New Residential Investment Corp (NRZ) is looking at continued dividend growth with new mortgage servicing rights from the company’s partnership with Nationstar Mortgage Holdings Inc (NSM), and the value of these rights position NRZ well should interest rates rise, says Douglas Harter, Vice President at Credit Suisse Group.
“New Residential (NRZ), I think that’s attractive from the continued transfer of servicing from banks to nonbanks; that should allow for continued dividend growth as they continue to source new mortgage servicing rights with their partner Nationstar (NSM),” Harter said.
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Harter views NRZ as an attractive asset, because rising interest rates would actually benefit the value of mortgage servicing rights, positioning NRZ well in a higher-interest-rate environment.
“I would also say on New Residential that I think it’s an attractive asset, because should rates rise, that would be beneficial to the value of those mortgage servicing rights. Especially in context of a mortgage REIT portfolio, having New Residential is attractive from a portfolio theory of having something that actually benefits from rising rates,” Harter said.
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