Good morning. My name is Darla, and I will be your conference operator today. At this time, I’d like to welcome everyone to the New Residential Fourth Quarter and Full Year 2017 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. I will now like to turn the conference over to Mandy Cheuk, from New Residential. Please go ahead.

Thank you, Darla, and good morning, everyone. I would like to welcome you today to New Residential’s fourth quarter and full year 2017 earnings call. Joining me here today are Michael Nierenberg, our CEO; Nick Santoro, our CFO; and Jonathan Brown, our CAO. Throughout the call, we’re going to reference earnings 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 earnings 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 today’s call. A reconciliation of these measures to the most directly comparable GAAP measures can be found in our earnings supplement. And now, I would like to turn the call over to Michael.

Thanks, Mandy. Good morning, everyone, and thanks for joining our call this morning. Obviously, some exciting news down in Dallas, so we will get through our call, I know the Nationstar guys are doing their call at the same time. So, as we look back on 2017 and the fourth quarter, on all fronts we had a very good year. All of our segments performed extremely well. The way that we view the company it’s a very unique one, which is different than other mortgage REITs and quite frankly virtually impossible to recreate in today’s environment. We put the company in what we believe to be a great position as the new tax bill and other initiatives from the administration would likely cause the Fed to raise rates three to four times this year and lead to higher rates. Our balance sheet contains $500 billion plus of mortgage servicing rights, one of the few investments which will increase in value as a result of higher rates. If you couple that with our 150 billion of call rights our portfolios make us very excited for the future. The recent acquisition of Shellpoint in the fourth quarter provides us with additional optionality around our portfolios, including recapturing our MSR portfolios, as well as the potential growth of our servicing business. I mention this as the current investing climate is not great. The abundance of capital is causing most asset classes to be fully priced. While saying that, we have a portfolio that should continue to perform well for our shareholders, our current liquidity of 500 million plus today puts us in a great position to take advantage of any opportunities that come our way. I’ll now refer to our supplement, which has been posted online. So, I’m now going to begin on…

[Operator Instructions] Your first question is from Jessica Levi-Ribner with B. Riley FBR.

Hi good morning. Thanks for taking my question. Can you talk a little bit about the economics that you've gotten on the call rights and the loan securitizations and what you purchased the $882 million of Non-Agencies at?

Sure. The call rights, the way to think about that is, in the fourth quarter, we purchased approximately give or take $800 million worth of nonagency MBS at approximately $0.70. The way that we think about it, we have accretion on the underlying bond portfolio and we do securitization, then we mark down our delinquent loans or call it non-performing loans and the average gains have been something anywhere from 1.5 to 2 points. It depends on per deal, certain deals that have higher delinquencies, you're going to see lower economics, other deals that have lower delinquencies you're going to see higher economics. As we go into a higher rate environment, which we are to give you a sense the weighted average coupon on our underlying calls is approximately 5%. So, just to kind of frame that for everybody, so we're still very optimistic on our call business, obviously higher rates could lead into economics, but higher rates will likely lead to lower delinquencies, so your securitization gains may be a higher.

Okay. And the execution on the January securitization, do you know what you netted yet?

I will tell you at the end of the quarter. You should assume it is something anywhere from 1.5 to 2 points.

Okay. In terms of the Nationstar announcement this morning, can we expect any immediate impact beyond the Ginnies?

No. If you think about our business, one of the things that how we’ve tried to position the company over the course of the past few years is to be a real capital provider to the servicing industry have a number of different counterparties be very supportive of them, whether be Ocwen, Walter, and Nationstar PHH, and I think we've demonstrated that. Obviously, Nationstar will have a new owner as they go forward, but they are still a great partner. They service $300 billion of mortgage loans for us, whether that be subservice or where we own the excess. So, I would anticipate them continuing to be a good partner of ours as we go forward.

Okay. And then one last one just around kind of acquisition opportunities that you're seeing. I mean, you have a lot of dry powder on the balance sheet today, what can we expect? And I know - and I say that knowing that the environment is tough and you've made a lot of comments around that, but is there anything kind of on the horizon?

We always look for, what I would call strategic investments or strategic acquisitions that will benefit our shareholders. We continue to rate the fields for corn and we are out there in the markets and looking at everything. I mean there is nothing specific I can point today, but where we sit as a company and our success over the past few years, I would expect something to happen at some point, I just don't know when. The markets will, higher rates will likely lead to some kind of dislocation in the markets. You see the volatility in the stock market, you see rates rising. I do believe as we go through this year, if interest rates continue to - their upward trajectory, you are going to see more consolidation around the mortgage origination business, as origination volumes come down.

Okay, fair enough. Thank you.

Thanks Jess.

[Operator Instructions] Your next question is from Bose George with KBW.

Thanks. Good morning. This is Eric on for Bose.

Hi Eric.

Hi, good morning. Forgive me if you have said this, but can you just tell us the amount of core earnings from the quarter that reflects the call rates executed during 4Q?

Believe it’s $0.04.

$0.04, great, thanks. And then just given the move in interest rates that we’ve seen so far this year, can you just give us a sense for the valuation changes you’ve seen on MSRs, and then if you could just comment maybe across the portfolio and mark-to-market changes that would be really helpful?

Sure. For the fourth quarter, our full MSR portfolio was up little under $92 million, and our excess MSR portfolio was up a little under of $40 million. So, when you look at the combination of those two it’s $0.43 in GAAP earnings.

Great. Maybe you can comment just on quarter to date, sorry so far in 2018.

I can't comment quarter to date yet. I would say they are up marginally, but we will be able to give you more color. What you are seeing on the MSR, the valuations in MSRs is that some of the banks are in buying cleaner MSRs. So, you're seeing valuations actually increase and I would expect that to continue not only through the first quarter, but throughout the course of the year to the extent that the 10-year Treasury continues to rise. So, I think the way that we’re currently positioned and the way that I wanted to frame our call today, yes, I think the company and the team has done a great job over the course of the past few years, but this is not about a highlight reel. This is about 2018 and going forward, and how we position the company. And if you take a step back, $530 billion of MSRs corelated to a total investment amount of something between $4.5 billion and $5 billion and our call rights, coupled out with $500 million of liquidity we’re in a great, great position to continue to execute around our strategies on our existing portfolios, without actually having a go and deploy a ton of capital that’s today. While saying that and going back to Jess’ question, we’re always looking a different things from an investment perspective, and as everybody knows, our portfolios do pay down over time. So, we need to continue to again deploy capital, but right now we’re in no rush to deploy capital as we look for opportunities that we think are going to be creative for shareholders.

Great. Thanks for the comments Mike.

Thanks.

And your next question is from Ken Bruce with Bank of America.

Thanks, good morning.

Hi, Ken.

Hi. Couple of questions. First, you kind of talked in, or I guess, a righteous over the past few quarters we have been talking about the size of the overall nonagency servicing markets and I guess I’m always a little surprised and you keep pulling in large transactions, I guess even in the first quarter, maybe just kind of scope out how much of the addressable market is still available to you? I’m always a little surprised as to where the servicing is coming from?

Specifically, Ken, on the nonagency side?

Yes, on the nonagency side.

I think the way that we view it is, we have, I mean, I think the legacy nonagency market is probably something between $450 billion and $500 billion of outstandings. We control, if you think about it this way, with our call rights a third of that market. The banks in general as you probably know have cleaned up most of their legacy exposure around mortgage servicing rights. I think any, I think the ability to acquire legacy nonagency PLS is going to be much lower today just because there’s not that much out there. There will be some as I think as the banks continue to settle with some of the regulators around or some of the settlements that were agreed to a few years ago, and the banks get out of some of the legacy servicing, but I don't foresee a ton of it coming our way right now.

Okay. So, it’s really just more bank holding on to what they’ve got versus their - versus anything else?

Yes, I think a bunch of it’s still wrapped up in settlements. You know when there are certain services that - there are certain approved improved servicers by the different regulatory bodies that are able to service some of the stuff and even in Shellpoint, Shellpoint services portfolios for some of the banks. So, when you think about Shellpoint to the extent there are some of these portfolios and they are approved by a number of different banks and regulators. If anything does come out, I would anticipate those folks being in great position to be able to grow that.

All right. And is that one of the areas I mean you’ve referenced the margins and squeeze or returns have been squeezed a bit, is that included in the nonagency servicing area?

You know, the kind of, I will call it the less clean servicing, banks don't really want to be in less clean servicing, banks. Banks want to acquire customers as do we. When you think about our customer profile we have something between 2.5 and 3 million customers, but overall spreads, whether it be nonagency mortgage funds, whether it be residential mortgage loans, whether it be non-performing loans that buy homes everything is extremely well bid because it’s just a very large abundance of capital out there. So, the way that we’re approaching it is, we say okay, our portfolio continues to perform extremely well. We are in a higher rate environment, our MSR portfolios should do great. Our call business with the weighted average coupon of 5% should continue to do better, although you could see margin squeeze as rates rise, particularly in the front-end. So, everything is well bid, but we’re going to be patient here and try to be very strategic around how we deploy capital. But there is nothing that’s that interesting right now.

Right. And you had mentioned that you anticipate some more consolidation to occur in the primary market, just given the rates up and originators being squeezed. I mean, how active do you want to be in being a catalyst for that consolidation, and what strategic benefits do you think that New Residential games from stepping into an operating role as it has to Shellpoint?

What I would say is, I think it’s likely will be in the middle of more consolidation. When I think about the operating business, the operating business is hard, I mean it’s been very hard in the past number of years. I do think the winds are shifting a bit and to the extent that we could be a great partner of somebody and it makes sense for either us, or obviously for both parties. I would intend and I believe that we will be part of something there. While saying that, you just can't anticipate because you don't know what’s going to happen, but I truly believe that you're going to see a lot of consolidation, a lot more consolidation that will occur in 2018 as the industry gets cleaned out.

Okay, great. Thank you for your comments, appreciate it Mike.

Thanks Ken.

Thank you. I would now like to turn the call back over to Michael Nierenberg for any closing remarks.

Well, thanks for all your support. Obviously, 2017 was a good year. We are not about to highlight here. As we look forward, we will do all we can to continue to put up good returns for shareholders. And again, we appreciate your support and have a great day. Thanks.

Thank you. This concludes new residential fourth quarter and full-year 2017 earnings conference call. You may now disconnect.