VARIABLE INTEREST ENTITIES (Tables)

9 Months Ended

Sep. 30, 2023

Organization, Consolidation and Presentation of Financial Statements [Abstract]

The table below presents the carrying value and classification of the assets and liabilities of consolidated VIEs on the Consolidated Balance Sheets:


	Advance Purchaser		Newrez Joint Ventures		Residential Mortgage Loans		Consumer Loan SPVs		Mortgage Loans Receivable		Total
September 30, 2023
Assets

Servicer advance investments, at fair value	$	378,664	$	—	$	—	$	—	$	—	$	378,664


Residential mortgage loans, held-for-sale, at fair value	—		—		1,094,978		—		—		1,094,978
Consumer loans	—		—		—		303,881		—		303,881
Mortgage loans receivable	—		—		—		—		348,061		348,061
Cash and cash equivalents	5,241		21,177		4,410		—		—		30,828
Restricted cash	8,151		—		9,378		6,375		12,859		36,763

Other assets	9		410		—		4,528		—		4,947
Total Assets	$	392,065	$	21,587	$	1,108,766	$	314,784	$	360,920	2,198,122
Liabilities

Secured notes and bonds payable(A)	271,488		—		995,361		245,695		307,228		1,819,772
Accrued expenses and other liabilities	2,612		3,257		74		1,422		3,100		10,465
Total Liabilities	$	274,100	$	3,257	$	995,435	$	247,117	$	310,328	$	1,830,237

December 31, 2022
Assets

Servicer advance investments, at fair value	$	387,675	$	—	$	—	$	—	$	—	$	387,675
Residential mortgage loans, held-for-investment, at fair value	—		—		22,699		—		—		22,699

Residential mortgage loans, held-for-sale, at fair value	—		—		844,000		—		—		844,000
Mortgage loans receivable	—		—		—		—		349,975		349,975
Consumer loans	—		—		—		363,756		—		363,756
Cash and cash equivalents	34,084		28,404		23,473		—		—		85,961
Restricted cash	7,433		—		7,547		6,652		9,368		31,000

Other assets	9		1,026		165,975		5,253		(238)		172,025
Total Assets	$	429,201	$	29,430	$	1,063,694	$	375,661	$	359,105	$	2,257,091
Liabilities
Secured financing agreements(A)	—		—		51,325		—		—		51,325
Secured notes and bonds payable(A)	313,093		—		768,959		299,498		312,918		1,694,468
Accrued expenses and other liabilities	1,928		4,306		25,381		1,144		349		33,108
Total Liabilities	$	315,021	$	4,306	$	845,665	$	300,642	$	313,267	$	1,778,901

(A)The creditors of the VIEs do not have recourse to the general credit of Rithm Capital, and the assets of the VIEs are not directly available to satisfy Rithm Capital’s obligations.

The following table summarizes the carrying value of the Company’s unconsolidated bonds retained pursuant to required risk retention regulations which reflects the Company’s maximum exposure to loss, as well as the UPB of transferred loans. These bonds are grouped and presented as part of real estate and other securities on the Consolidated Balance Sheets:


	As of and for the Nine Months Ended September 30,
	2023			2022
Residential mortgage loan UPB and other collateral	$	10,809,466		$	12,137,481
Weighted average delinquency(A)	4.2		%	4.9		%
Net credit losses	$	167,519		$	170,439
Face amount of debt held by third parties(B)	$	9,840,864		$	11,228,461

Carrying value of bonds retained by Rithm Capital(C)(D)	$	867,134		$	920,904
Cash flows received by Rithm Capital on these bonds	$	113,527		$	173,765

(A)Represents the percentage of the UPB that is 60+ days delinquent.

(B)Excludes bonds retained by Rithm Capital.

(C)Includes bonds retained pursuant to required risk retention regulations.

(D)Classified within Level 3 of the fair value hierarchy as the valuation is based on certain unobservable inputs including discount rate, prepayment rates and loss severity. See Note 19 for details on unobservable inputs.

The following table summarizes the carrying value of the Company’s unconsolidated commercial real estate projects which reflects the Company’s maximum exposure to loss. See Note 22 regarding certain guarantees provided in connection with the investments. These investments are grouped and presented as part of Equity investments within Other assets on the Consolidated Balance Sheets:


	September 30, 2023		December 31, 2022
Carrying value of commercial real estate held within unconsolidated VIEs	$	48,438	$	—
Carrying value of Rithm’s investments in unconsolidated commercial real estate VIEs	$	19,933	$	—

Consolidation, Less than Wholly Owned Subsidiary, Parent Ownership Interest, Effects of Changes, Net

Others’ interests in the equity of consolidated subsidiaries is computed as follows:


	September 30, 2023									December 31, 2022
	Advance Purchaser(A)			Newrez Joint Ventures			Consumer Loan Companies			Advance Purchaser(A)			Newrez Joint Ventures			Consumer Loan Companies
Total consolidated equity	$	117,966		$	18,330		$	82,007		$	114,180		$	25,124		$	91,263
Others’ ownership interest	10.7		%	49.5		%	46.5		%	10.7		%	49.5		%	46.5		%
Others’ interest in equity of consolidated subsidiary	$	12,600		$	9,073		$	38,234		$	12,193		$	12,437		$	42,437

Others’ interests in the net income (loss) is computed as follows:


	Three Months Ended September 30,
	2023									2022
	Advance Purchaser(A)			Newrez Joint Ventures			Consumer Loan Companies			Advance Purchaser(A)			Newrez Joint Ventures			Consumer Loan Companies
Net income (loss)	$	13,229		$	544		$	6,806		$	(1,296)		$	952		$	15,000
Others’ ownership interest	10.7		%	49.5		%	46.5		%	10.7		%	49.5		%	46.5		%
Others’ interest in net income (loss) of consolidated subsidiary	$	1,414		$	269		$	3,165		$	(139)		$	471		$	6,975


	Nine Months Ended September 30,
	2023									2022
	Advance Purchaser(A)			Newrez Joint Ventures			Consumer Loan Companies			Advance Purchaser(A)			Newrez Joint Ventures			Consumer Loan Companies
Net income (loss)	$	19,786		$	1,238		$	16,582		$	1,219		$	4,374		$	53,340
Others’ ownership interest	10.7		%	49.5		%	46.5		%	10.7		%	49.5		%	46.5		%
Others’ interest in net income (loss) of consolidated subsidiary	$	2,113		$	613		$	7,711		$	130		$	2,165		$	24,803

(A)Rithm Capital owned 89.3% of Advance Purchaser as of September 30, 2023 and 2022.

- Definition

Tabular disclosure of the significant judgments and assumptions made in determining whether a variable interest (as defined) held by the entity requires the variable interest entity (VIE) (as defined) to be consolidated and (or) disclose information about its involvement with the VIE, individually or in aggregate (as applicable); the nature of restrictions, if any, on the consolidated VIE's assets and on the settlement of its liabilities reported by an entity in its statement of financial position, including the carrying amounts of such assets and liabilities; the nature of, and changes in, the risks associated with involvement in the VIE; how involvement with the VIE affects the entity's financial position, financial performance, and cash flows; the lack of recourse if creditors (or beneficial interest holders) of the consolidated VIE have no recourse to the general credit of the primary beneficiary (if applicable); the terms of arrangements, giving consideration to both explicit arrangements and implicit variable interests, if any, that could require the entity to provide financial support to the VIE, including events or circumstances that could expose the entity to a loss; the methodology used by the entity for determining whether or not it is the primary beneficiary of the variable interest entity; the significant factors considered and judgments made in determining that the power to direct the activities of a VIE that most significantly impact the VIE's economic performance are shared (as defined); the carrying amounts and classification of assets and liabilities of the VIE included in the statement of financial position; the entity's maximum exposure to loss, if any, as a result of its involvement with the VIE, including how the maximum exposure is determined and significant sources of the entity's exposure to the VIE; a comparison of the carrying amounts of the assets and liabilities and the entity's maximum exposure to loss; information about any liquidity arrangements, guarantees, and (or) other commitments by third parties that may affect the fair value or risk of the entity's variable interest in the VIE; whether or not the entity has provided financial support or other support (explicitly or implicitly) to the VIE that it was not previously contractually required to provide or whether the entity intends to provide that support, including the type and amount of the support and the primary reasons for providing the support; and supplemental information the entity determines necessary to provide.

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