This week on the Power House podcast, Diego sits down with Baron Silverstein, the president of Newrez. Baron joined the Newrez team in May of 2020 and has over 30 years of industry experience with senior roles at Bear Stearns, JP Morgan Chase, Merrill Lynch, and Bank of America Securities. With a total unpaid principal balance of $750 billion, Newrez has seen significant growth under Baron’s leadership.
Baron talks about past, present, and future growth and acquisition strategies, the 2025 roadmap for customer experience and retention in the tech and AI space, and their continued focus on third-party servicing and owned MSRs.
Here’s what you’ll learn:
M&A will continue to be a priority for New Res's growth strategy.
Servicing is a core focus, with a strong emphasis on special servicing.
Customer retention is key: leverage technology to enhance homeowner experience.
New Res aims to balance servicing and origination efforts based on market conditions.
Community engagement is a priority, especially in response to natural disasters.
AI initiatives are part of a broader technology strategy, not the sole focus.
Baron talks about past, present, and future growth and acquisition strategies, the 2025 roadmap for customer experience and retention in the tech and AI space, and their continued focus on third-party servicing and owned MSRs.
Here’s what you’ll learn:
M&A will continue to be a priority for New Res's growth strategy.
Servicing is a core focus, with a strong emphasis on special servicing.
Customer retention is key: leverage technology to enhance homeowner experience.
New Res aims to balance servicing and origination efforts based on market conditions.
Community engagement is a priority, especially in response to natural disasters.
AI initiatives are part of a broader technology strategy, not the sole focus.
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NewsTranscript
00:00We obviously want to basically connect with customers the way that they want to be connected
00:05to, and it starts with self-service tools, it starts with our digital tools, it starts with
00:13making sure that we are making it as easy as possible for them as they continue to basically
00:20go out and throughout their home ownership journey.
00:30Welcome to Powerhouse, where we interview the biggest names in housing and ask them
00:35about their strategy for growth. I'm Diego Sanchez, president of Housing Wire.
00:40My guest today is Barron Silverstein, president of New Rez and a true powerhouse.
00:46Barron, it's so great to have you on the show.
00:49Thanks for having me, Diego, and I appreciate you guys inviting me. I think I'm definitely
00:56a fan of your podcast, I'll say that. I've listened to many of them and a fan of Housing
01:03Wire. Across the board, you guys continue to put out great content and you're a great partner,
01:09what I would say, in the industry overall.
01:11Well, I really love to hear that, Barron. And you're actually approaching
01:15five years at New Rez. I would love to hear from you some of the highlights and the low
01:24lights of your tenure and what you're thinking about for the next five years.
01:28Yeah, so look, I've been in the industry a lot longer than five years, but I've only
01:34been at New Rez for, this is coming into my fifth anniversary, but I will say this, it's
01:42been a wild ride, but it's also been fun. It's been exciting and no different that the mortgage
01:51industry continues to basically put up either new challenges, but also new wins and new,
01:59exciting kind of paths across our entire industry and our business overall.
02:06But I will tell you that our path has been through a lot of different acquisitions and
02:14a lot of growth. It's really kind of throughout every single one of the different
02:19hurdles that we've had, it's brought our team closer together. And from my perspective and
02:26from even my prior career, 30 years on Wall Street, for me, it's always been about the
02:33leadership team and the people you have in your organization about how they drive your business,
02:41from either a cultural perspective, but also from a business perspective and how they think about
02:48what they do every single day. And do they care about what they do? Here at New Rez,
02:52we talk about caring fiercely and that is a core value for us. And I would tell you,
02:59I have the best leadership team in the business and we care about our homeowners, we care about
03:05our employees, and we care about what we do every day and it cares and it just drives through our
03:09entire organization. Have you integrated leaders from some of the companies that you acquired
03:18into that leadership team or has that primarily been built by you?
03:22It's a combination, but I would definitely say the base is from the organizations that
03:31we have acquired and that also gives you kind of the benefit of how others have run their platforms,
03:41whether it's on the origination side, whether it's on the tech side, whether it's on the
03:45servicing side, or any one of your corporate groups about how they think about attaching
03:50to the business. And I've always kind of felt that it provides you those different perspectives
03:56really to kind of drive your path on how your organization is run. So, that combination
04:06is what our leadership team is made up of. We've done some acquisitions at HousingWire
04:13and it can be challenging even if there's a cultural fit. Leaders from the other organization
04:21have been doing things their own way for a while and you've been doing things your way for a while.
04:28How do you kind of mesh those two different ways of doing things so that it can be a cohesive and
04:35functioning leadership team? Yeah, so look, there can only really be one person that drives that
04:40strategy at the end. The term that you just referenced, I sometimes call that foundritis.
04:48Thankfully, I haven't had to use that in some period of time. But I would tell you that of
04:55all the transactions we've done, the businesses were run by what I'd say is top-notch leaders that
05:02had their strategy. And what at the end of the day is like is if you feel and we feel as a business
05:10that we've pointed ourselves in the right path on what we want to prioritize, what's important to us
05:18and what's the path to get there, the leadership team kind of basically comes in alignment. And
05:24that to me is really important to make sure that all of us are collaborating, all of us are
05:30basically focused on what our strategy is and what our platform wants to be. And to the extent
05:38that you make it collaborative, it strengthens my relationship with the leadership team. Like you
05:45said, I've only been here for five years, but the people I work with on a day in and day out basis,
05:51I consider them to all be my friends. And they're all my partners. And I care a lot about
05:59them and us winning every single day. So that's the way I look at it. So yes,
06:04there's that cultural difference. But if they're not aligned with you, then obviously you need to
06:10move in a different direction. But where we are today is in a great spot, best spot we've been in
06:17since I started. Now, in 2025, I know that NewRez has been primarily built through acquisitions.
06:26In 2025, will M&A continue to be prominent in your growth strategy, or are you moving in a
06:32different direction? We're going to continue to look at
06:38all types of opportunities for us. There's no reason for us to not continue to look at
06:45opportunities in the marketplace, whether it's a servicing opportunity, or an origination
06:51opportunity, or a technology opportunity. We will look at each of those to the extent that we feel
07:00like it's creative for our business. We're certainly going to use that, and that'll turn
07:06into one of our priorities for our platform and our business. So that's not going to stop.
07:14Part of that is also with Rhythm. Rhythm is obviously focused on being what I would say is
07:22a top global asset manager, and Michael continues to change his strategy about how he wants us to
07:30basically drive his company. That same kind of philosophy just flows downstream into NewRez.
07:38I was going to ask about Rhythm Capital next, so that's a helpful transition. How does their
07:44ownership impact your day-to-day and the operations at NewRez?
07:51Michael, as any other corporate parent, they have a board and they have an expectation of
08:02what we do on a day-in and day-out basis. That drives from all of our risk management practices,
08:12policies, and procedures. But also, Rhythm, we are a key asset for Rhythm. We are a strategic
08:23partner for Rhythm, and that's not going to change. We create assets here. We acquire assets
08:34here. When I talk about assets, I'm talking about mortgages. We acquire and create mortgage
08:38servicing rights. That has always been a DNA of Rhythm and their investment philosophy and their
08:48investment strategy, so I don't see that changing. The way I look at it is they're a great partner to
08:54have. They have permanent capital, and they also have an investment thesis. But I would also tell
08:59you that why I also think they're a great partner is just their risk philosophy on everything that
09:08we do. That risk philosophy is certainly on the capital market side and the investment side,
09:17but across the framework of our compliance framework and our operational thesis of how
09:24we manage risk. Rhythm has gone on the record multiple times over the past couple of years
09:31and said that New-Res could eventually be spun out on its own. To the extent that you
09:38can comment on that, is that still under consideration? Michael talked a little bit
09:44about it in the third quarter earnings call. He continues to evaluate it. The thing that I
09:54would tell you, and I just referenced it, we are a strategic asset, New-Res is, of the Rhythm
10:03strategy. They're becoming what I would say is a best-in-class global asset manager.
10:14I don't expect that to change, meaning that we are going to continue to be in whatever
10:21type of transaction that Rhythm is evaluating. We're going to continue to be a big part of
10:27that strategy on whatever type of transaction they otherwise choose to execute on.
10:35That makes sense. Now, New-Res is a giant servicing business with $755 billion in
10:43unpaid principal balance, but you also have distributed retail, wholesale,
10:50direct-to-consumer efforts. How do you prioritize between these different business lines?
10:58Look, servicing has always been a core focus. I think it's a good place to start.
11:08The market has obviously changed in the favor of servicing from an interest rate perspective,
11:17but Rhythm, and then obviously with their acquisitions of different operating businesses,
11:24has always really been a servicing focus. It certainly started from an investment thesis,
11:30and now it continues to basically morph into an operating business. Then we've bifurcated
11:37the operating business into our third-party strategy, service on behalf of others, but
11:42also on an own MSR framework. From a prioritization perspective, it is a core focus of
11:50our platform across the board. The origination businesses, what I would say is, from each of
11:56the different acquisitions, there have been different channels on how we focus our business,
12:05but we look at each of the origination businesses as to where we think we get the biggest alpha at
12:13that time. We don't need to be the biggest, and we've talked about this on multiple different
12:18quarters. We focus on relative value, profitability, and where we can take
12:26advantage of opportunities between each channel. That's how we think about where we put our
12:31capital. We like today, in today's market, where Correspondent is, and it's the largest,
12:37from at least by dollar volume and originations. We have the largest share in the Correspondent
12:46channel, but we take advantage of each of the channels as to how we think about
12:53and where we put our prioritizations. From Rhythm Capital's Q3 earnings,
12:59I calculated that third-party servicing is about 30% of your overall book.
13:07Is that the right ratio for New-Res?
13:13I would say it this way. Our focus has always really been on special servicing.
13:22I'll say, and I talk a lot with our servicing team about it, like our DNA. We focus on
13:29our special servicing capabilities and our ability to help homeowners stay in their home,
13:34but our ability to basically help clients that own, say, hard-of-service portfolios of MSRs and
13:43come up with solutions for them, as well as coming up for solutions for the homeowners.
13:48That has always been a core focus of ours. It is what we're great at. Obviously, with the market,
13:54basically, where you see delinquencies slowly continue to rise, and depending on what happens
14:02with employment, obviously, today's number was a little more bullish and robust, great movement,
14:09but we know that is our core DNA, what we're great at, and what we continue to focus on.
14:16The SOS acquisition is very similar. They had a similar thesis to us,
14:21focused on some of those, what I'll say is those hard-of-service assets or non-agency-type assets.
14:27When you look at the other third-party servicing businesses, we call it subservicing or just
14:33really agency, Fannie, Freddie, or Ginnie third-party servicing on behalf of those third-party
14:40clients. We have not really focused on that business historically. The acquisition of MSRs
14:47on that business historically, the acquisition of SLS gave us our first footprint with certain
14:55clients into that platform. You see some of our competitors there. There are quite a few
15:01competitors that are in that sector. I do think that, from a growth perspective, we have the
15:07ability to put a footprint into that sector. We have the ability to offer recapture services to
15:16clients that own those MSRs, but it's not really a number that we otherwise benchmark to. It's more
15:25about how we think about overall returns on that business and where we can take advantage of
15:31certain opportunities and be helpful to what I'll say is strategic clients. Again, similar to the
15:36way we think about originations, I don't have to be the biggest servicer. I don't have to sit here
15:40and say, okay, let's get to a trillion dollars, and that is the number. We're going to focus on
15:47how we think about it from an ROE perspective and what is strategic for us as a platform overall.
15:55But I think there's definitely opportunity for us to continue to grow above 30%.
15:59That makes sense. Digging into NewRez's Q3, it appears that you were able to originate
16:08from your book when mortgage rates dipped. Is that the strategy for NewRez? When rates are high
16:16or increasing, you capture value from your MSRs. When rates are decreasing, you have this opportunity
16:22to originate from your book? Yes. Let's keep it at that. We have a lot of terms for it, but it is
16:32certainly all about homeowner retention. Think about it. The front end of our business origination,
16:40you do a lot of work to basically bring that customer into your ecosystem, onto your servicing
16:46platform, no matter which channel that you've done the acquisition, whether it's a large bulk
16:51acquisition of MSRs or its correspondent channel or a co-issue business, which is a new channel for
16:58us or certainly in the wholesale side and our direct-to-consumer channels that we have as well.
17:07There's a lot of effort in boarding that customer. Not only is all the work on basically
17:12introducing yourself and who you are and what you stand for from a brand perspective, but
17:18you also have capital, so you own the MSR. Retaining that customer is key. For us, that
17:23is where we focus on our technology initiatives, our AI initiatives, our branding initiatives,
17:31is really driving to our 3.7 million homeowners and making sure that we're presenting
17:43solutions, we're presenting content that helps them throughout their homeownership journey.
17:48And there are lots of different terms that what I would say people use, but we obviously want to
17:56basically connect with customers the way that they want to be connected to. And it starts with
18:03self-service tools, it starts with our digital tools, it starts with making sure that we are
18:10making it as easy as possible for them as they continue to basically go out and throughout
18:16their homeownership journey. That's what we're focused on, that's where the dollars are
18:21that we focus on. Now, does it mean that we can't otherwise step into what I would say
18:27other channels? So one of the channels that we haven't really focused on is what I'll call is
18:32customer acquisition, meaning are we buying leads or are we thinking about broad-based advertising,
18:38as I would otherwise say, and advertising in whatever, if you decide to put out television
18:43ads or other types of sponsorships. It's not something we've really, really said as a strategy
18:51today. It doesn't mean that we might not otherwise consider to see where we want to do that, but
18:59every dollars that we're otherwise putting out there is really focused on our existing customers
19:05and how do we basically have them want to stay with us and how do they think about
19:12their homeownership journey and then think about it from a friends and family perspective.
19:18I would tell you that if my family certainly knows who New-Res is and they care about New-Res
19:24and they need to and they should and they like New-Res and they actually love New-Res and
19:29my friends and family care about that as well, including some of my cousins who are taking out
19:35and buying homes today. So it is wanting to make sure that you're paying it forward and I do
19:41think that that is how I look at what a big growth strategy is for us. And I would also say
19:49it's like it is when you think about some of the legacy platforms that we bought, legacy companies,
19:55it's never been like a core strategy. So it is, you even talked about it, it's like you need to
20:00make sure that everybody's on board and we're delivering on behalf of our homeowners at all
20:04times to make sure that we can deliver our platform to them. You mentioned friends and
20:11family. Does that mean you have a New-Res customer who's happy being a New-Res customer and you're
20:19giving them an incentive to introduce you to their friends and family? Is that what you mean by that?
20:24I mean, look, it starts with our employees and our employees are our brand ambassadors, right?
20:28So we have over 5,000 employees and they're our brand ambassadors. And then when you think
20:34about paying it forward, if everybody, 5,000 employees, everybody's in a family of four,
20:39I know it's not perfectly works out that way. And that makes it 20,000 people in their direct
20:46families. And then when you do it to their extended families, brothers, sisters, cousins,
20:51and so forth, you can just kind of see to the extent that we can make sure that they can sell
20:57our brand to them. Yeah, those are brand ambassadors. They're going to continue to
21:03help deliver it. Now, if we can do that the same with our 3.7 million customers, that delivers
21:10the strategy on a go-forward basis. And from a cost perspective, am I out there marketing and
21:18selling from a broad-based perspective and advertising? I'm not trying to say that those
21:24things are not important to basically make sure and that still saying in front of your customers
21:30in that manner. But I think it's a different thing, right? So to the extent that we're delivering
21:35our brand and we're doing everything we possibly can to make your home ownership experience as
21:40easy as possible, we do think that that'll pay forward for us. It's a really interesting flywheel.
21:46And as you bring more servicing rights into your book and hopefully delight more customers,
21:56you potentially have more brand ambassadors. I mean, look, you also have to think about it from
22:02an investment thesis, right? You're spending money to bring in a customer from an MSR perspective,
22:07right? That's capital. And you're buying effectively an I.O. So if that borrower goes
22:15somewhere else, that I.O. goes away and that capital just disappears. So keeping that capital,
22:20maintaining that capital, what's important is ensuring that you are doing what is best for
22:26that customer. And if you do a great job, that customer will at least consider you
22:32on anything that they otherwise may need and even from a recommendation perspective.
22:36So from our view, that is what I'm going to tell you is certainly our 25 strategy. It's
22:42about our customers today and focusing on our customers and in the best possible way,
22:48whether it is from a CX perspective or delivering tools for our employees from a UX perspective to
22:53deliver that CX. That's how we focus on A.I. as well. No different. Yeah, I was going to ask about
23:00A.I. next. Great, great transition for me. You were on stage at HousingWire's A.I. Summit
23:07about six months ago where you talked about Rezzy, new Rezzy's A.I. chatbot.
23:14Is Rezzy still primarily deployed with your CSRs or have you expanded its footprint?
23:22We're very much focused on, as I said before, like our UX and CX. That's what we're focused
23:29on, on our A.I. initiatives. The call center for us is, it's our call center, it's our complaint
23:38trackers, it is how we connect to either customers and how customers connect with us to the extent
23:47that we can kind of make it easy for them to connect with us to the extent that when they call
23:53in, we know and see everything that they have otherwise done with us or issues they may have
23:59had with us or perhaps make it really, really simple to solve their issue and we can do it
24:04timely and quickly. It's just going to make for a better experience. So yes, that is what our focus
24:11is on where we otherwise are. We are obviously looking at it from an origination perspective as
24:17well. I don't want to say that we're not. We will look at it from every single aspect of how we
24:25attach to the customer. So it's not just so much focused on servicing, but what I would say is
24:34all of our capital for short term is very much focused on our call centers and our customer
24:41attachments and our complaint tracking, right? But to the extent that we will continue to
24:49basically evaluate every one of these things as different technology initiatives. You even
24:54talked about M&A in the beginning. We are canvassing, so a lot of discussions about
25:01what's out there, how do we think about it, strategy on that and how do we make our platform better.
25:08Is your tech roadmap for 25 mostly focused on AI or are there other
25:15components to your tech strategy that you'd like to talk about?
25:22I mean, no. The answer is no. Definitely no. We have, and I publicly said this,
25:31we've, Salesforce is a big partner of ours as a vendor and there are multiple different
25:39initiatives that we have going on with them that will continue throughout 25 and they've been a
25:45great partner of ours as we continue to build out all of our CRMs and our other initiatives that we
25:50have going with them. We continue to look at multiple ways to think about process efficiency
25:58from an operating perspective as well. But our focus are certainly going to be on the digital
26:05tool side, right? And how do we think about digital tools that allow for that self-service
26:12and digital tools that, again, make it easier for our customers to connect with us. And those are
26:19going to definitely be our priority. So it is not just AI focused. There are multiple different
26:25prioritizations that we have in technology. Before we break, I have to ask, how was the
26:31Dave Matthews concert at MSG? You made a very substantial donation to Hurricane Relief and
26:37also had this benefit concert. Yeah. So we didn't have the benefit
26:43concert. I'll say this. We sponsored the concert. It was amazing. But look, we care about our
26:52communities that we serve. We care about the homeowners that we service and we care about
26:56our employees, right? I mean, that's what's important. And those hurricanes,
27:04Helene and Milton, obviously caused a lot of damage and they caused a lot of disruption to
27:12our homeowners and caused a lot of disruption to our employees, right? Greenville,
27:18we have a large operating center there. And that certainly was noted. Those employees were out of
27:26power for almost two weeks. And it made us really think about how we were connected to them.
27:34Asheville's obviously right next door. And the connection there really had to do with
27:43Dave Matthews from Asheville and myself and Michael have been long time music kind of guys.
27:52And that connection just kind of seemed like it fit. And while that connection was there,
28:04the dollars that we were focused on was really given back to the communities and given back
28:07to our employees. And that's how we really wanted to make sure that we were focused.
28:11It was less about the music and much more about giving back. And even when you think about and
28:17see what's happening in Los Angeles right now, which is just awful, right? We think about it
28:23in the same way, right? We have branches there. One of the operating businesses in Rhythm, which
28:31is Genesis Capital, and they're located in LA and they've been displaced. It's been really tough
28:41for their employees as well to kind of work through this. And we're going to think about
28:46it similarly as to how we think about giving back. Well, Baron, this has been a really
28:54interesting conversation. I really appreciate you for joining me today. Thank you so much.
29:00All right, Diego. Thank you so much. Appreciate you inviting me and looking forward to
29:06your continued content and your upcoming conferences and participating. So thank you.