Good day, everyone, and welcome to today's Onity Group Second Quarter Earnings and Business Update Call. Please note, this call is being recorded, and I will be standing by should you need assistance. It is now my pleasure to turn today's program over to Valerie Haertel. You may begin.

Thank you, Emma. Good morning, everyone, and welcome to Onity Group's second quarter 2025 earnings call. Please note that our earnings release and presentation are available on our website at onitygroup.com. Speaking on the call will be Chair, President and Chief Executive Officer, Glen Messina; and Chief Financial Officer, Sean O'Neil. As a reminder, our comments today may contain forward-looking statements made pursuant to the safe harbor provisions of the Federal Securities laws. These statements may be identified by reference to future periods or by use of forward-looking terminology and address matters that are uncertain. Forward-looking statements speak only as of the date they are made and involve assumptions, risks, and uncertainties, including those described in our SEC filings. In the past, actual results have differed materially from those suggested by forward-looking statements, and this may happen again. In addition, the presentation and our comments contain references to non-GAAP financial measures such as adjusted pretax income. We believe these non-GAAP measures provide a useful supplement to discussions and analysis of our financial condition because they are measures that management uses to assess the performance of our operations and allocate resources. Non-GAAP measures should be viewed in addition to and not as an alternative for the company's reported GAAP results. A reconciliation of these non-GAAP measures to their most directly comparable GAAP measures and management's reasons for including them may be found in the press release and the appendix to the investor presentation. Now I would like to turn the call over to Glen Messina.

Thanks, Valerie. Good morning, everyone, and thank you for joining our call. We're looking forward to sharing a few highlights for the second quarter as well as reviewing our strategy and financial objectives to deliver long-term value for our shareholders. Let's get started on Slide 3. I want to start with 3 key themes today. First, for the second quarter, we delivered robust net income and continued to grow book value, demonstrating our sound strategy and high-caliber execution. Second, our balanced business is delivering sustainable results across origination and servicing amid market volatility. Finally, we are reaffirming our annual adjusted ROE guidance, underscoring our commitment to strong shareholder returns. Let's turn to Slide 4 to review a few highlights for the quarter. Despite volatile and unpredictable market conditions, we delivered steady financial performance in the second quarter with GAAP net income attributable to common shareholders of $20 million or $2.40 per share fully diluted, reflecting an annualized ROE of 17%. Adjusted pretax income of $16 million is annualized and an annualized adjusted ROE of 14%, reflecting a $4 million unfavorable impact of market volatility on originations revenue and margins as well as increased MSR runoff from higher prepayments and reverse asset fair value changes compared to prior periods. Average servicing UPB continued to grow steadily, fueled by year-over-year originations volume growth, which exceeded total industry originations growth for the same period. And finally, book value increased to $60 per share, up 5% versus the prior year. We believe the structural changes we've made to our business over the past several years have positioned us to successfully and profitably navigate volatile and unpredictable market conditions. Let's turn to Slide 5 to discuss the market environment in the second quarter and our expectations for the balance of the year. The second quarter unfolded consistent with the expectations we discussed on our last earnings call. We saw high financial market volatility in the early part of the quarter, which adversely impacted origination revenue and margins and increased MSR hedging costs for a brief period. Despite challenging market conditions, origination volumes were strong and the Mortgage Bankers Association Refinance Application Index was up 43% over the prior year. Another M&A transaction was announced with Bayview Purchasing Guild and several economists improved their outlook for the economy versus the end of the first quarter. Looking ahead, we're expecting continued interest rate volatility and uncertainty. The Mortgage Bankers Association and Fannie Mae estimates for originations volume growth have been lowered to 14% year-over-year, largely due to interest rate expectations and slower home sales. Refinancing opportunities will be tied to interest rates, and consumers are likely to refinance at the earliest opportunity. The longer rates stay high, the more likely it is there will be continued industry consolidation. And while the economy has been strong thus far, the longer-term picture is less clear. We believe our balanced business is well positioned for this dynamic market environment, including elevated interest rates and unpredictable periods of market volatility. And as always, we're maintaining agility to find opportunities to create value for shareholders. Let's turn to Slide 6 for more about our balanced business. We believe our scale in both servicing and originations enables us to perform well with high or low interest rates. As you can see, even with the sharp increase in interest rates from 2021, our total business is delivering improved performance, driven today by our servicing platform. As in 2021, if interest rates were to materially decline, we believe industry originations volume and margins would typically expand while servicing runoff would increase. In this scenario, we would expect originations to deliver most of our earnings. Given the current outlook for interest rates, we expect servicing will continue to be the predominant earnings contributor for 2025 with industry originations volume projected to increase modestly. Let's turn to Slide 7 for more about our growth actions. We're continuing to drive growth in our total servicing portfolio while executing prudent and opportunistic asset management. We've been steadily increasing our owned MSR portfolio, consistent with our objectives to retain more MSRs to grow book earnings and book value as well as reload our portfolio for recapture opportunities. Ending total servicing in the second quarter is up approximately $5 billion or 2% year-over-year, with $36 billion in servicing additions, net of runoff more than offsetting opportunistic asset sales and planned transfers to Rythm. Dynamic asset management is an integral element of our strategy. And last year, both Onity and MAV took advantage of the robust bulk market to opportunistically sell MSRs above our book value. In the case of the MSRs Onity sold, these were an instrumental component of our corporate debt refinancing strategy. With respect to the assets sold by MAV, we recognized our pro rata share of favorable fair value realization commensurate with the 15% joint venture interest we maintained at that time. I believe our agility and ability to replenish the growth in the portfolio, while executing our asset management actions highlights the power of our originations capability and the success of our growth strategy. Please turn to Slide 8 to discuss originations growth. In the second quarter, our originations team delivered 35% year-over-year growth versus the industry's 23% growth over the same period. Origination drives replenishment and growth in our servicing portfolio through all market cycles, leveraging an enterprise sales approach to deliver our wide range of products, delivery methods, and services. We have continuously invested in technology and process optimization to enhance the customer experience, reduce cost structure and improve scalability and competitiveness of our platform in both business-to-business and consumer direct channels. We're launching new and upgraded products and services to expand our addressable market opportunity, provide access to higher-margin market segments, and create alternatives for our consumer direct platform to maintain operating capacity for surges in refinancing activity. To highlight how far we've come in originations, the second quarter 2025 funded volume was almost equal to the level we recorded in the second quarter 2021 with a market opportunity that was twice the size of the current market. Now please turn to Slide 9 to discuss the progress we made in our recapture platform. Our Consumer Direct team is continuing to improve our recapture capability to industry top-tier performance levels while working to ensure we maintain flexibility to address mortgage rate volatility. As you can see on the left, funded volume in our consumer direct platform was up 2.4x versus the second quarter of 2024, with an interest rate environment that is not much different between the 2 periods. Based on our refinance recapture benchmarking for the quarter and the last 12 months, excluding home equity products, we believe our platform is performing better than several of our public nonbank third-party origination-focused peers and the ICE reported average. And for the second quarter, our refinance recapture rate is slightly above all 3 of our peers. Even more notable, our refinance recapture rate for the past 12 months, where the previous loan was originated by our consumer direct channel, is 88%. This points out the significant upside in recapture as we continue to improve our first-time recapture capability. To that end, we continue to invest in talent, technology, predictive analytics, products, and marketing to further improve our capability. Let's turn to Slide 10 to discuss our servicing platform. We've built a strong servicing platform, and our team is delivering top-tier performance on multiple dimensions. We service or subservice 1.4 million loans on behalf of more than 3,900 investors and over 120 subservicing clients, including forward, reverse, and business purpose residential mortgages. We've been recognized by Fannie Mae, Freddie Mac, and HUD for industry-leading servicing performance. And we again compared favorably in the Mortgage Bankers Association 2025 servicing cost study, with our fully loaded servicing operating expenses materially lower versus the large nonbank servicer average for performing and nonperforming loans. Our continuous improvement in customer experience is evidenced with high satisfaction ratings from our borrowers and subservicing clients. Most recently, Fitch upgraded all 6 of our residential servicing ratings, and Moody's upgraded our second lien servicer rating following their upgrade of all of our forward servicing ratings in 2023. Fitch noted the upgrades reflect our effective enterprise risk management controls and processes and continuous technology enhancements among other attributes. While we are not the largest servicer in the industry, we deliver top-tier performance for customers and investors, and we are positioned to fiercely compete with anyone regardless of size. Let's turn to Slide 11 to discuss our technology strategy. We've been investing across 4 categories of AI, robotics, natural language processing, vision and machine learning to improve business performance and competitiveness on several dimensions. Our technology journey began almost 7 years ago with the replacement of our core business systems and transition of our infrastructure to a cloud-based environment to create a solid, stable foundation for continued development. We've cultivated our own robotic process automation center of excellence and technology innovation lab, which supports projects of increasing size and complexity focused on 4 desired outcomes: drive cost leadership, accelerate revenue growth, maximize customer retention and deliver superior operating performance. I'm proud of what the team has accomplished through focused and purposeful investment to enable a highly competitive servicing and origination platform, top-tier refinance recapture performance and an improved customer experience. We continue to utilize this 4x 4 approach to technology development and innovation to ensure our investments are aligned with delivering outcomes that matter most to our stakeholders. Let's turn to Slide 12 to see what we've accomplished and where we are taking our technology program. We believe our AI investments have delivered meaningful process performance improvements, creating value for all Onity stakeholders. Robotic process automation, optical character recognition, and neural network-based data extraction have been deployed in over 190 processes, completing the work of roughly 400 people, saving approximately 57,000 hours per month of manual efforts year-to-date. We are leveraging machine learning and predictive analytics to predict borrower behavior, which helps us maximize retention and collections outcomes. And 88% of our customer inquiries this year have been resolved through our digital interface channels supported by natural language processing and generative AI. Our vision for the future of AI in our business is to integrate robotics, large language models, and machine learning across all operations to eliminate inefficiencies, reduce costs, and elevate accuracy. Transforming every process with data-enabled intelligence and unifying operations under a single AI-driven framework, where every process is optimized, every decision is data-informed, and every outcome is superior. The opportunity here is exciting and the potential impact is incredibly powerful. Now I'll turn it over to Sean to discuss our results for the quarter in more detail.

Thanks, Glen. Please turn to Slide 13 for a recap of our net income. 2025 continues to be a strong year for us, and you can see that with net income up 2x year-over-year and GAAP return on equity of over 17% for the second quarter. Our adjusted return on equity was 14%, and we'll discuss that on the following slide. Our ability to deliver steady net income added approximately $3 to book value per share year-over-year. This quarter, we continued to add scaling to our servicing platform and grew our originations business in an uncertain interest rate and geopolitical environment. Please turn to Slide 14 for a historical trend of our adjusted pretax income, which is positive for the 11th straight quarter. We posted a good second quarter for adjusted PTI. However, it was lower than the second quarter of '24 due to several factors. First, we added about $7 million of pretax income from both growth in owned MSRs and from lower debt interest expense resulting from our 2024 debt restructuring. Offsetting those gains was the absence of a 15% equity return on MAV, April volatility impairing originations margins and a fair value mark on reverse servicing assets. Finally, MSR runoff was higher than a year ago, partially due to higher prepayment speeds. This component of runoff was approximately $8 million higher than a year ago. The year-to-date adjusted ROE is 17.9% at the upper end of our 2025 guidance. We continue to maintain our adjusted ROE guidance at 16% to 18% for the full year '25. As discussed, GAAP ROE was 17%, and the appendix has a walk from net income to adjusted PTI to help you understand the differences. Now let's turn to Slide 15 for the pretax income results on our Origination segment. Originations adjusted PTI was slightly lower year-over-year, driven primarily by the interest rate volatility we experienced in April that impacted our origination profitability by over $4 million. Consumer Direct continued another strong quarter of recapture results. This quarter, our recapture rate outpaced our closest peers. We also saw higher loss volume versus last year and continued strong performance in the improved closed-end second product that we launched in the first quarter. Reverse orig maintained profitability amid an uncertain interest rate environment, where higher rates for an extended period have limited the amount of benefit a reverse borrower can realize on a new loan. Overall, we're pleased with the performance of our originations business. We continue to operate profitably in a variety of rate environments. Slide 16 gives you the volume and margin review of the Originations segment. The left side shows improved volumes for the consumer direct and B2B origination channels on a sequential quarter and year-over-year basis with flat to declining margins. Reverse experienced lower volume on lower margins, but was still able to deliver a profitable quarter. Consumer Direct's recapture was helped both by better data analytics and improved processes to better connect loan officers with borrowers interested in refinancing. The graphs on the right show the extreme impact that market volatility had in the month of April, where a pronounced dip in margins in the various channels drove a $4 million revenue impact in that month alone. Absent the extreme market volatility, originations would likely have posted a growth quarter versus a slight decline. Please turn to Slide 17 for the Servicing segment performance. Our servicing segment remained a solid contributor to adjusted pretax income with $31 million for the quarter. Forward servicing experienced a growth in average UPB with higher revenue both sequentially and year-over-year. The revenue lift from servicing growth was offset by higher runoff in Q2, driven by more owned MSR and higher prepayment fees. While reverse servicing pretax income declined in the quarter, primarily driven by the negative valuation adjustments on reverse buyout loans, the reverse channel continues to help us in a number of ways. It delivers scale to our servicing platform. It typically provides a cost-effective hedge to forward MSR. It adds to the breadth of our product suite, which helps attract and retain corresponding clients. It provides us with operational expertise to acquire assets that generate significant liquidity on subsequent securitizations on our OLED shelf. And as a reminder, reverse servicing has been profitable 12 of the 13 quarters prior to this quarter. With respect to delinquency, our owned MSR portfolio exhibited improved delinquency stats in the second quarter, both sequentially and year-over-year. There's an MSR valuation page in the appendix on Page 25 with more details. Finally, we continue to pursue new subservicing clients and anticipate subservicing additions over the next 4 quarters. Please turn to Slide 18 for an assessment of our improved hedging performance. Our MSR hedge strategy continues to perform well and as intended. Our strategy is designed to mitigate interest rate risk, and our hedge has been effective in minimizing the impact of interest rates on our MSR valuation, as you can see in the graph. Over the last 2-plus years, we have increased our hedge coverage ratio such that by the end of 2023, we were seeking to hedge the majority of our interest rate risk. When we compare our results with information in the public domain, we believe we provide an effective MSR hedge at a relatively efficient cost versus our peers, who hedge a significant portion of their book. Given that an MSR hedge is dependent on interest rate markets and related derivative markets, we frequently review and assess our hedge strategy to manage risk and optimize liquidity and returns. As such, we adjusted our hedge target to 80% to 100% range following the April market volatility, and we were pleased with the quarterly results. We will continue to assess our hedge strategy going forward as we have done in the past. On Slide 19, we continue to confirm our guidance for 2025. Our financial objectives remain unchanged. And following another strong GAAP net income quarter, we are maintaining the guidance we provided for '25. Details are shown here. Note that our adjusted ROE guidance is not dependent on the release of some or all of the valuation allowance that offsets our deferred tax asset, but is rather driven by our view of the strength of our operating businesses. Overall, I'm pleased to report another good quarter that grew book value per share and delivered a continued strong return on equity for our shareholders. Back to you, Glen.

Thanks, Sean. Let's turn to Slide 20 for a few comments before we open the call for questions. For the second quarter, we delivered sustained robust net income and book value growth, demonstrating our sound strategy and high-caliber execution. Our balanced business is delivering steady results across origination and servicing amid market volatility. And we're reaffirming our annual adjusted ROE guidance, underscoring our commitment to strong shareholder returns. We believe the changes we've made to our business over the past several years have positioned us to successfully and profitably navigate volatile and unpredictable market conditions. Our execution is driven by our experienced business team, who are relentlessly focused on delivering on our commitments and providing excellent service to our customers. All of this comes together to suggest a share price that we believe has significant upside, and we intend to continue to take the necessary actions and maintain agility in a dynamic market to harvest that value for the benefit of all shareholders. Overall, we could not be more optimistic about the potential for our business. With that, Emma, let's open up the call for questions.

We'll take our first question from Bose George with KBW.

Actually, first, just one on expenses. There was a dip in the professional services line item quarter-over-quarter. Can you remind us, was there something unusual last quarter? And are the expenses this quarter fairly normalized?

Sean, do you want to take that?

Sure. Bose, the professional expenses can vary occasionally based on either setting up financing structures, where we're paying legal fees or other litigation activities that could either wax or wane. There's nothing particularly significant, I think, in the change that you're looking at.

Okay. Great. And then actually, just a couple on the deferred tax asset. Can you just walk through the variables that determine, whether all of it comes back or some of it comes back? And then from a credit counterparty standpoint, your capital obviously increases. Do counterparties see your capital levels as being improved once that deferred tax asset increases your equity? Or do they kind of look through that?

Sure. I'll do it in reverse order. Basically, as the deferred tax asset flows through and hits the equity, as you just described, that's kind of the normalized view of any corporation. And so we expect that most counterparties will view that as an improvement in total equity or book value. With respect to the various components that we have to assess before we make a decision on the degree of the valuation allowance that is lifted, the simplest thing to do is look at the various deferred tax asset lines that sit in our K. We only update it once a year. So the 2024 K has all the DTA components. And there, you can see the various aspects that we have to do analytics on as part of a tax planning process. So I can't really go into the details of each line item. The simple ones are the federal and the state tax NOLs. Those are pretty static and unremarkable. And then the other line items are where the variation can occur.

I have one more question about the deferred tax assets. Do they have an expiration date, or are most of them indefinite?

The majority of our federal net operating losses are indefinite since they were generated after the tax law change at the end of 2017 that affected NOL timing. In contrast, some state NOLs will have expiration dates and are utilized on a first-in, first-out basis. Therefore, we generally expect to utilize those before they expire.

We'll take our next question from Randy Binner with B. Riley Securities.

This is Tim D'Agostino on for Randy Binner. On M&A, we think of deals as more origination focused. Do you have a view on M&A activity in servicing?

Tim, yes, I believe that over the past two to three years, there has been a balance in M&A activity concerning some servicing platforms that were available for sale, where companies acquired them mainly for scale, adding either MSRs or subservicing UPB. However, as we have seen, the prolonged higher interest rates are putting pressure on origination-focused firms, and we anticipate some consolidation in that area. Regarding the potential for continued M&A in the servicing sector, it will largely depend on the supply and demand for servicing in the marketplace. If the bulk markets remain strong with a significant influx of MSRs at reasonable prices, I think those looking to expand their servicing scale will turn to the bulk market. Conversely, if that volume decreases but demand for MSRs and servicing assets remains high, we could still witness some M&A activity on the servicing side. Ultimately, it comes down to the decision between pursuing M&A or accessing the bulk market, which is a key consideration for industry players.

It appears there are no further questions at this time. I will now turn the program back over to Glen for closing remarks.

Thanks, Emma. And I'd like to thank our shareholders and key business partners for supporting our business. And I'd also like to thank and recognize the Board of Directors and global business team for their hard work and commitment to our success. I look forward to updating everyone on the call on our progress on the next quarter earnings call. Thank you.

This does conclude today's program. Thank you for your participation. You may disconnect at any time.