Onity’s Reverse Business Turns A Profit As Margins Climb

Onity Group managed to deliver a profit in its reverse mortgage origination segment in the third quarter of 2025, as higher margins offset lower volumes.

Onity — the parent company of PHH Mortgage Corp. and its subsidiary, Liberty Reverse Mortgage — originated $143 million in reverse mortgages from July through September, down from $166 million in the prior quarter and $197 million in the same period of 2024.

But margins rose to 446 basis points, compared to 367 bps in the second quarter and 314 bps in the third quarter of 2024.

The company essentially broke even in reverse originations during Q3 2025, posting a $1 million profit. Meanwhile, Onity’s reverse servicing segment recorded $4 million in adjusted pretax income, a rebound from a $3 million loss in Q2 2025 but down from a $10 million gain in Q3 2024.

“Reverse originations maintained profitability with higher margins on lower volume,” Sean O’Neil, Onity‘s chief financial officer, said during the company’s third-quarter earnings call on Thursday morning. “Reverse servicing pretax income rebounded to $4 million in the quarter, driven primarily by stronger gain-on-sale on the reverse assets.” 

The company’s owned reverse servicing portfolio stood at $11 billion at the end of Q3 2025, up from $8 billion a year prior. On average, its reverse owned and subserviced portfolio averaged $19 billion in unpaid principal balance (UPB), accounting for about 6% of Onity’s total book value.

According to the company, reverse mortgages provide upside potential if rates decline. They also serve as a cost-efficient hedge to its forward mortgage servicing portfolio, and they generate liquidity and accretive earnings through securitizations. They also offer a “one-stop solution” for correspondent clients that offer both forward and reverse products.

Overall performance

Across all business lines, Onity’s total average servicing portfolio stood at $311.5 billion in UPB at the end of Q3 2025, up from $304.2 billion in the same period last year, with more than half in owned servicing. The segment generated $31 million in adjusted pretax income.

In subservicing, Onity announced the termination of its agreement with Rithm Capital, which represented $33 billion in UPB — roughly 10% of the company’s total servicing book at the end of September. These loans, composed mainly of pre-2008 subprime mortgages, were among the company’s least profitable assets.

Meanwhile, Onity’s originations segment posted $25 million in adjusted pretax income on $12 billion in volume, including $11.3 billion from its business-to-business channel.

“Our balanced business delivered sustained results with lower interest rates driven by originations profitability offsetting MSR runoff,” Glen Messina, the company’s chair, president and CEO, said during the call. “Record origination volume and steady servicing profitability drove increased adjusted pretax income versus the second quarter and continued book value growth. 

“To highlight how far we have come in origination, our third-quarter funded volume was the highest we have recorded with a market size that is only 41% of the 2021 market peak,” he added.

Onity ended the quarter with adjusted pretax income of $31 million and an 85% recapture rate for loans originally sourced through its consumer-direct channel.