Reverse Mortgages Offer Resilience For Onity In Latest Earnings Report

Executives at Onity Group have managed to preserve “marginal profitability” in their reverse mortgage origination operations, despite ongoing headwinds in the market.

“Higher rates for an extended period have limited the amount of benefit a reverse borrower can realize on a new loan,” Sean O’Neil, Onity‘s chief financial officer, said during the company’s second-quarter earnings call on Tuesday morning. “Reverse experienced lower volumes on lower margins but was still able to deliver a profitable quarter.” 

Onity — the parent company of PHH Mortgage Corp. and its subsidiary, Liberty Reverse Mortgage — originated $166 million in reverse mortgages from April to June, down from $176 million in the prior quarter and $184 million in the second quarter of 2024.

Margins came in at 367 basis points — 25 bps lower quarter over quarter but 58 bps higher year over year. The company basically broke even in reverse originations in Q2 2025, compared to a $1 million gain in Q1 2025 and a $1 million loss in Q2 2024.

But Onity’s reverse servicing segment posted a $3 million adjusted pretax loss, driven by a valuation adjustment on buyout loans, compared to a $2 million gain in Q1 2025 and a $4 million gain in Q2 2024. 

The company’s owned reverse servicing portfolio grew to $12 billion at the end of Q2 2025, up from $8 billion a year prior. On average, its reverse owned and subserviced portfolio averaged $20 billion in unpaid principal balance (UPB) — accounting for about 7% of Onity’s total servicing book.

O’Neil said that the reverse channel continues to provide strategic value beyond earnings. It helps to scale the servicing platform, acting as a cost-effective hedge to forward mortgage servicing rights (MSRs) and diversifies the firm’s product suite to help attract and retain correspondent clients.

“As a reminder, reverse servicing has been profitable 12 of the 14 quarters prior to this quarter,” O’Neil added. 

Overall performance

Including all business lines, Onity’s total average servicing portfolio stood at $307 billion in UPB at the end of Q2 2025, with approximately half of that owned by the company. The segment generated $31 million in income.

​​Onity services and subservices 1.4 million loans across its forward, reverse and business-purpose channels on behalf of more than 3,900 investors and 120-plus subservicing clients.

Meanwhile, its originations segment posted $9 million in adjusted pretax income on $9.4 billion in loan volume during the quarter.

Looking ahead, Glen Messina — Onity’s chair, president and CEO — said the company expects servicing to remain as its primary earnings driver in 2025, with originations projected to grow modestly.

“We’ve been steadily increasing our own 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 opportunity,” he said. 

Onity currently has an 88% recapture rate when the original loan was sourced through its consumer direct channel.

The firm is also leveraging artificial intelligence to improve efficiency. Messina noted that AI-powered data extraction has now been deployed in more than 190 processes, performing the work of approximately 400 employees and saving roughly 57,000 hours of manual labor per month.