Head of NRZ’s Executive Management Team — Michael Nierenberg has been President and Chief Executive Officer of NRZ since 2013 and Board Chairman since May 2016.
Residential mortgages include different “life stages” that often start with pre-qualification and then go through other phases such as mortgage servicing. This article will highlight the most common stages.
One of the few mortgage-related companies that can handle virtually all of the standard residential mortgage phases effectively is New Residential Investment Corp., a mortgage real estate investment trust that trades on the New York Stock Exchange (ticker symbol “NRZ”) — and this overview will include examples based on NRZ. As part of an acquisition finalized about a year ago, NRZ acquired mortgage origination, servicing and ancillary businesses that include appraisal services, title insurance and REO (real estate owned) management.
From Alpha to Omega with a Residential Loan
Here is one typical scenario involving seven life stages for a home mortgage:
- Pre-Qualifying — Some borrowers might skip this step and simply start with the loan origination process after making an offer to buy a home that is accepted by the seller. However, a prospective borrower’s decision to prequalify at an early stage of a home search is a prudent choice that can expedite the rest of the process for finalizing the loan. Pre-qualification usually involves providing income, asset, tax and employment information to a mortgage lender. NewRez is a New Residential subsidiary (currently lending in 49 states and the District of Columbia) that offers a straightforward process to pre-qualify for either a qualified mortgage (QM) or non-qualified mortgage (non-QM).
- Origination — The loan production stage begins when a lender is selected by a borrower to handle the loan. Borrowers can work with NewRez via a flexible choice of business channels that include joint venture/retail lending, wholesale lending, correspondent lending and a direct to consumer process.
- Loan Processing — This part of the mortgage process includes several mandatory steps. One of the requirements is arranging for a real estate appraisal company to complete a valuation of the property being purchased. The eStreet Appraisal Management Company routinely handles this requirement for most NewRez transactions. Another step includes gathering verified documents and data needed for loan underwriting and closing. The underwriting process involves risk analysis by a loan underwriter whose responsibilities include calculating a loan-to-value (LTV) ratio for a mortgage if fully approved.
- Loan Closing — The closing process is usually coordinated by a specialized settlement services provider such as Avenue 365 Lender Services that handles NewRez closings in 40 states. The closing agent must work effectively with multiple parties that include the buyer, seller, insurance companies, originator and lender.
- Mortgage Servicing — After closing, the ongoing administration of a mortgage is coordinated by a mortgage servicer such as NRZ’s subsidiary, Shellpoint Mortgage Servicing. A mortgage servicing company is responsible for handling monthly payments and a wide variety of other tasks that include dealing with delinquencies if they should occur.
- Refinancing — Homeowners often refinance a mortgage to secure a lower interest rate or to obtain funds for purposes such as education, home improvement and paying off debts like credit card balances. This stage will frequently encompass a repeat of the phases described above, although refinancing is usually streamlined in comparison to a purchase mortgage process (for buying a home) when dealing with non-traditional lenders like NewRez.
- Paying Off the Mortgage — Mortgages can typically be paid off at any time, and common scenarios include when a house is sold, when all payments have been made over the life of the mortgage and when borrowers decide to use a lump sum to pay off the remaining mortgage balance (resulting in 100 percent equity). According to a 2017 ATTOM Data Solutions report, about one-third of U.S. homeowners currently have 100 percent equity in their homes.
Publicly Traded REIT: NRZ on NYSE — New Residential Investment
As noted in a recent summary of the company’s successes, “Specialized mortgage investors like New Residential are better prepared to handle the mortgage servicing complexities that are common with securitization of both Agency and non-Agency mortgages.” Here is additional information about Michael Nierenberg and New Residential:
2013-2018 Dividends — NRZ paid out $693 million in common share dividends during 2018 and more than $2.4 billion in total dividends to shareholders since inception (May 2013). Based on the May 24 closing price of New Residential ($16.52), the 2018 dividend of $2 per share (paid quarterly) represents a yield of 12.1 percent.