SEGMENT REPORTING

6 Months Ended

Jun. 30, 2023

Segment Reporting [Abstract]

SEGMENT REPORTING

SEGMENT REPORTING

At June 30, 2023, Rithm Capital’s reportable segments include (i) Origination, (ii) Servicing, (iii) MSR Related Investments, (iv) Residential Securities, Properties and Loans, (v) Consumer Loans, (vi) Mortgage Loans Receivable and (vii) Corporate. The Corporate segment primarily consists of general and administrative expenses, corporate cash and related interest income, unsecured senior notes (Note 18) and related interest expense.

The following tables summarize segment financial information, which in total reconciles to the same data for Rithm Capital as a whole:

	Origination and Servicing								Residential Securities, Properties and Loans
	Origination		Servicing		MSR Related Investments		Total Origination and Servicing		Real Estate Securities		Properties and Residential Mortgage Loans		Consumer Loans		Mortgage Loans Receivable		Corporate		Total
Three Months Ended June 30, 2023
Servicing fee revenue, net and interest income from MSRs and MSR financing receivables	$	—	$	359,854	$	105,708	$	465,562	$	—	$	—	$	—	$	—	$	—	$	465,562
Change in fair value of MSRs and MSR financing receivables (includes realization of cash flows of $(139,410))	—		45,767		(23,735)		22,032		—		—		—		—		—		22,032
Servicing revenue, net	—		405,621		81,973		487,594		—		—		—		—		—		487,594
Interest income	26,552		102,687		35,622		164,861		122,476		26,291		24,401		58,809		1,948		398,786
Gain on originated residential mortgage loans, held-for-sale, net	134,130		10,188		—		144,318		1,247		6,257		—		—		—		151,822
Total revenues	160,682		518,496		117,595		796,773		123,723		32,548		24,401		58,809		1,948		1,038,202
Interest expense	28,613		81,606		30,368		140,587		115,572		30,830		4,315		29,282		8,572		329,158
G&A and other	143,064		94,074		75,295		312,433		1,560		19,242		2,734		14,795		20,350		371,114
Total operating expenses	171,677		175,680		105,663		453,020		117,132		50,072		7,049		44,077		28,922		700,272
Realized and unrealized gains (losses) on investments, net	(112)		386		10,311		10,585		77,442		(7,936)		(3,994)		13,328		—		89,425
Other income (loss), net	255		(5,434)		34,428		29,249		(2,035)		17,998		5,396		(822)		(33,926)		15,860
Total other income (loss)	143		(5,048)		44,739		39,834		75,407		10,062		1,402		12,506		(33,926)		105,285
Income (loss) before income taxes	(10,852)		337,768		56,671		383,587		81,998		(7,462)		18,754		27,238		(60,900)		443,215
Income tax expense (benefit)	(2,718)		51,925		3,308		52,515		—		4,948		48		(981)		—		56,530
Net income (loss)	(8,134)		285,843		53,363		331,072		81,998		(12,410)		18,706		28,219		(60,900)		386,685
Noncontrolling interests in income (loss) of consolidated subsidiaries	386		—		845		1,231		—		—		5,658		—		—		6,889
Dividends on preferred stock	—		—		—		—		—		—		—		—		22,395		22,395
Net income (loss) attributable to common stockholders	$	(8,520)	$	285,843	$	52,518	$	329,841	$	81,998	$	(12,410)	$	13,048	$	28,219	$	(83,295)	$	357,401

	Origination and Servicing								Residential Securities, Properties and Loans
	Origination		Servicing		MSR Related Investments		Total Origination and Servicing		Real Estate Securities		Properties and Residential Mortgage Loans		Consumer Loans		Mortgage Loans Receivable		Corporate		Total
Six Months Ended June 30, 2023
Servicing fee revenue, net and interest income from MSRs and MSR financing receivables	$	—	$	709,278	$	226,123	$	935,401	$	—	$	—	$	—	$	—	$	—	$	935,401
Change in fair value of MSRs and MSR financing receivables (includes realization of cash flows of $(245,101))	—		8,241		(128,513)		(120,272)		—		—		—		—		—		(120,272)
Servicing revenue, net	—		717,519		97,610		815,129		—		—		—		—		—		815,129
Interest income	52,085		186,920		60,181		299,186		236,723		49,057		38,688		117,146		4,600		745,400
Gain on originated residential mortgage loans, held-for-sale, net	246,952		5,587		—		252,539		1,247		7,304		—		—		—		261,090
Total revenues	299,037		910,026		157,791		1,366,854		237,970		56,361		38,688		117,146		4,600		1,821,619
Interest expense	58,608		162,680		62,070		283,358		213,864		57,022		5,995		59,974		18,013		638,226
G&A and other	283,576		194,908		144,536		623,020		2,190		28,625		4,500		31,026		37,788		727,149
Total operating expenses	342,184		357,588		206,606		906,378		216,054		85,647		10,495		91,000		55,801		1,365,375
Realized and unrealized gains (losses) on investments, net	56		195		(2,087)		(1,836)		31,443		(14,363)		(9,984)		8,516		—		13,776
Other income (loss), net	(335)		(18,271)		70,349		51,743		(1,870)		42,179		(3,326)		891		(43,279)		46,338
Total other income (loss)	(279)		(18,076)		68,262		49,907		29,573		27,816		(13,310)		9,407		(43,279)		60,114
Income (loss) before income taxes	(43,426)		534,362		19,447		510,383		51,489		(1,470)		14,883		35,553		(94,480)		516,358
Income tax expense (benefit)	(10,878)		56,413		(4,063)		41,472		—		1,220		107		(3,075)		—		39,724
Net income (loss)	(32,548)		477,949		23,510		468,911		51,489		(2,690)		14,776		38,628		(94,480)		476,634
Noncontrolling interests in income (loss) of consolidated subsidiaries	344		—		699		1,043		—		—		4,546		—		—		5,589
Dividends on preferred stock	—		—		—		—		—		—		—		—		44,790		44,790
Net income (loss) attributable to common stockholders	$	(32,892)	$	477,949	$	22,811	$	467,868	$	51,489	$	(2,690)	$	10,230	$	38,628	$	(139,270)	$	426,255

	Origination and Servicing								Residential Securities, Properties and Loans
	Origination		Servicing		MSR Related Investments		Total Origination and Servicing		Real Estate Securities		Properties and Residential Mortgage Loans		Consumer Loans		Mortgage Loans Receivable		Corporate		Total
June 30, 2023
Investments	$	1,824,653	$	7,014,766	$	1,962,023	$	10,801,442	$	9,701,000	$	2,345,181	$	1,602,571	$	1,939,499	$	—	$	26,389,693
Cash and cash equivalents	223,222		513,195		298,632		1,035,049		268,083		546		1,000		49,375		14,972		1,369,025
Restricted cash	41,621		125,706		71,069		238,396		4,154		11,849		21,454		43,912		—		319,765
Other assets	159,964		2,371,343		2,526,478		5,057,785		230,001		100,699		79,106		119,642		107,164		5,694,397
Goodwill	11,836		12,540		5,092		29,468		—		—		—		55,731		—		85,199
Total assets	$	2,261,296	$	10,037,550	$	4,863,294	$	17,162,140	$	10,203,238	$	2,458,275	$	1,704,131	$	2,208,159	$	122,136	$	33,858,079
Debt	$	1,741,717	$	4,255,588	$	2,886,131	$	8,883,436	$	9,203,274	$	1,923,139	$	1,441,648	$	1,620,937	$	545,930	$	23,618,364
Other liabilities	204,083		2,202,768		50,832		2,457,683		73,121		320,311		3,888		15,890		174,138		3,045,031
Total liabilities	1,945,800		6,458,356		2,936,963		11,341,119		9,276,395		2,243,450		1,445,536		1,636,827		720,068		26,663,395
Total equity	315,496		3,579,194		1,926,331		5,821,021		926,843		214,825		258,595		571,332		(597,932)		7,194,684
Noncontrolling interests in equity of consolidated subsidiaries	9,978		—		11,612		21,590		—		—		38,661		—		—		60,251
Total Rithm Capital stockholders’ equity	$	305,518	$	3,579,194	$	1,914,719	$	5,799,431	$	926,843	$	214,825	$	219,934	$	571,332	$	(597,932)	$	7,134,433
Investments in equity method investees	$	—	$	—	$	66,770	$	66,770	$	—	$	—	$	—	$	—	$	22,620	$	89,390

	Origination and Servicing								Residential Securities, Properties and Loans
	Origination		Servicing		MSR Related Investments		Total Origination and Servicing(A)		Real Estate Securities		Properties and Residential Mortgage Loans		Consumer Loans		Mortgage Loans Receivable		Corporate		Total
Three Months Ended June 30, 2022
Servicing fee revenue, net and interest income from MSRs and MSR financing receivables	$	—	$	345,114	$	124,364	$	469,478	$	—	$	—	$	—	$	—	$	—	$	469,478
Change in fair value of MSRs and MSR financing receivables (includes realization of cash flows of $(180,265))	—		344,329		(9,639)		334,690		—		—		—		—		—		334,690
Servicing revenue, net	—		689,443		114,725		804,168		—		—		—		—		—		804,168
Interest income	46,216		16,757		11,340		74,313		54,584		22,640		18,109		36,748		5,254		211,648
Gain on originated residential mortgage loans, held-for-sale, net	302,610		15,739		—		318,455		—		(13,664)		—		—		—		304,791
Total revenues	348,826		721,939		126,065		1,196,936		54,584		8,976		18,109		36,748		5,254		1,320,607
Interest expense	27,578		41,096		25,788		94,462		20,216		11,332		2,088		12,680		10,051		150,829
G&A and other	349,432		105,796		70,000		525,228		710		11,891		2,160		14,600		431,325		985,914
Total operating expenses	377,010		146,892		95,788		619,690		20,926		23,223		4,248		27,280		441,376		1,136,743
Realized and unrealized gains (losses) on investments, net	—		(1,780)		(49)		(1,829)		(124,034)		6,601		(7,196)		(10,773)		—		(137,231)
Other income (loss), net	1,832		5,192		11,295		18,319		(2,127)		29,471		15,725		7,430		(9,430)		59,388
Total other income (loss)	1,832		3,412		11,246		16,490		(126,161)		36,072		8,529		(3,343)		(9,430)		(77,843)
Income (loss) before income taxes	(26,352)		578,459		41,523		593,736		(92,503)		21,825		22,390		6,125		(445,552)		106,021
Income tax expense (benefit)	(6,522)		151,236		9,466		154,180		—		(2,480)		1		(3,623)		(75,388)		72,690
Net income (loss)	(19,830)		427,223		32,057		439,556		(92,503)		24,305		22,389		9,748		(370,164)		33,331
Noncontrolling interests in income (loss) of consolidated subsidiaries	1,287		—		41		1,328		—		—		12,854		—		—		14,182
Dividends on preferred stock	—		—		—		—		—		—		—		—		22,427		22,427
Net income (loss) attributable to common stockholders	$	(21,117)	$	427,223	$	32,016	$	438,228	$	(92,503)	$	24,305	$	9,535	$	9,748	$	(392,591)	$	(3,278)

(A)    Includes elimination of intercompany transactions of $0.1 million primarily related to loan sales.

	Origination and Servicing								Residential Securities, Properties and Loans
	Origination		Servicing		MSR Related Investments		Total Origination and Servicing(A)		Real Estate Securities		Properties and Residential Mortgage Loans		Consumer Loans		Mortgage Loans Receivable		Corporate		Total
Six Months Ended June 30, 2022
Servicing fee revenue, net and interest income from MSRs and MSR financing receivables	$	—	$	671,510	$	254,368	$	925,878	$	—	$	—	$	—	$	—	$	—	$	925,878
Change in fair value of MSRs and MSR financing receivables (includes realization of cash flows of $(380,590))	—		841,331		68,123		909,454		—		—		—		—		—		909,454
Servicing revenue, net	—		1,512,841		322,491		1,835,332		—		—		—		—		—		1,835,332
Interest income	101,587		28,110		27,042		156,739		110,933		49,629		37,042		71,025		11,693		437,061
Gain on originated residential mortgage loans, held-for-sale, net	709,879		77,501		—		789,885		—		(13,098)		—		—		—		776,787
Total revenues	811,466		1,618,452		349,533		2,781,956		110,933		36,531		37,042		71,025		11,693		3,049,180
Interest expense	57,013		74,802		52,153		183,968		29,245		32,200		4,350		19,649		20,250		289,662
G&A and other	758,190		208,629		147,957		1,114,776		1,482		35,325		4,414		31,008		462,955		1,649,960
Total operating expenses	815,203		283,431		200,110		1,298,744		30,727		67,525		8,764		50,657		483,205		1,939,622
Realized and unrealized gains (losses) on investments, net	—		(1,812)		(3,343)		(5,155)		(200,563)		18,765		(20,929)		(14,655)		—		(222,537)
Other income (loss), net	3,927		6,135		40,176		50,238		(4,727)		43,787		24,497		7,430		(9,505)		111,720
Total other income (loss)	3,927		4,323		36,833		45,083		(205,290)		62,552		3,568		(7,225)		(9,505)		(110,817)
Income (loss) before income taxes	190		1,339,344		186,256		1,528,295		(125,084)		31,558		31,846		13,143		(481,017)		998,741
Income tax expense (benefit)	(6)		312,352		40,929		353,275		—		1,177		38		(3,623)		(75,388)		275,479
Net income (loss)	196		1,026,992		145,327		1,175,020		(125,084)		30,381		31,808		16,766		(405,629)		723,262
Noncontrolling interests in income (loss) of consolidated subsidiaries	1,694		—		269		1,963		—		—		17,828		—		—		19,791
Dividends on preferred stock	—		—		—		—		—		—		—		—		44,888		44,888
Net income (loss) attributable to common stockholders	$	(1,498)	$	1,026,992	$	145,058	$	1,173,057	$	(125,084)	$	30,381	$	13,980	$	16,766	$	(450,517)	$	658,583

(A)Includes elimination of intercompany transactions of $2.5 million primarily related to loan sales.

Servicing Segment Revenues

The table below summarizes the components of servicing segment revenues:

	Three Months Ended June 30,				Six Months Ended June 30,
	2023		2022		2023		2022
Base servicing
MSR-owned assets	$	304,912	$	287,904	$	603,871	$	550,755
Residential whole loans	1,920		3,019		4,336		6,408
Third party	23,015		23,069		45,378		46,722
	329,847		313,992		653,585		603,885
Other fees
Ancillary and other fees(A)	30,007		31,122		55,693		67,625
Change in fair value due to:
Realization of cash flows	(103,034)		(117,680)		(175,049)		(250,956)
Change in valuation inputs and assumptions and other	148,801		462,009		183,290		1,092,287
Total servicing fees	$	405,621	$	689,443	$	717,519	$	1,512,841
Servicing data – unpaid principal balance (“UPB”) (period end) (in millions)
UPB – MSR-owned assets	$	401,628	$	399,900	$	401,628	$	399,900
UPB – Residential whole loans	8,753		10,959		8,753		10,959
UPB – Third party	95,603		87,190		95,603		87,190

(A)Includes incentive, boarding and other fees.