Good morning. My name is James and I will be your conference operator today. At this time I'd like to welcome everyone to the New Residential Third Quarter 2016 Earnings Call. All lines have been placed on mute to prevent any background noise. After the speakers' remarks there will be a question-and-answer session. [Operator Instructions] Thank you. Mandy Cheuk, from Investor Relations, you may begin your conference.

Thank you, James and good morning everyone. I would like to welcome you today to New Residential's third quarter of 2016 earnings call. Joining me here today are Michael Nierenberg our CEO; Nick Santoro, our CFO; and Jonathan Brown, our CAO. The call we are going to reference to the earning supplement that was posted to the New Residential website this morning. If you have not already done so, I would suggest that you download it now. Before I turn the call over to Michael, I would like to point out that certain statements made today will be forward-looking statements. These statements by their nature are uncertain and may differ materially from actual results. I encourage you to review the disclaimers in our press release and earning supplement regarding forward-looking statements and to review the Risk Factors contained in our annual and quarterly reports filed with the SEC. In addition we’ll be discussing some non-GAAP financial measures during the call today. And the reconciliation or these measures to the most directly comparable GAAP measures can be found in the earning supplement. And now I would like to turn the call over to Michael.

Thanks, Mandy. Good morning everybody and thanks for joining our call this morning. Overall we had a very good quarter across all of our business lines. We increased our investments in our core business lines, we increased liquidity, grew book value over the quarter and we continue to position the company for the long run with quality sustainable earnings. We grew our portfolios in Non-Agency RMBS by approximately 20% to 25%. This will enable us to continue to execute around call strategies. In MSRs, we announced the acquisition of $65 billion to $70 billion of mortgage servicing rights from Walter and their associated REIT [ph] WCO. This is our first investment in MSRs away from excess MSRs and we are able to achieve this as a result of being licensed now in all 50 states, as well as having Fannie, Freddie and FHA approvals. During the quarter, we announced the refinancing of our SpringCastle consumer deal, which enabled us to increase our advance rates, lock and lower cost funding and take out equity. We continue to execute on our clean-up call strategy, while exploring ways to accelerate timing and do much larger deals. From a broader market perspective both the equity and credit markets performed well in the quarter and its healthier [ph] bond portfolio and the overall investing environment. Post Q3 rates continue to move higher, which should help our MSR portfolio where we have a gross market value investment of approximately $2.2 billion. As we look forward, we are optimistic on our ability to deliver solid earnings, create shareholder value as our pipeline of investment opportunities in our core business lines continues to be robust. I will now refer to the supplement which is been posted online. Please turn to page 2. So overall, since the company was…

[Operator Instructions] Your first question comes in line of Doug Harter from Credit Suisse. Your line is open.

Hey, Doug.

One moment please. [Technical Difficulty] for 67…

Could you hear me?

Yes, we can hear now. And you start from the beginning.

Sure. I was just hoping you could clarify the comment you just made about the access to that undrawn facility, I guess for excess MSRs, again, should we think about, plus your cash as your kind of available liquidity to pursue future deals?

Yes. At the end of the quarter we had $300 plus million in cash throughout the quarter and into 2016 we continue to try to work on different financing vehicles or funding vehicles for excess MSRs and MSRs, and as a result you know we have plenty of available liquidity today, and we expect that to continue throughout the course of the quarter.

Got it. And then, I guess, how would you characterize the opportunity for additional or either owned MSRs or excess MSRs following the Walter deal?

The don't pipeline is - as is very robust. I think we sit in a very good spot in the marketplace. Now that we are licensed, we could work with a number of different sellers who you know, in our opinion have the desire to sell MSRs and then you know, stay in sub servicing business. So, you know, overall, the pipeline is probably is as robust for us as we've seen in a long, long time.

Thanks. And then just on - is there any seasonality to the call rights as we get into the fourth quarter or could we expect that to continue around the pace that’s been running the past couple of quarters?

We're going to try to continue at that pace, if not try to increase that pace. We've been pretty locoed [ph] over time to try - that we need to figure out an industry solution and how to fix the kind of the legacy non-agency mortgage market. We do think that would benefit all bondholders, mortgage servicers, trustees, et cetera. So we've had a number of discussions with different folks and we're going to continue down that path. While we can't promise anything will occur from that, you know, we are hopeful that at some point we could truly impact that part of the market, which again we think would be a win for the entire industry.

Great. Thank you, Mike.

Thanks, Doug.

Your next question comes in the line of Bose George [KBW] Your line is open.

Hey. Good morning. First, just in terms of increasing book value, was that almost – was that driven largely by the capital raise or was there other pieces in there as well?.

Yes. The capital raise, we have our non-agency bond portfolio for the quarter increased and those are probably the two primary drivers for us.

Okay. Great. And then actually in terms of the cleanup call opportunity, without the structural changes that you've discussed, is the run rate probably going to stay around this level or is there room for this to increase even without some of those bigger changes you are discussing?

I think there is couple of things to point out on that, we definitely want to fix the legacy market. We definitely want to figure out ways to amend certain things. However, if you take a step back and think about time these deals which is between 2000, call it 3 or 4 and 2007. Servicer advances, continue to decrease, if you think about it over the course of the past year I believe they are down about 17%, delinquencies continue to come down as time goes on. So while it may not - you may not see an immediate pick up in for example in Q4, we do expect over the course of the next couple years if are not able to make some changes to the market that you know, the pace of our activity or clean-up call should continue. Couple that with where we are in our non-agency bond portfolio, where we are now about $1.1 billion of equity committed to that part of the market, you know, we do believe we're going to be over to start increasing our pace around it.

And then just in terms of thinking about how I mean, more activity on the clean-up call side could impact earnings? I mean, if the $300 million in the quarter was 600 million, is there way to think about what that would mean?

Double the amount of income, you think about from the clean-up call. I think that’s – I don’t want to try to be too simplistic or too complicated about it, but that's kind of, you know, if we can continue to average something or a couple points on these transactions, 300 times, and other two is $6 million per quarter in earnings.

Okay, great. Thanks.

Your next question comes from the line of Jessica Ribner from FBR Capital. Your line is open.

Good morning, guys. How are you?

Hey, Jess. How are you?

Good. So a question on your dividend, you have been on a core basis out earning your dividend over the past few quarters, how can we think about that going forward?

I think that we will – quite frankly as long as we continue to trade at what I think is a dividend yield that’s likely to high for where we think we should be, we'll likely keep our dividend around this level. I think our goal and we've been pretty locoed about that over the course of the past couple years as they create very sustainable, long-term earnings for shareholders. You know, currently where I guess, we're paying a $1.84, our core earnings have been in and around $0.50. We continue to evaluate it. But however I'm not, - I don't think we want to sit here on this call and say we're going to increase our dividend at this time as we think about where we trade from a dividend yield.

Fair enough. And just tie backing on Doug's question, what is kind of the view towards more non-agency MSR purchases, either whole MSRs or excess MSRs from the bank, has there been all that many portfolios trading, what's kind of renewed there?

I think the banks really don’t have that much left when you think about their private label securities because they paid down you know so much. To the extent to our portfolios, I think we're in a very good position to acquire them, some of these MSRs are continue to be held on bank portfolios and a linked to some of the settlements that have been publicly disclosed with bondholders. But to the extent that somebody's come out, I think we're in a very good position. Our bank relationships are quite frankly terrific. We work very hard at those relationships. So if in fact they do come out, you know, we'd like to be in the middle of it and try to acquire them.

Okay. Thanks for that. And then on the call-rights, if rates rise, right, like a 25 basis point rate hike what would that do, do you think to executions…

Yes, I think it’s pretty marginal, I don't think there's going to be a dramatic impact. I think the way to think about this is, the bond portfolios will earn you more income until they're called because the securities are floating rate. That first part of that is when you issue these deals a lot of them are fixed rate collaterals, so your cost of funds will likely go up on that spreads tighten in the sector, and I think if you take a step back and look what's happen the mortgage rates over the course of the past quarter and how you know, quite frankly agency mortgages are trading, agency mortgages are trading have tighten versus comparable benchmarks treasuries for example, I think they tightened by 15 to 20 basis points in the quarter. To the extent that we get a similar result in our non-agency securitizations, I think the impact will be marginal at best.

Okay. Thanks so much for that.

Thanks, Jess.

Your next question comes from the line of Jeremy Campbell from Barclays. Your line is open.

Hey, thanks. So I think on the last quarter call you guys sized up your pipeline at about $500 billion and you just said that its very robust and probably the most robust that you've guys have seen in quite a while. But in your view how much could realistically transact in the market over the next kind of to 12 months here?

Here is the way I would think about it, from a capital perspective I think we're in a great position to deploy more capital. If you think about our model versus I think some of the traditional models, we're really in asset manager, now that we are a licensed MSR owner obviously we take on a little bit of a different role. While saying that, we work very closely with - you know we're working closely with the folks at FHS, Fannie, Freddie, Ginnie and everybody else quite frankly in the system to truly provide more capital to the sector, be a good owner of the asset class. And I think hopefully we continue to you know to get the support of our friends in DC and we do believe that will happen. I think a lot of this has to do with the timing of transfers and when you know, when they would transfer the ideal thing, I think for everybody when you look at like the Walter transaction is that we acquired the MSR, there were no hello, goodbye letter sent out, because Walter continue to operate as a sub-servicer, to the extent that we can continue down that path with that model, I think that is a huge win for everybody. So I think a lot of this stuff could happen, were you are actually going to have servicing portfolio transfer over time, that could take some time. But again, we're doing all we can to expedite timing of some of these transactions and again, we are in constant dialogue with everybody in the system, whether it be the servicers, again and FHS, Fannie, Freddie and Ginnie. So I think you know, a lots going to happen.

And then because a lot of the stuff has to be approved by FHA, Fannie, Freddie all that good stuff, do you guys have to take a little bit of a breather and onboard this Walter capital deal before you guys can look to do another deal or traditionally so the way the operational servicers because there is more operational risk in on boarding, but you guys are more of a capital partner and sub-servicing to your point stays at the normal servicers. So you know, what's the interplay there between, historically along operational servicer guys, just a measured pace of slow acquisitions versus you is just more of a capital partner, how does that dynamic might work?

The first word I will use is balance and then taking the word balance, I think the Walter transaction is a different one than going out and acquiring MSRs where you're sending out hello, goodbye letters. While saying that, you know, we are newly licensed again and working with the folks that gave us the licenses. There will be - certain things will take a little bit more time, probably than others. But you know, we're excited about the prospect of executing on the strategy, becoming a big asset manager, becoming a quality provider of capital to the servicing industry, while maintaining robust procedures and compliance around our business.

Got it. And then finally, given your kind of your preference here for non-agency MSRs or more seasoned scratch and dent agency or FHA, kind of MSRs, would your flow agreement with Walters is that more accurate to characterize that as more of a right of first refusal than a traditional, kind of obligatory repurchase flow program?

Yeah, I think if the pricing works for us and the pricing works for them we'll do it and I think that’s truly the way to think about. I wouldn't think about it much more broadly than that.

Great. Thanks a lot.

Thank you.

Your next question comes from the line of Jason Weaver from Wedbush. Your line is open.

Hey, good morning. Thanks for taking my question. In your prepared comments, you mentioned exploring some ways to accelerate the call right strategy and you touched on this in a couple of your other answers, can you just talk about some of the factors in the market that might help you achieve that, whether it be more amenable securitization market conditions or just timing on when you're able to execute the actual call?

Yeah, I think its less about Jason, I think it’s less about the market factors, then it is – I was trying to explore ways to change the system truthfully. I pointed out advance balances have come down, delinquencies continue to come down. We think our servicing partners continue to do a good job around that. But while saying that you know, we need to figure out a broader solution to be able to collapse you know, in our business $160 billion of legacy non-agency mortgage bonds. Taken a step back, this will benefit truly everybody, other than probably some of the legacy holders of CDOs who probably shouldn't be getting cash flow anyway. So that's kind of how I think about it.

Got it. And you may have mentioned this in the past, but if you could just refresh me, could you talk about a little bit of what you expect for the subsequent, the WCO, MSRs, any sort of portfolio level differences from the initial $32 billion you acquired from WAC [ph]

No, they are pretty much similar, you know, both of these are – their are large portfolios of agency MSRs were working with Walters/Ditech on the recapture and in doing that, you know, there I guess in an average there, excuse me, they are about 85 months seasoned. So they are pretty similar overall,

All right. Congrats on the quarter.

Thanks.

Your next question comes from the line of Michael Kaye from Citi Group. Your line is open.

Hi, good morning. You've had a pretty good track record of being opportunistic and finding attractive investments, now in the investment in SpringCastle. Could you just talk a little bit about some more potential opportunity in personal loans, given some of the dislocation in the markets?

I would say that you know for us we're going to stay with our core strategy in our business because we think there's enough to do, to the extent there is a large portfolio of consumer stuff that comes out way that we think attractive, inverse words within our overall rate, we would consider that. But while saying that you know, I think that market continues to change. I would say almost on a daily basis. So the larger opportunity, we dabbled a little bit there, but the larger opportunity for us I don't see it right now in NRZ or in the REIT.

Okay. Thanks. That’s helpful. Ocwen was recently saying that they expect to try to get the focusing on acquire new loan servicing assets listed in the next few weeks. Could you be interested in partnering with them on new deals?

Sure, you know, I mean we'd be partner with anyone.

All right. Thank you.

Thanks.

Your next question comes in line of Trevor Cranston from JMP Securities. Your line is open.

Hi, thanks. Looking at slide four, the investment in the resi securities has gone up quite a bit over the last couple quarters, can you talk about how you think about that going forward, the opportunity to continue grow in that market bucket, particularly given how spreads have tightened in the last couple of quarters?. Thanks.

Yes. It’s a good question, thanks. Spreads have tightened quite a bit, I think that for us to buy a lot more legacy non-agency security has to be something that is – that’s really associated with our call right, unless we think there's some other strategic opportunity around that. When you think about senior cash flows in that space they have actually tightened as you point out quite a bit, so they are little bit less interesting to us. While saying that, the group has done a great job, sourcing assets over time and I expect that to continue to do that. But, I think I can't tell you that we're going a to be a $2 billion by the end of Q1 or $1.5 billion, I don't necessarily see that unless there's something that comes our way or spread widely quite a bit.

Got it. That makes sense. All my other questions have been asked. Thanks.

Okay.

Your next question comes from the line of Fred Small from Compass Point. Your line is open.

Hey. Good morning. Thanks for taking my question. I just have two, on the call right strategy, what was the contribution to core EPS from call rights in the quarter?

It’s about $0.03 in the quarter.

Got it. Thanks. And is the - when I think about the underlying or the increase in sort of the equity allocation to non-agency is the call right strategy underlying driver there?

Its both actually, you know, obviously we have to be happy with the asset that we're purchasing, but it does help with our call right strategy when our average price is in and around $0.70. So we'll continue again to deploy capital there strategically, but you know, that's how I would think about it.

Okay. The capital intensity of that business isn’t really changing at all?

No.

Okay. Great. Thanks a lot.

Thank you.

Your next question comes from the line of Matthew Paulfrom from Piper Jaffray. Your line is open.

This is Kevin Barker from Piper. Just wanted to follow-up on the comment you made about the potential amount of MSR you acquire, the private label, I mean, outside of the largest servicers right now that you know, including the money center banks, Nationstar and Ocwen, could you quantify the potential amount of private label MSRs that could trade outside of largest players?

It’s hard. Kevin. Again, I don't think there is that many you know, unless you entered in - unless we could figure out something with one of the large commercial. We obviously know who the large commercial - you know that we obviously know who the large non-bank servicers are, unless some of the larger kind of you know, investments bank\commercial banks decide to part with some of their legacy stuff. I don't again, I don't think there's that much of doubt there, some it’s tied up in settlements, the countrywide settlement got paid out in June. So to be centered some of that stuff comes out, yes, we like to be in a position to acquire, but again, I don't think it’s that material right now.

Do you think there's any flexibility whatsoever from ones that are tied up in settlements or any changes there that could release those MSRs or do feel there's nothing to really their restricting with what they have?

You know, I think, I mean, probably it depends on the banks themselves. I mean, we'd like to be in that position. There are certain servicing guidelines and things that have to happen as a result of that, clearly we'd have to work with one of our sub-servicing partners. But to be simply come out, we'd there, but I wouldn’t you know, for as we think about the company and as everybody on the call things about the company, I don't want to - I don't want to give everybody guidance that we're going just acquire a ton of legacy POS as I don’t see it, particularly from the bank.

Okay. That’s helpful. And then in regards to the expiration of [indiscernible] do you see any impact was there on your prepayment rates or the extension of your MSRs going into 2017?

I think, whatever the different programs, we continue to work aggressively with our servicing and sub-servicing partners around recapture. So to the extent that there is any you know, any change in some of these programs, I would expect that to continue to be steady as she goes, as our servicing and sub-servicing partners continue to do the job around recapture.

Okay. And then in regard Ocwen recently announced major - expansion of their origination platform, do you see any incremental impact on your overall recapture rates due to that program or potentially changes in prepayment rates in regards to the Ocwen portfolio in particular?

We really haven't seen a lot to the extent that they do this, we have recaptured provisions in place for them as well. So we'll see what happens. We're also thinking going into a seasonal market, right, you're entering the winter and the seasonal will come into play as it relates to origination, I think is some mortgage apps down a little bit today that were announced this morning.

Okay. Thank you for taking my question.

Your next question comes from the line of Brock Vandervliet from Nomura. Your line is open.

Hi, good morning. Thanks for taking the questions. I guess, first one, just in terms of the Michael how do you think of the return profile of the agency MSRs as that around, for example slide four, where you have the targeted lifetime yield, what you've just acquired on the agency side versus your historical legacy positions?

On some of this self, we are going put a little bit of leverage, I think I pointed out that we opened up - we've been doing some stuff around financing on the MSR, while saying that, we're not going to put a ton of leverage on MSR because is inherently they are leveraged instrument you know, to be what. So certain portfolios if we acquired at a lower yield, we would put some financing on it, other ones we probably wouldn't. While saying that, we continue to try to maintain kind of mid teen’s type return or the desire to maintain mid teens type returns. So again certain ones will be more specific to financing and other ones won't. But I think the big driver for us Brock is that you know we look at some of these acquisitions and if there newer production MSRs, a lot of it has to do with the multiple that were actually acquiring those and what I mean by that is a multiple of the service space. So clearly with lower multiples of servicing fees we're more comfortable with newer production stuff, then you know, we might have been if you are buying a brand-new MSR with a large multiple of that coupon. So -- and couple that with the recapture provisions that we have with our sub-servicers, I think we feel pretty good about it.

Okay. And in terms of the transactions that you see in the marketplace, you mention the multiple and how robust is I guess, in term of the price discovery if you will, in terms of an active market in these types of MSRs and a robust give-and-take in terms of realistic pricing?

I think it's robust you know there's a lot of discussion, we always have discussion with our partners, and when we're trying to enter a transaction, keep my mind when we buy a portfolio of MSRs typically that partner is part of our life. So there's a lot of it, there is a lot of discussion. And you know, quite frankly there's a lot of transparency in these markets.

Okay. And separately, in terms of capital available for further investments, you mentioned $300 million in cash. Could you just review how long the runway is for it at this point?

I would say, including the WCO funding and other investment that we currently have contemplated, we have plenty of cash and plenty of runway right now. So unless there is something large that’s material away from the things that we're working on. Again, I think it would be pretty steady as she goes. But while saying that, we're in discussion on a lot of things right now. So you know, we have plenty of liquidity right now, that that does contemplated the WCO of funding, as well as some other things, but let's see.

Okay, thank you.

Thank you.

Your next question comes from the line of Bose George from KBW. Your line is open.

Hey, just wanted to follow-up on the liquidity again. So you have the 300 in cash, can you just go over how much, including your financing you'll have after the WCO closing?

We expect between now and the end of the year based on the things that we have committed to, to have liquidity of approximately $500 million and again, those are approximate numbers. And that's a stuff that we have currently committed to, that we've agreed on. So we have plenty of capital right now to run our business.

Okay, great. Thanks.

Thank you.

Your next question comes from the line of Mihir Bhatia from Bank of America. Your line is open.

Hi, guys. I am on for Ken Roos. Just had one quick question on the advances and the – just advance to UPB ratio, it feels like its been coming down a fair amount on the Nationstar service stuff, I think its gone from something like 2.9% to 2.5%, this year where as the Ocwen service stuff seems to be improving at lot slower rate. Is that something inherently different about the portfolios that the Ocwen service would improve a lot slower or is something else going on there, just given their - with the monitors and stuff there, right, they are just being a little more conservative. And the – and just is there a natural way where way you feel like this would bottom out too?

Yes, I think - I can't really comment on the servicing side. I do think with monitors and you know and where Ocwen is today, I would expect over time their advance balances to come down and get to place hopefully in line with where Nationstar is. Again if delinquencies continue to trend lower, it will be less advances, but we're hopeful for quite frankly everyone that advance balances continue to come down and you know and they get reduced.

Right. But there is nothing in the portfolio that would keep one much higher than the other?

I don't believe so.

Okay. Thank you.

And with, I would like to turn the call back over to Michael Nierenberg for closing remarks.

So, thanks everyone for all your support and while we won't speak to anybody before the holiday. Have a great end of the year and a great holiday and look forward to catching up with you after the New Year. Thanks, again.

This concludes today's conference call. You may now disconnect.