DEBT OBLIGATIONS

9 Months Ended

Sep. 30, 2022

Debt Disclosure [Abstract]

DEBT OBLIGATIONS

DEBT OBLIGATIONS

The following table summarizes Secured Financing Agreements and Secured Notes and Bonds Payable debt obligations:

	September 30, 2022															December 31, 2021
									Collateral
Debt Obligations/Collateral	Outstanding Face Amount		Carrying Value(A)		Final Stated Maturity(B)	Weighted Average Funding Cost		Weighted Average Life (Years)	Outstanding Face		Amortized Cost Basis		Carrying Value		Weighted Average Life (Years)	Carrying Value(A)
Secured Financing Agreements(C)
Repurchase Agreements:
Warehouse Credit Facilities-Residential Mortgage Loans(F)	$	3,743,336	$	3,741,373	Oct-22 to Sep-25	3.96	%	0.6	$	4,454,467	$	4,260,857	$	4,112,852	21.4	$	10,296,812
Warehouse Credit Facilities-Mortgage Loans Receivable(E)	1,077,413		1,077,413		Feb-23 to Dec-23	5.65	%	1.0	1,283,193		1,283,193		1,283,193		0.7	1,252,660
Agency RMBS(D)	8,224,352		8,224,352		Oct-22 to Jan-23	2.75	%	0.0	8,598,313		8,582,299		8,482,906		9.9	8,386,538
Non-Agency RMBS(E)	612,109		612,109		Oct-22 to Dec-23	5.11	%	0.9	14,626,707		930,056		926,339		5.1	656,874
Total Secured Financing Agreements	13,657,210		13,655,247			3.42	%	0.3								20,592,884
Secured Notes and Bonds Payable
Excess MSRs(G)	228,497		228,497		Aug-25	3.74	%	2.9	70,067,350		263,278		315,966		5.9	237,835
MSRs(H)	4,574,995		4,566,704		Mar-23 to Dec-26	4.91	%	2.4	536,226,491		6,764,622		8,839,634		7.1	4,234,771
Servicer Advance Investments(I)	318,590		317,752		Dec-22 to Mar-24	1.23	%	0.3	334,818		358,225		371,418		7.8	355,722
Servicer Advances(I)	2,127,691		2,123,593		Oct-22 to Nov-26	3.16	%	1.0	2,525,729		2,522,246		2,522,246		0.7	2,355,969
Residential Mortgage Loans(J)	771,748		771,285		May-24 to Jul-43	2.17	%	2.1	789,890		799,997		799,997		28.2	802,526
Consumer Loans(K)	355,211		320,001		Sep-37	2.07	%	3.3	353,127		365,989		393,567		3.3	458,580
SFR Properties	863,029		813,915		Mar-23 to Sep-27	3.60	%	4.2	N/A		941,715		941,715		N/A	199,407
Mortgage Loans Receivable	524,062		511,917		Jul-26 to Dec-26	5.17	%	4.1	576,851		576,851		576,851		0.6	—
Total Secured Notes and Bonds Payable	9,763,823		9,653,664			3.96	%	2.3								8,644,810
Total/ Weighted Average	$	23,421,033	$	23,308,911		3.65	%	1.1								$	29,237,694

(A)Net of deferred financing costs.

(B)All debt obligations with a stated maturity through the date of issuance were refinanced, extended or repaid.

(C)Includes approximately $54.0 million of associated accrued interest payable as of September 30, 2022.

(D)All fixed interest rates.

(E)All LIBOR-based floating interest rates.

(F)Includes $217.6 million which bear interest at a fixed rate of 4.0% with the remaining having LIBOR-based floating interest rates.

(G)Includes $228.5 million of corporate loans which bear interest at a fixed rate of 3.7%.

(H)Includes $2.7 billion of MSR notes which bear interest equal to the sum of (i) a floating rate index equal to one-month LIBOR or SOFR, and (ii) a margin ranging from 2.5% to 3.5%; and $1.9 billion of capital market notes with fixed interest rates ranging 3.0% to 5.4%. The outstanding face amount of the collateral represents the UPB of the residential mortgage loans underlying the MSRs and MSR Financing Receivables securing these notes.

(I)$1.7 billion face amount of the notes have a fixed rate while the remaining notes bear interest equal to the sum of (i) a floating rate index equal to one-month LIBOR or a cost of funds rate, as applicable, and (ii) a margin ranging from 1.1% to 3.5%. Collateral includes Servicer Advance Investments, as well as servicer advances receivable related to the mortgage servicing rights and MSR financing receivables owned by NRM.

(J)Represents (i) $21.8 million of SAFT 2013-1 mortgage-backed securities issued with fixed interest rate of 3.8%, and (ii) $750.0 million securitization backed by a revolving warehouse facility to finance newly originated first-lien, fixed- and adjustable-rate residential mortgage loans which bears interest equal to one-month LIBOR plus 1.1%.

(K)Includes the SpringCastle debt, which is primarily composed of the following classes of asset-backed notes held by third parties: $302.2 million UPB of Class A notes with a coupon of 2.0% and a stated maturity date in September 2037 and $53.0 million UPB of Class B notes with a coupon of 2.7% and a stated maturity date in September 2037 (collectively, “SCFT 2020-A”).

General

Certain of the debt obligations included above are obligations of Rithm Capital’s consolidated subsidiaries, which own the related collateral. In some cases, such collateral is not available to other creditors of Rithm Capital.

As of September 30, 2022, Rithm Capital has margin exposure on $13.7 billion of secured financing agreements. To the extent that the value of the collateral underlying these secured financing agreements declines, Rithm Capital may be required to post margin, which could significantly impact its liquidity.     

The following table summarizes activities related to the carrying value of debt obligations:

	Excess MSRs		MSRs		Servicer Advances(A)		Real Estate Securities		Residential Mortgage Loans and REO		Consumer Loans		SFR Properties		Mortgage Loans Receivable		Total
Balance at December 31, 2021	$	237,835	$	4,234,771	$	2,711,691	$	9,043,412	$	10,940,823	$	458,580	$	357,922	$	1,252,660	$	29,237,694
Secured Financing Agreements
Borrowings	—		—		—		39,713,905		64,580,729		—		201,918		1,513,645		106,010,197
Repayments	—		—		—		(39,920,856)		(70,979,422)		—		(360,433)		(1,688,892)		(112,949,603)
Capitalized deferred financing costs, net of amortization	—		—		—		—		1,769		—		—		—		1,769
Secured Notes and Bonds Payable
Borrowings	—		945,000		1,928,999		—		—		—		879,947		524,062		4,278,008
Repayments	(9,338)		(615,406)		(2,201,378)		—		(32,355)		(99,331)		(216,631)		—		(3,174,439)
Discount on borrowings, net of amortization	—		—		—		—		—		—		(42,030)				(42,030)
Unrealized gain on notes, fair value	—		—		—		—		1,114		(39,248)		—		(12,145)		(50,279)
Capitalized deferred financing costs, net of amortization	—		2,339		2,033		—		—		—		(6,778)		—		(2,406)
Balance at September 30, 2022	$	228,497	$	4,566,704	$	2,441,345	$	8,836,461	$	4,512,658	$	320,001	$	813,915	$	1,589,330	$	23,308,911

(A)Rithm Capital net settles daily borrowings and repayments of the Secured Notes and Bonds Payable on its servicer advances.

Maturities

Contractual maturities of debt obligations as of September 30, 2022 are as follows:

Year Ending	Nonrecourse(A)		Recourse(B)		Total
October 1 through December 31, 2022	$	500,000	$	9,114,790	$	9,614,790
2023	1,307,040		5,503,195		6,810,235
2024	1,207,484		1,325,350		2,532,834
2025	—		1,810,739		1,810,739
2026	324,062		1,772,173		2,096,235
2027 and thereafter	1,106,200		—		1,106,200
	$	4,444,786	$	19,526,247	$	23,971,033

(A)Includes secured notes and bonds payable of $4.4 billion.

(B)Includes secured financing agreements and secured notes and bonds payable of $13.7 billion and $5.9 billion, respectively.

Borrowing Capacity

The following table represents borrowing capacity as of September 30, 2022:

Debt Obligations / Collateral	Borrowing Capacity		Balance Outstanding		Available Financing(A)
Secured Financing Agreements
Residential mortgage loans and REO	$	5,414,545	$	2,152,331	$	3,262,214
Loan originations	14,509,009		2,668,419		11,840,590
Secured Notes and Bonds Payable
Excess MSRs	286,380		228,497		57,883
MSRs	5,503,838		4,574,995		928,843
Servicer advances	4,183,491		2,446,280		1,737,211
Residential mortgage loans	290,715		224,503		66,212
	$	30,187,978	$	12,295,025	$	17,892,953

(A)Although available financing is uncommitted, Rithm Capital’s unused borrowing capacity is available if it has additional eligible collateral to pledge and meets other borrowing conditions as set forth in the applicable agreements, including any applicable advance rate.

Certain of the debt obligations are subject to customary loan covenants and event of default provisions, including event of default provisions triggered by certain specified declines in Rithm Capital’s equity or a failure to maintain a specified tangible net worth, liquidity, or indebtedness to tangible net worth ratio. Additionally, with the expected phase out of LIBOR, the Company expects the calculated rate on certain debt obligations will be changed to another published reference standard before the planned cessation of LIBOR quotations in 2023. However, the Company does not anticipate this change will have a significant effect on the terms and conditions, ability to access credit, or on its financial condition. Rithm Capital was in compliance with all of its debt covenants as of September 30, 2022.

2025 Senior Unsecured Notes

On September 16, 2020, the Company, as borrower, completed a private offering of $550.0 million aggregate principal amount of 6.250% senior unsecured notes due 2025 (the “2025 Senior Notes”). Interest on the 2025 Senior Notes accrue at the rate of 6.250% per annum with interest payable semi-annually in arrears on each April 15 and October 15.

The 2025 Senior Notes mature on October 15, 2025 and the Company may redeem some or all of the 2025 Senior Notes at the Company’s option, at any time from time to time, on or after October 15, 2022 at a price equal to the following fixed redemption prices (expressed as a percentage of principal amount of the 2025 Senior Notes to be redeemed):

Year	Price
2022	103.125%
2023	101.563%
2024 and thereafter	100.000%

Prior to October 15, 2022, the Company will be entitled at its option on one or more occasions to redeem the 2025 Senior Notes in an aggregate principal amount not to exceed 40% of the aggregate principal amount of the 2025 Senior Notes originally issued prior to the applicable redemption date at a fixed redemption price of 106.250%.

Net proceeds from the offering were approximately $544.5 million, after deducting the initial purchasers’ discounts and commissions and estimated offering expenses payable by the Company. The Company incurred fees of approximately $8.3 million in relation to the issuance of the 2025 Senior Notes. These fees were capitalized as debt issuance cost and are grouped and presented as part of Unsecured Senior Notes, Net of Issuance Costs on the Consolidated Balance Sheets. For the three months ended September 30, 2022, the Company recognized interest expense of $5.9 million. At September 30, 2022, the unamortized debt issuance costs was approximately $5.8 million.

The 2025 Senior Notes are senior unsecured obligations and rank pari passu in right of payment with all of the Company’s existing and future senior unsecured indebtedness and senior unsecured guarantees. At the time of issuance, the 2025 Senior Notes were not guaranteed by any of the Company’s subsidiaries and none of its subsidiaries are required to guarantee the 2025 Senior Notes in the future, except under limited specified circumstances.

The 2025 Senior Notes contain financial covenants and other non-financial covenants, including, among other things, limits on the ability of the Company and its restricted subsidiaries to incur certain indebtedness (subject to various exceptions), requires that the Company maintain total unencumbered assets (as defined in the debt agreement) of not less than 120% of the aggregate principal amount of the outstanding unsecured debt, and imposes certain requirements in order for the Company to merge or consolidate with or transfer all or substantially all of its assets to another person, in each case subject to certain qualifications set forth in the debt agreement. If the Company were to fail to comply with these covenants, after the expiration of the applicable cure periods, the debt maturity could be accelerated or other remedies could be sought by the lenders. As of September 30, 2022, the Company was in compliance with all covenants.

In the event of a change of control, each holder of the 2025 Senior Notes will have the right to require the Company to repurchase all or any part of the outstanding balance at a purchase price of 101% of the principal amount of the 2025 Senior Notes repurchased, plus accrued and unpaid interest, if any, to, but not including, the date of such repurchase.