The Institutional Risk Analyst

We have enormous respect for Nierenberg and his team, but wonder why they don't make some obvious adjustments in the business model. For example, NLY has 20% of its capital in agency MSRs and focuses on agency mortgages and MBS, RITM has one of the largest MSR portfolios in the industry and yet is transitioning away from residential mortgages in pursuit of a multi-asset strategy. The result is a business profile that is a challenge to define...

The FOMC meeting this week with Chairman Kevin Warsh was about what we expected. Less is more in terms of forward guidance, maybe pivot to even less talk MT. Models being renovated, personnel evaluated. Maybe the end of the idiotic dot plots is in sight? No guidance will be forthcoming from the Chairman.

PFSI trades on a trailing P/E of 14x vs ~ 8x for RITM. PFSI trades around 1.6x book vs 0.9x for RITM. Case closed? We have long believed that RITM should spin off its manager to create a comp for PFSI and then externally manage the RITM REIT. Like PFSI, in this scenario the new RITM manager would need to retain the Ginnie Mae MSRs.

The majority of the actual cash profit generated from residential lending is found in the mortgage servicing rights (MSRs).

If we are marking balance sheet assets to actual market in the age of deflation, what of the heavily modeled world of servicing assets?

Since 2008, dollar swap spreads have traded below Treasury yields, suggesting a persistent demand for dollars coming from offshore.

The good news is that NRZ is growing and making strides in terms of asset creation and, especially, asset retention.

There is no actual disclosure from PSFI as to exactly how much of the firm’s default advances are being financed with bondholder funds