Onity Group Inc.

What they do

Onity services and originates forward and reverse residential mortgage loans, reporting in three segments: Servicing, Originations and Corporate. The Servicing segment collects borrower principal and interest, administers escrow accounts, manages delinquencies and advances, and covers both an owned MSR portfolio and a subservicing portfolio for clients including the GSEs, Ginnie Mae and non-Agency RMBS trusts. The Originations business originates and purchases conventional and government-insured loans through retail, correspondent and wholesale channels, sells them on a servicing-retained basis, and also grows MSRs via flow purchase agreements, Agency Cash Window/co-issue programs and bulk purchases.

Revenue drivers

• Servicing segment — The largest revenue source, spanning an owned MSR portfolio averaging $142.3 billion UPB in 2025 (up 15.6% year over year) plus a subservicing portfolio that generates relatively stable fees without significant capital use or MSR fair value exposure. Servicing and subservicing totaled approximately 1.4 million loans and $328.3 billion UPB at December 31, 2025.
• Originations segment — Generates gains on loan sales and replenishes the servicing portfolio; contributed $42.7 billion of total production in 2025, including $22.3 billion correspondent MSR and $17.8 billion flow and Agency Cash Window MSR purchases.
• MSR purchases — Bulk MSR purchases added $8.8 billion UPB in 2025 and $8.7 billion in the first half of 2026; total 2025 servicing additions were $51.5 billion, funding the owned MSR portfolio that drives net servicing returns.

Recent performance

Second quarter 2026 revenue was $283 million, up 15% versus Q2 2025, with adjusted revenue of $281 million, up 24%. The company reported a net loss attributable to common stockholders of $13 million, or diluted EPS of $(1.53), including $9 million pre-tax cost tied to the reverse asset sale and legacy subservicing transfer and $24 million pre-tax unfavorable asset fair value changes. Adjusted pre-tax income was $14 million, an annualized adjusted ROE of 9%. Total servicing additions reached $42 billion, including a quarterly record over $15 billion of Originations, up 64% versus Q2 2025, and ending servicing UPB was $341 billion, up 10%. Full-year 2025 net income was $189.5 million, or diluted EPS of $21.46, on revenue of $1.07 billion.

Strategy

Management describes a strategy of balance and diversification, prudent capital-light growth, an industry-leading cost structure, and dynamic asset management, with Servicing as the core competency and Originations to replenish the portfolio. The company targets a balanced mix of owned MSR servicing and subservicing based on capital allocation and returns, and grows servicing volume via MSR flow purchase agreements, Agency Cash Window and co-issue programs, bulk MSR transactions and subservicing agreements. On June 30, 2026 it closed the sale of approximately 80% of reverse MSRs to Finance of America Reverse LLC (about $77 million net proceeds), transferred the reverse originations pipeline, agreed to subservice the sold portfolio and additional FAR loans for an initial three-year term, and will not originate reverse mortgages for five years except HECM recapture on retained reverse MSRs. The company also transferred approximately $22 billion of Rithm servicing UPB in the first half of 2026, with $8 billion remaining, of which $4 billion is expected to transfer subject to consents, and repurchased 141,343 shares for $5.8 million in Q2 2026.

Risks

• Legal and regulatory compliance — Failure to operate in compliance with complex legal or regulatory requirements or contractual obligations is identified as a risk that could materially and adversely affect the business.
• GSE and Ginnie Mae actions — Adverse changes to GSE and Ginnie Mae business models, initiatives and other actions are listed as a risk, notable given the company services on behalf of the GSEs and Ginnie Mae.
• Financing and liquidity — The company cites inability to access capital to meet business financing requirements, noncompliance with debt agreements or covenants, and inability to obtain sufficient servicer advance financing due to increased delinquencies or forbearance.
• Litigation outcomes — Adverse litigation outcomes are called out as a legal risk that could affect financial condition, liquidity and results of operations.

Outlook

Management maintained its adjusted ROE guidance range of 10%–15% but expects to land at the lower end, citing persistent geopolitical instability, inflation and market volatility. It reaffirmed prior guidance on servicing UPB growth, MSR hedge effectiveness and operating efficiency. First half 2026 subservicing additions of $35 billion exceed the prior first half guidance, and the CEO stated the company believes it is well positioned to capitalize on attractive opportunities and continue prudent growth following its portfolio repositioning.