RoundPoint's corporate parent reported a net loss to common shareholders of almost $141.25 million or nearly $80.21 million on a comprehensive basis. Common shares' second quarter loss was over $270 million or $221.8 on a comprehensive basis.

Adjusting for the $375 million settlement with Pine River, which the second quarter's related loss contingency accrual of $199.9 million reduced to $175.1 million, Two generated $94.9 million in comprehensive income. Portfolio sales, cash on hand and borrowing funded the settlement.

"Looking ahead, we now have a clean slate to capitalize on opportunities in our MSR and MBS portfolio, and to drive growth in servicing and originations," Two President and CEO Bill Greenberg said during an earnings call on Tuesday.

Excluding the litigation settlement expense, the investor in mortgage-backed securities and servicing rights generated an adjusted total economic return of 7.6%, according to the company's press release.

Estimated book value, when adjusted to remove the settlement expense, was around 4.8% and "roughly in line with peers" such as Annaly, Dynex and AGNC, according to Keefe, Bruyette & Woods report distributed Monday night before the call.

"The shares are trading at 89% of book value which is inexpensive vs. peers trading at book value or above," Bose George and Frankie Labetti, analysts at KBW, wrote in the report. "We would expect a modestly positive reaction."

As of last Friday, book value had risen roughly 1%, Greenberg said during the earnings call.

The company previously known as Two Harbors Investment Corp. prior to a rebranding additionally recorded positive $37.15 million or 36 cents in earnings available for distribution. It also increased its subservicing business during the quarter.

The REIT sold $30 billion of MSRs on a retained basis to a new client in that business line. RoundPoint will soon be set up for Ginnie Mae subservicing, Greenberg said during the call.

Industry consolidation has created an opportunity to slowly add subservicing business relationships, which typically are "sticky" and take time to cultivate, Greenberg said.

"There are opportunities for us to pick up either some clients that are dissatisfied with their current subservicer, or people who might feel that they have too much concentration risk as the number of subservicers in the world has decreased," he said.

The company's direct-to-consumer originations division within RoundPoint funded an unpaid principal balance of more than $49 million in first and second liens. It brokered over $60 million in seconds, up from $42 million the previous quarter.

"DTC efforts are working as intended and can provide a meaningful pickup in portfolio recapture and economic returns," Greenberg said, noting that lower rates are promising for this segment.

When asked about how lower rates might impact MSRs, Chief Investment Officer Nick Letica said Two's MSR portfolio is insulated from refinancing incentives, and interest in higher coupons persists due to the company's recapture capabilities.

"The MSR market continues to benefit from historically high levels of interest and participation from bank and nonbank originators, and investors. Though mortgage rates have dropped and prepayment rates for refinanceable coupons are on the rise, our low mortgage rate MSR portfolio remains hundreds of basis points out of the money," he said.

In addition to being active in the MSR and MBS markets, Two has increased some of the other investing it does in assets like interest-only and inverse IO securities.

"That's a sector that we have added to in the last six months," Letica said. "It's still a small portion of the portfolio but we have added to that."