Net income at the mortgage subsidiary of the New York-based real estate investment trust came in at $225.4 million for the third quarter, rising for the fourth straight earnings period. The total included a hedge mark-to-market loss of $61 million in mortgage servicing rights. 

The latest numbers fell 28.3% from the second quarter's profit of $315.7 million but represented a turnaround from the loss of $228.4 million recorded one year ago that factored in a significant  decrease in MSR fair value. 

Newrez performance by mortgage segment

Newrez saw its largest monthly mortgage lock volume since 2022 at the end of the quarter thanks to recent falling rates, and the activity helped lead to $80.4 million in profit in its originations unit. While profit was down from $86.6 million in the second quarter, it came in near par with $80.8 million from a year ago. 

Origination profits came off of third-quarter production volume of $16.4 billion compared to $16.3 billion three months earlier and $15.9 billion 12 months ago. 

Despite increased production, profits pulled back with gain-on-sale margins shrinking to 114 basis points from 122 in the prior quarter and 123 a year ago. The decrease was attributed to channel mix and a significant increase in government streamline refinances with lower margins, Silverstein said. 

Meanwhile, its servicing operations posted $260.3 million in income before fair value adjustments, with a boost also coming from a new deal announcement. The number headed upward from $233.6 million in 2025's second fiscal period and $223.4 million on a year-over-year basis. 

"We're also excited about a new partnership with Wells Fargo, which validates our nonagency servicing leadership in the industry," Silverstein said. 

Unpaid servicing balance hit $877.5 billion in the most recent reporting period, up from $864.2 billion three months earlier and $754.7 billion in third quarter 2024. 

The lender touted operational efficiency from the expansion of its ReziAI artificial intelligence platform toward helping Newrez deliver "cost leadership," as employees adopted the system. It also launched a new AI tool to assist loan officers with call automation and coaching.

Newrez revenue last quarter finished at $836.2 million. The number dropped from $925.6 million in the second quarter but surged from $142.3 million 12 months ago, with the totals all factoring in fair value servicing adjustments

Developments at Rithm Capital

The latest positive results at Newrez corresponded to growth at its parent, which celebrated two new acquisitions in the third quarter that furthered efforts to diversify its business. Rithm Capital's purchase of fellow REIT Paramount Group established its presence in the commercial space. 

At the same time, another third-quarter merger with Crestline Management added insurance services to Rithm's offerings. 

Quarterly net profit across all company segments for Rithm Capital clocked in at $193.7 million based on generally accepted accounting principles or 35 cents per diluted share. 

While the company tabled the long-discussed possibility of spinning Newrez off as a separate public entity earlier this year, it continues to seek ways to grow the lender and capitalize on its value alongside its other lines of business. Potential strategies include a partial public listing, company officials told analysts during the call.

"We explore that every day," said Rithm CEO Michael Nierenberg. 

"The mortgage company is something that we always look at and say, 'Do we take it public or not?' Quite frankly, sometimes it's easier not to be in the public markets," he added.