Onity Group Inc. (NYSE:ONIT), a Florida-based mortgage banking and loan servicing company, has renewed its subservicing agreements with Rithm Capital Corp., extending their partnership until January 31, 2026. The renewal, effective November 22, 2024, also includes the agreement known as Rights to MSRs (Mortgage Servicing Rights).
The renewal terms allow for an automatic extension on February 1, 2026, unless either party provides a notice of non-renewal by the specified dates—July 1, 2025, for Onity, and November 1, 2025, for Rithm. As part of the renewal, the economic terms have been adjusted, including a reduction in subservicing fees for Onity.
This strategic move is expected to continue the collaboration between Onity Group Inc. and Rithm Capital Corp., enabling Onity to maintain its role in the mortgage servicing sector. The updated agreements are seen as a step towards optimizing the financial and operational aspects of their partnership.
Onity, which is listed on the New York Stock Exchange, operates under the standardized industrial classification of mortgage bankers and loan correspondents. The company, formerly known as Ocwen Financial Corp (NYSE:ONIT)., has undergone several name changes in the past, with the most recent being in March 2011.
The announcement of the renewal of these agreements is part of Onity's current report form 8-K filed on November 26, 2024, as required by the Securities Exchange Act of 1934. The report was signed by Sean B. O'Neil, the Chief Financial Officer of Onity Group Inc.
In other recent news, Onity Group has been making significant strides in its financial operations. Keefe, Bruyette & Woods have raised their price target for the company to $45, citing strong performance in mortgage banking and servicing. This performance led to a 7% increase in book value and a robust return on equity of 25.7%. The firm has revised its earnings estimates for Onity Group for the coming years, showing positive expectations.
Onity Group has also been actively restructuring its capital through a series of transactions. The company plans to offer $475 million in Senior Notes due 2029, contingent on market conditions. These funds, along with additional resources, are set to be placed in escrow until the completion of Onity's sale of its 15% stake in MSR Asset Vehicle LLC to Oaktree Capital Management.
Furthermore, Onity has extended its subservicing agreements with Rithm Capital Corp until February 2025. The company has also sold its 15% stake in MSR Asset Vehicle LLC to Oaktree Capital Management for an estimated $49 million. Moreover, Onity has announced its intention to acquire assets from Mortgage Assets Management, LLC and investment funds managed by Waterfall Asset Management, LLC, valued at approximately $55 million.
InvestingPro Insights
Onity Group Inc.'s recent renewal of subservicing agreements with Rithm Capital Corp. aligns with several key financial indicators and trends highlighted by InvestingPro. The company's market cap stands at $243.92 million, reflecting its position in the mortgage banking sector.
InvestingPro Tips suggest that Onity's net income is expected to grow this year, which could be partly attributed to the adjusted economic terms in the renewed agreements, including reduced subservicing fees. This positive outlook is further supported by the fact that two analysts have revised their earnings upwards for the upcoming period.
The company's P/E ratio of 16.59 indicates a relatively modest valuation compared to its earnings, which could be attractive to value-oriented investors. Additionally, Onity's price-to-book ratio of 0.52 suggests that the stock may be undervalued relative to its book value.
It's worth noting that Onity has been profitable over the last twelve months, with a significant 25.45% price increase over the past six months. This performance aligns with the company's strategic moves, such as the agreement renewal, which aims to optimize its operations and financial position.
For investors seeking more comprehensive analysis, InvestingPro offers 11 additional tips for Onity Group Inc., providing a deeper understanding of the company's financial health and market position.
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