Good morning. My name is Holly, and I'll be conference operator today. At this time, I would like to welcome everyone to the New Residential Second Quarter 2013 Earnings Conference Call. [Operator Instructions] I'd now like to turn this conference over to Ms. Sarah Waterson. Please go ahead, Sarah.

Thank you, and welcome to New Residential second quarter earnings call. Today, with me, I have Wes Edens, Chairman of the Board; Ken Riis, CEO; Robert Williams, CFO; and Paul Stockamore, who manages our Excess MSR and 98 Street [ph] RMBS portfolio. Certain statements made today may be forward-looking statements and not statements of fact. These statement described the company's current belief regarding events that, by their nature, are uncertain and outside the company's control. The company's actual results may differ materially from the expectations expressed in any forward-looking statements. So do not place undue reliance on any forward-looking statements. I encourage you to read the disclaimers in our earnings release and supplements regarding forward-looking statements and expected returns and to review our most recently filed documents with the SEC. Thank you, and I would now like to turn the call over to Wes.

Great. Thanks, Sarah, and welcome, everyone. Well this is our inaugural call for New Residential. We've had some calls with you, our shareholders and analysts, with regards to our spin activity and whatnot, but as a public as a company, this our first quarter. It's actually exactly a 0.5 of the quarter as a company that spun off from Newcastle on May 15. This is a business that has primary exposure to the U.S. residential housing markets and elements of that, as well as the consumer markets in the U.S. Those are gigantic markets. We think that there's a tremendous amount of interesting things going on and the opportunities that is a vast one. It's a portfolio that was constructed to perform well in high-volatility environments. It's a portfolio that we expect to perform very well in high-rate environments, and we've got a test of that thesis really right out of the blocks. I think, 7 days after the company was spun out is when the Fed Chairman announced that they were contemplating reducing QE or eliminating QE. The market went through a tremendously volatile period in the month of May. If you look at the -- some of the benchmark issues, so Fannie Mae, 3.5 had roughly an 8-point swing over the course of the quarter. It went from mid-105s down to mid-94s. The AVX market, which is a good proxy for the non-agency investments that we invest in, again about a 10-point swing. I think the high was 76, the low, about 67. 10-year interest rates went up fairly dramatically in the quarter. I think the total volatility over the course of the was about 80 basis points. Quarter-over-quarter rates up 63 basis points. Across all that backdrop, at the end of it all, our book value at…

Thank you, Wes. So I'm going to start on Page 7 and just bringing the kind of portfolio that we've been able to selectively pick and choose over the last 18 months. And so right now, the entire portfolio is about $300 billion of UPB. In the second quarter, we closed on approximately $104 billion UPB and invested $140 million. And also, the profile, the stuff that we closed in the quarter is very consistent with the existing portfolio that we have. As Wes mentioned, the portfolio is predominantly a credit impaired portfolio, which, again, we prefer and we've actually targeted. And the reasons we target it is that these borrowers typically have fewer refinance options, as well as they have some kind of credit stress, where we think that the performance of Nationstar and the servicer can overall drive to higher returns and improve the overall performance of the portfolio. So walking through the portfolio, we really think about in 2 different ways. We think that we have an agency portfolio that is $162 billion of UPB and a non-agency portfolio that's $135 billion of UPB. So let's take the agency portfolio. The characteristics right now is it's 5.1% WAC versus a 4.5% current coupons. So a lot of these borrowers are close to being out of the money in terms of refinance options. The average loan age is about 5.5 years. The credit characteristics look at the FICO and the LTV. These borrowers -- really, the only refinance option is through a hard plight government refinance program, where we have -- we've experienced recapture rates north of 50%. And as well, the FICO score is a little bit credit distressed. And so these are ones that have fewer options. In terms of performance with this portfolio, life to…

Great. Thanks, Paul. Just really briefly on Page 13, this is a snapshot of the portfolio that we invested in. So you can see from the map, these are consumer loans, for the most part, in the Nation's heartland. It was a total portfolio of about $4 billion in phase. We've paid about $3 billion for it. It was financed with originally $2.2 billion in debt. Does not pay down the $2 billion. You can see that we, at NRZ, own 30% ratably of this. There's a box from the left-hand side that gives you the profile of borrowers. So the reason for the discount, really a couple of things. One, the economics of the underlying borrowers, a little bit less than where the market is. You see a coupon rate in this 18%. That's 4,000 basis points or so less than the other portfolios, which we see are -- that are prime portfolios. One, too, is FICO, a little low -- delinquencies and performance are a little bit less than where the market standards were. That's why we end up buying at a discount. If you look at Page 14, the performance of the portfolio given the price that we paid for it has been exceptional thus far. The box at the bottom of collateral performance is the one that I would really point to. If you look at the CDR, the charge-off rates, so this is the rate at which borrowers are actually being charge of within the portfolio. Second quarter 2011, so just to the tail end of the crisis, 17.6%. That's dropped down to 13.6% in the second quarter 2012. That's continued to drop. It's now 11.4% today. Again, for context, the prime portfolio in the consumer portfolio, we see frequently are 5% or less. So…

Sure. So on Page 17, really, the goal for this page is while we think this is a relatively small percentage of our overall portfolio, we wanted to give some substantial disclosure in terms of what we actually own. The purpose of our agency arm book is predominately for '40 Act reasons. And so even though we hit the $1.1 billion portfolio, it has an extremely short duration and, in fact, the behavior of the portfolio really acts more like a treasury bill versus being more like a longer-duration asset. The portfolio is 100% ARMS. The first coupon adjustment is close to 500 basis points. So we think that's a meaningful protection in terms of any movement in interest rates. Over the quarter, the portfolio was down only $6 million relative to our overall book value. That's less than 0.5%. And we think that going forward, this portfolio, being in the ARM portfolio, will just -- will move along interest rates.

Great, thanks. And actually, one thing, I'll turn it over to Robert Williams, CFO, to walk through the financial update. Robert?

Sure. Thank you, Wes. As we mentioned a couple of times, we spun New Residential out on May 15. So what's important is within the second quarter, the independent publicly traded company was in existence for 45 days. However, under GAAP, we report our full quarter. So for the full quarter, we had GAAP income of $109 million, which is $0.43 per diluted share. Core earnings for the full quarter was $37.5 million or $0.15 per diluted share. When we look at the post-spin of 45-day period, our GAAP income was $85 million or $0.33 per diluted share. And again, core earnings for that post-spin 45-day period was $18 million or $0.07 for this, again, this post-spin period. Our second quarter, common dividend was paid based on our earnings generated by New Residential as a standalone public company, or again for the second 45 days of the quarter. We paid a common dividend of $80 million, which is $0.07 per share, which represented 100% of our core earnings. Our quarterly results were impacted by having approximately $112 million of average owned invested cash for the quarter. If we'd invested this capital at 15% return for the quarter, our results would have increased by about $0.02 per diluted share. A quick update on liquidity. Our cash available on invested pro forma basis after activity, after 2Q activity was approximately $60 million. So with that, we'll open up the floor for questions.

[Operator Instructions] And your first question will come from the line of Douglas Harter, Credit Suisse.

If you could talk about -- it looks like on pool 7 and 8, the expected IRR on those defined. If you can could just give us some explanation behind that?

Sure. I mean, I think, what we've -- in general, what we've done in our portfolio, we've held our underwriting assumptions consistent. And so while we've seen some pricing pressure in terms of, as we've continued to move along, we think that there is meaningful upside in the portfolio. And so while -- rather than adjusting our assumptions, we underwrite to a conservative yield. And then as Wes mentioned, through driving improvements and delinquencies and as well as prepayments and recapture rates, we think that we'll be able to see higher-teens returns.

So I mean, I guess, in -- will there be any impact from the higher rates on those? And I guess, has that been flowing through?

Well, I mean, we obviously think that higher rates are going to impact prepayments. So we showed the range. The sensitivity page we've put together was specifically to try and get people a very clear snapshot into what could happen if rates were to really move and thus, prepayments will really slow. So if you take, if you look at the page, if you go from a 15%, an underwritten rate across the portfolio down to a 5% rate, which I think is something that you would get if rates were up a couple of hundred basis points, the portfolio goes up in value on that one metric alone by about $0.5 billion. So again, there are very few things in the plan that would actually go higher in value as rates would arise. This happens to be one of them, and this is a very, very clear kind metric to kind of look at in that regard.

But the IRR assumption does not reflect any of that through your assumptions?

It really doesn't. And as Paul said, we underwrite to where we underwrite and we've kind of reported it faithfully. I think -- I hope you guys like the disclosure. We -- in addition to the aggregate disclosure we walk you through here, there is disclosure on every single pool and they'll ask to show what it is. So obviously, that's designed to give you real visibility into what's going on. The aggregate numbers are what, of course, we pay attention to because that's what really drives our abilities to pay dividends and earn money and I think -- and generate returns for shareholders. But the disaggregation of that, underpinning that portfolio by portfolio, is what you see in the back of this.

And then I was hoping you could walk through what the difference -- on the consumer loan portfolio, what the difference between the GAAP earnings and kind of the core earnings would be on that portfolio?

Hey, John -- John and Brian are in 2 different places. John, Brian, are you there? Walk through it. I mean, I think that the difference in the GAAP earnings is just the leverage, right? So it's a leverage and the fact that the leverage is basically paying -- the cash flows from the portfolio are paying down the leverage, so you're showing -- that's why the book value of the investment actually went up over the quarter because what happened essentially is we took cash flows and reduced the amount of debt. Rather than bring in the cash earnings, that's where -- we didn't really change the mark on the portfolio. What happened is you're just basically adding to the book value by adding in the returns for the quarter. That's the kind of the short answer to that.

Did you what made hop in on the core earnings versus GAAP on the consumer loans?

Yes, go ahead, John.

Sure. So the core earnings is actually really easy to explain. The core earnings on the consumer loans is simply based on a level yield methodology. So all the cash flows from the loans are treated equally and the yield is even over time. And that's kind of the easiest way to think about it and that's the way we underwrote the portfolio. On a GAAP basis, based on the -- some of the loans not falling into our accounting regime where you can use a level yield, the GAAP basis earnings are going to be choppy over time based on your actual cash receipts, both on the interest side, on the coupon and on the charge-offs on the loans when they go and they default, is going to cause a great deal of choppiness from the GAAP side. So that's why we decided to go with a level yield methodology for our core earnings.

Your next question comes from the line of Henry Coffey, Sterne Agee.

A couple of questions. If you look at the interest income reported on the -- for the quarter and divide it by whatever the average MSR is, what sort of effective yield would that suggest? And is that the best way to really think about this portfolio?

I mean, I think it's not a bad proxy. So I mean, just think about the cash flows for the MSR book was...

No, no, the interest income. The one -- because a portion of the cash flows in the MSR and then they just -- it's like owning an IO. It's just return of principals.

Yes. The -- well, the interest income is basically an estimate of what is returned on principle.

Right. And if you did -- divide A by B, what would that number look like?

It's the current return. It's actually is as reported. So it's 17% return that we've shown in the overall portfolio. That's the interest income. That's the current yield on it.

And that really is a -- and that seems to be tying in nicely to internal rate of returns as well, right?

It is. They basically are the same. When it's on leverage like this, there's very little other things that can influence this, so it's really is the same thing.

When you look forward, we're probably going to see 2 sources of MSRs released either late this year or early next. Pricing is going to range everywhere from 60 basis points for highly distressed POS to probably over 100 basis points for clean MSRs. There'll be more of the clean stuff coming over the next 3 to 4 years. Can you structure a levered capital situation where you not only can buy the historical business that you've been buying and made that 17% on, but perhaps also find a way to buy cleaner more leverageable servicing?

It's a really interesting question, Henry. We've got -- it has really been a market of 2 types of MSRs to date for the most part, which has been the credit impaired agency and then the PLS, which is, by definition, has been credit impaired. And now with origination volumes being where they, you've seen a handful of portfolios that are trading on the new stop and certainly, we've seen that. One window that we have into that activity is that to the extent that we have been rewriting business, in other words, recapturing the loans that been refinanced, the actual prepayment rate. which Is something we will break out as it becomes more meaningful over time, have really been next to 0. So those are tremendous assets to own. And if you look back in the very first portfolio that we have, we have nearly $1 billion of new MSRs that we rewritten that we think is just solid gold. Now I think when you look at the new portfolios, the risk of them, as the price goes higher, is you're dependence upon your refinance ability to recapture them gets higher and higher. So for example, there was portfolio we looked at recently where we thought it was attractive from an economic standpoint. We didn't -- we would not have controlled the recapture in the same way that we have another portfolios and as a result, ended up passing on it. We dropped our bid and passed on it because I just thought there was -- from a risk-adjusted standpoint, it was this out of sync with what this is. I do think that as the second half of the year goes on, you are going to see a lot of action in the market on MSRs that are similar to what we own right now. So I do think there's a lot more of this to come in some form or another. But this time next year, this time 2 years from now, I think the activity will be dominated by the new origination stuff. And so you'll have -- really have these 3 classes of MSRs to keep track of.

But do you think you can find a structure within NRZ that will allow you to buy these, we'll call them 9% to 10% yielding MSRs?

The -- we obviously -- our investment objectives are higher than that. So we would have to think that there was a better return on that. And I think when you really look hard, and then MSRs are priced to 9% or 10% rate right now, there's a lot more downside than upside to that. And the -- it sounds like a very simplistic thing to say, I'll say it anyhow is that with an interest rate-sensitive investment like this, once it's prepared, it's gone, right? So what you're doing, I mean, IOs don't run prepaid. Once they've hit prepaid, they're gone. I get to be very conscious in those type of investments. And you can certainly add financial leverage to increase returns, but that's not been our position or statement thus far. We can obviously improve it to hit the economics of this portfolio by leveraging it. We generated substantial returns without that and that's going to be our base case right now. And what the structures look like on the new originations stuff, we'll have to see. I think there's -- without kind of getting into the details, there are other ways, we think, that you can access those MSRs on a bit more of a kind of an operating basis that we think can generate the kinds of returns that we want. So hopefully, you'll see some good action from us in the second half this year along those lines.

And then on the consumer loan portfolio, and this may be overly simplistic, but these are real estate-secured, not real estate secured loans? And what is the real lever for turning those assets into cash?

The -- look, the consumer loan business is a gigantic one, $2.5 trillion, we have a big stake in our company, Springleaf, and -- so we are a very, very familiar with that portfolio in general. Again, these are, for the most part, unsecured. When we say unsecured, in many cases, they have some form of collateral. The collateral could be about a car, even the mortgage on a house, but for the most part, they really are unsecured financings. They are installment credit as opposed to revolving credit, right? And so the -- which makes them, from a static kind of loan analytical perspective, much to easier to understand and predict their behavior than of the revolving basis. So we like the business a lot. This is a portfolio that was a legacy portfolio that was being sold. It had some impairment in terms of its creditworthiness. It had impairments in terms of it's overall coupon. That's why it traded at a discount where we don't think the rest of the market really does trade in discount, but -- so we're very happy with the acquisition.

But what's the magic to getting the customer to pay you?

People -- there's a rule on this country when people, for the most part, payback what they've borrowed. Not in every case, but that's what it is.

Are you then able to offer a future inducement of additional access to credit, or...

That's actually a big part of -- we're doing some really -- I mean, this is not the right call to talk about it, but we're doing some really interesting things of the consumer side. I hope we will be talking about it in the context of Springleaf sooner rather than later. But we think that there's a lot you can do for those customers in addition to providing them just share capital, so...

Your next question comes from the line of Jason Stewart, Compass Point Research.

On the -- I just wanted to get back to Doug's question on the performance of pool 7 and 8. And it looks like the CPRs are outside, a little bit outside of the bin [ph] you initially expected. And just wanted to get out what the driver of was, whether it was HARP activity or perhaps it was expanding credit underwriting guidelines from competitors? Any more color on what's driving the increase in CPR? If I'm wrong in that, it's not what's causing it, correct me.

Yes. I think you nailed it with the first point. It's that each full [indiscernible] have a roughly high HARP concentration. And so in terms of timing of when Nationstar is able to target those borrowers and recapture those loans, it's unclear, but it's also defining [ph] population. And so whether the pool prepays faster in the short term and then slows quicker, or it's more a level basis, we are -- what we're seeing is that Nationstar has been able to effectively go after those loans specifically and actually see a pretty impressive response rate. And so we think that some of that's going to taper as interest rates rise and as that population declines --

Okay, and I agree. We've seen Nationstar be very successful in recapture rates. Is there any lag between when it's reported as a CPR and when it's reported as a recapture?

So the way we report recapture is actually when the load is actually redelivered. So let's assume that the period is about 45 days or so. So there's a small lag in recapture rates.

Okay, got it. And then one follow up on the consumer loan. I mean, obviously, it's funded today, but we've seen Springleaf be pretty successful in executing some term deals in a market at significantly higher leverage ratios and probably better funding costs. Once the portfolio is being serviced and you can get the rating agencies on board, any updated thoughts on accessing the term market with at least a portion of the portfolio?

Yes. The acquisition, we ended up funding, I think, at a better level than where the market was. And I think a big part of the reason why we generated 30% returns on this is because the price ended up being opportunistic with respect to what financing we got in place. I think that's the short answer to that. Specifically, on the question of refinance or restructuring this, I do think that there's a better debt that's available, as this portfolio has more experience and goes forward over time. The overall cost of leverage on this transaction is about 3.75%. So on a nominal basis, it is higher than where the financing got done for Springleaf, certainly. But 3.75% is a pretty sport rate to start with. So there could be -- there could definitely be some early return of capital. To the extent that we want to deleverage it, [ph] something that's very, very plausible for us now. And we think the rates could be better. But at the moment, with the current capital structure in place, it's generating plus or minus a 30% return, so it's something we're very happy with.

Okay. One last one. As I look at [indiscernible] and look at the Excess MSR Fund 1 and 2, the amount of capital that's been raised for both of those funds, I mean, it seems pretty clear that the suggestion of pipeline is still a little bit than reported here. And perhaps if you could just comment on how we flip the capital being raised there, whether NSM [indiscernible] continues to expect to risk share or effectively, investment share in all the transactions, or if there's a different set of opportunities because...

No. Well, look. Look, you're always -- it's an imperfect science of trying to estimate the future availability of investment and matching it up to investment dollar. So what we have done historically is we basically have kind of split investments roughly 1/3, 1/3, 1/3, between Nationstar, private equity funds and then NRZ, and that's we anticipate going forward. That could change based on the size of the transaction, the nature of the transaction, et cetera, but I think that, that's a very good rule set to start to walk forward. I do think that there is the potential for some very large transaction, similar to what we saw over the last 12 months, to occur. Because as I said in my opening remarks, I think that the forces that are compelling the banks to think hard about reducing exposure to the mortgage market, capital requirements, regulatory pressures, et cetera, have not abated, and in fact, in some cases, are actually rational increasing. So I think it's entirely possible, we're going to see some big portfolios coming out. What Paul is really referencing in his pipeline report are things that are in the market now, that are actionable and things that we're working on. So there appears to be kind of a disconnect between what we think the aggregate opportunity is and the specific portfolios that are out there. It's really that.

The next question comes from the line of Bose George with Keefe, Bruyette & Woods.

Actually, this is Brian, sitting in for Bose. I was just curious, what drove the decline in the average discount to used in the Excess MSRs, and just if you could help quantify the impact of that on the MSR valuation?

Yes. I mean, I think it was a combination of a couple of factors. But, by and large, it was interest rates. And so as -- if you have a portfolio with an average coupon of 5% and let's say a 30-year fixed rate at 3.5%, just the refinance incentive for the portfolio is -- or call it, 150 basis points non average. And that's -- that creates a lot of optionality and a lot of pricing variability. As interest rates rose in the quarter and as we got closer to borrowers being out of the money, we felt that the overall quality of the portfolio improved. And as such, the discount rate -- we've brought discount rate in. The second factor, too, is admittedly, there's definitely more pricing pressure in markets here. And so I think that the second component was just given the bit that we saw and call it, the overall activity in the quarter, we felt that a more, call it, mid-teens discount rate going in was consistent with where we were in the bidding of portfolios.

Great. Any way you can, I guess, quantify the impact that had on the valuation?

No. I mean, it's really the -- it's false. You're looking at a bunch of different factors to try and come up with valuations. When you look at the price activity of the most liquid instruments, which would be the IOs, right, that's probably the single biggest factor, that was the actual market transactions on where thing are traded. And I think our market valuations are conservative, kind of given the movement of those 2 things.

[Operator Instructions] And your next question will come from the line of Matthew Howlett, UBS.

Just going -- looking to non-agency portfolio, what's the time frame for collapsing what you have left? Are you looking to make -- I mean, are there additional investments with the recent sell-off in that market? Are you still looking to build that portfolio, or you're looking to sort of just collapse it and realize the gain?

No, absolutely. I mean, I think we're on a growth path of this portfolio. I mean, Nationstar services, $100 billion-plus of the [indiscernible] University on call rates on mostly all of it, where we own 1% of that portfolio. And so it's really about staying strict within the terms of sourcing, the right part of the capital structure that really enhances the economics of the collapse. And so -- but what we saw in the quarter, I mean, just given the corporate -- the technicals that ensued after kind of -- their break is the announcement on [indiscernible] really created a -- even more of a window in terms of buying opportunities. There was -- there are dealers right now sitting pretty heavy on inventories. There was a large liquidation list in May and June as well, where we've put some pressure, downward pressure on pricing. Fortunately, for our portfolio, which is relatively seasoned, we didn't see much of the movement in pricing. But in terms of near-term buying opportunities, absolutely. We'll be taking advantage of it.

It looks -- clearly, with the leverage returns in mid-teens and possibly higher than -- I mean, it -- there certainly is an investment [indiscernible] to be made to being in this business. But when you combine it with the serving, the MSRs, I think the goal of the vehicle was to lower the overall requirement to cost of capital, given the steadiness of the MSR, 5-, 6-year cash flows and the leverage. I mean, what's the investment case that combine these 2 portfolios? I mean, do you think the market is going to recognize the stableness of -- and the received cash flows, even if you're using a little bit of leverage with this type of portfolio? I mean, what -- just walk me through some of the combination of both basis?

I think it's actually very complementary between the 2. They're both related in the mortgage space, and mortgage space is a big one. The MSR investments, the new investments tend to be episodic in nature. So there are and there will be continuing more floral arrangements. You'll see more consistent investment additions from that side. But the nature of the businesses is it's been episodic sales on the part of financials institutions that have created kind of the investment opportunities. The non-agency positions are related. They're different, but related. And we think leveraged to the one with the none mark-to-market debt, generate mid-teens returns in this market of 0 percentage interest rates, still is still extremely attractive investments. And the -- I think that as Paul and the group had success in collapsing transactions and adding incrementally those returns, it makes that part of the business even more attractive and it's also business that happens kind of everyday, right? There's -- that's still a very large market. It was couple of trillion dollars at the peak. It's still $800 billion or 900 billion in non-agency securities that are out there. So it's a big environment market. We see a lot of opportunities. And to the extent that we can actually focus of those with our servicing partner and control both the collapse, as well as the refinance and the collections activity of them, we think that those concerns are terrific. And I do think that the combination of that over time actually adds to the stability and stableness of the earnings and thus, the dividends. And hopefully, our cost of capital will really reflect that.

You certainly have no peers, I mean, to really comp against. That's part of the market's confusion why you're not already getting a lower dividend yield requirement. And then just on that point, on looking at new acquisitions, raising capital down the road? I mean, Wes, you talked about possibly using short-term alliance against your MSRs to buy a big portfolio and then to term it out later. You have all seen -- [ph] know preferred in the capital structure. And your trust preferred that, that [indiscernible] left with the legacy company. I mean, how come we -- what can we assume in terms of reasonable corporate debt in terms of leverage in the core debt market, what you do going forward. Would you choose some short-term borrowing to buy a big portfolio of that [indiscernible] on your screen?

Well, I think having the really leveraged balance sheet gives us a lot of financial flexibility to look at actions and that's obviously -- that's an intended result. So we do think that it gives us flexibility. We're working on a bunch of different financing initiatives to try to make that a bit more actionable. We have looked at corporate stuff. We had looked at different kind of the financing lines. Nothing is in place right now, but it's a very, very hot topic around the firm and we're looking to that. Relating to that, to your point is exactly the right one, is you want to be in a position of -- to be opportunistic if this situation arises. But you don't have to have a bunch of capital sitting in your balance sheet, invested, in order to do so.

Right. So when you look at -- and finally, for me, you could -- you look at everything from the preferred market to converts, some of your peers, you'll see exchangeable notes. I mean, are you looking at sort of everything?

We are. Except I'd say that the governing factor for me is, I think that the market will reward transparency and simplicity in virtually, every case. And we've got an extremely concise business here. We've given -- gone at great lengths of great, tremendous transparency for the analyst investment community. And before I did something that was really, I think, little bit fancier in the capital structure, we will think long and hard about it because I don't think that, that is necessarily always the long-term best solution, so...

Right. But as I've said, now, with your balance sheet, you could be involved with a large -- to them, a big MSR transaction came out there. I mean, energy, it could be involve very easily with the size of your balance sheet here today?

Absolutely.

And that does conclude today's conference call. Thank you for your participation in the New Residential call. You may now disconnect.