On November 8, 2021, KBRA assigned an Issuer rating of BB+ to NewRez LLC (“NewRez” or “the company”), an indirect, wholly-owned subsidiary of New Residential Investment Corp. (NYSE: NRZ; “the parent company”). The rating Outlook is Stable.

As the principal residential mortgage operating subsidiary of NRZ in recent years, NewRez has grown substantially, both with respect to its servicing portfolio, as well as production, since being acquired by the parent company in July 2018. During 2021, NewRez originated $97.6 billion of loans, and as of YE21, reflected an owned servicing portfolio of ~$122 billion UPB; the majority of which was comprised of GNMA loans. NewRez’s recent year operating performance has been favorable, in what has been a particularly robust and highly profitable origination environment. The company’s creditor profile – highlighted by solid capitalization / moderate leverage, and adequate liquidity – is considered durable.

NewRez’s Issuer rating is anchored by that of its ultimate parent NRZ, for which we maintain a BB+ Issuer rating with a Stable Outlook. NRZ’s rating is supported by its scale operations as a leading mortgage originator / servicer – NewRez, together with recently acquired, Caliber Home Loans, Inc. – as well as the parent company’s heritage investment portfolio and operations, $6.7 billion of consolidated total equity at YE21, and a solid operating performance history outside of the extremely challenging second half of March 2020. As noted, NewRez has been, and remains, a key operating division of NRZ; one which has become an increasingly significant contributor to the parent company’s financial performance, particularly given the March 2020 liquidation of a meaningful amount of NRZ’s mortgage investments. NewRez’s well-regarded executive management team, including those running its Shellpoint servicing division, benefits the company’s, as well as the parent company’s, respective credit profiles. Importantly, NewRez has considerably lower, true economic exposure to the volatility associated with its owned-MSR, since the majority of the asset risk is transferred to NRZ through excess spread arrangements, with the accounting liability (“ESR financing payable”) tracking the life of the MSR. NewRez’s prospective capital structure could be altered somewhat depending on the ultimate parent’s financial management decisioning, yet the subsidiary’s capital strength is expected by KBRA to be preserved over time.

The ratings are based on KBRA’s Finance Company Global Rating Methodology, published November 28, 2017 and KBRA’s ESG Global Rating Methodology, published on June 16, 2021.

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Disclosures

Further information on key credit considerations, sensitivity analyses that consider what factors can affect these credit ratings and how they could lead to an upgrade or a downgrade, and ESG factors (where they are a key driver behind the change to the credit rating or rating outlook) can be found in the full rating report referenced above.

A description of all substantially material sources that were used to prepare the credit rating and information on the methodology(ies) (inclusive of any material models and sensitivity analyses of the relevant key rating assumptions, as applicable) used in determining the credit rating is available in the Information Disclosure Form(s) located here.

Information on the meaning of each rating category can be located here.

Further disclosures relating to this rating action are available in the Information Disclosure Form(s) referenced above. Additional information regarding KBRA policies, methodologies, rating scales and disclosures are available at www.kbra.com.

About KBRA

Kroll Bond Rating Agency, LLC (KBRA) is a full-service credit rating agency registered with the U.S. Securities and Exchange Commission as an NRSRO. Kroll Bond Rating Agency Europe Limited is registered as a CRA with the European Securities and Markets Authority. Kroll Bond Rating Agency UK Limited is registered as a CRA with the UK Financial Conduct Authority pursuant to the Temporary Registration Regime. In addition, KBRA is designated as a designated rating organization by the Ontario Securities Commission for issuers of asset-backed securities to file a short form prospectus or shelf prospectus. KBRA is also recognized by the National Association of Insurance Commissioners as a Credit Rating Provider.

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