The residential real estate business in the United States took a turn for the best investment opportunity for most investors after the most recent financial crisis. While this turn of events changed the way financial institutions offered and originated mortgage loans, it also created opportunities for investors and investment firms to make and get maximum returns on their investments. New Residential Investment Corp was established as a publicly traded subsidiary wholly owned by the New Castle investment group. Like most investment firms, the residential real estate investment corporation is managed by an affiliate of the Fortress investments group. Fortress investments group is a global alternative investment manager as well as advisor.
With these type of networks, the corporation is set to help their investors enjoy constantly growing returns on their investments. New Residential Investment Corp uses MSRs among other investment plans to achieve their goals. MSRs, Mortgage Servicing Rights, are presenting very attractive investment opportunities for investors. These are rights that allow the mortgage services with the right to a number of mortgage loan service for a fee in return. As banks face the pressure to reduce their MSRs exposure due to the implementation of regulations requiring the increase capital reserves, the percentage of MSRs they own is going to decline as time goes by creating an opportunity for investors and investment firms.
These opportunities are presented in the form of excess MSRs that are on sale from banks to private institutions like New Residential Investment Corp. MSRs are broken down into two parts, one is the basic fee which is usually the amount of compensation for the servicing performance. The owners of this basic fee are also held liable for portfolios underinvestment, have advanced obligations and have servicing duties, none of which are related to the Excess MSRs. MSRs are monthly fees that exceed the basic fee. New Residential Investment Corp is one of the biggest investment beneficiaries of the excess MSRs. MSRs generate approximately 10 trillion dollars in the United States market. With the banks’ 74% rapidly moving into the private market, investors have limitless opportunities to invest with the New Residential Investment Corp and get high returns.