due to a temporary increase in reverse government-insured loan claims in connection with reverse mortgage buyouts.
Previous wording
Total liabilities decreased by $3,802 million compared to December 31, 2025, largely due to the factors described above. HMBS-related borrowings decreased by $6,001 million primarily due to the sale of reverse MSRs described above, as well as 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. Advance match funded liabilities decreased $87 million consistent with the decline in servicing advances, as discussed above, and MSR related financing liabilities, at fair value declined $113 million mostly due to the derecognition transaction described above. Reverse mortgage securitization notes, net increased $1,026 million due to the issuance of additional OLIT Notes in 2026 to finance the acquisition of reverse mortgage loan buyouts. Mortgage warehouse facilities increased $837 million due to the higher Originations pipeline loans held for sale balance at June 30, 2026, and MSR financing facilities increased $281 million with the increase in our MSR portfolio. Senior notes, net increased $204 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 $103 million as discussed above.
Current wording
Total liabilities decreased by $4,830.4 million compared to December 31, 2025, largely due to the factors described above. HMBS-related borrowings, at fair value decreased by $6,276.6 million primarily due to the sale of reverse MSRs, as well as 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. MSR related financing liabilities, at fair value declined $228.9 million mostly due to the MSR derecognition transactions described above, and Advance match funded liabilities decreased $82.5 million consistent with the decline in servicing advances, as discussed above. Reverse mortgage securitization notes, net increased $800.1 million due to the issuance of additional OLIT Notes in 2026 to finance the acquisition of reverse mortgage loan buyouts. MSR financing facilities increased $414.7 million with the increase in our MSR portfolio, and Mortgage warehouse facilities increased $205.5 million due to the higher Originations pipeline loans held for sale balance at September 30, 2026. Senior notes, net increased $204.0 million due to our issuance of an additional $200.0 million aggregate principal amount of 9.875% Senior Notes due 2029 at 103.25% on January 30, 2026. Contingent loan repurchase liability increased $96.2 million as discussed above.
Previous wording
Total stockholders’ equity decreased $18.1 million during the six months ended June 30, 2026 mostly due to $12.0 million repurchases of our common stock, $4.2 million net loss, and $2.1 million dividends on preferred stock.
Current wording
Total stockholders’ equity decreased $19.3 million during the nine months ended September 30, 2026 primarily due to $18.0 million repurchases of our common stock, and $3.1 million dividends on preferred stock.
Previous 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 $261 million and $143 million in the six months ended June 30, 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%.
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 $433 million and $259 million in the nine months ended September 30, 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%.
Showing the first 40 of 129 pairs. Open the source sections for the rest.
Rearranged current paragraphs (4)
Current report — wording carried from elsewhere
Item 3. Quantitative and Qualitative Disclosures About Market Risk for further detail on our hedging strategy and its effectiveness.
Current report — wording carried from elsewhere
Operating expenses have generally trended upward, following the growth of our operations. Quarterly fluctuations of operating expenses are largely driven by legal expenses, compensation related expenditures and servicing and originations expenses.
Current report — wording carried from elsewhere
(5)Includes MSRs sold in the third quarter of 2026 with a UPB of $8.2 billion for which we started performing subservicing.
Current report — wording carried from elsewhere
◦In July 2026, we repaid $250.0 million of the balance outstanding under the above facility and entered into a $250.0 million term loan facility secured by a lien on certain of our Fannie Mae MSRs with a maturity date of July 2029 and subject to daily margining requirements. Onity guarantees the obligations under the facility.
Rearranged previous paragraphs (2)
Previous report — wording carried elsewhere
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 a portion of its reverse MSRs comprised of approximately 20,000 Ginnie Mae HECM loans. The amended sale was approved by Ginnie Mae on May 28, 2026 and the transaction closed on June 30, 2026. The subservicing agreement has an initial three-year term effective on the date of closing, subject to automatic one-year renewal unless FAR provides notice of non-renewal 180 days prior to the expiration of the original term, and subject thereafter to renewal upon mutual agreement of the parties. As of the closing date, the sold balances included $5.6 billion securitized assets ($5.2 billion UPB), the associated $5.5 billion HMBS-related borrowings (or net $70 million reverse MSR), and approximately $57 million newly originated reverse loans and tails pending securitization. Refer to Note 5 - Reverse Mortgages.
Previous report — wording carried elsewhere
These increases were partially offset by a $3.5 million decrease in interest on advance match funded liabilities, mostly driven by the decline in average debt balances for servicing advances due to lower delinquencies and increased loan resolutions in our non-Agency MSR portfolio. The interest on mortgage warehouse facilities decreased $2.7 million, mostly driven by a decrease in the average debt balance due to the increase in OLIT securitizations as a financing structure option.