Newrez Laying Off Almost 500 Staff After Rithm Acquisitions
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Mortgage lending and servicing big Newrez LLC is shedding almost 500 employees in Colorado and Florida as its mother or father firm, Rithm Capital Corp., continues its quest to diversify throughout a tough time for lenders.
Newrez and Rithm — a worldwide asset supervisor targeted on actual property, credit score and monetary companies — declined to touch upon the pending layoffs of 420 Newrez staff in Colorado and 53 employees in Florida.
However the first spherical of layoffs was disclosed Could 2 — the day after Rithm closed its $720 million acquisition of Specialised Mortgage Servicing (SLS) LLC and its mother or father firm, Computershare Mortgage Providers Inc.
SLS is a mortgage servicer that makes a speciality of gathering month-to-month mortgage funds from distressed debtors, offering exercises to some householders who can’t make their funds and foreclosing on others. A number of the staff Newrez is shedding carry out comparable roles as employees at Computershare Mortgage Providers and SLS, which now does enterprise as Shellpoint.
Rithm had beforehand closed one other large deal in November — the $720 million acquisition of Sculptor Capital Management Inc., a hedge fund that invests in debt, actual property and “multi-strategy platforms” with $32 billion in property beneath administration.
Primarily based in Fort Washington, Pennsylvania, Newrez sponsors 733 mortgage mortgage originators understanding of 90 department areas, down from 983 mortgage originators at 155 areas in October, in response to NMLS records. Newrez can also be partnered with actual property brokerages in various mortgage joint ventures via its Newrez Ventures platform, previously often called Shelter Mortgage Firm.
Michael Nierenberg
Though Newrez isn’t commenting on the layoffs, Rithm President, Chairman and CEO Michael Nierenberg outlined the considering behind the SLS acquisition on an earnings name shortly after the deal was announced on Oct. 2.
“Actually what it’s, is a servicing deal; there’s little or no on the origination facet,” Nierenberg mentioned on the Oct. 27 earnings name.
Rithm acquired $149 billion in mortgage servicing enterprise via the SLS deal, most of it ($104 billion) consisting of loans that SLS was servicing as a 3rd occasion. As of March 31, Rithm’s mortgage servicing portfolio totaled $857 billion, together with $225 billion in loans that Rithm companies as a 3rd occasion for different lenders.
That places Rithm in the identical league as mortgage servicing big Mr. Cooper, which has grown its mortgage servicing portfolio from $650 billion in 2021 to greater than $1 trillion this yr.
However Nierenberg mentioned the SLS acquisition is “not about so-called scale,” however boosting Rithm’s third-party servicing charges. These charges, in addition to the chance to supply refinancing to householders serviced by Newrez, will assist increase earnings at a time when elevated mortgage charges make it harder to originate new loans.
“Relating to the mortgage firm, we proceed to be vigilant on expense discount initiatives, significantly within the origination segments,” Nierenberg mentioned in October. “We anticipate the origination enterprise to stay beneath excessive stress with mortgage charges at 8 %.”
Mortgage charges have come down some from their October 2023 peaks. However on Could 2 — the day after the SLS acquisition closed — Newrez notified state labor departments in Colorado and Florida of its plans to put off 156 employees — 103 in Colorado, and 53 in Florida — starting July 1.
On June 3, Newrez filed one other Employee Adjustment and Retraining Notification (WARN) Act discover with Colorado officers, informing them of plans to put off 317 employees from the corporate’s Greenwood Village facility starting on Aug. 2.
Positions Newrez is reducing in Colorado embody asset managers, chapter supervisors and assist associates, exercise specialists, default assist associates, loss mitigation supervisors and valuations analysts — roles that overlap with staffing at SLS.
In October, Nierenberg mentioned buying SLS “will increase our capability within the particular servicing area. In order we go ahead, and you consider the worldwide macro image — if the financial system within the U.S. does decelerate, and there’s a necessity for extra particular servicing, there’s going to be no person higher than Newrez … to work with householders and customers.”
[In 2020 SLS agreed to provide $1.275 million in relief to consumers and pay a $250,000 civil monetary penalty to settle allegations by the Consumer Financial Protection Bureau that it improperly foreclosed on some borrowers, without admitting or denying the allegations].
Final large acquisition additionally resulted in layoffs
Whereas Rithm’s $1.44 billion acquisition spree has led to layoffs of almost 500 employees, the corporate went via much more dramatic rising pains in 2022, as hovering mortgage charges curbed mortgage lending.
Earlier than altering its title to Rithm Capital in 2022, New Residential Funding Corp. (as the corporate was recognized on the time) acquired Caliber House Loans and Genesis Capital in 2021.
The $1.675 billion Caliber Home Loans deal — a part of a technique to broaden the corporate’s origination, servicing and asset administration capabilities — included $141 billion in mortgage servicing rights. Most of Caliber’s mortgage originators have been laid off after that deal closed.
Rithm lower greater than 6,500 employees from its payrolls to cut back bills in 2022, primarily inside its mortgage originations section. After beginning out 2022 with 12,296 folks on the payroll, Rithm lower its workforce by 53 %, ending the yr with 5,723 employees.
The operations of Caliber have been totally built-in into Newrez within the fourth quarter of 2023, with various former executives ending up at Ohio-based Union Home Mortgage.
As of Dec. 31, 2023, Rithm reported a complete of 6,570 staff on its payroll, of whom 5,656 labored in mortgage origination and servicing.
Rithm can also be within the single-family rental enterprise via its subsidiary, Adoor LLC.
“Adoor is properly positioned to profit from the present market atmosphere, buying SFR properties at elevated cap charges via its acquisition channels and vertically integrating its property administration capabilities,” Rithm mentioned in an April 30 investor presentation.
Final fall, Rithm announced a strategic partnership with Pagaya Applied sciences subsidiary Darwin Properties Inc. on a brand new property administration platform, Adoor Property Administration LLC.
Led by former Caliber CEO Sanjiv Das, Pagaya acquired Darwin Homes in a January 2023 all-stock transaction valued at $18 million, plus $12 million in money and fairness awards to Darwin staff.
One week after asserting the Darwin Properties deal, Pagaya mentioned it was shedding 20 % of its workforce, ending the year with 712 employees on the payroll — together with 142 full-time Darwin staff.
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