National lender and servicer Newrez reported positive earnings and touted opportunities amid ongoing economic volatility, as its leadership sees potential growth in new lending products and savings from artificial intelligence investments. 

With rising interest rates throughout the quarter dimming early-year enthusiasm for a significant bump in lending volumes, the company found itself able to leverage economic developments to achieve profits, including in its servicing operations.          

"Results were driven by our disciplined origination strategies, higher servicing fees — and despite interest rate volatility — higher recapture and lower amortization," Newrez President Baron Silverstein said in Rithm's earnings call on Tuesday.  

The mortgage subsidiary of New York-based Rithm Capital posted second-quarter pre-tax income of $113.1 million, with the total decreasing 54.9% from the previous three months' $250.6 million. Both numbers factored in changes in fair value of mortgage servicing rights, with the second-quarter markdown totaling $392.9 million. 

On a year-over-year basis, pre-tax income contracted further from $305 million, reflecting a 62.9% fall from the same three months in 2025. 

The profit came off of revenue of $704.2 million, which sat 15% lower than the prior quarter's total of $828.2 million and 23.9% from $925.6 million one year ago. 

While the impact of current rate levels is leading to stagnant mortgage originations forecasts for the next several months, company leadership hinted it would likely lead to the rollout of new products, including home equity and personal loans, to help fuel growth. 

"You're going to see more and more product innovation coming out of us where we actually own the origination business," Rithm Capital President and CEO Michael Nierenberg said.

"If there's 4 million homeowners and each house has one-and-a-half, two people, you could tap into roughly 7 million consumers," he noted. 

After predicting substantial savings to come from artificial intelligence investments made earlier this year, Newrez also said it expects its decision to move its servicing portfolio onto Valon Technologies AI-backed platform next year looks ready to support future earnings growth. 

"We remain on track for the transition to the Valon operating system in early 2027 that we estimate will deliver a total annual expense savings in excess of $65 million," Silverstein added.

How originations and servicing fared

Originations at the lender brought in $105 million in pre-tax income, with the number falling from $116.9 million in the first quarter. The latest profit increased from $86 million a year ago. 

New loan production across all channels totaled $15.9 billion, rising from $15.5 billion three months earlier. Compared to second-quarter 2025, Newrez originations dropped from $16.3 billion.

Improved gain-on-sale margin of 164 basis points propped up profits, as it grew from 144 bps quarter over quarter. The number also accelerated from 122 bps over the same three months in 2025. 

On the servicing side, activity drove $254.6 million in pre-tax income, excluding fair-value markdowns. Profit increased from $203.6 million and $233.6 million from the prior quarterly and yearly reporting period.

Unpaid loan balances stood at $865.2 billion, surging from $850.4 billion in the first quarter and inching up from $864.2 billion 12 months earlier.

"Our focus remains on growing our capital-light, fee-based third-party business with eight new clients this quarter and $27 billion in new loan boardings," Silverstein noted. 

Rithm Capital sees growth in investment lending

Positive earnings from Newrez contributed to $67.9 million in profits for its parent company, which operates in several segments, including asset management, commercial real estate and, residential-transition lending for real estate investors

The latest bottom line at Rithm declined from $109.5 million in the first quarter and $318 million a year ago. 

During the earnings call, the company pointed to the current promise held in the RTL space, demonstrated by the growth of its lending subsidiary Genesis Capital, which Rithm acquired from Goldman Sachs in 2022. 

Since the acquisition, residential-transition lending has grown from roughly $1.7 billion in annual production to nearly $7 billion, much of it driven by market demand from insurance companies, Nierenberg said. 

"The upside in this business is significant," Nierenberg said. "A lot of the growth will be driven by the demand from our clients in the third-party business."

Financial markets reacted favorably to Rithm's latest developments on Tuesday, pushing its stock value higher at opening bell to $9.34 from the previous day's closing price of $9.23. By late morning, shares had surged even further, jumping more than 6% from the prior evening to a price of $9.80.