There’s always been a risk that comes with buying into either commercial or residential mortgage backed securities (RMBS), especially since the fallout of the housing market in 2008. Nonetheless, there has been interest in the publicly-traded New Residential Investment Corp (NYSE: NRZ) whose shares showed some growth recently even as the S&P 500 index in the market was struggling. While its shares may be down over a year-to-year period, there’s still reason to like where the company is headed. Now could be the right time to buy into the real estate properties and mortgage security sectors with confidence in the Trump economy still fairly high.
New Residential Investment Corp understands how changes and risk adjustments have to be made to offset losses, a lesson Bear Stearns,Lehman Brothers and Merrill Lynch may have learned the hard way. New Residential Investment Corp is a fairly new mortgaged-based real estate investment trust (REIT), and it was previously formed under Newcastle but became independent in 2013. They are loosely tied to Fortress Investment Group through a separate management agreement, but they’re independently traded on the NYSE. In 2017, they bought out Shellpoint Partners, a varied mortgage servicing firm that offers origination and is authorized as a Fannie Mae and Freddie Mac seller.
New Residential is currently run by CEO and Chairman Michael Nierenberg, Chief Financial Officer Nick Santoro and Chief Accounting Officer David Schneider. Along with RMBS, New Residential Investment Corp also offers Servicer Advances, Excess Mortgage Servicing Rights (MSRs), and in some cases non-performing and reverse mortgages. One reason they’ve built their portfolio in MBSs is because they believe the structure of this financing has changed dramatically since 2008, and they have different leverage options they employ to bring back performance into non performing loans. They’ve also formed the right partnerships across the board that they see as the right strategy for returning high dividends to investor funds.
Sources of the article: https://www.newresi.com/investment-portfolio-comm/excess-msrs