Could Rithm Capital’s Non‑Prime RMBS Strategy Reshape Its Real Estate Credit Platform Narrative (RITM)?

• Earlier this month, KBRA assigned preliminary ratings to 10 classes of mortgage-backed notes from New Residential Mortgage Loan Trust 2025-NQM7, a non-prime RMBS deal sponsored by Rithm Capital and backed mainly by loans originated by NewRez LLC and Champions Funding, LLC.
• This latest non-prime securitization highlights Rithm’s ongoing use of capital markets to fund and recycle mortgage risk across its broader real estate credit platform.
• We’ll now consider how Rithm’s new non-prime RMBS issuance, and the ratings validation from KBRA, could influence its investment narrative.

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Rithm Capital Investment Narrative Recap

To own Rithm Capital, you need to believe in its ability to convert a broad real estate credit platform into steady earnings and dividends, despite rate and credit cycles. The new non-prime RMBS deal, with preliminary ratings from KBRA, supports the short term catalyst of capital markets access but does not materially change the key risk around funding conditions and spread compression.

The most relevant recent announcement here is Rithm’s solid profitability so far in 2025, with US$221.54 million of net income in the six months to 30 September and consistent quarterly common dividends of US$0.25 per share. That earnings base provides context for how efficiently it can use securitizations like 2025 NQM7 to recycle mortgage risk and support fee and spread income if investor demand for non-prime paper remains resilient.

Yet, while securitizations help diversify funding, investors should still be aware of how reliant Rithm remains on broader interest rate conditions and...

Read the full narrative on Rithm Capital (it's free!)

Rithm Capital's narrative projects $6.3 billion revenue and $1.3 billion earnings by 2028.

Uncover how Rithm Capital's forecasts yield a $14.40 fair value, a 29% upside to its current price.

Exploring Other Perspectives

Three members of the Simply Wall St Community value Rithm between US$14.40 and US$16.24 per share, highlighting a relatively tight cluster of views. Set against this, the reliance on capital markets and interest rate conditions around transactions like the 2025 NQM7 deal could be critical for how those expectations play out over time.

Explore 3 other fair value estimates on Rithm Capital - why the stock might be worth just $14.40!

Build Your Own Rithm Capital Narrative

Disagree with existing narratives? Create your own in under 3 minutes - extraordinary investment returns rarely come from following the herd.

• A great starting point for your Rithm Capital research is our analysis highlighting 5 key rewards and 3 important warning signs that could impact your investment decision.
• Our free Rithm Capital research report provides a comprehensive fundamental analysis summarized in a single visual - the Snowflake - making it easy to evaluate Rithm Capital's overall financial health at a glance.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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