The lender and servicer Thursday posted net income attributable to common shareholders of $18.7 million, down from the $21.5 million and $21.4 million profits of the quarter- and year-ago periods. Its latest adjusted income of $31.5 million however topped those comparable quarters, and represented the 12th consecutive quarter in the black.

The company recorded $11.9 billion of funded volume, $7.1 billion of which came from its correspondent and consumer-direct operations. An 85% recapture rate on consumer-direct originations, on par with retail competitors, drove that surge with the recent lower rates, the company said.

Onity also reported $25 million in adjusted origination pre-tax income, more than doubling quarter- and year-ago marks, on the strength of greater closed-end second volume and higher margins on lower volumes of reverse originations. While reverse volume fell 13% quarterly to $143 million in the third quarter, revenue margin shot up to 446 basis points from 367 basis points the quarter before. 

The company posted $31 million in adjusted pretax income, flat compared to the second quarter and down $18 million from the same time last year. The company's total revenue climbed to $280 million, rising 13% quarterly and 5% annually. On an adjusted basis, revenue was $265 million, an amount including the portion of the looming subservicing subtraction.  

Onity, Rithm Capital end subservicing relationship

Company chair, president and CEO Glenn Messina explained Rithm Capital's notice of non-renewal for a subservicing portfolio, expected to transfer in the first quarter next year, of which $8.5 billion of unpaid principal balance requires further trustee and other consents. 

That low-margin subservicing portfolio is composed of low-balance, pre-2008 subprime loans, and accounts for over half of Onity's delinquencies, Messina said. Shedding the portfolio was an eventuality, he noted. 

"The portfolio probably had maybe another year of marginal profit contribution associated with it," said Messina. 

The portfolio accounted for 4.9% of Onity's third quarter adjusted revenue, but the CEO said the company doesn't expect the move to have a material financial impact for 2026.

Onity's servicing growth

Onity expects $32 billion of unpaid principal balance additions in the second half this year, from nine new clients and six more under negotiation. 

The firm's servicing average unpaid principal balance ticked up to $312 billion ending Sept. 30, and the fair value of its mortgage servicing rights has risen quarterly and annually to $2.76 billion. 

The company also reported improvements in late payments, with a 4.2% portfolio-wide rate showing improvements in each of conforming, government-sponsored and non-qualified mortgage loans. The company's Ginnie Mae holdings had better delinquency metrics than the broader market, Executive Vice President and Chief Financial Officer Sean O'Neil said. 

Shareholders reacted positively to the third quarter figures, and Onity's stock was up 7% and trading around $42.40 per share as of midmorning.