Rithm Capital Corp. has announced a mortgage-servicing rights securitization that's unprecedented in terms of its size and further establishes a market for nonrecourse structures.
The $878 million single-tranche securitization, NZES 2025-FHT1, backed by Freddie Mac MSRs, is the largest fixed-rate deal of its kind. At nearly twice the size of Rithm's November nonrecourse deal, it sets a new benchmark.
As Rithm considers
"We are committed to further solidifying Rithm's leadership in the sector and expanding access to this emerging asset class," said Michael Nierenberg, chairman, CEO and president of the company, in a press release.
While many firms securitize MSRs, Rithm said it is the first in the nonrecourse market.
Other players who have been active more broadly MSR securitizations include Pennymac and Freedom Mortgage. Kroll Bond Rating Agency rated
Rithm's record fixed-rate nonrecourse securitizations, which it has used to refinance pre-existing MSR lines, potentially open up new opportunities for other nonbanks with large MSR portfolios, according to Sanjeev Khanna, head of capital markets at Rithm Capital.
"It allows more people to participate in the capital markets than structures that were only linked to corporate ratings," Khanna said. "A lot of other players who don't have the corporate ratings sell MSRs as a form of liquidity. Now there's another tool available for them."
Nonrecourse transactions offer
"We have a lot of recourse debt. We have warehouse lines and other instruments. So if we can rely less on recourse over time, that should help our corporate rating," Khanna said.
Nonrecourse MSR deals have been rare due to stricter investor performance assurances, limiting competition to firms that can meet them.
Rithm decided to offer a nonrecourse deal because its track record in rated fixed-rate MSR securitization dates back to 2015 either its own name or
Since 2015, Rithm has closed 17 MSR deals totaling $7.7 billion across Fannie, Freddie, Ginnie, and private-label servicing, proving resilience through rate cycles, including the pandemic.
"We had many issues outstanding when we went through COVID and these structures held up. We didn't have to contribute cash. We didn't have to contribute additional MSR assets," Khanna said.
The one previous nonrecourse, single-tranche MSR securitization Rithm completed was a $461 million fixed-rate transaction involving rights to Fannie loans. This was upsized from what was originally set to be a $378 million deal due to strong demand, according to the company.
The more recent transaction was originally a $360 million deal and was upsized twice, first to $540 million and then to $878 million, according to Khanna.
Khanna said prior to this securitization, most average-sized fixed-rate MSR transactions in the market at large tended to be in the $300 million to $500 million range, with some of its own being higher.
