Our estimations of future cash flows include the combined cash flows of all of the components that comprise the servicer advance investments: existing advances, the requirement to purchase future advances and the right to the basic fee component of the related MSR. The factors that most significantly impact the fair value include (i) the rate at which the servicer advance balance declines, which we estimate is approximately $1.0 billion per year on average over the weighted average life of the investment held as of ~~September 30, 2015,~~March 31, 2016, (ii) the duration of outstanding servicer advances, which we estimate is approximately nine months on average for an advance balance at a given point in time (not taking into account new advances made with respect to the pool), and (iii) the UPB of the underlying loans with respect to which we have the obligation to make advances and own the basic fee component.

As described above, we recognize income from servicer advance investments in the form of (i) interest income, which we reflect as a component of net interest income and (ii) changes in the fair value of the servicer advances, which we reflect as a component of other income.

We remit to ~~the applicable servicer~~our servicers a portion of the basic fee component of the MSR related to our servicer advance investments as compensation for acting as servicer, as described in more detail under “—Our Portfolio—Servicing Related Assets—Servicer Advances.” Our interest income is recorded net of the servicing ~~fee~~fees owed to ~~the applicable servicer.~~our servicers.

Real Estate Securities (RMBS)

Our Non-Agency RMBS and Agency RMBS are classified as available-for-sale. As such, they are carried at fair value, with net unrealized gains or losses reported as a component of accumulated other comprehensive income, to the extent impairment losses are considered temporary, as described below.

We expect that any RMBS we acquire will be categorized under Level 2 or Level 3 of the GAAP hierarchy, depending on the observability of the inputs. Fair value may be based upon broker quotations, counterparty quotations, pricing service quotations or internal pricing models. The significant inputs used in the valuation of our securities include the discount rate, prepayment speeds, default rates and loss severities, as well as other variables.

The determination of estimated cash flows used in pricing models is inherently subjective and imprecise. The methods used to estimate fair value may not be indicative of net realizable value or reflective of future fair values. Changes in market conditions, as well as changes in the assumptions or methodology used to determine fair value, could result in a significant increase or decrease in fair value. ~~Management validates~~We validate significant inputs and outputs of our models by comparing them to available independent third party market parameters and models for reasonableness. We believe the assumptions we use are within the range that a market participant would use, and factor in the liquidity conditions in the markets. Any changes to the valuation methodology will be reviewed by ~~management~~us to ensure the changes are appropriate.

We must also assess whether unrealized losses on securities, if any, reflect a decline in value that is other-than-temporary and, if so, record an ~~other-than-temporary impairment~~OTTI through earnings. A decline in value is deemed to be other-than-temporary if (i) it is probable that we will be unable to collect all amounts due according to the contractual terms of a security that was not impaired at acquisition (there is an expected credit loss), or (ii) if we have the intent to sell a security in an unrealized loss position or it is more likely than not that we will be required to sell a security in an unrealized loss position prior to its anticipated recovery (if any). For the purposes of performing this analysis, we will assume the anticipated recovery period is until the expected maturity of the applicable security. Also, for securities that represent beneficial interests in securitized financial assets within the scope of ASC No. 325-40, whenever there is a probable adverse change in the timing or amounts of estimated cash flows of a security from the cash flows previously projected, an ~~other-than-temporary impairment~~OTTI will be deemed to have occurred. Our Non-Agency RMBS acquired with evidence of deteriorated credit quality for which it was probable, at acquisition, that we would be unable to collect all contractually required payments receivable, fall within the scope of ASC No. 310-30, as opposed to ASC No. 325-40. All of our other Non-Agency RMBS, those not acquired with evidence of deteriorated credit quality, fall within the scope of ASC No. 325-40.

Income on these securities is recognized using a level yield methodology based upon a number of cash flow assumptions that are subject to uncertainties and contingencies. Such assumptions include the rate and timing of principal and interest receipts (which may be subject to prepayments and defaults). These assumptions are updated on at least a quarterly basis to reflect changes related to a particular security, actual historical data, and market changes. These uncertainties and contingencies are difficult to predict and are subject to future events, and economic and market conditions, which may alter the assumptions. For securities acquired at a discount for credit losses, we recognize the excess of all cash flows expected over our investment in the securities as Interest Income on a “loss adjusted yield” basis. The loss-adjusted yield is determined based on an evaluation of the credit status of securities, as described in connection with the analysis of impairment above.

Impairment of Performing Loans

To the extent that they are classified as held-for-investment, we must periodically evaluate each of these loans or loan pools for possible impairment. Impairment is indicated when it is deemed probable that we will be unable to collect all amounts due according to the contractual terms of a loan, or, for loans acquired at a discount for credit losses, when it is deemed probable that we will be unable to collect as anticipated. Upon determination of impairment, we would establish a specific valuation allowance with a corresponding charge to earnings. We continually evaluate our loans receivable for impairment.

Our residential mortgage loans are aggregated into pools for evaluation based on like characteristics, such as loan type and acquisition date. Pools of loans are evaluated based on criteria such as an analysis of borrower performance, credit ratings of borrowers, loan to value ratios, the estimated value of the underlying collateral, the key terms of the loans and historical and anticipated trends in defaults and loss severities for the type and seasoning of loans being evaluated. This information is used to estimate provisions for estimated unidentified incurred losses on pools of loans. Significant judgment is required in determining impairment and in estimating the resulting loss allowance. Furthermore, we must assess our intent and ability to hold our loan investments on a periodic basis. If we do not have the intent to hold a loan for the foreseeable future or until its expected payoff, the loan must be classified as “held-for-sale” and recorded at the lower of cost or estimated value.

A loan is determined to be past due when a monthly payment is due and unpaid for 30 days or more. Loans, other than ~~PCI~~PCD loans (described below), are placed on nonaccrual status and considered non-performing when full payment of principal and interest is in doubt, which generally occurs when principal or interest is 120 days or more past due unless the loan is both well secured and in the process of collection. A loan may be returned to accrual status when repayment is reasonably assured and there has been demonstrated performance under the terms of the loan or, if applicable, the terms of the restructured loan.

Loans, other than ~~PCI~~PCD loans, are generally charged off or charged down to the net realizable value of the underlying collateral (i.e., fair value less costs to sell), with an offset to the allowance for loan losses, when available information indicates that loans are uncollectible.

Determinations of whether a loan is collectible are inherently uncertain and subject to significant judgment.

Purchased Credit ~~Impaired (PCI)~~Deteriorated (PCD) Loans

We evaluate the credit quality of our loans, as of the acquisition date, for evidence of credit quality deterioration. Loans with evidence of credit deterioration since their origination, and where it is probable that we will not collect all contractually required principal and interest payments, are ~~purchase credit impaired, or PCI~~PCD loans. Recognition of income and accrual status on ~~PCI~~PCD loans is dependent on having a reasonable expectation about the timing and amount of cash flows to be collected. At acquisition, we aggregate ~~PCI~~PCD loans into pools based on common risk characteristics and loans aggregated into pools are accounted for as if each pool were a single loan with a single composite interest rate and an aggregate expectation of cash flows.

The excess of the total cash flows (both principal and interest) expected to be collected over the carrying value of the ~~PCI~~PCD loans is referred to as the accretable yield. This amount is not reported on our Condensed Consolidated Balance Sheets but is accreted into interest income at a level rate of return over the remaining estimated life of the pool of loans.

On a quarterly basis, we estimate the total cash flows expected to be collected over the remaining life of each pool. Probable decreases in expected cash flows trigger the recognition of impairment. Impairments are recognized through the valuation and loss provision for loans and an increase in the allowance for loan losses. Probable and significant increases in expected cash flows would first reverse any previously recorded allowance for loan losses with any remaining increases recognized prospectively as a yield adjustment over the remaining estimated lives of the underlying loans.

The excess of the total contractual cash flows over the cash flows expected to be collected is referred to as the nonaccretable difference. This amount is not reported on our Condensed Consolidated Balance Sheets and represents an estimate of the amount of principal and interest that will not be collected.

The estimation of future cash flows for ~~PCI~~PCD loans is subject to significant judgment and uncertainty. Actual cash flows could be materially different than ~~management’s~~our estimates.

The liquidation of ~~PCI~~PCD loans, which may include sales of loans, receipt of payment in full by the borrower, or foreclosure, results in removal of the loans from the underlying ~~PCI~~PCD pool. When the amount of the liquidation proceeds (e.g., cash, real estate), if any, is less than the unpaid principal balance of the loan, the difference is first applied against the ~~PCI~~PCD pool’s nonaccretable ~~difference.~~

difference. When the nonaccretable difference for a particular loan pool has been fully depleted, any excess of the unpaid principal balance of the loan over the liquidation proceeds is written off against the ~~PCI~~PCD pool’s allowance for loan losses.

Real Estate Owned (REO)

REO assets are those individual properties where ~~we receive~~the owner of the related loan receives the property in satisfaction of a debt (e.g., by taking legal title or physical possession). We recognize REO ~~assets~~assets: (i) at the completion of the foreclosure process or upon execution of a deed in lieu of foreclosure with the ~~borrower.~~borrower or (ii) when acquired. We measure REO assets at the lower of cost or fair value, with valuation changes recorded in other income. REO is illiquid in nature and its valuation is subject to significant uncertainty and judgment and is greatly impacted by local market conditions.

~~Derivatives~~Consumer Loans

~~We financed certain investments with~~Prior to the ~~same counterparty from which we purchased those investments, and~~SpringCastle Transaction (Note 1 to our Condensed Consolidated Financial Statements), we accounted for our investment in the ~~contemporaneous purchase~~Consumer Loan Companies pursuant to the equity method of accounting because we could exercise significant influence over the ~~investments~~Consumer Loan Companies, but the requirements for consolidation were not met. Our share of earnings and the associated financings as linked transactions. Accordingly, we recorded a non-hedge derivative instrument on a net basis. We also enter into various economic hedges, particularly TBAs and interest rate swaps and caps. Changeslosses in ~~market value of non-hedge derivative instruments and economic hedges are~~these equity method investees was recorded in ~~“Other Income”~~“Earnings from investments in consumer loans, equity method investees” on the Condensed Consolidated Statements of Income. ~~The assets underlying linked transactions include~~Equity method investments are included in “Investments in consumer loans, ~~and securities, whose valuation is subject to significant judgment and uncertainty as described above.~~equity method investees” on the Condensed Consolidated Balance Sheets.

Subsequent to the SpringCastle Transaction, we consolidate the Consumer Loan Companies. The Consumer Loan Companies classify their investments in consumer loans as held-for-investment, as they have the intent and ability to hold for the foreseeable future, or until maturity or payoff. The Consumer Loan Companies record the consumer loans at cost net of any unamortized discount or loss allowance. The Consumer Loan Companies determined at acquisition that these loans would be aggregated into pools based on common risk characteristics (credit quality, loan type, and date of origination or acquisition); the loans aggregated into pools are accounted for as if each pool were a single loan.

Investment Consolidation

The analysis as to whether to consolidate an entity is subject to a significant amount of judgment. Some of the criteria considered are the determination as to the degree of control over an entity by its various equity holders, the design of the entity, how closely related the entity is to each of its equity holders, the relation of the equity holders to each other and a determination of the primary beneficiary in entities in which we have a variable interest. These analyses involve estimates, based on the assumptions of management, as well as judgments regarding significance and the design of entities.

Variable interest entities (“VIEs”) are defined as entities in which equity investors do not have the characteristics of a controlling financial interest or do not have sufficient equity at risk for the entity to finance its activities without additional subordinated financial support from other parties. A VIE is required to be consolidated by its primary beneficiary, and only by its primary beneficiary, which is defined as the party who has the power to direct the activities of a VIE that most significantly impact its economic performance and who has the obligation to absorb losses or the right to receive benefits from the VIE that could potentially be significant to the VIE.

Our investments and certain other interests in Non-Agency RMBS are variable interests. We monitor these investments and analyze the potential need to consolidate the related securitization entities pursuant to the VIE consolidation requirements.

These analyses require considerable judgment in determining whether an entity is a VIE and determining the primary beneficiary of a VIE since they involve subjective determinations of significance, with respect to both power and economics. The result could be the consolidation of an entity that otherwise would not have been consolidated or the de-consolidation of an entity that otherwise would have been consolidated.

We have not consolidated the securitization entities that issued our Non-Agency RMBS. This determination is based, in part, on our assessment that we do not have the power to direct the activities that most significantly impact the economic performance of these entities, such as if we owned a majority of the currently controlling class. In addition, we are not obligated to provide, and have not provided, any financial support to these entities.

We have not consolidated the entities in which we hold a 50% interest that made an investment in Excess MSRs. We have determined that the decisions that most significantly impact the economic performance of these entities will be made collectively by us and the other investor in the entities. In addition, these entities have sufficient equity to permit the entities to finance their activities without additional subordinated financial support. Based on our analysis, these entities do not meet any of the VIE criteria.

We have invested in Nationstar serviced servicer advances, including the basic fee component of the related MSRs, through the Buyer, of which we are the managing member. The Buyer was formed through cash contributions by us and third-parties in exchange for membership interests. As of ~~September 30, 2015,~~March 31, 2016, we owned an approximately 44.5% interest in the Buyer, and the third-party investors owned the remaining membership interests. Through our managing member interest, we direct substantially all of the day-to-day activities of the Buyer. The third-party investors do not possess substantive participating rights or the power to direct the day-to-day activities that most directly affect the operations of the Buyer. In addition, no single third-party investor,

or group of third-party investors, possesses the substantive ability to remove us as the managing member of the Buyer. We have determined that the Buyer is a ~~voting~~variable interest entity. As a result of our managing member interest, which represents a controlling financial interest, we have determined that we are the primary beneficiary and consolidate the Buyer and its wholly owned subsidiaries, and we reflect membership interests in the Buyer held by third parties as noncontrolling interests.

~~Investments~~As a result of the SpringCastle Transaction, we have a 53.5% interest in ~~Equity Method Investees~~

~~We account for our investment~~and are the managing member of the Consumer Loan Companies. The Consumer Loan Companies were formed as joint ventures, designed by the members to share risk and rewards and provide each member with a certain level of participation in the overall management. Since formation, the Consumer Loan Companies ~~pursuant~~have demonstrated their ability to finance activities without additional subordinated financial support and, based on the Second A&R LLC Agreements, were organized with substantive voting rights and the holders of the equity ~~method~~investment at risk, as a group, have the characteristics of ~~accounting because~~a controlling financial interest. Therefore, we ~~can exercise significant influence over~~have determined that the Consumer Loan Companies ~~but~~are voting interest entities. As the ~~requirements for consolidation are~~holder of 53.5% of the voting equity and managing member, we have determined that we own a controlling financial interest and, as the third party investor does not ~~met. Our share of earnings and losses in these equity method investees is recorded in “Earnings from investments in consumer loans, equity method investees” on~~possess substantive participating rights, we have consolidated the ~~Condensed Consolidated Statements of Income. Equity method investments are included in “Investments in consumer loans, equity method investees” on the Condensed Consolidated Balance Sheets.~~

~~The~~ Consumer Loan ~~Companies classify their investments in consumer loans~~Companies. We reflect the 46.5% membership interest held by the third party as held-for-investment, as they have the intent and ability to hold for the foreseeable future, or until maturity or payoff. The Consumer Loan Companies record the consumer loans at cost net of any unamortized discount or loss allowance. The Consumer Loan Companies determined at acquisition that these loans would be aggregated into pools based on common risk characteristics (credit quality, loan type, and date of origination or acquisition); the loans aggregated into pools are accounted for as if each pool were a ~~single loan.~~noncontrolling interest.

We account for our investments in equity method investees that are invested in Excess MSRs pursuant to the equity method of accounting because we can exercise significant influence over the investees, but the requirements for consolidation are not met. We have elected to measure our investments in equity method investees which are invested in Excess MSRs at fair value. The equity method investees have also elected to measure their investments in Excess MSRs at fair value.

Income Taxes

We intend to operate in a manner that allows us to qualify for taxation as a REIT. As a result of our expected REIT qualification, we do not generally expect to pay U.S. federal or state and local corporate level income taxes. Many of the REIT requirements, however, are highly technical and complex. If we were to fail to meet the REIT requirements, we would be subject to U.S. federal, state and local corporate level income ~~and franchise~~ taxes, and we would face a variety of adverse consequences. See ~~“—Risk~~“Risk Factors—Risks Related to Our Taxation as a REIT.” We have made certain investments, particularly our investments in servicer advances, through TRSs and are subject to regular corporate income taxes on these investments.

RECENT ACCOUNTING PRONOUNCEMENTS

~~In May 2014, the FASB issued ASU No. 2014-09,~~ ~~Revenues from Contracts with Customers (Topic 606)~~. The standard’s core principle is that a company will recognize revenue when it transfers promised goods or services to customers in an amount that reflects the consideration to which the company expects to be entitled in exchange for those goods or services. In effect, companies will be required to exercise further judgment and make more estimates prospectively. These may include identifying performance obligations in the contract, estimating the amount of variable consideration to include in the transaction price and allocating the transaction price to each separate performance obligation. ASU No. 2014-09 is effective for New Residential in the first quarter of 2018. Early adoption is not permitted. Entities have the option of using either a full retrospective or a modified approach to adopt the guidance in ASU No. 2014-09. New Residential is currently evaluating the new guidance to determine the impact it may have on its condensed consolidated financial statements.

~~In June 2014, the FASB issued ASU No. 2014-11,~~ ~~Transfers and Servicing (Topic 860): Repurchase-to-Maturity Transactions, Repurchase Financings, and Disclosures~~. The standard changes the accounting for repurchase-to-maturity transactions and linked repurchase financing transactions to secured borrowing accounting. ASU No. 2014-11 also expands disclosure requirements related to certain transfers of financial assets that are accounted for as sales and certain transfers accounted for as secured borrowings. ASU No. 2014-11 was effective for New Residential in the first quarter of 2015. Disclosures are not required for comparative periods presented before the effective date. New Residential has determined that, as of JanuarySee Note 1 ~~2015, its formerly linked transactions are accounted for as secured borrowings as further described in Note 10~~ to our Condensed Consolidated Financial Statements.

~~In August 2014, the FASB issued ASU No. 2014-15,~~ ~~Presentation of Financial Statements - Going Concern (Subtopic 205-40): Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern~~. The standard provides guidance on management’s responsibility to evaluate whether there is substantial doubt about an entity’s ability to continue as a going concern by requiring management to assess an entity’s ability to continue as a going concern by incorporating and expanding on certain principles that are currently in U.S. auditing standards. ASU No. 2014-15 is effective for New Residential for the annual period

ending on December 31, 2016. Early adoption is permitted. New Residential is currently evaluating the new guidance to determine the impact that it may have on its condensed consolidated financial statements.

~~In February 2015, the FASB issued ASU No. 2015-02,~~ ~~Consolidation (Topic 810): Amendments to the Consolidation Analysis~~. The standard amends the consolidation considerations when evaluating certain limited partnerships, variable interest entities and investment funds. ASU No. 2015-02 is effective for New Residential in the first quarter of 2016. Early adoption is permitted. New Residential does not expect the adoption of this new guidance to have an impact on its condensed consolidated financial statements.

~~In April 2015, the FASB issued ASU No. 2015-03,~~ ~~Interest - Imputation of Interest~~. The standard amends the balance sheet presentation requirements for debt issuance costs such that they are no longer recognized as deferred charges but are rather presented in the balance sheet as a direct deduction from the carrying amount of the related debt liability, consistent with debt discounts. ASU No. 2015-03 is effective for New Residential in the first quarter of 2016. Early adoption is permitted. We have adopted ASU No. 2015-03 in June 2015 and have determined that the adoption of ASU No. 2015-03 resulted in an immaterial reclassification of our Deferred Financing Costs, Net to an offset of our Notes Payable.

The FASB has recently issued or discussed a number of proposed standards on such topics as financial statement presentation, financial instruments and hedging. Some of the proposed changes are significant and could have a material impact on our reporting. We have not yet fully evaluated the potential impact of these proposals, but will make such an evaluation as the standards are finalized.

RESULTS OF OPERATIONS

The following table summarizes the changes in our results of operations for the three ~~and nine~~ months ended ~~September 30, 2015~~March 31, 2016 compared to the three ~~and nine~~ months ended ~~September 30, 2014~~March 31, 2015 (dollars in thousands). Our results of operations are not necessarily indicative of ~~our~~ future performance.


	Three Months Ended September 30,					Increase (Decrease)			Nine Months Ended September 30,					Increase (Decrease)			Three Months Ended March 31,						Increase (Decrease)
	2015			2014		Amount			2015			2014		Amount			2016			2015			Amount
Interest income	$	182,341		$	97,587	$	84,754		$	444,891		$	261,733	$	183,158		$	190,036		$	84,373		$	105,663
Interest expense	77,558			33,307		44,251			193,408			108,816		84,592			81,228			33,979			47,249
Net Interest Income	104,783			64,280		40,503			251,483			152,917		98,566			108,808			50,394			58,414

Impairment
Other-than-temporary impairment (“OTTI”) on securities	1,574			—		1,574			3,294			943		2,351
Valuation provision on loans and real estate owned	(3,341		)	1,134		(4,475		)	2,408			1,591		817
Other-than-temporary impairment (OTTI) on securities																	3,254			1,071			2,183
Valuation and loss provision (reversal) on loans and real estate owned																	6,745			977			5,768
	(1,767		)	1,134		(2,901		)	5,702			2,534		3,168			9,999			2,048			7,951

Net interest income after impairment	106,550			63,146		43,404			245,781			150,383		95,398			98,809			48,346			50,463

Other Income
Change in fair value of investments in excess mortgage servicing rights	1,131			28,566		(27,435		)	(274		)	40,670		(40,944		)	7,926			(1,761		)	9,687
Change in fair value of investments in excess mortgage servicing rights, equity method investees	8,427			31,833		(23,406		)	16,443			50,950		(34,507		)	3,022			4,921			(1,899		)
Change in fair value of investments in servicer advances	(18,738		)	22,948		(41,686		)	(1,845		)	105,825		(107,670		)	(31,224		)	(7,669		)	(23,555		)
Earnings from investments in consumer loans, equity method investees	—			22,490		(22,490		)	—			60,185		(60,185		)
Gain on settlement of investments, net	(16,409		)	938		(17,347		)	(441		)	57,834		(58,275		)
Other income	7,764			15,289		(7,525		)	18,237			19,539		(1,302		)
Gain on consumer loans investment																	9,943			10,447			(504		)
Gain on remeasurement of consumer loans investment																	71,250			—			71,250
Gain (loss) on settlement of investments, net																	(14,500		)	14,767			(29,267		)
Other income (loss), net																	(14,495		)	(8,410		)	(6,085		)
	(17,825		)	122,064		(139,889		)	32,120			335,003		(302,883		)	31,922			12,295			19,627

Operating Expenses
General and administrative expenses	19,563			7,499		12,064			49,362			14,886		34,476			12,081			8,560			3,521
Management fee to affiliate	9,860			5,124		4,736			23,357			14,525		8,832			10,008			5,126			4,882
Incentive compensation to affiliate	1,811			10,910		(9,099		)	7,895			33,111		(25,216		)	1,196			3,693			(2,497		)
Loan servicing expense	1,668			1,778		(110		)	9,510			2,210		7,300			1,731			4,891			(3,160		)
	32,902			25,311		7,591			90,124			64,732		25,392			25,016			22,270			2,746

Income (Loss) Before Income Taxes	55,823			159,899		(104,076		)	187,777			420,654		(232,877		)	105,715			38,371			67,344
Income tax expense (benefit)	(5,932		)	7,801		(13,733		)	4,947			29,483		(24,536		)	(10,223		)	(3,427		)	(6,796		)
Net Income (Loss)	$	61,755		$	152,098	$	(90,343	)	$	182,830		$	391,171	$	(208,341	)	$	115,938		$	41,798		$	74,140
Noncontrolling Interests in Income (Loss) of Consolidated Subsidiaries	$	7,230		$	25,726	$	(18,496	)	$	17,174		$	92,524	$	(75,350	)	$	4,202		$	5,823		$	(1,621	)
Net Income (Loss) Attributable to Common Stockholders	$	54,525		$	126,372	$	(71,847	)	$	165,656		$	298,647	$	(132,991	)	$	111,736		$	35,975		$	75,761

Interest Income

Three months ended ~~September 30, 2015~~March 31, 2016 compared to the three months ended ~~September 30, 2014.~~March 31, 2015.

Interest income increased by ~~$84.8~~$105.7 million, primarily attributable to incremental interest income of (i) ~~$25.6~~$28.0 million from Excess MSR investments and (ii) ~~$54.2~~$38.7 million from servicer advance investments, in which we made additional investments subsequent to ~~September 30, 2014,~~March 31, 2015, primarily through the HLSS ~~Acquisition discussed in Note 1 to our Condensed Consolidated Financial Statements.~~Acquisition. Interest income further increased by (iii) ~~$17.7~~$31.6 million, largely due to an increase in the size of real estate securities portfolio and accelerated accretion on real estate securities owned in Non-Agency

RMBS trusts that were terminated upon the exercise

of call rights, and (iv) ~~$1.0~~$6.8 million related to interest income on GNMA EBO servicer advances funded by Home Loan Servicing Solutions, Ltd., a Cayman Islands exempted company (“HLSS”; following the Effective Time, as defined in Note 1 to our Condensed Consolidated Financial Statements, HLSS refers to Hexagon Merger Sub, Ltd., a Cayman Islands exempted company and a wholly owned subsidiary of New Residential, or “Merger Sub”), and accounted for as a financing transaction. These increases were partially offset by (v) decrease of $13.7 million from real estate loans, ~~due to a significant decrease~~specifically the FNMA loan pool acquired in December 2015 and the ~~size of the real estate loan portfolio in the first six months of 2015.~~

~~Nine months ended September 30,2015 compared to the nine months ended September 30, 2014.~~

Interest income increased by $183.2 million, primarily attributable to incremental interest income of (i) $50.2 million from Excess MSR investments and (ii) $102.3 million from servicer advance investments, in which we made additional investments subsequent to September 30, 2014, primarilyGinnie Mae EBO loans acquired through the HLSS Acquisition discussed in Note 1 to our Condensed Consolidated Financial Statements. Interest income further increased by (iii) $24.8 million, largely due to both additional investments and accelerated accretion on real estate securities owned in Non-Agency RMBS trusts that were terminated upon exercise of call rights, (iv) $4.1 million from real estate loans as a result of the small size of the portfolio in the first six months of 2014 and (v) $1.8 million related to interest income on GNMA EBO servicer advances funded by HLSS and accounted for as a financing transaction.Acquisition.

Interest Expense

Three months ended ~~September 30, 2015~~March 31, 2016 compared to the three months ended ~~September 30, 2014.~~March 31, 2015.

Interest expense increased by ~~$44.3~~$47.2 million primarily attributable to increases of (i) ~~$39.1~~$39.5 million onof interest ~~and~~on financings related to servicer advances primarily acquired through the HLSS Acquisition, ~~discussed in Note 1 to our Condensed Consolidated Financial Statements,~~ (ii) ~~$3.2~~$4.0 million ~~from~~of interest on repurchase agreements and financings on real estate securities in which we made additional levered investments subsequent to ~~September 30, 2014, and~~March 31, 2015, (iii) ~~$2.9~~$2.2 million onof interest ~~and financings from secured~~on corporate loans ~~issued in May 2015, partially offset~~secured by ~~(iv) $0.6 million decrease in interest from repurchase agreements on our consumer loans portfolio that we paid off~~Excess MSRs issued subsequent to ~~September 30, 2014.~~

~~Nine months ended September 30,~~March 31, 2015 ~~compared to the nine months ended September 30, 2014.~~

Interest expense increased by $84.6 million primarily attributable to increases of (i) $64.5 million on interest and financings related to servicer advances primarily through the HLSS Acquisition discussed in Note 1 to our Condensed Consolidated Financial Statements, (ii) $11.1 million on interest and financings from secured corporate loans issued in January and May 2015, (iii) $9.4 million and (iv) ~~$2.7~~$1.3 million ~~from repurchase agreements and financings~~of interest on real estate loans ~~and real estate securities, respectively, in which we made additional levered investments subsequent~~due to ~~September 30, 2014, partially offset by~~ a ~~(v) $3.1 million decrease in interest from repurchase agreements on our consumer loans~~larger portfolio ~~that we paid off subsequent to September 30, 2014.~~during the three months ended March 31, 2016.

~~Other than Temporary~~Other-Than-Temporary Impairment ~~(“OTTI”)~~ on Securities

Three months ended ~~September 30, 2015~~March 31, 2016 compared to the three months ended ~~September 30, 2014.~~March 31, 2015.

The other-than-temporary impairment on securities increased by ~~$1.6~~$2.2 million during the three months ended ~~September 30, 2015~~March 31, 2016 compared to the three months ended ~~September 30, 2014~~March 31, 2015 primarily resulting from a decline in fair values on a greater portion of our Non-Agency RMBS, which we purchased with existing credit impairment, below their amortized cost basis as of ~~September 30, 2015.~~March 31, 2016.

~~Nine months ended September 30,2015 compared to the nine months ended September 30, 2014.~~

The other-than-temporary impairment on securities increased by $2.4 million during the nine months ended September 30, 2015 compared to the nine months ended September 30, 2014 primarily resulting from a decline in fair values on a greater portion of our Non-Agency RMBS, which we purchased with existing credit impairment, below their amortized cost basis as of September 30, 2015.

Valuation and Loss Provision (Reversal) on Loans and Real Estate Owned

Three months ended ~~September 30, 2015~~March 31, 2016 compared to the three months ended ~~September 30, 2014.~~March 31, 2015.

The ~~$4.5~~$5.8 million ~~decrease~~increase in the valuation and loss provision (reversal) on residential mortgage loans, held-for-sale and real estate owned resulted from ~~a reversal of valuation allowance during the three months ended September 30, 2015 due to~~ an increase in impairment on loans of $2.1 million related to loans acquired through the ~~fair value~~exercise of call rights and $3.7 million of impairment on existing REO for ~~those assets subject to valuation allowances.~~

~~Nine months ended September 30,2015 compared to the nine months ended September 30, 2014.~~

The $0.8 million increase in the valuation provision on residential mortgage loans, held-for-sale and real estate owned resulted from a net increase in the average carrying values for those assets subject to valuation allowances during the nine months ended September 30, 2015 when compared to the same period during 2014.which new broker price opinions were obtained.

Change in Fair Value of Investments in Excess Mortgage Servicing Rights

Three months ended ~~September 30, 2015~~March 31, 2016 compared to the three months ended ~~September 30, 2014.~~March 31, 2015.

The change in fair value of investments in excess mortgage servicing rights ~~decreased~~increased by ~~$27.4~~$9.7 million during the three months ended ~~September 30, 2015~~March 31, 2016 compared to the three months ended ~~September 30, 2014.~~March 31, 2015. This ~~decrease~~increase primarily relates to mark-to-market fair value adjustments of ~~$1.1~~$7.9 million during the three months ended ~~September 30, 2015~~March 31, 2016 compared to negative adjustments of ~~$28.6~~$1.8 million during the three months ended ~~September 30, 2014.~~March 31, 2015. The mark-to-market adjustments during the three months ended September 30, 2015 consist of a cumulative positive prior period adjustment resulting from adjustments to certain modeling assumptions, partially offset by the impact of faster prepayment speeds and increased delinquency assumptions in the current period. The mark-to-market adjustments during the three months ended September 30, 2014 areMarch 31, 2016 were primarily driven by ~~a decrease in the weighted average discount rate from 12.0% to 10.0% during the three months ended September 30, 2014.~~

~~Nine months ended September 30,2015 compared to the nine months ended September 30, 2014.~~

The change in fair value of investments in excess mortgage servicing rights decreased by $40.9 million during the nine months ended September 30, 2015 compared to the nine months ended September 30, 2014. This decrease primarily relates to mark-to-market fair value adjustments of $(0.3) million during the nine months ended September 30, 2015 compared to adjustments of $40.7 million during the nine months ended September 30, 2014. The mark-to-market adjustments during the nine months ended September 30, 2015 consist of a decrease due to the impact of faster prepaymentslower prepayments speeds and ~~increased~~decreased delinquency ~~assumptions during the nine months ended September 30, 2015 partially offset by the cumulative positive prior period adjustment resulting from adjustments to certain modeling~~ assumptions. ~~The mark-to-market adjustments during the nine months ended September 30, 2014 are driven by a decrease in the weighted average discount rate from 12.8% to 10.0%.~~

Change in Fair Value of Investments in Excess Mortgage Servicing Rights, Equity Method Investees

Three months ended ~~September 30, 2015~~March 31, 2016 compared to the three months ended ~~September 30, 2014.~~March 31, 2015.

The change in fair value of investments in excess mortgage servicing rights, equity method investees decreased by ~~$23.4~~$1.9 million during the three months ended ~~September 30, 2015~~March 31, 2016 compared to the three months ended ~~September 30, 2014.~~March 31, 2015. This decrease ~~primarily~~ relates to decreased mark-to-market fair value ~~adjustments of $8.4 million during the three months ended September 30, 2015 compared to adjustments of $31.8 million during the three months ended September 30, 2014. The mark-to-market~~ adjustments during the three months ended ~~September 30, 2015 consist of a cumulative positive prior period adjustment resulting from adjustments~~March 31, 2016 compared to ~~certain modeling assumptions, partially offset by the impact of faster prepayment speeds and increased delinquency assumptions in the current period. The mark-to-market adjustments during~~ the three months ended ~~September 30, 2014 are~~March 31, 2015 due primarily ~~driven by a decrease~~to an increase in the weighted average discount rate from ~~12.0%~~9.6% to ~~10.0% during the three months ended September 30, 2014.~~

~~Nine months ended September 30,2015 compared to the nine months ended September 30, 2014.~~

The change in fair value of investments in excess mortgage servicing rights, equity method investees decreased by $34.5 million during the nine months ended September 30, 2015 compared to the nine months ended September 30, 2014. This decrease primarily relates to mark-to-market fair value adjustments of $16.4 million during the nine months ended September 30, 2015 compared to adjustments of $51.0 million during the nine months ended September 30, 2014. The mark-to-market adjustments during the nine months ended September 30, 2015 consist of a cumulative positive prior period adjustment resulting from adjustments to certain

modeling assumptions, partially offset by the impact of faster prepayment speeds and increased delinquency assumptions in the current period. The mark-to-market adjustments during the nine months ended September 30, 2014 are primarily driven by a decrease in the discount rate from 12.8% to 10.0% during the nine months ended September 30, 2014.9.8%.

Change in Fair Value of Investments in Servicer Advances

Three months ended ~~September 30, 2015~~March 31, 2016 compared to the three months ended ~~September 30, 2014.~~March 31, 2015.

The change in fair value of investments in servicer advances decreased by ~~$41.7~~$23.6 million during the three months ended ~~September 30, 2015~~March 31, 2016 compared to the three months ended ~~September 30, 2014.~~March 31, 2015. This decrease primarily relates to asset ~~mark-down~~mark-downs of ~~$18.7~~$31.2 million during the three months ended ~~September 30, 2015~~March 31, 2016 compared to ~~mark-up~~mark-downs of ~~$22.9~~$7.6 million during the three months ended ~~September 30, 2014.~~March 31, 2015. The net decrease in value during the three months ended ~~September 30, 2015~~March 31, 2016 was primarily due to a lower performance fee adjustment related to HLSS servicing advances resulting from a lower forward LIBOR curve as compared to prior ~~quarter~~ projections.

The ~~weighted average delinquency rate assumption used in projections was also increased during the three months ended September 30, 2015, further reducing future cash flows. The increase~~decrease in fair value of investments in servicer advances for the three months ended ~~September 30, 2014 was primarily due to a decrease in the servicer advance-to-UPB ratio.~~

~~Nine months ended September 30,2015 compared to the nine months ended September 30, 2014.~~

The change in fair value of investments in servicer advances decreased by $107.7 million during the nine months ended September 30, 2015 compared to the nine months ended September 30, 2014. This decrease primarily relates to asset mark-down of $1.8 million during the nine months ended September 30, 2015 compared to mark-up of $105.8 million during the nine months ended September 30, 2014. The change in fair value of investments in servicer advances for the nine months ended September 30, 2015 was due to the acquisition of HLSS servicing advances in April 2015 and subsequent net decrease in value. The net decrease in value during the nine months ended September 30,March 31, 2015 was primarily due to a lower performance fee adjustment related to HLSS servicing advances resulting from a lower forward LIBOR curve as compared to prior quarter projections. The change in fair value of investments in servicer advances for the nine months ended September 30, 2014 was primarily due to a decreasean increase in the ~~servicer advance-to-UPB ratio.~~weighted average life of the portfolio.

~~Earnings from Investments in~~Gain on Consumer Loans ~~Equity Method Investees~~Investment

Three months ended ~~September 30, 2015~~March 31, 2016 compared to the three months ended ~~September 30, 2014.~~March 31, 2015.

~~Earnings from investments in~~Gain on consumer loans investment decreased by $0.5 million as a result of slightly reduced cash distributions during the three months ended March 31, 2016 relative to March 31, 2015.

Gain on Remeasurement of Consumer Loans Investment

Three months ended March 31, 2016 compared to the three months ended March 31, 2015.

Gain on remeasurement of consumer loans investment of $71.3 million represents the remeasurement of New Residential’s previously held equity method ~~investees decreased by $22.5 million as we discontinued recording our share of the underlying earnings of~~investment in the Consumer Loan Companies ~~subsequent~~as a result of obtaining a controlling financial interest through the SpringCastle Transaction (Note 1 to ~~the refinancing of the outstanding debt on October 3, 2014, which resulted in a distribution to us in excess of~~ our ~~investment basis.~~Condensed Consolidated Financial Statements).

~~Nine months ended September 30,2015 compared to the nine months ended September 30, 2014.~~

Earnings from investments in consumer loans, equity method investees decreased by $60.2 million as we discontinued recording our share of the underlying earnings of the Consumer Loan Companies subsequent to the refinancing of the outstanding debt on October 3, 2014, which resulted in a distribution to us in excess of our investment basis.

Gain on Settlement of Investments, Net

Three months ended ~~September 30, 2015~~March 31, 2016 compared to the three months ended ~~September 30, 2014.~~March 31, 2015.

Gain on settlement of investments decreased by ~~$17.3~~$29.3 million, primarily related to (i) ~~increased loss of $37.0 million on settlement of derivatives and (ii) $1.7 million increase in loss on of sale of REO, partially offset by increased net gains of (iii) $20.8 million~~decreased gain on sale of real estate securities and residential mortgage loans of $8.6 million and $20.7 million, respectively, (ii) increased loss on settlement of derivatives of $10.0 million, and (iii) decreased gain on liquidated residential mortgage loans of $0.4 million, partially offset by (iv) decreased loss on sale of REO of $5.8 million, and (v) increased other gains of $4.7 million during the three months ended ~~September 30, 2015~~March 31, 2016 compared to the three months ended ~~September 30, 2014.~~

~~Nine months ended September 30,2015 compared to the nine months ended September 30, 2014.~~

Gain on settlement of investments decreased by $58.3 million, primarily related to (i) decreased net gains of $34.2 million on real estate securities sold, (ii) increased loss of $42.0 million on settlement of derivatives, (iii) increased loss of $9.0 million on sale of REO, and (iv) $4.0 million loss on extinguishment of debt at the Buyer, partially offset by (v) increased net gains of $32.9 million on the sale or liquidation of residential mortgage loans during the nine months ended September 30, 2015 compared to the nine months ended September 30, 2014.March 31, 2015.

Other Income (Loss), Net

Three months ended ~~September 30, 2015~~March 31, 2016 compared to the three months ended ~~September 30, 2014.~~March 31, 2015.

Other income (loss), net decreased by ~~$7.5~~$6.1 million, primarily attributable to (i) ~~$4.0 million decrease in gains on transfer of loans to REO, (ii) $19.0~~a $15.3 million net increase in unrealized losses on non-hedge derivative instruments, ~~(iii) non-recurring fee earned on deal termination of $5 million during three months ended September 30, 2014, and (iv) increase in REO expense of $0.8 million,~~ partially offset by ~~(v) realized gains~~(ii) increased unrealized gain on other ABS of ~~$14.3~~$0.3 million, ~~on our consumer loans investment during 2015, and, (vi) a $7.7 million reimbursement from servicer during 2015.~~

~~Nine months ended September 30,2015 compared to the nine months ended September 30, 2014.~~

~~Other income decreased by $1.3 million, primarily attributable to (i) $10.8 million decrease in gains~~(iii) increased gain on transfer of loans to REO of $3.0 million, (iv) increased gain on Excess MSR recapture agreements of $0.7 million and ~~(ii) $24.9 million net increase in unrealized losses on non-hedge derivative instruments, (iii) non-recurring fee earned on deal termination~~(v) increased other income of $5$5.2 million during ~~nine~~the three months ended September 30, 2014, and (iv) increase in REO expense of $3.4 million, partially offset by (v) realized gains of $33.3 million on our consumer loans investment during 2015, and, (vi) a $8.5 million reimbursement from servicer duringMarch 31, 2016 compared to the three months ended March 31, 2015.

General and Administrative Expenses

Three months ended ~~September 30, 2015~~March 31, 2016 compared to the three months ended ~~September 30, 2014.~~March 31, 2015.

General and administrative expenses increased by ~~$12.1~~$3.5 million ~~partially attributable~~due to ~~$2.2 million payroll and benefits, retention bonus, and severance~~an increase in deal expenses, including legal deal expenses related to ~~HLSS employees, triggered by our acquisition of HLSS. Legal deal expenses increased $8.8 million primarily driven by~~ the settlement agreement with certain HSART Bondholders as discussed in Note 18 to our Condensed Consolidated Financial Statements, and $1.1 million higher professional fees and other expenses were incurred to maintain and monitor our increasing asset base and general expenses.

~~Nine months ended September 30,2015 compared to the nine months ended September 30, 2014.~~

General and administrative expenses increased by $34.5 million, partially attributable to $7.1 million in payroll and benefits, retention bonus, and severance related to HLSS employees, triggered by our acquisition of HLSS. Legal deal expenses increased $14.7 million, primarily as a result of the HLSS AcquisitionSpringCastle Transaction, refinancings and the settlement agreement with certain HSART Bondholders as discussed in Note 18 to our Condensed Consolidated Financial Statements. Deal expense and securitization fees increased $7.2 million and $1.7 million, respectively, primarily as a resultexercise of ~~the HLSS Acquisition, and $3.8 million higher professional fees and other expenses incurred to maintain and monitor our increasing asset base and general expenses.~~call rights.

Management Fee to Affiliate

Three months ended ~~September 30, 2015~~March 31, 2016 compared to the three months ended ~~September 30, 2014.~~March 31, 2015.

Management fee to affiliate increased by ~~$4.7~~$4.9 million as a result of increases to our gross equity subsequent to ~~September 30, 2014.~~March 31, 2015.

~~Nine months ended September 30,2015 compared to the nine months ended September 30, 2014.~~

~~Management fee to affiliate increased by $8.8 million as a result of increases to our gross equity subsequent to September 30, 2014.~~

Incentive Compensation to Affiliate

Three months ended ~~September 30, 2015~~March 31, 2016 compared to the three months ended ~~September 30, 2014.~~March 31, 2015.

Incentive compensation to affiliate decreased by ~~$9.1~~$2.5 million due to a decrease in our incentive compensation earnings measure resulting from the changes in the income and expense items described above, excluding any unrealized gains or losses from ~~mark-to-market~~mark-

to-market valuation changes on investments and debt, and excluding the Gain on Remeasurement of Consumer Loans Investment, during the three months ended ~~September 30, 2015~~March 31, 2016 compared to the three months ended ~~September 30, 2014.~~March 31, 2015.

~~Nine months ended September 30,2015 compared to the nine months ended September 30, 2014.~~

Incentive compensation to affiliate decreased by $25.2 million due to a decrease in our incentive compensation earnings measure resulting from the changes in the income and expense items described above, excluding any unrealized gains or losses from mark-to-market valuation changes on investments and debt during the nine months ended September 30, 2015 compared to the nine months ended September 30, 2014.

Loan Servicing Expense

Three months ended ~~September 30, 2015~~March 31, 2016 compared to the three months ended ~~September 30, 2014.~~March 31, 2015.

Loan servicing expense decreased by ~~$0.1~~$3.2 million due to a smaller average real estate loan portfolio in the three months ended ~~September 30, 2015~~March 31, 2016 as a result of significant loan sales incompleted during the ~~first six months of 2015.~~

~~Nine~~three months ended ~~September 30,2015 compared to the nine months ended September 30, 2014.~~

~~Loan servicing expense increased by $7.3 million due to the acquisition of additional non-performing residential mortgage loans subsequent to September 30, 2014.~~March 31, 2015.

Income Tax Expense (Benefit)

Three months ended ~~September 30, 2015~~March 31, 2016 compared to the three months ended ~~September 30, 2014.~~March 31, 2015.

Income tax expense (benefit) ~~decreased~~increased by ~~$13.7~~$6.8 million primarily due to the increase in the net deferred tax ~~impact of the reduction of~~benefit resulting from changes in mark-to-market fair value adjustments on investments in servicer advances and other book to tax differences.

~~Nine months ended September 30,2015 compared to the nine months ended September 30, 2014.~~

Income tax expense (benefit) decreased by $24.5 million primarily due to the deferred tax impact of the reduction of mark-to-market fair value adjustments on investments in servicer advances and other book to tax differences.

Noncontrolling Interests in Income of Consolidated Subsidiaries

Three months ended ~~September 30, 2015~~March 31, 2016 compared to the three months ended ~~September 30, 2014.~~March 31, 2015.

Noncontrolling interests in income of consolidated subsidiaries decreased by ~~$18.5~~$1.6 million primarily due to (i) a decrease in net interest income earned on the Buyer’s levered assets as they are repaid over time, ~~and~~partially offset by (ii) a decrease in the change in fair value of the Buyer’s assets.

~~Nine months ended September 30,2015 compared to the nine months ended September 30, 2014.~~

Noncontrolling interests in income of consolidated subsidiaries decreased by $75.4 million primarily due to (i) a decrease in net interest income earned on the Buyer’s levered assets as they are repaid over time, (ii) a decrease in the change in fair value of the Buyer’s assets, (iii) a loss on extinguishment of debt at the Buyer, and (iv) HLSS shareholders’ interests in the net loss of HLSS Ltd., partially offset by (v) an increase in the income tax benefit due to the reduction in the reserve for unrecognized tax benefits to zero during the nine months ended September 30, 2015 in the Buyer.

LIQUIDITY AND CAPITAL RESOURCES

Liquidity is a measurement of our ability to meet potential cash requirements, including ongoing commitments to repay borrowings, fund and maintain investments, and other general business needs. Additionally, to maintain our status as a REIT under the Internal Revenue Code, ~~of 1986, as amended (the “Internal Revenue Code”),~~ we must distribute annually at least 90% of our REIT taxable income. We note that a portion of this requirement may be able to be met in future years through stock dividends, rather than cash, subject to limitations based on the value of our stock.

Our primary sources of funds for liquidity generally consist of cash provided by operating activities (primarily income from our investments in Excess MSRs, servicer advances, RMBS and loans), sales of and repayments from our investments, potential debt financing sources, including securitizations, and the issuance of equity securities, when feasible and appropriate. Our primary uses of funds are the payment of interest, management fees, incentive compensation, outstanding commitments (including margins) and other operating expenses, and the repayment of borrowings and hedge obligations, as well as dividends.

~~Our~~Currently, our primary sources of financing ~~currently~~ are notes and bonds payable and repurchase agreements, although we have in the past and may in the future also pursue one or more other sources of financing such as securitizations and other secured and unsecured forms of borrowing. As of ~~September 30, 2015,~~March 31, 2016, we had outstanding repurchase agreements with an aggregate face amount of approximately ~~$3.8~~$4.0 billion to finance residential mortgage loans, real estate owned, consumer loans, Non-Agency RMBS and Agency RMBS. The financing of our entire RMBS portfolio, which generally has 30 to 90 day terms, is subject to margin calls. Under repurchase agreements, we sell a security to a counterparty and concurrently agree to repurchase the same security at a later date for a higher specified price. The sale price represents financing proceeds and the difference between the sale and repurchase prices represents interest on the financing. The price at which the security is sold generally represents the market value of the security less a discount or “haircut,” which can range broadly, for example from 3%~~-4%~~ - 4% for Agency RMBS, 10%~~-50%~~ - 50% for Non-Agency RMBS, and 9%5% - ~~43%~~53% for residential mortgage loans. During the term of the repurchase agreement, the counterparty holds the security as collateral. If the agreement is subject to margin calls, the counterparty monitors and calculates what it estimates to be the value of the collateral during the term of the agreement. If this value declines by more than a de minimis threshold, the counterparty could require us to post additional collateral (or “margin”) in order to maintain the initial haircut on the collateral. This margin is typically required to be posted in the form of cash and cash equivalents. Furthermore, we may, from time to time, be a party to derivative agreements or financing arrangements that may be subject to margin calls based on the value of such instruments. We seek to maintain adequate cash reserves and other sources of available liquidity to meet any margin calls resulting from decreases in value related to a reasonably possible (in the opinion of management) change in interest rates.

Our ability to obtain borrowings and to raise future equity capital is dependent on our ability to access borrowings and the capital markets on attractive terms. We continually monitor market conditions for financing opportunities and at any given time may be

entering or pursuing one or more of the transactions described above. Our Manager’s senior management team has extensive long-term relationships with investment banks, brokerage firms and commercial banks, which we believe will enhance our ability to source and finance asset acquisitions on attractive terms and access borrowings and the capital markets at attractive levels.

With respect to the next ~~twelve~~12 months, we expect that our cash on hand, combined with our cash flow provided by operations and our ability to roll our repurchase agreements and servicer advance financings, will be sufficient to satisfy our anticipated liquidity needs with respect to our current investment portfolio, including related financings, potential margin calls and operating expenses. While it is inherently more difficult to forecast beyond the next ~~twelve~~12 months, we currently expect to meet our long-term liquidity requirements through our cash on hand and, if needed, additional borrowings, proceeds received from repurchase agreements and other financings, proceeds from equity offerings and the liquidation or refinancing of our assets.

These short-term and long-term expectations are forward-looking and subject to a number of uncertainties and assumptions, including those described under “—Market ~~Considerations”~~Considerations,” as well as “Risk Factors.” If our assumptions about our liquidity prove to be incorrect, we could be subject to a shortfall in liquidity in the future, and such a shortfall may occur rapidly and with little or no notice, which could limit our ability to address such a shortfall on a timely basis and could have a material adverse effect on our business.

Our cash flow provided by operations differs from our net income due to these primary factors: (i) accretion of discount or premium on our residential securities and loans, (ii) the difference between (a) accretion and unrealized gains and losses recorded with respect to our Excess MSR (direct and indirect) and servicer advance investments and (b) cash received therefrom, (iii) unrealized gains and losses on our derivatives, and recorded impairments, if any, (iv) deferred taxes, and (v) principal cash flows related to held-for-sale loans, which are characterized as operating cash flows under GAAP.

In addition to the information referenced above, the following factors could affect our liquidity, access to capital resources and our capital obligations. As such, if their outcomes do not fall within our expectations, changes in these factors could negatively affect our liquidity.

Access to Financing from Counterparties – Decisions by investors, counterparties and lenders to enter into transactions with us will depend upon a number of factors, such as our historical and projected financial performance, compliance with the terms of our current credit arrangements, industry and market trends, the availability of capital and our investors’, counterparties’ and lenders’ policies and rates applicable thereto, and the relative attractiveness of alternative investment or lending opportunities. Our business strategy is dependent upon our ability to finance certain of our investments at rates that provide a positive net spread.

Impact of Expected Repayment or Forecasted Sale on Cash Flows – The timing of and proceeds from the repayment or sale of certain investments may be different than expected or may not occur as expected. Proceeds from sales of assets are unpredictable and may vary materially from their estimated fair value and their carrying value. Further, the availability of investments that provide similar returns to those repaid or sold investments is unpredictable and returns on new investments may vary materially from those on existing investments.

Debt Obligations

The following table presents certain information regarding our debt obligations (dollars in thousands):


	September 30, 2015																March 31, 2016
										Collateral																Collateral
Debt Obligations/Collateral	Month Issued	Outstanding Face Amount		Carrying Value^(A)		Final Stated Maturity^(B)	Weighted Average Funding Cost		Weighted Average Life (Years)	Outstanding Face		Amortized Cost Basis		Carrying Value		Weighted Average Life (Years)	Month Issued	Outstanding Face Amount		Carrying Value^(A)		Final Stated Maturity^(B)	Weighted Average Funding Cost		Weighted Average Life (Years)	Outstanding Face		Amortized Cost Basis		Carrying Value		Weighted Average Life (Years)
Repurchase Agreements^(C)
Agency RMBS^(D)	Various	$	2,144,624	$	2,144,624	Oct-15	0.47	%	0.1	$	2,138,144	$	2,236,321	$	2,234,248	0.5	Various	$	1,629,971	$	1,629,971	Apr-16	0.70	%	0.1	$	1,612,119	$	1,667,876	$	1,691,144	0.6
Non-Agency RMBS ^(E)	Various	890,025		890,025		Oct-15 to Mar-16	1.80	%	0.1	2,594,423		1,166,464		1,179,444		7.9	Various	1,490,273		1,490,273		Apr-16 to Jun-16	1.96	%	0.1	3,599,118		1,788,871		1,777,260		7.2
Residential Mortgage Loans^(F)	Various	627,656		626,962		Nov-15 to Oct-16	2.79	%	0.5	799,635		728,339		730,312		3.5	Various	723,954		723,167		May-16 to Mar-17	2.87	%	0.6	1,119,845		886,918		884,110		3.1
Real Estate Owned^(G)(H)	Various	72,084		72,005		Nov-15 to Aug-16	3.13	%	0.4	N/A		N/A		82,796		N/A	Various	95,983		95,878		May-16 to Mar-17	2.76	%	0.6	N/A		N/A		108,330		N/A
Consumer Loan Investment^(I)	Apr-15	40,264		40,264		Oct-15	3.78	%	0.1	N/A		N/A		—		3.4	Apr-15	34,223		34,223		Apr-16	4.11	%	0.1	N/A		N/A		71,250		4.2
Total Repurchase Agreements		3,774,653		3,773,880			1.25	%	0.2									3,974,404		3,973,512			1.65	%	0.2
Notes Payable
Notes and Bonds Payable
Secured Corporate Note^(J)	May-15	188,266		186,520		Apr-17	5.44	%	1.6	96,532,601		222,505		263,476		5.0	May-15	182,772		181,602		Apr-17	5.69	%	1.1	89,074,745		212,250		258,422		5.2
Servicer Advances^(K)	Various	7,055,203		7,038,079		Oct-15 to Aug-18	3.06	%	1.1	7,644,435		7,417,372		7,499,775		4.3	Various	6,880,413		6,868,732		Aug-16 to Aug-18	3.44	%	1.2	7,203,924		7,005,501		7,001,004		4.5
Residential Mortgage Loans^(L)	Oct-14	20,601		20,601		Oct-15	3.08	%	0.1	37,331		22,078		20,316		4.1	Oct-15	13,786		13,786		Oct-16	3.30	%	0.5	20,801		13,914		12,809		4.4
Real Estate Owned	N/A	—		—			—	%	—	N/A		N/A		—		N/A
Total Notes Payable		7,264,070		7,245,200			3.12	%	1.1
Consumer Loans^(M)																	Oct-14	1,808,211		1,803,192		May-23 to Apr-34	4.14	%	3.7	1,986,162		1,951,879		1,951,879		4.2
Receivable from government agency^(L)																	Oct-15	3,539		3,539		—	3.30	%	0.5	N/A		N/A		5,333		N/A
Total Notes and Bonds Payable																		8,888,721		8,870,851			3.63	%	1.7
Total/ Weighted Average		$	11,038,723	$	11,019,080		2.48	%	0.8									$	12,863,125	$	12,844,363		3.02	%	1.2


(A)	Net of deferred financing ~~costs associated with the adoption of ASU No. 2015-03.~~costs.


(B)	All debt obligations with a stated maturity of ~~October 2015~~April 2016 were refinanced, extended, or repaid.


(C)	These repurchase agreements had approximately ~~$2.9~~$6.7 million of associated accrued interest payable as of ~~September 30, 2015.~~March 31, 2016.

(D)

The counterparties of these repurchase agreements are Citibank ($674.2 million), Morgan Stanley ($308.4 million), Bank of America ($202.1 million), Daiwa ($249.5 million), Royal Bank of Canada ($372.6 million) and Jefferies ($337.8 million) and were subject to customary margin call provisions. All of the Agency RMBS repurchase agreements have a fixed rate. Collateral amounts include approximately ~~$2.0~~$1.5 billion of related trade and other receivables.

(E)

The counterparties of these repurchase agreements are Barclays ($11.1 million), Credit Suisse ($266.8 million), Royal Bank of Canada ($10.1 million), Bank of America, N.A. ($266.8 million), Citibank ($66.6 million), Goldman Sachs ($68.7 million) and UBS ($199.9 million) and were subject to customary margin call provisions. All of the Non-Agency RMBS repurchase agreements have LIBOR-based floating interest rates. This includes repurchase agreements of $145.8 million on retained servicer advance bonds.


(F)	All of these repurchase agreements have LIBOR-based floating interest rates.

~~(F)~~

The counterparties on these repurchase agreements are Barclays ($247.1 million maturing in January 2016), Bank of America N.A. ($264.1 million maturing in August 2016), Nomura ($55.5 million maturing in May 2016), Citibank ($3.1 million maturing in October 2016) and Credit Suisse ($57.9 million maturing in November 2015). All of these repurchase agreements have LIBOR-based floating interest rates.


(G)	~~The counterparties of these repurchase agreements are Barclays ($56.1 million), Credit Suisse ($1.1 million), Bank of America, N.A. ($5.0 million) and Nomura ($9.8 million).~~ All of these repurchase agreements have LIBOR-based floating interest rates.


(H)	Includes financing collateralized by receivables including claims from FHA on ~~GNMA~~Ginnie Mae EBO loans for which foreclosure has been completed and for which we have made or intend to make a claim on the FHA guarantee.


(I)	The repurchase agreement ~~is payable to Bank of America, N.A. and~~ bears interest equal to three-month LIBOR plus 3.50% and is collateralized by 56% of our interest in ~~consumer loans.~~the Consumer Loan Companies (Note 9 to our Condensed Consolidated Financial Statements).


(J)	The loan bears interest equal to the sum of (i) a floating rate index equal to one-month LIBOR and (ii) a margin of 5.25%. The outstanding face amount of the collateral represents the UPB of the residential mortgage loans underlying the Excess MSRs that secure this corporate ~~loan.~~ note.


(K)	$~~3.8~~2.7 billion face amount of the notes have a fixed rate while the remaining notes bear interest equal to the sum of (i) a floating rate index rate equal to one-month LIBOR or a cost of funds rate, as applicable, and (ii) a margin ranging from ~~1.0%~~1.7% to 2.2%.


(L)	The note is payable to Nationstar and bears interest equal to one-month LIBOR plus 2.875%.

(M)

Represents the debt assumed in the SpringCastle Transaction (Note 1 to our Condensed Consolidated Financial Statements), which is comprised of the following classes of asset-backed notes (collectively, the “2014-A Notes”) held by third parties: $850.2 million UPB of Class A notes with a coupon of 2.7% and a stated maturity date in May 2023 (the “Class A Notes”); $427.0 million UPB of Class B notes with a coupon of 4.61% and a stated maturity date in October 2027 (the “Class B Notes”); $331.2 million UPB of Class C notes with a coupon of 5.59% and a stated maturity date in October 2033 (the “Class C Notes”); and $199.8 million UPB of Class D notes with a coupon of 6.82% and a stated

maturity date in April 2034 (the “Class D Notes”). Prior to the payment date in October 2016, the redemption price for any class of the outstanding 2014-A Notes shall be the sum of (i) 100% of the outstanding principal balance of the 2014-A Notes of the applicable class to be redeemed, plus (ii) the applicable Specified Call Premium Amount (as defined below) for such 2014-A Notes, plus (iii) accrued and unpaid interest and fees in respect of such 2014-A Notes. On or after the payment date occurring in October 2016, the redemption price for any class of 2014-A Notes shall be the sum of (i) 100% of the outstanding principal balance of the 2014-A Notes of the applicable class to be redeemed, plus (ii) accrued and unpaid interest and fees in respect of such 2014-A Notes. The “Specified Call Premium Amount” on any payment date for any class of 2014-A Notes shall mean (i) in the case of Class A Notes, an amount equal to 1.00% of the outstanding principal balance of the Class A Notes to be redeemed and (ii) in the case of the Class B Notes, the Class C Notes and the Class D Notes, an amount equal to (a) the product of (1) with respect to the Class B Notes, 0.75%, with respect to the Class C Notes, 1.00% and with respect to the Class D Notes, 2.00%, times (2) the outstanding principal balance of the 2014-A Notes of such class to be redeemed on such payment date, times (3) the number of days, computed on a 30/360 basis, from and including such payment date to but excluding the payment date occurring in October 2016, divided by (b) 360.

Certain of the debt obligations included above are obligations of our consolidated subsidiaries, which own the related collateral. In some cases, including ~~servicer advances,~~Servicer Advances, such collateral is not available to other creditors of ours.

We have margin exposure on ~~$3.8~~$4.0 billion of repurchase agreements. To the extent that the value of the collateral underlying these repurchase agreements declines, we may be required to post margin, which could significantly impact our liquidity.

The following tables provide additional information regarding our short-term borrowings (dollars in thousands).


			Nine Months Ended September 30, 2015								Three Months Ended March 31, 2016
	Outstanding Balance at September 30, 2015		Average Daily Amount Outstanding^(A)		Maximum Amount Outstanding		Weighted Average Daily Interest Rate		Outstanding Balance at March 31, 2016		Average Daily Amount Outstanding^(A)		Maximum Amount Outstanding		Weighted Average Daily Interest Rate
Repurchase Agreements
Agency RMBS	$	2,144,624	$	1,421,617	$	2,156,448	0.39	%	$	1,629,971	$	1,637,506	$	1,683,305	0.69	%
Non-Agency RMBS	890,025		591,441		890,025		1.84	%	1,490,273		1,369,703		1,490,273		1.86	%
Residential Mortgage Loans	627,656		408,367		683,603		2.70	%	723,954		889,834		974,408		2.80	%
Real Estate Owned	72,084		51,252		86,652		3.06	%	95,983		87,270		97,943		3.07	%
Consumer Loans	40,264		41,717		42,976		3.78	%	34,223		34,569		40,446		4.10	%
Notes Payable
Notes and Bonds Payable
Servicer Advances	4,318,717		4,106,066		6,248,947		2.04	%	2,916,719		2,651,087		2,961,031		2.43	%
Residential Mortgage Loans	20,601		22,414		24,006		3.07	%	13,786		14,260		15,652		3.26	%
Real Estate Owned									3,539		3,518		3,877		3.26	%
Total/Weighted Average	$	8,113,971	$	6,642,874	$	10,132,657	1.65	%	$	6,908,448	$	6,687,747	$	7,266,935	1.96	%

Regulatory scrutiny regarding foreclosure processes could lengthen foreclosure timelines, which could increase advances and materially and adversely affect our business, financial condition, results of operations and liquidity.

When a mortgage loan is in foreclosure, the servicer is generally required to continue to advance delinquent principal and interest to the securitization trust and to also make advances for delinquent taxes and insurance and foreclosure costs and the upkeep of vacant property in foreclosure to the extent we determine that such amounts are recoverable. These servicer advances are generally recovered when the delinquency is resolved. Foreclosure moratoria or other actions that lengthen the foreclosure process increase the amount of servicer advances, lengthen the time it takes for reimbursement of such advances and increase the costs incurred during the foreclosure process. In addition, advance financing facilities generally contain provisions that limit the eligibility of servicer advances to be financed based on the length of time that servicer advances are outstanding, and, as a result, an increase in foreclosure timelines could further increase the amount of servicer advances that need to be funded from the related servicer’s own capital. Such increases in foreclosure timelines could increase the need for capital to fund servicer advances, which would increase our interest expense, delay the collection of interest income or servicing fee revenue until the foreclosure has been resolved and, therefore, reduce the cash that we have available to pay our operating expenses or to pay dividends. According to Ocwen’s public ~~disclosure,~~disclosures, on April 28, 2014, Ocwen received a letter from the staff of the New York Regional Office of the SEC informing Ocwen that the SEC was conducting an investigation relating to Ocwen and making a request for voluntary production of documents and information relating to the April 22, 2014 surrender of certain options to purchase its common stock by ~~Mr.~~William C. Erbey, its former Executive Chairman, including the 2007 Equity Incentive Plan and the related option grant and surrender documents. On June 12, 2014, Ocwen received a subpoena from the SEC requesting production of various documents relating to its business dealings with HLSS, Altisource Portfolio Solutions, S.A., Altisource Asset Management Corporation and Altisource Residential Corporation and the interests of its directors and executive officers in these companies. Ocwen has also disclosed that it received an additional subpoena from the SEC related to its amendments to its Annual Report on Form 10-K for the fiscal year ended December 31, 2013 and its Quarterly Report on Form 10-Q for the quarter ended March 31, 2014. Ocwen subsequently disclosed in its Annual Report on Form 10-K for the year ended December 31, 2014 that it received a further subpoena from the SEC requesting certain documents related to Ocwen’s agreement with Southwest Business Corporation and related to former HLSS and Ocwen Chairman William C. Erbey’s approvals for specifically enumerated board actions, and that it received a letter from the SEC staff dated February 10, 2015 informing it that the SEC was conducting an investigation relating to mortgage loan servicer use of collection agents and requesting voluntary production of documents and information.

Certain of our servicers have triggered termination events or events of default under some PSAs underlying the MSRs with respect to which we are entitled to the basic fee component or ~~excess~~Excess MSRs, and the parties to the related securitization transactions could enforce their rights against such servicer as a result.

If a servicer termination event or event of default occurs under a PSA, the servicer may be terminated without any right to compensation for its loss from the trustee for the securitization trust, other than the right to be reimbursed for any outstanding servicer advances as the related loans are brought current, modified, liquidated or charged off. So long as we are in compliance with our obligations under our servicing agreements and purchase agreements, if a servicer is terminated as servicer, we may have the right to receive an indemnification payment from such servicer, even if such termination related to servicer termination events or events of default existing at the time of any transaction with such servicer. If one of our servicers is terminated as servicer under a PSA, we will lose any investment related to such servicer’s MSRs. If such servicer is terminated as servicer with respect to a PSA and we are unable to enforce our contractual rights against such servicer or if such servicer is unable to make any resulting indemnification payments to us, if any such payment is due and payable, it may have a material adverse effect on our financial condition, results of operations, ability to make distributions, liquidity and financing arrangements, including our advance financing facilities, and may make it more difficult for us to acquire additional MSRs in the future.

During February and March 2015, Ocwen received two notices of servicer termination affecting four separate PSAs related to MSRs related to the transactions contemplated by the Ocwen Purchase Agreement. Ocwen could be subject to further terminations as a result of its failure to maintain required minimum servicer ratings, which could have an adverse effect on our business, financing activities, financial condition and results of operations.

On January 23, 2015, Gibbs & Bruns LLP, on behalf of its clients, issued a press release regarding the notices of nonperformance provided to various trustees in relation to Ocwen’s servicing practices under 119 residential mortgage-backed securities trusts. Of these transactions, 90 relate to agreements for MSRs related to the transactions contemplated by the Ocwen Purchase Agreement. It is possible that Ocwen could be terminated for other servicing agreements related to such MSRs.

On January 29, 2015, Moody’s downgraded Ocwen’s SQ assessment from SQ3+ to SQ3- as a primary servicer of subprime residential loans and as a special servicer of residential mortgage loans. During February 2015, Fitch Ratings downgraded Ocwen’s residential primary servicer rating for subprime products from “RPS3” to ~~“RPS4,”~~“RPS4” and, ~~Morningstar downgraded its~~in February 2016, upgraded such rating to “RPS3-.” During February 2015, Morningstar also downgraded Ocwen’s residential primary servicer rating from “MOR RS2” to

“MOR RS3.” On June 18, 2015, S&P downgraded Ocwen’s ratings as a residential mortgage prime, subprime, special, and

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subordinate-lien servicer from “average” to “below average.” On October 1, 2015, S&P downgraded Ocwen’s master servicer rating to “below average.”

The performance of loans that we acquired in the HLSS Acquisition may be adversely affected by the performance of parties who service or subservice these mortgage loans.

HLSS and its subsidiaries acquired by us in the HLSS Acquisition contracted with third parties for the servicing of the mortgage loans in its ~~EBO~~early buy-out (“EBO”) portfolio. The performance of this portfolio and our ability to finance this portfolio are subject to risks associated with inadequate or untimely servicing. If our servicers or subservicers commit a material breach of their obligations as a servicer, we may be subject to damages if the breach is not cured within a specified period of time following notice. In addition, we may be required to indemnify an investor or our lenders against losses from any failure of our servicer or subservicer to perform the servicing obligations properly. Poor performance by a servicer or subservicer may result in greater than expected delinquencies and foreclosures and losses on our mortgage loans. A substantial increase in our delinquency or foreclosure rate or the inability to process claims in accordance with ~~GNMA~~Ginnie Mae or FHA guidelines could adversely affect our ability to access the capital and secondary markets for our financing needs.

Servicing issues in the portfolio of loans that was acquired in the HLSS Acquisition could adversely impact our claims against FHA insurance and result in our reliance on servicer indemnifications which could increase losses.

We will rely on HLSS’s servicers (including Ocwen) to service our ~~GNMA~~Ginnie Mae EBO loans in a manner that supports our ability to make claims to the FHA for shortfalls on these loans. If servicing issues result in the curtailment of FHA insurance claims, we will only have recourse against the servicer for any shortfall. If the servicer is unable to make indemnification payments owed to us under this circumstance, we could incur losses.

Our borrowings collateralized by loans require that we make certain representations and warranties that, if determined to be inaccurate, could require us to repurchase loans or cover losses.

Our financing facilities require us to make certain representations and warranties regarding the loans that collateralize the borrowings. Although we perform due diligence on the loans that we acquire, certain representations and warranties that we make in respect of such loans may ultimately be determined to be inaccurate. In the event of a breach of a representation or warranty, we may be required to repurchase affected loans, make indemnification payments to certain indemnified parties or address any claims associated with such breach. Further, we may have limited or no recourse against the seller from whom we purchased the loans. Such recourse may be limited due to a variety of factors, including the absence of a representation or warranty from the seller corresponding to the representation provided by us or the contractual expiration thereof.

Representations and warranties made by us in our loan sale agreements may subject us to liability.

In March 2015, HLSS sold reperforming loans to an unrelated third party and transferred mortgages into a trust in exchange for cash. We may be liable to purchasers under the related sale agreement for any breaches of representations and warranties made by HLSS at the time the applicable loans are sold. Such representations and warranties may include, but are not limited to, issues such as the validity of the lien; the absence of delinquent taxes or other liens; the loans compliance with all local, state and federal laws and the delivery of all documents required to perfect title to the lien. If the purchaser is successful in asserting their claim for recourse, it could adversely affect the availability of financing under loan financing facilities or otherwise adversely impact our results of operations and liquidity. From time to time we sell residential mortgage loans pursuant to loan sale agreements. The risks describe in this paragraph relate to any such sale as well.

Our ability to exercise our cleanup call rights may be limited or delayed if a third party contests our ability to exercise our cleanup call rights, if the related securitization trustee refuses to permit the exercise of such rights, or if a related party is subject to bankruptcy proceedings.

Certain servicing contracts permit more than one party to exercise a cleanup call-meaning the right of a party to collapse a securitization trust by purchasing all of the remaining loans held by the securitization trust pursuant to the terms set forth in the applicable servicing agreement. While the servicers from which we acquired our cleanup call rights (or other servicers from which our servicers acquired MSRs) may be named as the party entitled to exercise such rights, certain third parties may also be permitted to exercise such rights. If any such third party exercises a cleanup call, we could lose our ability to exercise our cleanup call right and, as a result, lose the ability to generate positive returns with respect to the related securitization transaction. In addition, another party could impair our ability to exercise our cleanup call rights by contesting our rights (for example, by claiming that they hold the exclusive cleanup call right with respect to the applicable securitization trust). Moreover, because the ability to exercise a

cleanup call right is governed by the terms of the applicable servicing agreement, any ambiguous or conflicting language regarding

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the exercise of such rights in the agreement may make it more difficult and costly to exercise a cleanup call right. Furthermore, certain servicing contracts provide cleanup call rights to a servicer currently subject to bankruptcy proceedings from which our servicers have acquired MSRs. While, notwithstanding the related bankruptcy proceedings, it is possible that we will be able to exercise the related cleanup calls within our desired time frame, our ability to exercise such rights may be significantly delayed or impaired by the applicable securitization trustee or bankruptcy estate or any additional steps required because of the bankruptcy process. Finally, many of our call rights are not currently exercisable and may not become exercisable for a period of years. As a result, our ability to realize the benefits from these rights will depend on a number of factors at the time they become exercisable many of which are outside our control, including interest rates, conditions in the capital markets and conditions in the residential mortgage market.

WeNew Residential’s subsidiary New Residential Mortgage LLC is or may ~~form a captive insurance~~become subject to significant state and federal regulations.

A subsidiary ~~which we expect will apply for membership in a regional Federal Home Loan Bank~~of NRZ, New Residential Mortgage LLC (“~~FHLB”~~NRM”)~~. If membership~~, is currently in the ~~FHLB~~process of obtaining applicable qualifications, licenses and approvals to own agency and non-agency MSRs in the United States and certain other jurisdictions. As a result of NRM’s current and expected approvals, NRM is ~~granted, we will be exposed~~or may in the future become subject to extensive and comprehensive regulation under federal, state and local laws in the United States. These laws and regulations may in the future significantly affect the way that NRM does business, and may subject NRM and New Residential to additional costs and regulatory obligations, which could impact our financial results.

NRM’s business may become subject to increasing regulatory oversight and scrutiny in the future as it continues seeking and obtaining state and agency approvals to hold MSRs, which may lead to regulatory investigations or enforcement, including both formal and informal inquiries, from various state and federal agencies as part of those agencies' oversight of the mortgage servicing business. An adverse result in governmental investigations or examinations or private lawsuits, including purported class action lawsuits, may adversely affect NRM’s and our financial results or result in serious reputational harm. In addition, a number of ~~new risks.~~participants in the mortgage servicing industry have been the subject of purported class action lawsuits and regulatory actions by state regulators, and other industry participants have been the subject of actions by state Attorneys General.

We may form a captive insurance subsidiary, which we expect will apply for membership in a regional Federal Home Loan Bank. There are 11 regional FHLBs that provide long-term and short-term secured loans, called “advances,” to their members. FHLB members may use a variety of real estate related assets, including RMBS and residential mortgage loans, as collateral for advances. Membership in the FHLB would permit our captive insurance subsidiary to access a variety of products and services offered by the FHLB and obligate our captive insurance subsidiary to purchase membership stock and activity stock, the latter being a percentage of the advances it obtains from the FHLB. We expect our captive insurance subsidiary will seek advances of both short- and long-term indebtedness from the FHLB.

If we form a captive insurance subsidiary and our captive insurance subsidiary becomes a member in the FHLB, our captive insurance company will be exposed to new risks, and will be subject to new regulation, including, but not limited to, regulations which may limit such subsidiary’s ability to make dividends and require us to maintain certain minimum net capital. Violation of these new regulations can result in revocation of its authorization to do business as a captive insurer or result in censures or fines. Under certain circumstances, regulatory actions (such as new rulemakings) impacting the captive could result in limitations on the ability of our captive subsidiary to borrow from the FHLB, or termination of its membership in the FHLB, and thereby impact the FHLB’s availability as a source of financing for our operations.

Additionally, if our captive insurance subsidiary’s membership is not granted, or is granted but then terminated, we may be at a competitive disadvantage vis-à- vis our competitors with captive insurance company members of a Federal Home Loan Bank and therefore have access to long-term funding with which to acquire their target assets.

Risks Related to Our Manager

We are dependent on our Manager and may not find a suitable replacement if our Manager terminates the Management Agreement.

None of our officers or other senior individuals who perform services for us is an employee of New Residential. Instead, these individuals are employees of our Manager. Accordingly, we are completely reliant on our Manager, which has significant discretion as to the implementation of our operating policies and strategies, to conduct our business. We are subject to the risk that our Manager will terminate the Management Agreement and that we will not be able to find a suitable replacement for our Manager in a timely manner, at a reasonable cost or at all. Furthermore, we are dependent on the services of certain key employees of our Manager whose compensation is partially or entirely dependent upon the amount of incentive or management compensation earned by our Manager and whose continued service is not guaranteed, and the loss of such services could adversely affect our operations.

There are conflicts of interest in our relationship with our Manager.

Our Management Agreement with our Manager was not negotiated between unaffiliated parties, and its terms, including fees payable, although approved by the independent directors of New Residential as fair, may not be as favorable to us as if they had been negotiated with an unaffiliated third party.

There are conflicts of interest inherent in our relationship with our Manager insofar as our Manager and its affiliates—including investment funds, private investment funds, or businesses managed by our Manager, including Newcastle, Nationstar and ~~Springleaf—invest~~OneMain —invest in real estate related securities, consumer loans and Excess MSRs and servicer advances and whose investment objectives overlap with our investment objectives. Certain investments appropriate for us may also be appropriate for one or more of these other investment vehicles. Certain members of our board of directors and employees of our Manager who are our officers also serve as officers and/or directors of these other entities. For example, we have some of the same directors and officers as Newcastle. Although we have the same Manager, we may compete with entities affiliated with our Manager or Fortress, including Newcastle,

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for certain target assets. From time to time, affiliates of Fortress focus on investments in assets with a similar profile as our target assets that we may seek to acquire. These affiliates may have meaningful purchasing capacity, which may change over time depending upon a variety of factors, including, but not limited to, available equity capital and debt financing, market conditions and cash on hand. Fortress has two funds primarily focused on investing in Excess MSRs with approximately $0.7 billion in capital

commitments in aggregate. ~~We intend to co-invest with these funds in Excess MSRs.~~ We have broad investment guidelines, and we have and may co-invest with Fortress funds or portfolio companies of private equity funds managed by our Manager (or an affiliate thereof) in a variety of investments. We also may invest in securities that are senior or junior to securities owned by funds managed by our Manager. Fortress funds generally have a fee structure similar to ours, but the fees actually paid will vary depending on the size, terms and performance of each fund. Fortress had approximately ~~$74.3~~$70.6 billion of assets under management as of ~~September 30, 2015.~~March 31, 2016.

Our Management Agreement with our Manager generally does not limit or restrict our Manager or its affiliates from engaging in any business or managing other pooled investment vehicles that invest in investments that meet our investment objectives. Our Manager intends to engage in additional real estate related management and real estate and other investment opportunities in the future, which may compete with us for investments or result in a change in our current investment strategy. In addition, our certificate of incorporation provides that if Fortress or an affiliate or any of their officers, directors or employees acquire knowledge of a potential transaction that could be a corporate opportunity, they have no duty, to the fullest extent permitted by law, to offer such corporate opportunity to us, our stockholders or our affiliates. In the event that any of our directors and officers who is also a director, officer or employee of Fortress or its affiliates acquires knowledge of a corporate opportunity or is offered a corporate opportunity, provided that this knowledge was not acquired solely in such person’s capacity as a director or officer of New Residential and such person acts in good faith, then to the fullest extent permitted by law such person is deemed to have fully satisfied such person’s fiduciary duties owed to us and is not liable to us if Fortress or its affiliates pursues or acquires the corporate opportunity or if such person did not present the corporate opportunity to us.

The ability of our Manager and its officers and employees to engage in other business activities, subject to the terms of our Management Agreement with our Manager, may reduce the amount of time our Manager, its officers or other employees spend managing us. In addition, we may engage (subject to our investment guidelines) in material transactions with our Manager or another entity managed by our Manager or one of its affiliates, including Newcastle, Nationstar ~~Springleaf~~ and ~~Holiday~~OneMain which may include, but are not limited to, certain financing arrangements, purchases of debt, co-investments in Excess MSRs, consumer loans, servicer advances ~~senior housing~~ and other assets that present an actual, potential or perceived conflict of interest. It is possible that actual, potential or perceived conflicts could give rise to investor dissatisfaction, litigation or regulatory enforcement actions. Appropriately dealing with conflicts of interest is complex and difficult, and our reputation could be damaged if we fail, or appear to fail, to deal appropriately with one or more potential, actual or perceived conflicts of interest. Regulatory scrutiny of, or litigation in connection with, conflicts of interest could have a material adverse effect on our reputation, which could materially adversely affect our business in a number of ways, including causing an inability to raise additional funds, a reluctance of counterparties to do business with us, a decrease in the prices of our equity securities and a resulting increased risk of litigation and regulatory enforcement actions.

The management compensation structure that we have agreed to with our Manager, as well as compensation arrangements that we may enter into with our Manager in the future (in connection with new lines of business or other activities), may incentivize our Manager to invest in high risk investments. In addition to its management fee, our Manager is currently entitled to receive incentive compensation. In evaluating investments and other management strategies, the opportunity to earn incentive compensation may lead our Manager to place undue emphasis on the maximization of earnings, including through the use of leverage, at the expense of other criteria, such as preservation of capital, in order to achieve higher incentive compensation. Investments with higher yield potential are generally riskier or more speculative than lower-yielding investments. Moreover, because our Manager receives compensation in the form of options in connection with the completion of our common equity offerings, our Manager may be incentivized to cause us to issue additional common stock, which could be dilutive to existing stockholders. In addition, our Manager’s management fee is not tied to our performance and may not sufficiently incentivize our Manager to generate attractive risk-adjusted returns for us.

It would be difficult and costly to terminate our Management Agreement with our Manager.

It would be difficult and costly for us to terminate our Management Agreement with our Manager. The Management Agreement may only be terminated annually upon (i) the affirmative vote of at least two-thirds of our independent directors, or by a vote of the holders of a simple majority of the outstanding shares of our common stock, that there has been unsatisfactory performance by our Manager that is materially detrimental to us or (ii) a determination by a simple majority of our independent directors that the management fee payable to our Manager is not fair, subject to our Manager’s right to prevent such a termination by accepting a mutually acceptable reduction of fees. Our Manager will be provided 60 days’ prior notice of any termination and will be paid a termination fee equal to the amount of the management fee earned by the Manager during the ~~twelve-month~~12-month period preceding

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such termination. In addition, following any termination of the Management Agreement, our Manager may require us to purchase its right to receive incentive compensation at a price determined as if our assets were sold for their fair market value (as determined by an appraisal, taking into account, among other things, the expected future value of the underlying investments) or otherwise we may continue to pay the incentive compensation to our Manager. These provisions may increase the effective cost to us of terminating the Management Agreement, thereby adversely affecting our ability to terminate our Manager without cause.

Our directors have approved broad investment guidelines for our Manager and do not approve each investment decision made by our Manager. In addition, we may change our investment strategy without a stockholder vote, which may result in our making investments that are different, riskier or less profitable than our current investments.

Our Manager is authorized to follow broad investment guidelines. Consequently, our Manager has great latitude in determining the types and categories of assets it may decide are proper investments for us, including the latitude to invest in types and categories of assets that may differ from those in which we currently invest. Our directors will periodically review our investment guidelines and our investment portfolio. However, our board does not review or pre-approve each proposed investment or our related financing arrangements. In addition, in conducting periodic reviews, the directors rely primarily on information provided to them by our Manager. Furthermore, transactions entered into by our Manager may be difficult or impossible to unwind by the time they are reviewed by the directors even if the transactions contravene the terms of the Management Agreement. In addition, we may change our investment strategy, including our target asset classes, without a stockholder vote.

Our investment strategy may evolve in light of existing market conditions and investment opportunities, and this evolution may involve additional risks depending upon the nature of the assets in which we invest and our ability to finance such assets on a short or long-term basis. Investment opportunities that present unattractive risk-return profiles relative to other available investment opportunities under particular market conditions may become relatively attractive under changed market conditions and changes in market conditions may therefore result in changes in the investments we target. Decisions to make investments in new asset categories present risks that may be difficult for us to adequately assess and could therefore reduce our ability to pay dividends on our common stock or have adverse effects on our liquidity, results of operations or financial condition. A change in our investment strategy may also increase our exposure to interest rate, foreign currency, real estate market or credit market fluctuations and expose us to new legal and regulatory risks. In addition, a change in our investment strategy may increase our use of non-match-funded financing, increase the guarantee obligations we agree to incur or increase the number of transactions we enter into with affiliates. Our failure to accurately assess the risks inherent in new asset categories or the financing risks associated with such assets could adversely affect our results of operations, liquidity and financial condition.

Our Manager will not be liable to us for any acts or omissions performed in accordance with the Management Agreement, including with respect to the performance of our investments.

Pursuant to our Management Agreement, our Manager will not assume any responsibility other than to render the services called for thereunder in good faith and will not be responsible for any action of our board of directors in following or declining to follow its advice or recommendations. Our Manager, its members, managers, officers and employees will not be liable to us or any of our subsidiaries, to our board of directors, or our or any subsidiary’s stockholders or partners for any acts or omissions by our Manager, its members, managers, officers or employees, except by reason of acts constituting bad faith, willful misconduct, gross negligence or reckless disregard of our Manager’s duties under our Management Agreement. We shall, to the full extent lawful, reimburse, indemnify and hold our Manager, its members, managers, officers and employees and each other person, if any, controlling our Manager harmless of and from any and all expenses, losses, damages, liabilities, demands, charges and claims of any nature whatsoever (including attorneys’ fees) in respect of or arising from any acts or omissions of an indemnified party made in good faith in the performance of our Manager’s duties under our Management Agreement and not constituting such indemnified party’s bad faith, willful misconduct, gross negligence or reckless disregard of our Manager’s duties under our Management Agreement.

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Our Manager’s due diligence of investment opportunities or other transactions may not identify all pertinent risks, which could materially affect our business, financial condition, liquidity and results of operations.

Our Manager intends to conduct due diligence with respect to each investment opportunity or other transaction it pursues. It is possible, however, that our Manager’s due diligence processes will not uncover all relevant facts, particularly with respect to any assets we acquire from third parties. In these cases, our Manager may be given limited access to information about the investment and will rely on information provided by the target of the investment. In addition, if investment opportunities are scarce, the process for selecting bidders is competitive, or the timeframe in which we are required to complete diligence is short, our ability to conduct a due diligence investigation may be limited, and we would be required to make investment decisions based upon a less thorough diligence process than would otherwise be the case. Accordingly, investments and other transactions that initially appear to be viable may prove not to be over time, due to the limitations of the due diligence process or other factors.

The ownership by our executive officers and directors of shares of common stock, options, or other equity awards of ~~Springleaf,~~OneMain, Nationstar, and other entities either owned by Fortress funds managed by affiliates of our Manager or managed by our Manager may create, or may create the appearance of, conflicts of interest.

Some of our directors, officers and other employees of our Manager hold positions with ~~Springleaf,~~OneMain, Nationstar, and other entities either owned by Fortress funds managed by affiliates of our Manager or managed by our Manager and own such entities’ common stock, options to purchase such entities’ common stock or other equity awards. Such ownership may create, or may create the appearance of, conflicts of interest when these directors, officers and other employees are faced with decisions that could have different implications for such entities than they do for us.

Risks Related to the Financial Markets

We do not know what impact the Dodd-Frank Act will have on our business.

On July 21, 2010, the U.S. enacted the Dodd-Frank ~~Wall Street Reform and Consumer Protection Act (the “Dodd-Frank Act”).~~Act. The Dodd-Frank Act affects almost every aspect of the U.S. financial services industry, including certain aspects of the markets in which we operate. The Dodd-Frank Act imposes new regulations on us and how we conduct our business. As we describe in more detail below, it affects our business in many ways but it is difficult at this time to know exactly how or what the cumulative impact will be.

First, generally the Dodd-Frank Act strengthens the regulatory oversight of securities and capital markets activities by the SEC and empowers the newly-created Consumer Financial Protection Bureau to enforce laws and regulations for consumer financial products and services. It requires market participants to undertake additional record-keeping activities and imposes many additional disclosure requirements for public companies.

Moreover, the Dodd-Frank Act contains a risk retention requirement for all asset-backed securities. We issue many asset-backed securities. In October 2014, final rules were promulgated by a consortium of regulators implementing the final credit risk retention requirements of Section 941(b) of the Dodd-Frank Act. Under these “Risk Retention Rules,” sponsors of both public and private securitization transactions or one of their majority owned affiliates are required to retain at least 5% of the credit risk of the assets collateralizing such securitization transactions. These regulations generally prohibit the sponsor or its affiliate from directly or indirectly hedging or otherwise selling or transferring the retained interest for a specified period of time, depending on the type of asset that is securitized. ~~Sponsors~~Beginning December 2015, sponsors securitizing residential mortgages must comply with the Risk Retention Rules beginning in December 2015, while sponsors securitizing other types of assets will be required to comply with such rules beginning in December 2016. The Risk Retention Rules provide for limited exemptions for certain types of assets, however, these exemptions may be of limited use under our current market practices. In any event, compliance with these new Risk Retention Rules has increased and will likely continue to increase the administrative and operational costs of asset securitization.

Further, the Dodd-Frank Act imposes mandatory clearing and exchange-trading requirements on many derivatives transactions (including formerly unregulated over-the-counter derivatives) in which we may engage. In addition, the Dodd-Frank Act is expected to increase the margin requirements for derivatives transactions that are not subject to mandatory clearing requirements, which may impact our activities. The Dodd-Frank Act also creates new categories of regulated market participants, such as “swap-dealers,” “security-based swap dealers,” “major swap participants” and “major security-based swap participants,” and subjects or may subject these regulated entities to significant new capital, registration, recordkeeping, reporting, disclosure, business conduct and other regulatory requirements that will give rise to new administrative costs.

Also, under the Dodd-Frank Act, financial regulators belonging to the Financial Stability Oversight Council are required to name financial institutions that are deemed to be systemically important to the economy and which may require closer regulatory

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supervision. Such systemically important financial institutions, or ~~“SIFIs”,~~“SIFIs,” may be required to operate with greater safety margins, such as higher levels of capital, and may face further limitations on their activities. The determination of what constitutes a SIFI is evolving, and in time SIFIs may include large investment funds and even asset managers. There can be no assurance that we will not be deemed to be a SIFI and thus subject to further regulation.

Even if certain of the new requirements of the Dodd-Frank Act are not directly applicable to us, they may still increase our costs of entering into transactions with the parties to whom the requirements are directly applicable. For instance, the new exchange-trading and trade reporting requirements may lead to reductions in the liquidity of derivative transactions, causing higher pricing or reduced availability of derivatives, or the reduction of arbitrage opportunities for us, which could adversely affect the performance of certain of our trading strategies. Importantly, many key aspects of the changes imposed by the Dodd-Frank Act will continue to be established by various regulatory bodies and other groups over the next several years. As a result, we do not know how significantly the Dodd-Frank Act will affect us. It is possible that the Dodd-Frank Act could, among other things, increase our costs of operating as a public company, impose restrictions on our ability to securitize assets and reduce our investment returns on securitized assets.

We do not know what impact certain U.S. government programs intended to stabilize the economy and the financial markets will have on our business.

In recent years, the U.S. government has taken a number of steps to attempt to strengthen the financial markets and U.S. economy, including direct government investments in, and guarantees of, troubled financial institutions as well as government-sponsored programs such as the Term Asset-Backed Securities Loan Facility program and the Public Private Investment Partnership Program. The U.S. government continues to evaluate or implement an array of other measures and programs intended to help improve U.S. financial and market conditions. While conditions appear to have improved relative to the depths of the global financial crisis, it is not clear whether this improvement is real or will last for a significant period of time. It is not clear what impact the government’s future actions to improve financial and market conditions will have on our business. We may not derive any meaningful benefit from these programs in the future. Moreover, if any of our competitors are able to benefit from one or more of these initiatives, they may gain a significant competitive advantage over us.

The federal conservatorship of Fannie Mae and Freddie Mac and related efforts, along with any changes in laws and regulations affecting the relationship between these agencies and the U.S. government, may adversely affect our business.

The payments we receive on the Agency ~~Securities~~securities in which we invest depend upon a steady stream of payments by borrowers on the underlying mortgages and the fulfillment of guarantees by GSEs. Ginnie Mae is part of a U.S. Government agency and its guarantees are backed by the full faith and credit of the U.S. Fannie Mae and Freddie Mac are GSEs, but their guarantees are not backed by the full faith and credit of the ~~U.S~~U.S. Government.

In response to the deteriorating financial condition of Fannie Mae and Freddie Mac and the credit market disruption beginning in 2007, Congress and the U.S. Treasury undertook a series of actions to stabilize these GSEs and the financial markets, generally. The Housing and Economic Recovery Act of 2008 was signed into law on July 30, 2008, and established the FHFA, with enhanced regulatory authority over, among other things, the business activities of Fannie Mae and Freddie Mac and the size of their portfolio holdings. On September 7, 2008, FHFA placed Fannie Mae and Freddie Mac into federal conservatorship and, together with the U.S. Treasury, established a program designed to boost investor confidence in Fannie Mae’s and Freddie Mac’s debt and Agency ~~Securities.~~securities.

As the conservator of Fannie Mae and Freddie Mac, the FHFA controls and directs the operations of Fannie Mae and Freddie Mac and may (1) take over the assets of and operate Fannie Mae and Freddie Mac with all the powers of the stockholders, the directors and the officers of Fannie Mae and Freddie Mac and conduct all business of Fannie Mae and Freddie Mac; (2) collect all obligations and money due to Fannie Mae and Freddie Mac; (3) perform all functions of Fannie Mae and Freddie Mac which are consistent with the conservator’s appointment; (4) preserve and conserve the assets and property of Fannie Mae and Freddie Mac; and (5) contract for assistance in fulfilling any function, activity, action or duty of the conservator.

Those efforts resulted in significant U.S. Government financial support and increased control of the GSEs.

The U.S. Federal Reserve (the “Fed”) announced in November 2008 a program of large-scale purchases of Agency ~~Securities~~securities in an attempt to lower longer-term interest rates and contribute to an overall easing of adverse financial conditions. Subject to specified investment guidelines, the portfolios of Agency ~~Securities~~securities purchased through the programs established by the U.S. Treasury and the Fed may be held to maturity and, based on mortgage market conditions, adjustments may be made to these portfolios. This flexibility may adversely affect the pricing and availability of Agency ~~Securities~~securities that we seek to acquire during the remaining term of these portfolios.

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There can be no assurance that the U.S. Government’s intervention in Fannie Mae and Freddie Mac will be adequate for the longer-term viability of these GSEs. These uncertainties lead to questions about the availability of and trading market for, Agency ~~Securities.~~securities. Accordingly, if these government actions are inadequate and the GSEs defaulted on their guaranteed obligations, suffered losses or ceased to exist, the value of our Agency ~~Securities~~securities and our business, operations and financial condition could be materially and adversely affected.

Additionally, because of the financial problems faced by Fannie Mae and Freddie Mac that led to their federal conservatorships, many policymakers have been examining the value of a federal mortgage guarantee and the appropriate role for the U.S. government in providing liquidity for mortgage loans. In June 2013, legislation titled “Housing Finance Reform and Taxpayer Protection Act of 2013” was introduced in the U.S. Senate; in July 2013, legislation titled “Protecting American Taxpayers and Homeowners Act of 2013” was introduced in the U.S. House of Representatives. The bills differ in many respects, but both require the wind-down of the GSEs. Other bills have been introduced that change the GSEs’ business charters and eliminate the entities. We cannot predict whether or when the introduced legislation, the amended legislation or any future legislation may be enacted. Such legislation could materially and adversely affect the availability of, and trading market for, Agency ~~Securities~~securities and could, therefore, materially and adversely affect the value of our Agency ~~Securities~~securities and our business, operations and financial condition.

Legislation that permits modifications to the terms of outstanding loans may negatively affect our business, financial condition, liquidity and results of operations.

The U.S. government has enacted legislation that enables government agencies to modify the terms of a significant number of residential and other loans to provide relief to borrowers without the applicable investor’s consent. These modifications allow for outstanding principal to be deferred, interest rates to be reduced, the term of the loan to be extended or other terms to be changed in ways that can permanently eliminate the cash flow (principal and interest) associated with a portion of the loan. These modifications are currently reducing, or in the future may reduce, the value of a number of our current or future investments, including investments in mortgage backed securities and Excess MSRs. As a result, such loan modifications are negatively affecting our business, results of operations, liquidity and financial condition. In addition, certain market participants propose reducing the amount of paperwork required by a borrower to modify a loan, which could increase the likelihood of fraudulent modifications and materially harm the U.S. mortgage market and investors that have exposure to this market. Additional legislation intended to provide relief to borrowers may be enacted and could further harm our business, results of operations and financial condition.

Risks Related to Our Taxation as a REIT

Qualifying as a REIT involves highly technical and complex provisions of the Internal Revenue Code.

Qualification as a REIT involves the application of highly technical and complex Internal Revenue Code provisions for which only limited judicial and administrative authorities exist. Even a technical or inadvertent violation could jeopardize our REIT qualification. Our qualification as a REIT will depend on our satisfaction of certain asset, income, organizational, distribution, stockholder ownership and other requirements on a continuing basis. Compliance with these requirements must be carefully monitored on a continuing basis. Monitoring and managing our REIT compliance has become challenging due to the increased size and complexity of the assets in our portfolio, a meaningful portion of which are not qualifying REIT assets. There can be no assurance that our Manager’s personnel responsible for doing so will be able to successfully monitor our compliance or maintain our REIT status.

Our failure to qualify as a REIT would result in higher taxes and reduced cash available for distribution to our stockholders.

We intend to operate in a manner intended to qualify us as a REIT for U.S. federal income tax purposes. Our ability to satisfy the asset tests depends upon our analysis of the fair market values of our assets, some of which are not susceptible to a precise determination, and for which we do not obtain independent appraisals. See “—Risks Related to our Business—The valuations of our assets are subject to uncertainty since most of our assets are not traded in an active market,” and “—Risks Related to Our Business—Rapid changes in the values of our assets may make it more difficult for us to maintain our qualification as a REIT or our exclusion from the 1940 Act.” Our compliance with the REIT income and quarterly asset requirements also depends upon our ability to successfully manage the composition of our income and assets on an ongoing basis. Moreover, the proper classification of one or more of our investments (such as TBAs) may be uncertain in some circumstances, which could affect the application of the REIT qualification requirements. Accordingly, there can be no assurance that the U.S. Internal Revenue Service (“IRS”) will not contend that our investments violate the REIT requirements.

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If we were to fail to qualify as a REIT in any taxable year, we would be subject to U.S. federal income tax, including any applicable alternative minimum tax, on our taxable income at regular corporate rates, and distributions to stockholders would not be deductible by us in computing our taxable income. Any such corporate tax liability could be substantial and would reduce the amount of cash available for distribution to our stockholders, which in turn could have an adverse impact on the value of, and trading prices for, our stock. See also “—Our failure to qualify as a REIT would cause our stock to be delisted from the NYSE.”

Unless entitled to relief under certain provisions of the Internal Revenue Code, we also would be disqualified from taxation as a REIT for the four taxable years following the year during which we initially ceased to qualify as a REIT. The rule against re-electing REIT status following a loss of such status would also apply to us if Newcastle ~~fails~~failed to qualify as a REIT for its taxable years ending on or before December 31, 2014, and we are treated as a successor to Newcastle for U.S. federal income tax purposes. Although, ~~as described under the heading “Certain Relationships and Transactions with Related Persons, Affiliates and Affiliated Entities” in our Form 10-K for the year ended December 31, 2014~~ Newcastle has (i) represented in the separation and distribution agreement that it entered into with us on April 26, 2013 (the “Separation and Distribution Agreement”) that it has no knowledge of any fact or circumstance that would cause us to fail to qualify as a REIT and (ii) covenanted in the Separation and Distribution Agreement to use its reasonable best efforts to maintain its REIT status for each of Newcastle’s taxable years ending on or before December 31, 2014 (unless Newcastle obtains an opinion from a nationally recognized tax counsel or a private letter ruling from the IRS to the effect that Newcastle’s failure to maintain its REIT status will not cause us to fail to qualify as a REIT under the successor REIT rule referred to above), no assurance can be given that such representation and covenant would prevent us from failing to qualify as a REIT. Although, in the event of a breach, we may be able to seek damages from Newcastle, there can be no assurance that such damages, if any, would appropriately compensate us. In addition, if Newcastle were to fail to qualify as a REIT despite its reasonable best efforts, we would have no claim against Newcastle.

Our failure to qualify as a REIT would cause our stock to be delisted from the NYSE.

The NYSE requires, as a condition to the listing of our shares, that we maintain our REIT status. Consequently, if we fail to maintain our REIT status, our shares would promptly be delisted from the NYSE, which would decrease the trading activity of such shares. This could make it difficult to sell shares and would likely cause the market volume of the shares trading to decline.

If we were delisted as a result of losing our REIT status and desired to relist our shares on the NYSE, we would have to reapply to the NYSE to be listed as a domestic corporation. As the NYSE’s listing standards for REITs are less onerous than its standards for domestic corporations, it would be more difficult for us to become a listed company under these heightened standards. We might not be able to satisfy the NYSE’s listing standards for a domestic corporation. As a result, if we were delisted from the NYSE, we might not be able to relist as a domestic corporation, in which case our shares could not trade on the NYSE.

The failure of assets subject to repurchase agreements to qualify as real estate assets could adversely affect our ability to qualify as a REIT.

We enter into financing arrangements that are structured as sale and repurchase agreements pursuant to which we nominally sell certain of our assets to a counterparty and simultaneously enter into an agreement to repurchase these assets at a later date in exchange for a purchase price. Economically, these agreements are financings that are secured by the assets sold pursuant thereto. We believe that, for purposes of the REIT asset and income tests, we should be treated as the owner of the assets that are the subject of any such sale and repurchase agreement, notwithstanding that those agreements generally transfer record ownership of the assets to the counterparty during the term of the agreement. It is possible, however, that the IRS could assert that we did not own the assets during the term of the sale and repurchase agreement, in which case we might fail to qualify as a REIT.

The failure of our Excess MSRs to qualify as real estate assets or the income from our Excess MSRs to qualify as mortgage interest could adversely affect our ability to qualify as a REIT.

We have received from the IRS a private letter ruling substantially to the effect that our Excess MSRs represent interests in mortgages on real property and thus are qualifying “real estate assets” for purposes of the REIT asset test, which generate income that qualifies as interest on obligations secured by mortgages on real property for purposes of the REIT income test. The ruling is based on, among other things, certain assumptions as well as on the accuracy of certain factual representations and statements that we and Newcastle have made to the IRS. If any of the representations or statements that we have made in connection with the private letter ruling, are, or become, inaccurate or incomplete in any material respect with respect to one or more Excess MSR investments, or if we acquire an Excess MSR investment with terms that are not consistent with the terms of the Excess MSR investments described in the private letter ruling, then we will not be able to rely on the private letter ruling. If we are unable to rely on the private letter ruling with respect to an Excess MSR investment, the IRS could assert that such Excess MSR investments do not qualify under the REIT asset and income tests, and if successful, we might fail to qualify as a REIT.

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Dividends payable by REITs do not qualify for the reduced tax rates available for some dividends.

Dividends payable to domestic stockholders that are individuals, trusts, and estates are generally taxed at reduced tax rates. Dividends payable by REITs, however, generally are not eligible for the reduced rates. The more favorable rates applicable to regular corporate dividends could cause investors who are individuals, trusts and estates to perceive investments in REITs to be relatively less attractive than investments in the stocks of non-REIT corporations that pay dividends, which could adversely affect the value of the stock of REITs, including our common stock. In addition, the relative attractiveness of real estate in general may be adversely affected by the favorable tax treatment given to non-REIT corporate dividends, which could affect the value of our real estate assets negatively.

REIT distribution requirements could adversely affect our liquidity and our ability to execute our business plan.

We generally must distribute annually at least 90% of our REIT taxable income, excluding any net capital gain, in order for corporate income tax not to apply to earnings that we distribute. We intend to make distributions to our stockholders to comply with the REIT requirements of the Internal Revenue Code. However, differences in timing between the recognition of taxable income and the actual receipt of cash could require us to sell assets or borrow funds on a short-term or long-term basis to meet the 90% distribution requirement of the Internal Revenue Code. Certain of our assets, such as our investment in consumer loans, generate substantial mismatches between taxable income and available cash. As a result, the requirement to distribute a substantial portion of our net taxable income could cause us to: (i) sell assets in adverse market conditions; (ii) borrow on unfavorable terms; (iii) distribute amounts that would otherwise be invested in future acquisitions, capital expenditures or repayment of debt; or (iv) make taxable distributions of our capital stock or debt securities in order to comply with REIT requirements. Further, amounts distributed will not be available to fund investment activities. If we fail to obtain debt or equity capital in the future, it could limit our ability to satisfy our liquidity needs, which could adversely affect the value of our common stock.

We may be required to report taxable income for certain investments in excess of the economic income we ultimately realize from them.

Based on IRS guidance concerning the classification of Excess MSRs, we intend to treat our Excess MSRs as ownership interests in the interest payments made on the underlying mortgage loans, akin to an “interest only” strip. Under this treatment, for purposes of determining the amount and timing of taxable income, each Excess MSR is treated as a bond that was issued with original issue discount on the date we acquired such Excess MSR. In general, we will be required to accrue original issue discount based on the constant yield to maturity of each Excess MSR, and to treat such original issue discount as taxable income in accordance with the applicable U.S. federal income tax rules. The constant yield of an Excess MSR will be determined, and we will be taxed, based on a prepayment assumption regarding future payments due on the mortgage loans underlying the Excess MSR. If the mortgage loans underlying an Excess MSR prepay at a rate different than that under the prepayment assumption, our recognition of original issue discount will be either increased or decreased depending on the circumstances. Thus, in a particular taxable year, we may be required to accrue an amount of income in respect of an Excess MSR that exceeds the amount of cash collected in respect of that Excess MSR. Furthermore, it is possible that, over the life of the investment in an Excess MSR, the total amount we pay for, and accrue with respect to, the Excess MSR may exceed the total amount we collect on such Excess MSR. No assurance can be given that we will be entitled to a deduction for such excess, meaning that we may be required to recognize “phantom income” over the life of an Excess MSR.

Other debt instruments that we may acquire, including consumer loans, may be issued with, or treated as issued with, original issue discount. Those instruments would be subject to the original issue discount accrual and income computations that are described above with regard to Excess MSRs.

We may acquire debt instruments in the secondary market for less than their face amount. The discount at which such debt instruments are acquired may reflect doubts about their ultimate collectability rather than current market interest rates. The amount of such discount will nevertheless generally be treated as “market discount” for U.S. federal income tax purposes. Accrued market discount is reported as income when, and to the extent that, any payment of principal of the debt instrument is made. If we collect less on the debt instrument than our purchase price plus the market discount we had previously reported as income, we may not be able to benefit from any offsetting loss deductions.

In addition, we may acquire debt instruments that are subsequently modified by agreement with the borrower. If the amendments to the outstanding instrument are “significant modifications” under the applicable U.S. Treasury regulations, the modified instrument will be considered to have been reissued to us in a debt-for-debt exchange with the borrower. In that event, we may be required to recognize taxable gain to the extent the principal amount of the modified instrument exceeds our adjusted tax basis in the unmodified instrument, even if the value of the instrument or the payment expectations have not changed. Following such a taxable modification, we would hold the modified loan with a cost basis equal to its principal amount for U.S. federal tax purposes.

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Finally, in the event that any debt instruments acquired by us are delinquent as to mandatory principal and interest payments, or in the event payments with respect to a particular instrument are not made when due, we may nonetheless be required to continue to recognize the unpaid interest as taxable income as it accrues, despite doubt as to its ultimate collectability. Similarly, we may be required to accrue interest income with respect to debt instruments at the stated rate regardless of whether corresponding cash payments are received or are ultimately collectible. In each case, while we would in general ultimately have an offsetting loss deduction available to us when such interest was determined to be uncollectible, the utility of that deduction could depend on our having taxable income of an appropriate character in that later year or thereafter.

In any event, if our investments generate more taxable income than cash in any given year, we may have difficulty satisfying our annual REIT distribution requirement.

We may be unable to generate sufficient cash from operations to pay our operating expenses and to pay distributions to our stockholders.

As a REIT, we are generally required to distribute at least 90% of our REIT taxable income (determined without regard to the dividends paid deduction and not including net capital losses) each year to our stockholders. To qualify for the tax benefits accorded to REITs, we intend to make distributions to our stockholders in amounts such that we distribute all or substantially all of our net taxable income, subject to certain adjustments, although there can be no assurance that our operations will generate sufficient cash to make such distributions. Moreover, our ability to make distributions may be adversely affected by the risk factors described herein. See also “—Risks Related to our Common Stock—We have not established a minimum distribution payment level, and we cannot assure you of our ability to pay distributions in the future.”

The stock ownership limit imposed by the Internal Revenue Code for REITs and our certificate of incorporation may inhibit market activity in our stock and restrict our business combination opportunities.

In order for us to maintain our qualification as a REIT under the Internal Revenue Code, not more than 50% in value of our outstanding stock may be owned, directly or indirectly, by five or fewer individuals (as defined in the Internal Revenue Code to include certain entities) at any time during the last half of each taxable year after our first taxable year. Our certificate of incorporation, with certain exceptions, authorizes our board of directors to take the actions that are necessary and desirable to preserve our qualification as a REIT. Stockholders are generally restricted from owning more than 9.8% by value or number of shares, whichever is more restrictive, of our outstanding shares of common stock, or 9.8% by value or number of shares, whichever is more restrictive, of our outstanding shares of capital stock. Our board may grant an exemption in its sole discretion, subject to such conditions, representations and undertakings as it may determine in its sole discretion. These ownership limits could delay or prevent a transaction or a change in our control that might involve a premium price for our common stock or otherwise be in the best interest of our stockholders.

Even if we remain qualified as a REIT, we may face other tax liabilities that reduce our cash flow.

Even if we remain qualified for taxation as a REIT, we may be subject to certain federal, state and local taxes on our income and assets, including taxes on any undistributed income, tax on income from some activities conducted as a result of a foreclosure, and state or local income, property and transfer taxes. Moreover, if a REIT distributes less than 85% of its ~~taxable~~ordinary income, 95% of its capital gain net income plus any undistributed shortfall from the prior year (the “Required Distribution”) to its stockholders during any calendar year (including any distributions declared by the last day of the calendar year but paid in the subsequent year), then it is required to pay an excise tax on 4% of any shortfall between the ~~required 85%~~Required Distribution and the amount that was actually distributed. Any of these taxes would decrease cash available for distribution to our stockholders. In addition, in order to meet the REIT qualification requirements, or to avert the imposition of a 100% tax that applies to certain gains derived by a REIT from dealer property or inventory, we ~~currently~~may hold some of our assets through ~~TRSs, such as our investment in servicer advances and we may contribute other non-qualifying investments, such as our investment in consumer loans, to a TRS.~~TRSs. Such subsidiaries will be subject to corporate level income tax at regular rates and the payment of such taxes would reduce our return on the applicable investment. Currently, we hold some of our investments in TRSs, including servicer advances, and we may contribute other non-qualifying investments, such as our investment in consumer loans, to a TRS in the future.

Complying with the REIT requirements may negatively impact our investment returns or cause us to ~~forego~~forgo otherwise attractive opportunities, liquidate assets or contribute assets to a TRS.

To qualify as a REIT for U.S. federal income tax purposes, we must continually satisfy tests concerning, among other things, the sources of our income, the nature and diversification of our assets, the amounts we distribute to our stockholders and the ownership of our stock. As a result of these tests, we may be required to make distributions to stockholders at disadvantageous times or when we do not have funds readily available for distribution, ~~forego~~forgo otherwise attractive investment opportunities, liquidate assets in

adverse market conditions or contribute assets to a TRS that is subject to regular corporate federal income tax. Our ability to

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acquire and hold Excess MSRs, interests in consumer loans, servicer advances and other investments is subject to the applicable REIT qualification tests, and we may have to hold these interests through TRSs, which would negatively impact our returns from these assets. In general, compliance with the REIT requirements may hinder our ability to make and retain certain attractive investments.

Complying with the REIT requirements may limit our ability to hedge effectively.

The existing REIT provisions of the Internal Revenue Code may substantially limit our ability to hedge our operations because a significant amount of the income from those hedging transactions is likely to be treated as non-qualifying income for purposes of both REIT gross income tests. In addition, we must limit our aggregate income from non-qualified hedging transactions, from our provision of services and from other non-qualifying sources, to less than 5% of our annual gross income (determined without regard to gross income from qualified hedging transactions).

As a result, we may have to limit our use of certain hedging techniques or implement those hedges through TRSs. This could result in greater risks associated with changes in interest rates than we would otherwise want to incur or could increase the cost of our hedging activities. If we fail to comply with these limitations, we could lose our REIT qualification for U.S. federal income tax purposes, unless our failure was due to reasonable cause, and not due to willful neglect, and we meet certain other technical requirements. Even if our failure were due to reasonable cause, we might incur a penalty tax. See also “—Risks Related to Our Business—Any hedging transactions that we enter into may limit our gains or result in losses.”

Distributions to tax-exempt investors may be classified as unrelated business taxable income.

Neither ordinary nor capital gain distributions with respect to our stock nor gain from the sale of stock should generally constitute unrelated business taxable income to a tax-exempt investor. However, there are certain exceptions to this rule. In particular:

part of the income and gain recognized by certain qualified employee pension trusts with respect to our stock may be treated as unrelated business taxable income if shares of our stock are predominantly held by qualified employee pension trusts, and we are required to rely on a special look-through rule for purposes of meeting one of the REIT ownership tests, and we are not operated in a manner to avoid treatment of such income or gain as unrelated business taxable income;

part of the income and gain recognized by a tax-exempt investor with respect to our stock would constitute unrelated business taxable income if the investor incurs debt in order to acquire the stock; and

to the extent that we are (or a part of us, or a disregarded subsidiary of ours, is) a “taxable mortgage pool,” or if we hold residual interests in a real estate mortgage investment conduit (“REMIC”), a portion of the distributions paid to a tax exempt stockholder that is allocable to excess inclusion income may be treated as unrelated business taxable income.

The “taxable mortgage pool” rules may increase the taxes that we or our stockholders may incur, and may limit the manner in which we effect future securitizations.

We may enter into securitization or other financing transactions that result in the creation of taxable mortgage pools for U.S. federal income tax purposes. As a REIT, so long as we own 100% of the equity interests in a taxable mortgage pool, we would generally not be adversely affected by the characterization of a securitization as a taxable mortgage pool. Certain categories of stockholders, however, such as foreign stockholders eligible for treaty or other benefits, stockholders with net operating losses, and certain tax exempt stockholders that are subject to unrelated business income tax, could be subject to increased taxes on a portion of their dividend income from us that is attributable to the taxable mortgage pool. In addition, to the extent that our stock is owned by tax exempt “disqualified organizations,” such as certain government-related entities and charitable remainder trusts that are not subject to tax on unrelated business income, we could incur a corporate level tax on a portion of our income from the taxable mortgage pool. In that case, we might reduce the amount of our distributions to any disqualified organization whose stock ownership gave rise to the tax. Moreover, we may be precluded from selling equity interests in these securitizations to outside investors, or selling any debt securities issued in connection with these securitizations that might be considered to be equity interests for tax purposes. These limitations may prevent us from using certain techniques to maximize our returns from securitization transactions.

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Uncertainty exists with respect to the treatment of TBAs for purposes of the REIT asset and income tests, and the failure of TBAs to be qualifying assets or of income/gains from TBAs to be qualifying income could adversely affect our ability to qualify as a REIT.

We purchase and sell Agency RMBS through TBAs and recognize income or gains from the disposition of those TBAs, through dollar roll transactions or otherwise. In a dollar roll transaction, we exchange an existing TBA for another TBA with a different settlement date. There is no direct authority with respect to the qualification of TBAs as real estate assets or U.S. Government

securities for purposes of the 75% asset test or the qualification of income or gains from dispositions of TBAs as gains from the sale of real property (including interests in real property and interests in mortgages on real property) or other qualifying income for purposes of the 75% gross income test. For a particular taxable year, we would treat such TBAs as qualifying assets for purposes of the REIT asset tests, and income and gains from such TBAs as qualifying income for purposes of the 75% gross income test, to the extent set forth in an opinion from Skadden, Arps, Slate, Meagher & Flom LLP substantially to the effect that (i) for purposes of the REIT asset tests, our ownership of a TBA should be treated as ownership of the underlying Agency RMBS, and (ii) for purposes of the 75% REIT gross income test, any gain recognized by us in connection with the settlement of such TBAs should be treated as gain from the sale or disposition of the underlying Agency RMBS. Opinions of counsel are not binding on the IRS, and no assurance can be given that the IRS would not successfully challenge the conclusions set forth in such opinions. In addition, it must be emphasized that any opinion of Skadden, Arps, Slate, Meagher & Flom LLP would be based on various assumptions relating to any TBAs that we enter into and would be conditioned upon fact-based representations and covenants made by our management regarding such TBAs. No assurance can be given that the IRS would not assert that such assets or income are not qualifying assets or income. If the IRS were to successfully challenge any conclusions of Skadden, Arps, Slate, Meagher & Flom LLP, we could be subject to a penalty tax or we could fail to qualify as a REIT if a sufficient portion of our assets consists of TBAs or a sufficient portion of our income consists of income or gains from the disposition of TBAs.

The tax on prohibited transactions will limit our ability to engage in transactions that would be treated as prohibited transactions for U.S. federal income tax purposes.

Net income that we derive from a “prohibited transaction” is subject to a 100% tax. The term “prohibited transaction” generally includes a sale or other disposition of property (including mortgage loans, but other than foreclosure property, as discussed below) that is held primarily for sale to customers in the ordinary course of our trade or business. We might be subject to this tax if we were to dispose of or securitize loans or Excess MSRs in a manner that was treated as a prohibited transaction for U.S. federal income tax purposes.

We intend to conduct our operations so that no asset that we own (or are treated as owning) will be treated as, or as having been, held-for-sale to customers, and that a sale of any such asset will not be treated as having been in the ordinary course of our business. As a result, we may choose not to engage in certain sales of loans or Excess MSRs at the REIT level, and may limit the structures we utilize for our securitization transactions, even though the sales or structures might otherwise be beneficial to us. In addition, whether property is held “primarily for sale to customers in the ordinary course of a trade or business” depends on the particular facts and circumstances. No assurance can be given that any property that we sell will not be treated as property held-for-sale to customers, or that we can comply with certain safe-harbor provisions of the Internal Revenue Code that would prevent such treatment. The 100% prohibited transaction tax does not apply to gains from the sale of property that is held through a TRS or other taxable corporation, although such income will be subject to tax in the hands of the corporation at regular corporate rates. We intend to structure our activities to prevent prohibited transaction characterization.

New legislation or administrative or judicial action, in each instance potentially with retroactive effect, could make it more difficult or impossible for us to qualify as a REIT.

The present U.S. federal income tax treatment of REITs may be modified, possibly with retroactive effect, by legislative, judicial or administrative action at any time, which could affect the U.S. federal income tax treatment of an investment in us. The U.S. federal income tax rules dealing with REITs constantly are under review by persons involved in the legislative process, the IRS and the U.S. Treasury Department, which results in statutory changes as well as frequent revisions to regulations and interpretations. Revisions in U.S. federal tax laws and interpretations thereof could affect or cause us to change our investments and commitments and affect the tax considerations of an investment in us.

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Liquidation of assets may jeopardize our REIT qualification or create additional tax liability for us.

To qualify as a REIT, we must comply with requirements regarding the composition of our assets and our sources of income. If we are compelled to liquidate our investments to repay obligations to our lenders, we may be unable to comply with these requirements, ultimately jeopardizing our qualification as a REIT, or we may be subject to a 100% tax on any resultant gain if we sell assets that are treated as dealer property or inventory.

Risks Related to our Common Stock

There can be no assurance that the market for our stock will provide you with adequate liquidity.

Our common stock began trading (on a when issued basis) on the NYSE on May 2, 2013. There can be no assurance that an active trading market for our common stock will be sustained in the future, and the market price of our common stock may fluctuate widely, depending upon many factors, some of which may be beyond our control. These factors include, without limitation:

a shift in our investor base;

our quarterly or annual earnings, or those of other comparable companies;

actual or anticipated fluctuations in our operating results;

changes in accounting standards, policies, guidance, interpretations or principles;

announcements by us or our competitors of significant investments, acquisitions or dispositions;

the failure of securities analysts to cover our common stock;

changes in earnings estimates by securities analysts or our ability to meet those estimates;

market performance of affiliates and other counterparties with whom we conduct business;

the operating and stock price performance of other comparable companies;

overall market fluctuations; and

general economic conditions.

Stock markets in general have experienced volatility that has often been unrelated to the operating performance of a particular company. These broad market fluctuations may adversely affect the trading price of our common stock. In addition, we completed a reverse stock split in October 2014. There can be no assurance that the reverse stock split will have the anticipated benefits. For instance, there can be no assurance that the market price per share of our common stock after the reverse stock split will rise in proportion to the reduction in the number of shares of our common stock outstanding before the reverse stock split, or that the reverse stock split will result in a market price per share that will attract brokers and investors who do not trade in lower priced stocks. Additionally, the liquidity of our common stock could be adversely affected by the reduced number of shares resulting from the reverse stock split, which, in turn, could result in greater volatility in the price per share of our common stock. The potential volatility in the price per share of our common stock may also make short-selling more attractive, which could put additional downward pressure on the price of our common stock. Furthermore, the reverse stock split may result in some shareholders owning “odd lots” of less than one hundred shares of our common stock on a post-split basis. Odd lots may be more difficult to sell, or require greater transaction costs per share to sell, than shares in “round lots” of even multiples of one hundred shares.

Sales or issuances of shares of our common stock could adversely affect the market price of our common stock.

Sales of substantial amounts of shares of our common stock in the public market, or the perception that such sales might occur, could adversely affect the market price of our common stock. The issuance of our common stock in connection with property, portfolio or business acquisitions or the exercise of outstanding options or otherwise could also have an adverse effect on the market price of our common stock. We have an effective registration statement on file to sell common stock in public offerings.

Failure to maintain effective internal control over financial reporting in accordance with Section 404 of the Sarbanes-Oxley Act of 2002 could have a material adverse effect on our business and stock price.

As a public company, we are required to maintain effective internal control over financial reporting in accordance with Section 404 of the Sarbanes-Oxley ~~Act.~~Act of 2002. Internal control over financial reporting is complex and may be revised over time to adapt to changes in our business, or changes in applicable accounting rules. We have made investments through joint ventures, such as our investment

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in consumer loans, and accounting for such investments can increase the complexity of maintaining effective internal control over financial reporting. We cannot assure you that our internal control over financial reporting will be effective in the future or that a material weakness will not be discovered with respect to a prior period for which we had previously believed that internal controls were effective. If we are not able to maintain or document effective internal control over financial reporting, our independent registered public accounting firm will not be able to certify as to the effectiveness of our internal control over financial reporting. Matters impacting our internal controls may cause us to be unable to report our financial information on a timely basis, or may cause us to restate previously issued financial information, and thereby subject us to adverse regulatory consequences, including sanctions or investigations by the SEC, or violations of applicable stock exchange listing rules. There could also be a negative reaction in the financial markets due to a loss of investor confidence in us and the reliability of our financial statements. Confidence in the reliability of our financial statements is also likely to suffer if we or our independent registered public accounting firm reports a material weakness in our internal control over financial reporting. This could materially adversely affect us by, for example, leading to a decline in our share price and impairing our ability to raise capital.

Your percentage ownership in us may be diluted in the future.

Your percentage ownership in us may be diluted in the future because of equity awards that we expect will be granted to our Manager, to the directors, officers and employees of our Manager who perform services for us, and to our directors, officers and employees, as well as other equity instruments such as debt and equity financing. ~~Our board of directors has approved~~We have adopted a Nonqualified Stock Option and Incentive Award Plan, as amended (the “Plan”), which provides for the grant of equity-based awards, including restricted stock, options, stock appreciation rights (“SARs”), performance awards, tandem awards and other equity-based and non-equity based awards, in each case to our Manager, to the directors, officers, employees, service providers, consultants and advisor of our Manager who perform services for us, and to our directors, officers, employees, service providers, consultants and advisors. We reserved 15,000,000 shares of our common stock for issuance under the Plan. On the first day of each fiscal year beginning during

the ten-year term of the Plan and in and after calendar year 2014, that number will be increased by a number of shares of our common stock equal to 10% of the number of shares of our common stock newly issued by us during the immediately preceding fiscal year (and, in the case of fiscal year 2013, after the effective date of the Plan). For a more detailed description of the Plan, see “—Market for Registrant’s Common Equity, Related Stockholder Matters, and Issuer Purchases of Equity Securities” in our Form 10-K for the year ended December 31, 2014. In connection with any offering of our common stock, we will issue to our Manager options relating to ~~purchase~~ shares of our common stock, representing 10% of the number of shares being offered. Our board of directors may also determine to issue options to the Manager that are not subject to the Plan, provided that the number of shares ~~underlying~~relating to any options granted to the Manager in connection with capital raising efforts would not exceed 10% of the shares sold in such offering and would be subject to NYSE rules.

We may incur or issue debt or issue equity, which may negatively affect the market price of our common stock.

We may in the future incur or issue debt or issue equity or equity-related securities. In the event of our liquidation, lenders and holders of our debt and holders of our preferred stock (if any) would receive a distribution of our available assets before common stockholders. Any future incurrence or issuance of debt would increase our interest cost and could adversely affect our results of operations and cash flows. We are not required to offer any additional equity securities to existing common stockholders on a preemptive basis. Therefore, additional issuances of common stock, directly or through convertible or exchangeable securities (including limited partnership interests in our operating partnership), warrants or options, will dilute the holdings of our existing common stockholders and such issuances, or the perception of such issuances, may reduce the market price of our common stock. Any preferred stock issued by us would likely have a preference on distribution payments, periodically or upon liquidation, which could eliminate or otherwise limit our ability to make distributions to common stockholders. Because our decision to incur or issue debt or issue equity or equity-related securities in the future will depend on market conditions and other factors beyond our control, we cannot predict or estimate the amount, timing, nature or success of our future capital raising efforts. Thus, common stockholders bear the risk that our future incurrence or issuance of debt or issuance of equity or equity-related securities will adversely affect the market price of our common stock.

We have not established a minimum distribution payment level, and we cannot assure you of our ability to pay distributions in the future.

We intend to make quarterly distributions of our REIT taxable income to holders of our common stock out of assets legally available therefor. We have not established a minimum distribution payment level and our ability to pay distributions may be adversely affected by a number of factors, including the risk factors described in this report. Any distributions will be authorized by our board of directors and declared by us based upon a number of factors, including actual results of operations, liquidity and financial condition, restrictions under Delaware law or applicable financing covenants, our taxable income, the annual distribution requirements under the REIT provisions of the Internal Revenue Code, our operating expenses and other factors our directors

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deem relevant. We cannot assure you that we will achieve investment results that will allow us to make a specified level of cash distributions or year-to-year increases in cash distributions in the future.

Furthermore, while we are required to make distributions in order to maintain our REIT status (as described above under “—Risks Related to our Taxation as a REIT—We may be unable to generate sufficient revenue from operations to pay our operating expenses and to pay distributions to our stockholders”), we may elect not to maintain our REIT status, in which case we would no longer be required to make such distributions. Moreover, even if we do elect to maintain our REIT status, we may elect to comply with the applicable requirements by, after completing various procedural steps, distributing, under certain circumstances, a portion of the required amount in the form of shares of our common stock in lieu of cash. If we elect not to maintain our REIT status or to satisfy any required distributions in shares of common stock in lieu of cash, such action could negatively affect our business, results of operations, liquidity and financial condition as well as the price of our common stock. No assurance can be given that we will pay any dividends on shares of our common stock in the future.

We may in the future choose to pay dividends in our own stock, in which case you could be required to pay income taxes in excess of the cash dividends you receive.

We may in the future distribute taxable dividends that are payable in cash and shares of our common stock at the election of each stockholder. Taxable stockholders receiving such dividends will be required to include the full amount of the dividend as ordinary income to the extent of our current and accumulated earnings and profits for federal income tax purposes. As a result, stockholders may be required to pay income taxes with respect to such dividends in excess of the cash dividends received. If a U.S. stockholder sells the stock that it receives as a dividend in order to pay this tax, the sale proceeds may be less than the amount included in income with respect to the dividend, depending on the market price of our stock at the time of the sale. Furthermore, with respect to certain non-U.S. stockholders, we may be required to withhold U.S. tax with respect to such dividends, including in respect of all or a portion of such dividend that is payable in stock. In addition, if a significant number of our stockholders determine to sell shares of our common stock in order to pay taxes owed on dividends, it may put downward pressure on the trading price of our common stock.

It is unclear whether and to what extent we will be able to pay taxable dividends in cash and stock in later years. Moreover, various aspects of such a taxable cash/stock dividend are uncertain and have not yet been addressed by the IRS. No assurance can be given that the IRS will not impose additional requirements in the future with respect to taxable cash/stock dividends, including on a retroactive basis, or assert that the requirements for such taxable cash/stock dividends have not been met.

An increase in market interest rates may have an adverse effect on the market price of our common stock.

One of the factors that investors may consider in deciding whether to buy or sell shares of our common stock is our distribution rate as a percentage of our share price relative to market interest rates. If the market price of our common stock is based primarily on the earnings and return that we derive from our investments and income with respect to our investments and our related distributions to stockholders, and not from the market value of the investments themselves, then interest rate fluctuations and capital market conditions will likely affect the market price of our common stock. For instance, if market interest rates rise without an increase in our distribution rate, the market price of our common stock could decrease as potential investors may require a higher distribution yield on our common stock or seek other securities paying higher distributions or interest. In addition, rising interest rates would result in increased interest expense on our variable rate debt, thereby adversely affecting cash flow and our ability to service our indebtedness and pay distributions.

Provisions in our certificate of incorporation and bylaws and of Delaware law may prevent or delay an acquisition of our company, which could decrease the trading price of our common stock.

Our certificate of incorporation, bylaws and Delaware law contain provisions that are intended to deter coercive takeover practices and inadequate takeover bids by making such practices or bids unacceptably expensive to the raider and to encourage prospective acquirers to negotiate with our board of directors rather than to attempt a hostile takeover. These provisions include, among others:

a classified board of directors with staggered three-year terms;

provisions regarding the election of directors, classes of directors, the term of office of directors, the filling of director vacancies and the resignation and removal of directors for cause only upon the affirmative vote of at least 80% of the then issued and outstanding shares of our capital stock entitled to vote thereon;

provisions regarding corporate opportunity only upon the affirmative vote of at least 80% of the then issued and outstanding shares of our capital stock entitled to vote thereon;

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removal of directors only for cause and only with the affirmative vote of at least 80% of the then issued and outstanding shares of our capital stock entitled to vote in the election of directors;

our board of directors to determine the powers, preferences and rights of our preferred stock and to issue such preferred stock without stockholder approval;

advance notice requirements applicable to stockholders for director nominations and actions to be taken at annual meetings;

a prohibition, in our certificate of incorporation, stating that no holder of shares of our common stock will have cumulative voting rights in the election of directors, which means that the holders of a majority of the issued and outstanding shares of common stock can elect all the directors standing for election; and

a requirement in our bylaws specifically denying the ability of our stockholders to consent in writing to take any action in lieu of taking such action at a duly called annual or special meeting of our stockholders.

Public stockholders who might desire to participate in these types of transactions may not have an opportunity to do so, even if the transaction is considered favorable to stockholders. These anti-takeover provisions could substantially impede the ability of public stockholders to benefit from a change in control or a change in our management and board of directors and, as a result, may adversely affect the market price of our common stock and your ability to realize any potential change of control premium.

ERISA may restrict investments by plans in our common stock.

A plan fiduciary considering an investment in our common stock should consider, among other things, whether such an investment is consistent with the fiduciary obligations under the Employee Retirement Income Security Act of 1974, as amended (“ERISA”), including whether such investment might constitute or give rise to a prohibited transaction under ERISA, the Internal Revenue Code or any substantially similar federal, state or local law and, if so, whether an exemption from such prohibited transaction rules is available.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

On July 16, 2015, a former employee of the Manager exercised options in respect of 37,500 shares of the Company’s common stock. The optionholder’s exercise of the options was accomplished pursuant to a cashless exercise, whereby the optionholder surrendered 17,273 shares of common stock based on the closing market price on July 16, 2015, which was $15.62 per share, to cover the per share exercise price of the options. The options had a weighted average exercise price of $7.19 per share.None.

The Company offered and sold all the shares of common stock described above in reliance upon Section 4(a)(2) of the Securities Act of 1933 for offerings not involving a public offering. At the time of the optionholder’s investment decisions, the optionholder was knowledgeable about the Company and its prospects, was a highly sophisticated professional who was able to understand the merits and risks of the investment decision, was an accredited investor, and the transaction involved did not involve any public offering.

~~Set forth below is information regarding the Company’s stock repurchases during the three months ended September 30, 2015:~~

Period
Total Number of Shares (or Units) Purchased^(A)
Average Price Paid Per Share (or Unit) Total Number of Shares (or Units) Purchased as Part of Publicly Announced Plans or Programs Approximate Dollar Value of Shares (or Units) that May Yet Be Purchased Under the Plans or Programs
July 1 – July 31, 2015 17,273
$ 7.19
—
$ —
August 1 – August 31, 2015 —
—
—
September 1 – September 30, 2015 —
—
—
Total 17,273
$ 7.19
—
$ —


~~(A)~~	~~Represents shares withheld by New Residential in payment of the exercise price upon exercise of options.~~

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ITEM 3. DEFAULTS UPON SENIOR SECURITIES

None.

ITEM 4. MINE SAFETY DISCLOSURES

Not Applicable.

ITEM 5. OTHER INFORMATION

None.

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ITEM 6. EXHIBITS



Exhibit Number			Exhibit Description

2.1			Separation and Distribution Agreement dated April 26, 2013, between New Residential Investment Corp. and Newcastle Investment Corp. (incorporated by reference to Amendment No. 6 of New Residential Investment Corp.’s Registration Statement on Form 10, filed April 29, 2013)

2.2			Purchase Agreement, among the Sellers listed therein, HSBC Finance Corporation and SpringCastle Acquisition LLC, dated March 5, 2013 (incorporated by reference to Newcastle Investment Corp.’s Current Report on Form 8-K, filed March 11, 2013)

2.3			Master Servicing Rights Purchase Agreement between Nationstar Mortgage LLC and Advance Purchaser LLC, dated as of December 17, 2013 (incorporated by reference to New Residential Investment Corp.’s Current Report on Form 8-K, filed on December 23, 2013)

2.4			Sale Supplement (Shuttle 1) between Nationstar Mortgage LLC and Advance Purchaser LLC, dated as of December 17, 2013 (incorporated by reference to New Residential Investment Corp.’s Current Report on Form 8-K, filed on December 23, 2013)

2.5			Sale Supplement (Shuttle 2) between Nationstar Mortgage LLC and Advance Purchaser LLC, dated as of December 17, 2013 (incorporated by reference to New Residential Investment Corp.’s Current Report on Form 8-K, filed on December 23, 2013)

2.6			Sale Supplement (First Tennessee) between Nationstar Mortgage LLC and Advance Purchaser LLC, dated as of December 17, 2013 (incorporated by reference to New Residential Investment Corp.’s Current Report on Form 8-K, filed on December 23, 2013)

2.7			Agreement and Plan of Merger, dated as of February 22, 2015, by and among New Residential Investment Corp., Hexagon Merger Sub, Ltd. and Home Loan Servicing Solutions, Ltd. (incorporated by reference to New Residential Investment Corp.’s Current Report on Form 8-K, filed on February 24, 2015)

2.8			Termination Agreement, dated as of April 6, 2015, by and among New Residential Investment Corp., Home Loan Servicing Solutions, Ltd. and Hexagon Merger Sub Ltd. (incorporated by reference to New Residential Investment Corp.’s Current Report on Form 8-K, filed on April 10, 2015)

2.9			Share and Asset Purchase Agreement, dated as of April 6, 2015, by and among New Residential Investment Corp., HLSS Advances Acquisition Corp., HLSS MSR-EBO Acquisition LLC and Home Loan Servicing Solutions, Ltd. (incorporated by reference to New Residential Investment Corp.’s Current Report on Form 8-K, filed on April 10, 2015)

2.10			Purchase Agreement, dated as of March 31, 3016, by and among SpringCastle Holdings, LLC, Springleaf Acquisition Corporation, Springleaf Finance, Inc., NRZ Consumer LLC, NRZ SC America LLC, NRZ SC Credit Limited, NRZ SC Finance I LLC, NRZ SC Finance II LLC, NRZ SC Finance III LLC, NRZ SC Finance IV LLC, NRZ SC Finance V LLC, BTO Willow Holdings II, L.P. and Blackstone Family Tactical Opportunities Investment Partnership - NQ - ESC L.P., and solely with respect to Section 11(a) and Section 11(g), NRZ SC America Trust 2015-1, NRZ SC Credit Trust 2015-1, NRZ SC Finance Trust 2015-1, and BTO Willow Holdings, L.P.

3.1			Amended and Restated Certificate of Incorporation of New Residential Investment Corp. (incorporated by reference to New Residential Investment Corp.’s Current Report on Form 8-K, filed May 3, 2013)

3.2			Amended and Restated Bylaws of New Residential Investment Corp. (incorporated by reference to New Residential Investment Corp.’s Current Report on Form 8-K, filed May 3, 2013)

3.3			Amendment to Amended and Restated Certificate of Incorporation of New Residential Investment Corp. (incorporated by reference to New Residential Investment Corp.’s Current Report on Form 8-K, filed on October 17, 2014)

4.1			Amended and Restated Indenture among NRZ Servicer Advance Receivables Trust BC (f/k/a Nationstar Servicer Advance Receivables Trust 2013-BC), as issuer, Wells Fargo Bank, N.A., as indenture trustee, calculation agent, paying agent and securities intermediary, Advance Purchaser LLC, as administrator, as owner of the rights to the servicing rights and as servicer, Nationstar Mortgage LLC, as subservicer, and as servicer, and Barclays Bank PLC, as administrative agent, dated as of December 17, 2013 (incorporated by reference to New Residential Investment Corp.’s Current Report on Form 8-K, filed on December 23, 2013)

~~4.2~~			Series 2013-VF1 Amended and Restated Indenture Supplement among NRZ Servicer Advance Receivables Trust BC (f/k/a Nationstar Servicer Advance Receivables Trust 2013-BC), as issuer, Wells Fargo Bank, N.A., as indenture trustee, calculation agent, paying agent and securities intermediary, Advance Purchaser LLC, as administrator and as servicer, Nationstar Mortgage LLC, as subservicer, and as servicer, and Barclays Bank PLC, as administrative agent, dated as of December 17, 2013 (incorporated by reference to New Residential Investment Corp.’s Current Report on Form 8-K, filed on December 23, 2013)

~~4.3~~			Amended and Restated Indenture among NRZ Servicer Advance Receivables Trust CS (f/k/a Nationstar Servicer Advance Receivables Trust 2013-CS), as issuer, Wells Fargo Bank, N.A., as indenture trustee, calculation agent, paying agent and securities intermediary, Advance Purchaser LLC, as administrator, as owner of the rights to the servicing rights and as servicer, Nationstar Mortgage LLC, as subservicer, and as servicer, and Credit Suisse AG, New York Branch, as administrative agent, dated as of December 17, 2013 (incorporated by reference to New Residential Investment Corp.’s Current Report on Form 8-K, filed on December 23, 2013)

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~~Exhibit~~ ~~Number~~			~~Exhibit Description~~
~~4.4~~			Series 2013-VF1 Amended and Restated Indenture Supplement among NRZ Servicer Advance Receivables Trust CS (f/k/a Nationstar Servicer Advance Receivables Trust 2013-CS), as issuer, Wells Fargo Bank, N.A., as indenture trustee, calculation agent, paying agent and securities intermediary, Advance Purchaser LLC, as administrator and as servicer, Nationstar Mortgage LLC, as subservicer, and as servicer, and Credit Suisse AG, New York Branch, as administrative agent, dated as of December 17, 2013 (incorporated by reference to New Residential Investment Corp.’s Current Report on Form 8-K, filed on December 23, 2013)

~~4.5~~			Series 2013-VF2 Amended and Restated Indenture Supplement among NRZ Servicer Advance Receivables Trust CS (f/k/a Nationstar Servicer Advance Receivables Trust 2013-CS), as issuer, Wells Fargo Bank, N.A., as indenture trustee, calculation agent, paying agent and securities intermediary, Advance Purchaser LLC, as administrator and as servicer, Nationstar Mortgage LLC, as subservicer, and as servicer, and Natixis, New York Branch, as administrative agent, dated as of December 17, 2013 (incorporated by reference to New Residential Investment Corp.’s Current Report on Form 8-K, filed on December 23, 2013)

~~4.6~~			Series 2013-VF3 Amended and Restated Indenture Supplement among NRZ Servicer Advance Receivables Trust CS (f/k/a Nationstar Servicer Advance Receivables Trust 2013-CS), as issuer, Wells Fargo Bank, N.A., as indenture trustee, calculation agent, paying agent and securities intermediary, Advance Purchaser LLC, as administrator and as servicer, Nationstar Mortgage LLC, as subservicer, and as servicer, and Morgan Stanley Bank, N.A., as administrative agent, dated as of December 17, 2013 (incorporated by reference to New Residential Investment Corp.’s Current Report on Form 8-K, filed on December 23, 2013)

~~4.7~~			Seventh Amended and Restated Indenture, dated as of October 23, 2015, by and among HLSS Servicer Advance Receivables Trust, Deutsche Bank National Trust Company, HLSS Holdings, LLC, Ocwen Loan Servicing, LLC, New Residential Investment Corp., Barclays Bank PLC, Wells Fargo Securities, LLC and Credit Suisse AG, New York Branch (incorporated by reference to New Residential Investment Corp.’s Current Report on Form 8-K filed on October 29, 2015)

~~4.8~~			Series 2012-VF1 Second Amended and Restated Indenture Supplement, dated as of August 30, 2013, to the Fourth Amended and Restated Indenture, dated as of August 8, 2013, by and among HLSS Servicer Advance Receivables Trust, Deutsche Bank National Trust Company, HLSS Holdings, LLC, Ocwen Loan Servicing, LLC and Barclays Bank PLC (incorporated by reference to Home Loan Servicing Solutions, Ltd’s Quarterly Report on Form 10-Q for the quarterly period ended September 30, 2013)

~~4.9~~			Amendment No. 4, dated as of July 16, 2014, to the Second Amended and Restated Series 2012-VF1 Indenture Supplement, dated as of August 30, 2013, by and among HLSS Servicer Advance Receivables Trust, Deutsche Bank National Trust Company, HLSS Holdings, LLC, Ocwen Loan Servicing, LLC and Barclays Bank PLC (incorporated by reference to Home Loan Servicing Solutions, Ltd.’s Current Report on Form 8-K filed on July 17, 2014)

~~4.10~~			Amendment No. 5, dated December 5, 2014, to the Second Amended and Restated Series 2012-VF1 Indenture Supplement, dated as of August 30, 2013, by and among HLSS Servicer Advance Receivables Trust, Deutsche Bank National Trust Company, HLSS Holdings, LLC, Ocwen Loan Servicing, LLC and Barclays Bank PLC (incorporated by reference to Home Loan Servicing Solutions, Ltd.’s Current Report on Form 8-K filed on December 5, 2014)

~~4.11~~			Amendment No. 6, dated as of January 15, 2015, to the Second Amended and Restated Series 2012-VF1 Indenture Supplement, dated as of August 30, 2013 and the Second Amended and Restated Note Purchase Agreement dated as of August 30, 2013, by and among HLSS Servicer Advance Receivables Trust, Deutsche Bank National Trust Company, HLSS Holdings, LLC, Ocwen Loan Servicing, LLC and Barclays Bank PLC (incorporated by reference to Home Loan Servicing Solutions, Ltd.’s Current Report on Form 8-K filed on January 15, 2015)

~~4.12~~			Amendment No. 7, dated as of April 6, 2015, to the Second Amended and Restated Series 2012-VF1 Indenture Supplement, dated as of August 30, 2013 and the Second Amended and Restated Note Purchase Agreement, dated as of August 30, 2013, by and among HLSS Servicer Advance Receivables Trust, Deutsche Bank National Trust Company, HLSS Holdings, LLC, Ocwen Loan Servicing, LLC, New Residential Investment Corp. and Barclays Bank PLC (incorporated by reference to New Residential Investment Corp.’s Quarterly Report on Form 10-Q, filed August 10, 2015)

~~4.13~~			Amendment No. 8, dated as of May 5, 2015, to the Second Amended and Restated Series 2012-VF1 Indenture Supplement, dated as of August 30, 2013 and the Second Amended and Restated Note Purchase Agreement, dated as of August 30, 2013, by and among HLSS Servicer Advance Receivables Trust, Deutsche Bank National Trust Company, HLSS Holdings, LLC, Ocwen Loan Servicing, LLC, New Residential Investment Corp. and Barclays Bank PLC (incorporated by reference to New Residential Investment Corp.’s Quarterly Report on Form 10-Q, filed August 10, 2015)

~~144~~



~~Exhibit~~ ~~Number~~			~~Exhibit Description~~
~~4.14~~			Amendment No. 9, dated as of June 11, 2015, to the Second Amended and Restated Series 2012-VF1 Indenture Supplement, dated as of August 30, 2013 and the Second Amended and Restated Note Purchase Agreement, dated as of August 30, 2013, by and among HLSS Servicer Advance Receivables Trust, Deutsche Bank National Trust Company, HLSS Holdings, LLC, Ocwen Loan Servicing, LLC, New Residential Investment Corp. and Barclays Bank PLC (incorporated by reference to New Residential Investment Corp.’s Quarterly Report on Form 10-Q, filed August 10, 2015)

~~4.15~~			Series 2012-VF2 Third Amended and Restated Indenture Supplement, dated as of August 14, 2015, to the to the Sixth Amended and Restated Indenture, dated as of January 17, 2014, as amended by Amendment No. 1, dated as of May 5, 2015, by and among HLSS Servicer Advance Receivables Trust, Deutsche Bank National Trust Company, HLSS Holdings, LLC, Ocwen Loan Servicing, LLC, New Residential Investment Corp. and Wells Fargo Securities LLC (incorporated by reference to New Residential Investment Corp.’s Current Report on Form 8-K filed on August 20, 2015)

~~4.16~~			Series 2012-VF3 Third Amended and Restated Indenture Supplement, dated as of August 28, 2015, to the Sixth Amended and Restated Indenture, dated as of January 17, 2014, as amended by Amendment No. 1, dated as of May 5, 2015, by and among HLSS Servicer Advance Receivables Trust, Deutsche Bank National Trust Company, HLSS Holdings, LLC, Ocwen Loan Servicing, LLC, New Residential Investment Corp. and Wells Fargo Securities LLC (incorporated by reference to New Residential Investment Corp.’s Current Report on Form 8-K filed on September 3, 2015)

~~4.17~~			Amendment No. 1, dated as of October 16, 2015, to the Series 2012-VF3 Third Amended and Restated Indenture Supplement, dated as of August 28, 2015, to the Sixth Amended and Restated Indenture, dated as of January 17, 2014, as amended by Amendment No. 1, dated as of May 5, 2015, by and among HLSS Servicer Advance Receivables Trust, Deutsche Bank National Trust Company, HLSS Holdings, LLC, Ocwen Loan Servicing, LLC, New Residential Investment Corp. and Wells Fargo Securities LLC (incorporated by reference to New Residential Investment Corp.’s Current Report on Form 8-K filed on October 22, 2015)

~~4.18~~			Indenture, dated as of August 28, 2015, by and among NRZ Advance Receivables Trust 2015-ON1, Deutsche Bank National Trust Company, Ocwen Loan Servicing, LLC, HLSS Holdings, LLC, ~~and~~ Credit Suisse AG, New York Branch and New Residential Investment Corp. (incorporated by reference to New Residential Investment Corp.’s Quarterly Report on Form 10-Q for the quarterly period ended September 30, 2015)

~~4.19~~4.2			Series 2015-T1 Indenture Supplement, dated as of August 28, 2015, to the Indenture, dated as of August 28, 2015, by and among NRZ Advance Receivables Trust 2015-ON1, Deutsche Bank National Trust Company, Ocwen Loan Servicing, LLC, HLSS Holdings, LLC, ~~and~~ Credit Suisse AG, New York Branch and New Residential Investment Corp. (incorporated by reference to New Residential Investment Corp.’s Quarterly Report on Form 10-Q for the quarterly period ended September 30, 2015)



Exhibit Number			Exhibit Description

~~4.20~~4.3			Series 2015-T2 Indenture Supplement, dated as of August 28, 2015, to the Indenture, dated as of August 28, 2015, by and among NRZ Advance Receivables Trust 2015-ON1, Deutsche Bank National Trust Company, Ocwen Loan Servicing, LLC, HLSS Holdings, LLC, ~~and~~ Credit Suisse AG, New York Branch and New Residential Investment Corp. (incorporated by reference to New Residential Investment Corp.’s Quarterly Report on Form 10-Q for the quarterly period ended September 30, 2015)

~~4.21~~4.4			Series 2015-VF1 Indenture Supplement, dated as of August 28, 2015, to the Indenture, dated as of August 28, 2015, by and among NRZ Advance Receivables Trust 2015-ON1, Deutsche Bank National Trust Company, Ocwen Loan Servicing, LLC, HLSS Holdings, LLC, ~~and~~ Credit Suisse AG, New York Branch and New Residential Investment Corp. (incorporated by reference to New Residential Investment Corp.’s Quarterly Report on Form 10-Q for the quarterly period ended September 30, 2015)

4.5			Amendment No. 1, dated as of November 24, 2015, to the Series 2015-VF1 Indenture Supplement, dated as of August 28, 2015, to the Indenture, dated as of August 28, 2015, by and among NRZ Advance Receivables Trust 2015-ON1, Deutsche Bank National Trust Company, Ocwen Loan Servicing, LLC, HLSS Holdings, LLC, Credit Suisse AG, New York Branch and New Residential Investment Corp. (incorporated by reference to New Residential Investment Corp.’s Annual Report on Form 10-K, for the annual period ended December 31, 2015)

~~10.1~~4.6			~~Management~~Amendment No. 2, dated as of March 22, 2016, to the Series 2015-VF1 Indenture Supplement, dated as of August 28, 2015, to the Indenture, dated as of August 28, 2015, by and ~~Advisory Agreement between~~among NRZ Advance Receivables Trust 2015-ON1, Deutsche Bank National Trust Company, Ocwen Loan Servicing, LLC, HLSS Holdings, LLC, Credit Suisse AG, New York Branch and New Residential Investment Corp. ~~and FIG LLC~~ (incorporated by reference to New Residential Investment Corp.’s Current Report on Form 8-K, filed ~~May 17, 2013)~~March 24, 2016)

~~10.2~~4.7			~~Amended~~Series 2015-T3 Indenture Supplement, dated as of November 24, 2015, to the Indenture, dated as of August 28, 2015, by and ~~Restated Management~~among NRZ Advance Receivables Trust 2015-ON1, Deutsche Bank National Trust Company, Ocwen Loan Servicing, LLC, HLSS Holdings, LLC, Credit Suisse AG, New York Branch and ~~Advisory Agreement between~~ New Residential Investment Corp. ~~and FIG LLC, dated August 1, 2013~~ (incorporated by reference to New Residential Investment Corp.’s ~~Quarterly~~Annual Report on Form ~~10-Q, filed August 8, 2013)~~10-K,for the annual period ended December 31, 2015)

~~10.3~~4.8			~~Second Amended~~Series 2015-T4 Indenture Supplement, dated as of November 24, 2015, to the Indenture, dated as of August 28, 2015, by and ~~Restated Management~~among NRZ Advance Receivables Trust 2015-ON1, Deutsche Bank National Trust Company, Ocwen Loan Servicing, LLC, HLSS Holdings, LLC, Credit Suisse AG, New York Branch and ~~Advisory Agreement between~~ New Residential Investment Corp. ~~and FIG LLC, dated August 6, 2014~~ (incorporated by reference to New Residential Investment Corp.’s ~~Quarterly~~Annual Report on Form ~~10-Q, filed August 7, 2014)~~10-K, for the annual period ended December 31, 2015)

~~10.4~~4.9			Series 2014-A Indenture dated as of October 3, 2014, by and among SpringCastle America Funding, LLC, SpringCastle Credit Funding, LLC, and SpringCastle Finance Funding, LLC, as co-issuers, Wilmington Trust, National Association, as loan trustee, Springleaf Finance, Inc., as servicer, Wells Fargo Bank, National Association, as paying agent and note registrar, and U.S. Bank National Association, as indenture trustee

10.1			Third Amended and Restated Management and Advisory Agreement between New Residential Investment Corp. and FIG LLC, dated May 7, 2015 (incorporated by reference to New Residential Investment Corp.’s Quarterly Report on Form 10-Q ~~filed May 11,~~for the quarterly period ended March 31, 2015)

~~10.5~~10.2			Form of Indemnification Agreement by and between New Residential Investment Corp. and its directors and officers (incorporated by reference to Amendment No. 3 of New Residential Investment Corp.’s Registration Statement on Form 10, filed March 27, 2013)

~~10.6~~10.3			New Residential Investment Corp. Nonqualified Stock Option and Incentive Award Plan (incorporated by reference to New Residential Investment Corp.’s Current Report on Form 8-K, filed May 3, 2013)

~~145~~



~~Exhibit~~ ~~Number~~			~~Exhibit Description~~
~~10.7~~10.4			Amended and Restated New Residential Investment Corp. Nonqualified Stock Option and Incentive Plan, adopted as of November 4, 2014 (incorporated by reference to New Residential Investment Corp.’s Quarterly Report on Form 10-Q ~~filed November 7,~~for the quarterly period ended September 30, 2014)

~~10.8~~10.5			Investment Guidelines (incorporated by reference to Amendment No. 4 of New Residential Investment Corp.’s Registration Statement on Form 10, filed April 9, 2013)

~~10.9~~10.6			Excess Servicing Spread Sale and Assignment Agreement, by and between Nationstar Mortgage LLC and NIC MSR I LLC, dated December 8, 2011 (incorporated by reference to Newcastle Investment Corp.’s Annual Report on Form 10-K, ~~filed March 15, 2012)~~for the annual period ended December 31, 2011)

~~10.10~~10.7			Excess Spread Refinanced Loan Replacement Agreement, by and between Nationstar Mortgage LLC and NIC MSR I LLC, dated December 8, 2011 (incorporated by reference to Newcastle Investment Corp.’s Annual Report on Form 10-K, ~~filed March 15, 2012)~~for the annual period ended December 31, 2011)



Exhibit Number			Exhibit Description

~~10.11~~10.8			Future Spread Agreement for FHLMC Mortgage Loans, between Nationstar Mortgage LLC and NIC MSR IV LLC, dated May 13, 2012 (incorporated by reference to Newcastle Investment Corp.’s Current Report on Form 8-K, filed May 15, 2012)

~~10.12~~10.9			Future Spread Agreement for FNMA Mortgage Loans, between Nationstar Mortgage LLC and NIC MSR V LLC, dated May 13, 2012 (incorporated by reference to Newcastle Investment Corp.’s Current Report on Form 8-K, filed May 15, 2012)

~~10.13~~10.10			Future Spread Agreement for Non-Agency Mortgage Loans, between Nationstar Mortgage LLC and NIC MSR VI LLC, dated May 13, 2012 (incorporated by reference to Newcastle Investment Corp.’s Current Report on Form 8-K, filed May 15, 2012)

~~10.14~~10.11			Future Spread Agreement for GNMA Mortgage Loans, between Nationstar Mortgage LLC and NIC MSR VII, LLC, dated May 13, 2012 (incorporated by reference to Newcastle Investment Corp.’s Current Report on Form 8-K, filed May 15, 2012)

~~10.15~~10.12			Current Excess Servicing Spread Acquisition Agreement for FHLMC Mortgage Loans, between Nationstar Mortgage LLC and NIC MSR III LLC, dated May 31, 2012 (incorporated by reference to Newcastle Investment Corp.’s Current Report on Form 8-K, filed June 6, 2012)

~~10.16~~10.13			Future Spread Agreement for FHLMC Mortgage Loans, between Nationstar Mortgage LLC and NIC MSR III LLC, dated May 31, 2012 (incorporated by reference to Newcastle Investment Corp.’s Current Report on Form 8-K, filed June 6, 2012)

~~10.17~~10.14			Amended and Restated Current Excess Servicing Spread Acquisition Agreement for FNMA Mortgage Loans, between Nationstar Mortgage LLC and NIC MSR II LLC, dated June 7, 2012 (incorporated by reference to Newcastle Investment Corp.’s Current Report on Form 8-K, filed June 7, 2012)

~~10.18~~10.15			Amended and Restated Future Spread Agreement for FNMA Mortgage Loans, between Nationstar Mortgage LLC and NIC MSR II LLC, dated June 7, 2012 (incorporated by reference to Newcastle Investment Corp.’s Current Report on Form 8-K, filed June 7, 2012)

~~10.19~~10.16			Amended and Restated Current Excess Servicing Spread Acquisition Agreement for FHLMC Mortgage Loans, between Nationstar Mortgage LLC and NIC MSR II LLC, dated June 7, 2012 (incorporated by reference to Newcastle Investment Corp.’s Current Report on Form 8-K, filed June 7, 2012)

~~10.20~~10.17			Amended and Restated Future Spread Agreement for FHLMC Mortgage Loans, between Nationstar Mortgage LLC and NIC MSR II LLC, dated June 7, 2012 (incorporated by reference to Newcastle Investment Corp.’s Current Report on Form 8-K, filed June 7, 2012)

~~10.21~~10.18			Amended and Restated Current Excess Servicing Spread Acquisition Agreement for Non-Agency Mortgage Loans, between Nationstar Mortgage LLC and NIC MSR II LLC, dated June 7, 2012 (incorporated by reference to Newcastle Investment Corp.’s Current Report on Form 8-K, filed June 7, 2012)

~~10.22~~10.19			Amended and Restated Future Spread Agreement for Non-Agency Mortgage Loans, between Nationstar Mortgage LLC and NIC MSR II LLC, dated June 7, 2012 (incorporated by reference to Newcastle Investment Corp.’s Current Report on Form 8-K, filed June 7, 2012)

~~10.23~~10.20			Amended and Restated Current Excess Servicing Spread Acquisition Agreement for FNMA Mortgage Loans, between Nationstar Mortgage LLC and NIC MSR V LLC, dated June 28, 2012 (incorporated by reference to Newcastle Investment Corp.’s Current Report on Form 8-K, filed July 5, 2012)

~~146~~



~~Exhibit~~ ~~Number~~			~~Exhibit Description~~
~~10.24~~10.21			Amended and Restated Current Excess Servicing Spread Acquisition Agreement for FHLMC Mortgage Loans, between Nationstar Mortgage LLC and NIC MSR IV LLC, dated June 28, 2012 (incorporated by reference to Newcastle Investment Corp.’s Current Report on Form 8-K, filed July 5, 2012)

~~10.25~~10.22			Amended and Restated Current Excess Servicing Spread Acquisition Agreement for Non-Agency Mortgage Loans, between Nationstar Mortgage LLC and NIC MSR VI LLC, dated June 28, 2012 (incorporated by reference to Newcastle Investment Corp.’s Current Report on Form 8-K, filed July 5, 2012)

~~10.26~~10.23			Amended and Restated Current Excess Servicing Spread Acquisition Agreement for GNMA Mortgage Loans, between Nationstar Mortgage LLC and NIC MSR VII LLC, dated June 28, 2012 (incorporated by reference to Newcastle Investment Corp.’s Current Report on Form 8-K, filed July 5, 2012)

~~10.27~~10.24			Current Excess Servicing Spread Acquisition Agreement for GNMA Mortgage Loans, between Nationstar Mortgage LLC and MSR VIII LLC, dated December 31, 2012 (incorporated by reference to Newcastle Investment Corp.’s Annual Report on Form 10-K, ~~filed February 28, 2013)~~for the annual period ended December 31, 2012)

~~10.28~~

Exhibit Number			Exhibit Description

10.25			Future Spread Agreement for GNMA Mortgage Loans, between Nationstar Mortgage LLC and MSR VIII LLC, dated December 31, 2012 (incorporated by reference to Newcastle Investment Corp.’s Annual Report on Form 10-K, ~~filed February 28, 2013)~~for the annual period ended December 31, 2012)

~~10.29~~10.26			Current Excess Servicing Spread Acquisition Agreement for FHLMC Mortgage Loans, between Nationstar Mortgage LLC and MSR IX LLC, dated January 6, 2013 (incorporated by reference to Newcastle Investment Corp.’s Annual Report on Form 10-K, ~~filed February 28, 2013)~~for the annual period ended December 31, 2012)

~~10.30~~10.27			Future Spread Agreement for FHLMC Mortgage Loans, between Nationstar Mortgage LLC and MSR IX LLC, dated January 6, 2013 (incorporated by reference to Newcastle Investment Corp.’s Annual Report on Form 10-K, ~~filed February 28, 2013)~~for the annual period ended December 31, 2012)

~~10.31~~10.28			Current Excess Servicing Spread Acquisition Agreement for FNMA Mortgage Loans, between Nationstar Mortgage LLC and MSR X LLC, dated January 6, 2013 (incorporated by reference to Newcastle Investment Corp.’s Annual Report on Form 10-K, ~~filed February 28, 2013)~~for the annual period ended December 31, 2012)

~~10.32~~10.29			Future Spread Agreement for FNMA Mortgage Loans, between Nationstar Mortgage LLC and MSR X LLC, dated January 6, 2013 (incorporated by reference to Newcastle Investment Corp.’s Annual Report on Form 10-K, ~~filed February 28, 2013)~~for the annual period ended December 31, 2012)

~~10.33~~10.30			Current Excess Servicing Spread Acquisition Agreement for GNMA Mortgage Loans, between Nationstar Mortgage LLC and MSR XI LLC, dated January 6, 2013 (incorporated by reference to Newcastle Investment Corp.’s Annual Report on Form 10-K, ~~filed February 28, 2013)~~for the annual period ended December 31, 2012)

~~10.34~~10.31			Future Spread Agreement for GNMA Mortgage Loans, between Nationstar Mortgage LLC and MSR XI LLC, dated January 6, 2013 (incorporated by reference to Newcastle Investment Corp.’s Annual Report on Form 10-K, ~~filed February 28, 2013)~~for the annual period ended December 31, 2012)

~~10.35~~10.32			Current Excess Servicing Spread Acquisition Agreement for Non-Agency Mortgage Loans, between Nationstar Mortgage LLC and MSR XII LLC, dated January 6, 2013, (incorporated by reference to Newcastle Investment Corp.’s Annual Report on Form 10-K, ~~filed February 28, 2013)~~for the annual period ended December 31, 2012)

~~10.36~~10.33			Future Spread Agreement for Non-Agency Mortgage Loans, between Nationstar Mortgage LLC and MSR XII LLC, dated January 6, 2013 (incorporated by reference to Newcastle Investment Corp.’s Annual Report on Form 10-K, ~~filed February 28, 2013)~~for the annual period ended December 31, 2012)

~~10.37~~10.34			Current Excess Servicing Spread Acquisition Agreement for Non-Agency Mortgage Loans, between Nationstar Mortgage LLC and MSR XIII LLC, dated January 6, 2013, (incorporated by reference to Newcastle Investment Corp.’s Annual Report on Form 10-K, ~~filed February 28, 2013)~~for the annual period ended December 31, 2012)

~~10.38~~10.35			Future Spread Agreement for Non-Agency Mortgage Loans, between Nationstar Mortgage LLC and MSR XIII LLC, dated January 6, 2013 (incorporated by reference to Newcastle Investment Corp.’s Annual Report on Form 10-K, ~~filed February 28, 2013)~~for the annual period ended December 31, 2012)

~~10.39~~10.36			Interim Servicing Agreement, among the Interim Servicers listed therein, HSBC Finance Corporation, as Interim Servicer Representative, HSBC Bank USA, National Association, SpringCastle America, LLC, SpringCastle Credit, LLC, SpringCastle Finance, LLC, Wilmington Trust, National Association, as Loan Trustee, and SpringCastle Finance LLC, as Owner Representative (incorporated by reference to Amendment No. 4 to New Residential Investment Corp.’s Registration Statement on Form 10, filed April 9, 2013)

~~10.40~~10.37			Second Amended and Restated Limited Liability Company Agreement of SpringCastle Acquisition LLC, dated ~~April 1, 2013 (incorporated by reference to the confidential submission by the Registrant of the draft Registration Statement on Form S-11 on August 19, 2013)~~

~~147~~



~~Exhibit~~ ~~Number~~			~~Exhibit Description~~March 31, 2016

~~10.41~~			Amended and Restated Receivables Sale Agreement among Nationstar Mortgage LLC, as initial receivables seller and as servicer, Advance Purchaser LLC, as receivables seller and as servicer, and NRZ Servicer Advance Facility Transferor BC, LLC (f/k/a Nationstar Servicer Advance Facility Transferor, LLC 2013-BC), as depositor, dated as of December 17, 2013 (incorporated by reference to New Residential Investment Corp.’s Current Report on Form 8-K, filed on December 23, 2013)

~~10.42~~			Amended and Restated Receivables Pooling Agreement between NRZ Servicer Advance Facility Transferor BC, LLC, as depositor, and NRZ Servicer Advance Receivables Trust BC (f/k/a Nationstar Servicer Advance Receivables Trust 2013-BC), as issuer, dated as of December 17, 2013 (incorporated by reference to New Residential Investment Corp.’s Current Report on Form 8-K, filed on December 23, 2013)

~~10.43~~10.38			Registration Rights Agreement, dated as of April 6, 2015, by and between New Residential Investment Corp and Home Loan Servicing Solutions, Ltd. (incorporated by reference to New Residential Investment Corp.’s Current Report on Form 8-K, filed on April 10, 2015)

~~10.44~~10.39			Services Agreement, dated as of April 6, 2015, by and between HLSS Advances Acquisition Corp. and Home Loan Servicing Solutions, Ltd. (incorporated by reference to New Residential Investment Corp.’s Current Report on Form 8-K, filed on April 10, 2015)

~~10.45~~			Third Amended and Restated Receivables Sale Agreement, dated as of March 13, 2013, by and among Ocwen Loan Servicing, LLC, Homeward Residential, Inc., HLSS Holdings, LLC and HLSS Servicer Advance Facility Transferor, LLC (incorporated by reference to New Residential Investment Corp.’s Quarterly Report on Form 10-Q for the quarterly period ended June 30, 2015)

~~10.46~~			Second Amended and Restated Receivables Pooling Agreement, dated as of September 13, 2012, by and between HLSS Servicer Advance Facility Transferor, LLC and HLSS Servicer Advance Receivables Trust (incorporated by reference to New Residential Investment Corp.’s Quarterly Report on Form 10-Q for the quarterly period ended June 30, 2015)

~~10.47~~10.40			Receivables Sale Agreement, dated as of August 28, 2015, by and among Ocwen Loan Servicing, LLC, HLSS Holdings, LLC and NRZ Advance Facility Transferor 2015-ON1 LLC (incorporated by reference to New Residential Investment Corp.’s Quarterly Report on Form 10-Q for the quarterly period ended September 30, 2015)

~~10.48~~10.41			Receivables Pooling Agreement, dated as of August 28, 2015, by and between NRZ Advance Facility Transferor 2015-ON1 LLC and NRZ Advance Receivables Trust 2015-ON1 (incorporated by reference to New Residential Investment Corp.’s Quarterly Report on Form 10-Q for the quarterly period ended September 30, 2015)

~~148~~



Exhibit Number			Exhibit Description

31.1			Certification of Chief Executive Officer as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

31.2			Certification of Chief Financial Officer as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

32.1			Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

32.2			Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

101.INS			XBRL Instance Document *

101.SCH			XBRL Taxonomy Extension Schema Document *

101.CAL			XBRL Taxonomy Extension Calculation Linkbase Document *

101.DEF			XBRL Taxonomy Extension Definition Linkbase Document *

101.LAB			XBRL Taxonomy Extension Label Linkbase Document *

101.PRE			XBRL Taxonomy Extension Presentation Linkbase Document *




*	XBRL (Extensible Business Reporting Language) information is furnished and not filed for purposes of Sections 11 and 12 of the Securities Act of 1933 and Section 18 of the Securities Exchange Act of 1934.Furnished electronically herewith.

~~149~~

The following second amended and restated limited liability company agreements of the Consumer Loan Companies are substantially identical in all material respects, except as to the parties thereto and the initial capital contributions required under each agreement, to the ~~Amendment~~Second Amended and Restated Limited Liability Company Agreement of SpringCastle Acquisition LLC that is filed as Exhibit ~~10.39~~10.37 hereto and are being omitted in reliance on Instruction 2 to Item 601 of Regulation S-K:

Second Amended and Restated Limited Liability Company Agreement of SpringCastle America, LLC, dated as of ~~April 1, 2013.~~March 31, 2016.

Second Amended and Restated Limited Liability Company Agreement of SpringCastle Credit, LLC, dated as of ~~April 1, 2013.~~March 31, 2016.

Second Amended and Restated Limited Liability Company Agreement of SpringCastle Finance, LLC, dated as of ~~April 1, 2013.~~March 31, 2016.

In addition, the following Amended and Restated Receivables Sale Agreement and Amended and Restated Receivables Pooling Agreement are substantially identical in all material respects, except as to the parties thereto, to the Amended and Restated Receivables Sale Agreement and Amended and Restated Receivables Pooling Agreement that are filed as Exhibits 10.40 and 10.41, respectively, hereto and are being omitted in reliance on Instruction 2 to Item 601 of Regulation S-K:

Amended and Restated Receivables Sale Agreement among Nationstar Mortgage LLC, as initial receivables seller and as servicer, Advance Purchaser LLC, as receivables seller and as servicer, and NRZ Servicer Advance Facility Transferor CS, LLC (f/k/a Nationstar Servicer Advance Facility Transferor, LLC 2013-CS), as depositor, dated as of December 17, 2013.

Amended and Restated Receivables Pooling Agreement between NRZ Servicer Advance Facility Transferor CS, LLC, as depositor, and NRZ Servicer Advance Receivables Trust CS (f/k/a Nationstar Servicer Advance Receivables Trust 2013-CS), as issuer, dated as of December 17, 2013.

~~150~~

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized:



	NEW RESIDENTIAL INVESTMENT CORP.

	By:	/s/ Michael Nierenberg
		Michael Nierenberg
		Chief Executive Officer and President
		(Principal Executive Officer)

		~~November~~May 4, ~~2015~~2016

	By:	/s/ Nicola Santoro, Jr.
		Nicola Santoro, Jr.
		Chief Financial Officer and Treasurer
		(Principal Financial Officer)

		~~November~~May 4, ~~2015~~2016

	By:	/s/ Jonathan R. Brown
		Jonathan R. Brown
		Chief Accounting Officer
		(Principal Accounting Officer)

		~~November~~May 4, ~~2015~~2016

~~151~~136



Delaware		45-3449660
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

1345 Avenue of the Americas, New York, NY		10105
(Address of principal executive offices)		(Zip Code)



	PAGE
Part I. Financial Information	1

Item 1. Financial Statements	1

Condensed Consolidated Balance Sheets as of ~~September 30, 2015~~March 31, 2016 (Unaudited) and December 31, ~~2014~~2015	1

Condensed Consolidated Statements of Income (Unaudited) for the three ~~and nine~~ months ended ~~September 30,~~March 31, 2016 and 2015 ~~and 2014~~	2

Condensed Consolidated Statements of Comprehensive Income (Unaudited) for the three ~~and nine~~ months ended ~~September 30,~~March 31, 2016 and 2015 ~~and 2014~~	3

Condensed Consolidated Statement of Changes in Stockholders’ Equity (Unaudited) for the ~~nine~~three months ended ~~September 30, 2015~~March 31, 2016	4

Condensed Consolidated Statements of Cash Flows (Unaudited) for the ~~nine~~three months ended ~~September 30,~~March 31, 2016 and 2015 ~~and 2014~~	5

Notes to Condensed Consolidated Financial Statements (Unaudited)	8

Note 1. Organization and Basis of Presentation	8

Note 2. Other Income, Assets and Liabilities	1512

Note 3. Segment Reporting	1613

Note 4. Investments in Excess Mortgage Servicing Rights	1915

Note 5. Investments in Excess Mortgage Servicing Rights, Equity Method Investees	2117

Note 6. Investments in Servicer Advances	2319

Note 7. Investments in Real Estate Securities	2622

Note 8. Investments in Residential Mortgage Loans	3026

Note 9. Investments in Consumer Loans ~~Equity Method Investees~~	3430

Note 10. Derivatives	3632

Note 11. Debt Obligations	3834

Note 12. Fair Value of Financial Instruments	4237

Note 13. Equity and Earnings Per Share	4742

Note 14. Commitments and Contingencies	4944

Note 15. Transactions with Affiliates and Affiliated Entities	5146

Note 16. Reclassification from Accumulated Other Comprehensive Income into Net Income	5348

Note 17. Income Taxes	5348

Note 18. Subsequent Events	5449

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations	5550

General	5550

Market Considerations	5550

Our Portfolio	5752

Application of Critical Accounting Policies	6963

Recent Accounting Pronouncements	7570



Results of Operations	7771

Liquidity and Capital Resources	8374

Interest Rate, Credit and Spread Risk	9180

Off-Balance Sheet Arrangements	9180

Contractual Obligations	9180

Inflation	9180

Core Earnings	9181

Item 3. Quantitative and Qualitative Disclosures About Market Risk	9382

Item 4. Controls and Procedures	9685

Part II. Other Information	97

Item 1. Legal Proceedings	9787

Item 1A. Risk Factors	9888

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds	~~141~~130

Item 3. Defaults Upon Senior Securities	~~142~~130

Item 4. Mine Safety Disclosures	~~142~~130

Item 5. Other Information	~~142~~130

Item 6. Exhibits	~~143~~131

Signatures	~~151~~136


	September 30, 2015		December 31, 2014		March 31, 2016			December 31, 2015
	(Unaudited)				(Unaudited)
Assets
Investments in:
Excess mortgage servicing rights, at fair value	$	1,459,690	$	417,733	$	1,547,004		$	1,581,517
Excess mortgage servicing rights, equity method investees, at fair value	213,318		330,876		209,901			217,221
Servicer advances, at fair value(A)	7,499,775		3,270,839		7,001,004			7,426,794
Real estate securities, available-for-sale	2,428,729		2,463,163		3,441,790			2,501,881
Residential mortgage loans, held-for-investment	40,813		47,838		324,734			330,178
Residential mortgage loans, held-for-sale	713,917		1,126,439		633,160			776,681
Real estate owned	29,454		61,933		56,402			50,574
Consumer loans, equity method investees	—		—
Consumer loans, held-for-investment^(A)					1,970,565			—
Cash and cash equivalents(A)	348,312		212,985		258,622			249,936
Restricted cash	165,039		29,418		170,364			94,702
Derivative assets	1,318		32,597
Trade receivable	2,031,425		—
Deferred tax asset	162,788		—
Trades receivable					1,509,016			1,538,481
Deferred tax asset, net					196,189			185,311
Other assets	261,640		95,423		253,026			239,446
	$	15,356,218	$	8,089,244	$	17,571,777		$	15,192,722

Liabilities and Equity

Liabilities
Repurchase agreements	$	3,773,880	$	3,149,090	$	3,973,512		$	4,043,054
Notes payable	7,245,200		2,908,763
Notes and bonds payable^(A)					8,870,851			7,249,568
Trades payable	1,059,232		2,678		1,431,003			725,672
Due to affiliates	12,398		57,424		5,847			23,785
Dividends payable	106,011		53,745		106,017			106,017
Deferred tax liability	—		15,114
Accrued expenses and other liabilities	133,426		52,505		105,551			58,046
	12,330,147		6,239,319		14,492,781			12,206,142

Commitments and Contingencies

Equity
Common Stock, $0.01 par value, 2,000,000,000 shares authorized, 230,458,866 and 141,434,905 issued and outstanding at September 30, 2015 and December 31, 2014, respectively	2,304		1,414
Common Stock, $0.01 par value, 2,000,000,000 shares authorized, 230,471,202 and 230,471,202 issued and outstanding at March 31, 2016 and December 31, 2015, respectively					2,304			2,304
Additional paid-in capital	2,640,680		1,328,587		2,640,893			2,640,893
Retained earnings	151,838		237,769		154,519			148,800
Accumulated other comprehensive income, net of tax	11,711		28,319
Accumulated other comprehensive income (loss)					(12,912		)	3,936
Total New Residential stockholders’ equity	2,806,533		1,596,089		2,784,804			2,795,933
Noncontrolling interests in equity of consolidated subsidiaries	219,538		253,836		294,192			190,647
Total Equity	3,026,071		1,849,925		3,078,996			2,986,580
	$	15,356,218	$	8,089,244	$	17,571,777		$	15,192,722


	Three Months Ended September 30,						Nine Months Ended September 30,						Three Months Ended March 31,
	2015			2014			2015			2014			2016			2015
Comprehensive income (loss), net of tax
Net income	$	61,755		$	152,098		$	182,830		$	391,171		$	115,938		$	41,798
Other comprehensive income (loss)
Net unrealized gain (loss) on securities	17,360			1,308			11,328			67,915			(19,969		)	15,132
Reclassification of net realized (gain) loss on securities into earnings	(22,880		)	(3,668		)	(27,936		)	(64,501		)	3,121			(23,626		)
	(5,520		)	(2,360		)	(16,608		)	3,414			(16,848		)	(8,494		)
Total comprehensive income	$	56,235		$	149,738		$	166,222		$	394,585		$	99,090		$	33,304
Comprehensive income attributable to noncontrolling interests	$	7,230		$	25,726		$	17,174		$	92,524		$	4,202		$	5,823
Comprehensive income attributable to common stockholders	$	49,005		$	124,012		$	149,048		$	302,061		$	94,888		$	27,481



	Common Stock
	Shares	Amount		Additional Paid-in Capital			Retained Earnings			Accumulated Other Comprehensive Income			Total New Residential Stockholders’ Equity			Noncontrolling Interests in Equity of Consolidated Subsidiaries			Total Equity
Equity - December 31, 2014	141,434,905	$	1,414	$	1,328,587		$	237,769		$	28,319		$	1,596,089		$	253,836		$	1,849,925
Dividends declared	—	—		—			(249,277		)	—			(249,277		)	—			(249,277		)
Capital contributions	—	—		—			—			—			—			5,161			5,161
Capital distributions	—	—		—			—			—			—			(56,633		)	(56,633		)
Issuance of common stock	85,435,389	854		1,311,829			—			—			1,312,683			—			1,312,683
Option exercises	3,570,984	36		(36		)	—			—			—			—			—
Director share grants	17,588	—		300			—			—			300			—			300
Modified retrospective adjustment for the adoption of ASU No. 2014-11	—	—		—			(2,310		)	—			(2,310		)	—			(2,310		)
Comprehensive income (loss) (net of tax)
Net income (loss)	—	—		—			165,656			—			165,656			17,174			182,830
Net unrealized gain (loss) on securities	—	—		—			—			11,328			11,328			—			11,328
Reclassification of net realized (gain) loss on securities into earnings	—	—		—			—			(27,936		)	(27,936		)	—			(27,936		)
Total comprehensive income (loss)													149,048			17,174			166,222
Equity - September 30, 2015	230,458,866	$	2,304	$	2,640,680		$	151,838		$	11,711		$	2,806,533		$	219,538		$	3,026,071



Total Consideration	Amount
Share Issuance Consideration	28,286,980
New Residential's 4/6/2015 share price	$	15.3460
Dollar Value of Share Issuance^(A)	$	434,092
Cash Consideration	621,982
HLSS Seller Financing^(B)	385,174
New Merger Payment (71,016,771 @ $0.704059)^(C)	50,000
Total Consideration	$	1,491,248



Total Consideration ($ in millions)	$	1,491.2
Assets
Cash and cash equivalents	$	51.5
Servicer advances, at fair value	5,098.2
Excess mortgage servicing rights, at fair value	919.5
Residential mortgage loans, held-for-sale^(A)	418.8
Deferred tax asset^(B)	186.8
Investment in HLSS Ltd.	44.9
Other assets^(C)	405.0
Total Assets Acquired	$	7,124.7

Liabilities
Notes payable	5,583.0
Deferred tax liabilities	(0.8		)
Accrued expenses and other liabilities^(D)(E)	51.3
Total Liabilities Assumed	$	5,633.5

Net Assets	$	1,491.2



Total Consideration ($ in millions)	$	237.5
Assets
Consumer loans, held-for-investment	$	1,970.6
Cash and cash equivalents	0.3
Restricted cash	74.6
Total Assets Acquired	$	2,045.5

Liabilities
Notes and bonds payable	1,803.2
Accrued expenses and other liabilities	4.8
Total Liabilities Assumed	$	1,808.0

Net Assets	$	237.5


~~(A)~~	Represents $424.3 million UPB of GNMA early buy-out (“EBO”) residential mortgage loans not subject to ASC No. 310-30 as the contractual cash flows are guaranteed by the Federal Housing Administration (“FHA”).


~~(B)~~	~~Due to the difference between carryover historical tax basis and acquisition date fair value of one of HLSS’s first tier subsidiaries.~~


~~(C)~~	~~Includes restricted cash and receivables not subject to ASC No. 310-30 which New Residential has deemed fully collectible.~~


~~(D)~~	~~Includes liabilities arising from contingencies regarding ongoing HLSS matters (Note 14).~~


~~(E)~~	~~Contingencies for HLSS class action law suits have not been recognized at the acquisition date as the criteria in ASC No. 450 have not been met (Note 14).~~



	Other Assets					Accrued Expenses and Other Liabilities
	March 31, 2016		December 31, 2015			March 31, 2016		December 31, 2015
Margin receivable, net	$	63,273	$	54,459	Interest payable	$	19,988	$	18,268
Other receivables	16,305		10,893		Accounts payable	37,826		18,650
Principal paydown receivable	822		795		Derivative liabilities (Note 10)	34,942		13,443
Receivable from government agency	75,514		68,833		Current taxes payable	2,180		1,573
Call rights	414		414		Other liabilities	10,615		6,112
Derivative assets (Note 10)	1,720		2,689			$	105,551	$	58,046
Interest receivable	38,431		36,963
Ginnie Mae EBO servicer advance receivable, net	44,652		49,725
Other assets	11,895		14,675
	$	253,026	$	239,446


~~(A)~~	~~Share Issuance Consideration~~


~~(C)~~	~~New Merger Payment~~


~~(A)~~	~~Includes approximately $3.2 million loss on REO sold as a part of the residential mortgage loan sales described in Note 8 during the nine months ended September 30, 2015.~~


~~(A)~~	Primarily includes a receivable from Ocwen related to their servicer rating downgrade, funds in transit from the EBO loan repurchase agreement counterparty, and claims receivable related to residual securities owned.


~~(B)~~	~~Deferred financing costs were reclassified as an offset to the related debt obligation in June 2015 pursuant to ASU No. 2015-03 (Note 1).~~


~~(C)~~	~~Represents claims receivable from FHA on EBO and reverse mortgage loans for which foreclosure has been completed and for which New Residential has made or intends to make a claim on the FHA guarantee.~~


~~(D)~~	~~Represents an HLSS loan to a counterparty collateralized by servicer advances on GNMA EBO loans.~~


~~(F)~~	~~Primarily includes accrued retention bonus and severance arrangements for HLSS employees.~~


	Servicing Related Assets					Residential Securities and Loans															Servicing Related Assets					Residential Securities and Loans
	Excess MSRs		Servicer Advances			Real Estate Securities			Real Estate Loans			Consumer Loans			Corporate			Total			Excess MSRs		Servicer Advances			Real Estate Securities			Real Estate Loans			Consumer Loans			Corporate			Total
Three Months Ended September 30, 2015
Three Months Ended March 31, 2016
Interest income	$	38,477	$	105,135		$	28,984		$	8,888		$	—		$	857		$	182,341		$	42,968	$	80,967		$	45,913		$	19,493		$	1		$	694		$	190,036
Interest expense	—		64,291			5,150			4,651			530			2,936			77,558			2,934		63,075			7,484			7,390			345			—			81,228
Net interest income (expense)	38,477		40,844			23,834			4,237			(530		)	(2,079		)	104,783			40,034		17,892			38,429			12,103			(344		)	694			108,808
Impairment	—		—			1,574			(3,341		)	—			—			(1,767		)	—		—			3,254			6,745			—			—			9,999
Other income	10,227		(12,554		)	(28,354		)	(1,530		)	14,386			—			(17,825		)	11,693		(27,391		)	(36,461		)	2,873			81,193			15			31,922
Operating expenses	168		10,341			766			2,845			66			18,716			32,902			232		994			461			4,334			1,604			17,391			25,016
Income (Loss) Before Income Taxes	48,536		17,949			(6,860		)	3,203			13,790			(20,795		)	55,823			51,495		(10,493		)	(1,747		)	3,897			79,245			(16,682		)	105,715
Income tax expense (benefit)	—		(4,852		)	—			(1,405		)	325			—			(5,932		)	—		(10,002		)	—			(221		)	—			—			(10,223		)
Net Income (Loss)	$	48,536	$	22,801		$	(6,860	)	$	4,608		$	13,465		$	(20,795	)	$	61,755		$	51,495	$	(491	)	$	(1,747	)	$	4,118		$	79,245		$	(16,682	)	$	115,938
Noncontrolling interests in income (loss) of consolidated subsidiaries	$	—	$	7,230		$	—		$	—		$	—		$	—		$	7,230		$	—	$	4,202		$	—		$	—		$	—		$	—		$	4,202
Net income (loss) attributable to common stockholders	$	48,536	$	15,571		$	(6,860	)	$	4,608		$	13,465		$	(20,795	)	$	54,525		$	51,495	$	(4,693	)	$	(1,747	)	$	4,118		$	79,245		$	(16,682	)	$	111,736


	Servicer												Servicer
	Nationstar			SLS^(A)			Ocwen^(B)			Total			Nationstar			SLS^(A)			Ocwen^(B)			Total
Balance as of December 31, 2014	$	409,076		$	8,657		$	—		$	417,733
Transfers from indirect ownership	98,258			—			—			98,258
Balance as of December 31, 2015													$	698,304		$	5,307		$	877,906		$	1,581,517
Purchases	131,488			—			919,531			1,051,019			—			—			—			—
Interest income	46,840			176			40,858			87,874			19,435			(7		)	23,540			42,968
Other income	2,246			—			—			2,246			732			—			—			732
Proceeds from repayments	(94,212		)	(997		)	(101,957		)	(197,166		)	(37,676		)	(272		)	(48,191		)	(86,139		)
Change in fair value^(C)	1,854			(1,890		)	(238		)	(274		)
Balance as of September 30, 2015	$	595,550		$	5,946		$	858,194		$	1,459,690
Change in fair value													3,527			(57		)	4,456			7,926
Balance as of March 31, 2016													$	684,322		$	4,971		$	857,711		$	1,547,004


(A)	Specialized Loan Servicing LLC (“SLS”). ~~See Note 6 for a description of the SLS Transaction.~~


(B)	Ocwen Loan Servicing LLC, a subsidiary of Ocwen Financial Corporation (together with its subsidiaries, including Ocwen Loan Servicing LLC, “Ocwen”), services the loans underlying the Excess MSRs and Servicer Advances acquired from HLSS. ~~See Note 1.~~


~~(C)~~	In the third quarter of 2015, New Residential recorded a cumulative positive prior period adjustment of $4.4 million (of which $4.2 million related to 2014 and prior) resulting from adjustments to certain modeling assumptions.


(A)	Weighted Average Life represents the weighted average expected timing of the receipt of expected cash flows for this investment.


(B)	The amortized cost basis of the ~~Recapture Agreements~~recapture agreements is determined based on the relative fair values of the ~~Recapture Agreements~~recapture agreements and related Excess MSRs at the time they were acquired.


(C)	Carrying Value represents the fair value of the pools or ~~Recapture Agreements,~~recapture agreements, as applicable.


(D)	Excess MSR investments in which New Residential also invested in related ~~servicer advances,~~Servicer Advances, including the basic fee component of the related MSR as of ~~September 30, 2015~~March 31, 2016 (Note 6).


	Percentage of Total Outstanding Unpaid Principal Amount as of				Percentage of Total Outstanding Unpaid Principal Amount as of
State Concentration	September 30, 2015		December 31, 2014		March 31, 2016		December 31, 2015
California	26.6	%	31.5	%	26.7	%	26.7	%
Florida	9.1	%	7.7	%	8.9	%	8.9	%
New York	7.3	%	4.3	%	7.9	%	7.8	%
Texas	4.4	%	4.2	%	4.3	%	4.3	%
New Jersey	4.0	%	3.2	%	4.1	%	4.1	%
Maryland	3.8	%	4.0	%	3.8	%	3.8	%
Illinois	3.4	%	3.2	%	3.4	%	3.4	%
Virginia	3.2	%	3.3	%	3.1	%	3.1	%
Washington	2.8	%	3.6	%	2.7	%	2.7	%
Massachusetts	2.6	%	2.1	%	2.7	%	2.7	%
Other U.S.	32.8	%	32.9	%	32.4	%	32.5	%
	100.0	%	100.0	%	100.0	%	100.0	%



Balance at December 31, 2014	$	330,876
Contributions to equity method investees	—
Transfers to direct ownership	(98,258		)
Distributions of earnings from equity method investees	(31,876		)
Distributions of capital from equity method investees	(3,867		)
Change in fair value of investments in equity method investees^(A)	16,443
Balance at September 30, 2015	$	213,318



Balance at December 31, 2015	$	217,221
Contributions to equity method investees	—
Distributions of earnings from equity method investees	(9,754		)
Distributions of capital from equity method investees	(588		)
Change in fair value of investments in equity method investees	3,022
Balance at March 31, 2016	$	209,901


	September 30, 2015											March 31, 2016
	Unpaid Principal Balance		Investee Interest in Excess MSR^(A)		New Residential Interest in Investees		Amortized Cost Basis^(B)		Carrying Value^(C)		Weighted Average Life (Years)^(D)	Unpaid Principal Balance		Investee Interest in Excess MSR^(A)		New Residential Interest in Investees		Amortized Cost Basis^(B)		Carrying Value^(C)		Weighted Average Life (Years)^(D)
Agency
Original and Recaptured Pools	$	76,072,734	66.7	%	50.0	%	$	274,979	$	343,007	5.8	$	70,087,028	66.7	%	50.0	%	$	264,544	$	336,113	5.7
Recapture Agreements	—		66.7	%	50.0	%	49,875		72,113		11.8	—		66.7	%	50.0	%	41,563		68,750		11.8
Total	$	76,072,734					$	324,854	$	415,120	6.7	$	70,087,028					$	306,107	$	404,863	6.6


(B)	Represents the amortized cost basis of the equity method investees in which New Residential holds a 50% interest. The amortized cost basis of the ~~Recapture Agreements~~recapture agreements is determined based on the relative fair values of the ~~Recapture Agreements~~recapture agreements and related Excess MSRs at the time they were acquired.