Mortgage Servicing Rights & Servicer Advances
A mortgage servicing right (MSR) provides a mortgage servicer with the right to service a pool of residential mortgage loans in exchange for a portion of the interest payments made on the underlying residential mortgage loans. Advances are required capital outlays by the servicer to fund missed payments from delinquent borrowers and foreclosure-related expenses. The servicer has limited risk of not being reimbursed for advances, because advances are almost always "top of the waterfall" in the event of a property sale.
Non-Agency Securities & Associated Call Rights
Residential mortgage backed securities are created through the securitization of a pool of residential mortgage loans.
We hold call rights on Non-Agency residential mortgage securitizations, which become exercisable once the current collateral balance reduces below a certain threshold of the original balance.
New Residential's Residential Loan portfolio consists of seasoned performing, non-performing, REO, Non-QM, and FHA insured loans.
New Residential's consumer loan portfolios have provided differentiated and compelling revenue streams over time.
Spring Castle - In April 2013, New Residential invested $241 million to purchase interest in a $3.9 billion UPB consumer loan portfolio from Spring Castle. Since then, we have maximized the returns on our investment by increasing our equity investment in, and securing multiple refinancings of, the SpringCastle portfolio.
Prosper - In February 2017, New Residential became part of a 4-member Consortium which agreed to purchase up to $5 billion of unsecured consumer loans from Prosper. As of June 30, 2019, 100% of the expected warrants had been earned by the Consortium; New Residential owns 8% of Prosper through warrants.
NRZ Subsidiaries and Partners
New Residential has made a number of opportunistic acquisitions, investments, and partnerships to date. These acquisitions, investments and partnerships have demonstrated New Residential’s disciplined and strategic approach to growth as markets have evolved. Over time, these have included bulk MSR purchases, operating companies, and ancillary services. Following the acquisition of Shellpoint Partners LLC ("Shellpoint") in 2018, New Residential benefits from Shellpoint's origination and third-party servicing platform, as well as a suite of ancillary businesses including title insurance, appraisal management, real estate owned management and other real estate services. In 2019, New Residential also announced that it had made a strategic investment in Covius Holdings, a leading provider of technology-enabled services to the financial services industry, and Guardian, a leading national provider of field services and property management.