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SERVICER ADVANCE INVESTMENTS | 6 Months Ended
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Jun. 30, 2024
Investments, All Other Investments [Abstract] |
SERVICER ADVANCE INVESTMENTS | SERVICER ADVANCE INVESTMENTS Servicer advance investments consist of arrangements to fund existing outstanding servicer advances and the requirement to purchase all future servicer advances made with respect to a specified pool of residential mortgage loans in exchange for the basic fee component of the related MSR. Rithm Capital elected to record its servicer advance investments, including the right to the basic fee component of the related MSRs, at fair value under the fair value option election to provide users of the financial statements with better information regarding the effects of market factors. As part of the Computershare Acquisition (Note 3), Rithm Capital acquired certain MSRs owned by SLS underlying the Servicer advance investment and therefore, reclassified the Servicer advance investment to MSR and Servicer advance receivable on its Consolidated Balance Sheets. Mr. Cooper performs all of the servicing and advancing functions on the Company’s remaining Servicer advance investments, retains the ancillary income and assumes servicing obligations and liabilities as the servicer of the underlying loans in the portfolio. Rithm Capital owns its interest in Servicer advance investments through a consolidated subsidiary, Advance Purchaser LLC (“Advance Purchaser”), in which it has an ownership interest of 89.3%. As of June 30, 2024, the noncontrolling third-party co-investor and Rithm Capital have funded all their capital commitments. Advance Purchaser may recall $71.5 million and $597.9 million of capital distributed to the third-party co-investors and Rithm Capital, respectively. Neither the third-party co-investor nor Rithm Capital is obligated to fund amounts in excess of their respective capital commitments, regardless of the capital requirements of Advance Purchaser. The Company’s servicer advance investments are presented in Other assets on the Consolidated Balance Sheets. The following table summarizes servicer advance investments, including the right to the basic fee component of the related MSRs:
| Amortized Cost Basis |  | Carrying Value(A) |  | Weighted Average Discount Rate |  | Weighted Average Yield |  | Weighted Average Life (Years)(B)
June 30, 2024 |  |  |  |  |  |  |  |  |
Servicer advance investments | $ | 336,131 |  |  | $ | 357,220 |  |  | 6.2 | % |  | 7.0 | % |  | 8.3
December 31, 2023 |  |  |  |  |  |  |  |  |
Servicer advance investments | $ | 362,760 |  |  | $ | 376,881 |  |  | 6.2 | % |  | 6.6 | % |  | 8.1
(A)Represents the fair value of the servicer advance investments, including the basic fee component of the related MSRs. (B)Represents the weighted average expected timing of the receipt of expected net cash flows for this investment. The following table provides additional information regarding the servicer advance investments and related financing:
| UPB of Underlying Residential Mortgage Loans |  | Outstanding Servicer Advances |  | Servicer Advances to UPB of Underlying Residential Mortgage Loans |  | Face Amount of Secured Notes and Bonds Payable |  | Loan-to-Value (“LTV”)(A) |  | Cost of Funds(C)
|  |  |  | Gross |  | Net(B) |  | Gross |  | Net
June 30, 2024 |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Servicer advance investments(D) | $ | 13,974,237 |  |  | $ | 302,282 |  |  | 2.2 | % |  | $ | 262,069 |  |  | 84.7 | % |  | 82.5 | % |  | 7.3 | % |  | 6.9 | %
December 31, 2023 |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Servicer advance investments(D) | $ | 15,499,559 |  |  | $ | 320,630 |  |  | 2.1 | % |  | $ | 278,845 |  |  | 84.1 | % |  | 81.9 | % |  | 7.5 | % |  | 6.9 | %
(A)Based on outstanding servicer advances, excluding purchased but unsettled servicer advances. (B)Ratio of face amount of borrowings to par amount of servicer advance collateral, net of any general reserve. (C)Annualized measure of the cost associated with borrowings. Gross cost of funds primarily includes interest expense and facility fees. Net cost of funds excludes facility fees. (D)The following table summarizes the types of advances included in servicer advance investments:
|  | June 30, 2024 |  | December 31, 2023
Principal and interest advances |  | $ | 52,686 |  |  | $ | 57,909 |
Escrow advances (taxes and insurance advances) |  | 137,726 |  |  | 149,346 |
Foreclosure advances |  | 111,870 |  |  | 113,375 |
Total |  | $ | 302,282 |  |  | $ | 320,630 |

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