Podcasts

Newrez’s roadmap for client retention with Baron Silverstein

January 23, 2025

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 Newrez’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.
Newrez 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.

Related to this episode:

This episode transcript below has been edited for length and clarity purposes:

Diego Sanchez: Welcome to Powerhouse, where we interview the biggest names in housing and ask them about their strategy for growth. I’m Diego Sanchez, President of HousingWire. My guest today is Baron Silverstein, president of Newrez and a true powerhouse. Baron, it’s so great to have you on the show.

Baron Silverstein: Thanks for having me, Diego. I appreciate you guys inviting me. I’m definitely a fan of your podcast, I’ll say that. I’ve listened to many of them. I’m a fan of HousingWire, across the board. You guys put out great content. You’re a great partner in the industry overall.

Sanchez: Well, I really love to hear that Baron. And, you’re actually approaching five years at Newrez. I would love to hear some of the highlights and the lowlights of your tenure, and what you’re thinking about for the next five years.

Silverstein: It’s been a wild ride, but it’s also been fun. It’s been exciting. The mortgage industry continues to basically put up new challenges, but also new wins and new exciting paths across our entire industry. Our path has been through a lot of different acquisitions and growth. Throughout every single one of the different hurdles that we’ve had, it’s brought our team closer together.

Even from my prior career, 30 years on Wall Street, it’s always been about the leadership team and the people you have in your organization. It’s about how they drive your business from a cultural and a business perspective. What do they do every single day, and do they care about what they do?

Here at Newrez, we talk about being caring. That is a core value for us. I think I have the best leadership team in the business, and we care about our homeowners, our employees and what we do every day. And it carries and drives through our entire organization.

Sanchez: Have you integrated leaders from some of the companies that you acquired into that leadership team, or has that primarily been built by you?

Silverstein: It’s a combination, but I would definitely say the base is from the organizations that we have acquired.That also gives you the benefit of how others have run their platforms — whether it’s on the origination side, the tech side, the servicing side or any one of your corporate groups. It’s concerns how they think about attaching to the business. I’ve always kind of felt that it provides different perspectives that kind of drive your path on how your organization is run.

Sanchez: We’ve done some acquisitions at HousingWire, and it can be challenging — even if there’s a cultural fit. Leaders from the other organization have been doing things their own way for a while, and you’ve been doing things your way for a while. How do you approach that to form a cohesive and functioning leadership team?

Silverstein: There can only really be one person that drives that strategy at the end. I sometimes call that “founderitis.” Thankfully, I haven’t had to use that in some period of time. Of all the transactions we’ve done, the businesses were run by top-notch leaders that had their strategy.

At the end of the day, we must feel that we’ve pointed ourselves in the right path on what we want to prioritize, what’s important to us and what the path to get there is. The leadership team comes in alignment. To me, it is really important to make sure that all of us are collaborating. All of us must be focused on our strategy and platform.

To the extent that you make it collaborative, it strengthens my relationship with the leadership team. Like you said, I’ve only been here for five years. But I consider the people I work with daily to all be my friends. And, they’re all my partners. I care a lot about them and about us winning every single day.

There’s that cultural difference, but if they’re not aligned with you, then obviously you need to move in a different direction. But, where we are today is a great spot.

Sanchez: In 2025, Newrez has been primarily built through acquisitions. In 2025, will M&A continue to be prominent in your growth strategy, or are you moving in a different direction?

Silverstein: We’re going to continue to look at all types of opportunities for us. There’s no reason for us not to look at opportunities in the marketplace — whether it’s a servicing, origination or technology opportunity. We will look at each of those, to the extent that we feel like it’s creative for our business.

We’re certainly going to use that, and that will turn into one of our priorities for our platform and business. Part of that is also with Rithm. Rithm is focused on being a top asset global asset manager. And, Michael [Nierenberg] continues to change his strategy about how he wants us to drive his company.

Sanchez: I was going to ask about Rithm Capital, next. How does their ownership impact your day-to-day life and the operations at Newrez?

Silverstein: Michael has, like any other corporate parent, a board that has an expectation of what we do on a daily basis. And, that drives all of our risk management practices, policies and procedures. But also, we are a key asset for Rithm, and that’s not going to change, right? We create and acquire assets here. When I talk about assets, I’m talking about mortgages. We acquire and create mortgage servicing rights. That has always been a part of the Rithm’s DNA, their investment philosophy and investment strategy.

I don’t see that changing. The way I look at it, they’re a great partner to have. They have permanent capital, and they also have an investment thesis. Why I also think they’re a great partner is their risk philosophy on everything that we do. And, that risk philosophy is certainly on the capital market and investment sides.

Sanchez: Rithm has gone on the record multiple times over the past couple of years and said that Newrez could eventually be spun out on its own. To the extent that you can comment on that, is that still under consideration?

Silverstein: Michael talked a little bit about it in the third quarter earnings call. He continues to evaluate it. We are a strategic asset. Newrez is, of the Rithm strategy for their becoming, a best in class global asset manager. So, I don’t expect that to change — meaning that we are going to be in whatever type of transaction Rithm is evaluating. We’re going to continue to be a big part of that strategy on whatever type of transaction they otherwise choose to execute on.

Sanchez: That makes sense. Now, Newrez has a giant servicing business with $755 billion in unpaid principal balance. But you also have distributed retail, wholesale and direct-to-consumer efforts. How do you prioritize between these different business lines?

Silverstein: Servicing has always been a core focus, and I think it’s a good place to start. The market has obviously changed in the favour of servicing from an interest rate perspective. Rithm, including their acquisitions of different operating businesses, has always been servicing-focused. It certainly started from an investment thesis, and now it continues to morph into an operating business. And then, we’ve bifurcated the operating business into our third-party strategy service on behalf of others, but also on an owned MSR framework. From a prioritization perspective, it is a core focus of our platform.

In the origination businesses, from each of the different acquisitions, there’s been different channels on how we focus our business. We look at each of the origination businesses, as to where we think we get the biggest alpha at that time. We don’t need to be the biggest, and we’ve talked about this in multiple different quarters.

We focus on relative value profitability, and where we can take advantage of opportunities between each channel. That’s how we think about placing our capital. We have the largest share in our correspondent channel. But we take advantage of each of the channels as to how we think about where we put our prioritizations.

Sanchez: From Rithm Capital’s Q3 earnings call, I calculated that third party servicing is about 30% of your overall book. Is that the right ratio for Newrez?

Silverstein: Our focus has always really been on special servicing. We focus on our special servicing capabilities, our ability to help homeowners stay in their home, but also our ability to help clients that own hard-to-service portfolios of MSRs. We come up with solutions for them and solutions for the homeowners. That has always been a core focus of ours. It is what we’re great at. Obviously with a market with rising delinquencies and developing employment changes, today’s number was a little more bullish.

Silverstein: But we know that is our core DNA, what we’re great at and what we continue to focus on. The SLS acquisition is very similar, they had a similar thesis to us you know focused on some of those what I’ll say is those harder service assets or non-agency type assets. You know when you kind of look at the other third party servicing business we call it subservicing or just really kind of agency.

Fannie, Freddie or Ginnie third-party servicing on behalf of those clients. We have not really focused on that business, historically. The acquisition of SLS gave us our first footprint with certain clients on that platform. You see some of our competitors there. There’s quite a few competitors in that sector.

So, from a growth perspective, we have the ability to put a footprint into that sector. We have the ability to offer recapture services to clients that own those MSRs. But it’s not a number that we otherwise benchmark. It’s more about how we think about overall returns on that business and where we can take advantage of certain opportunities and be helpful to strategic clients.

Again, similar to the way we think about originations, I don’t have to be the biggest servicer. I don’t have to sit here and say let’s get to a billion dollars. That’s how we think about it from a return on investment (ROI) perspective, and what is strategic for the platform overall. But I think there’s definitely an opportunity for us to continue to grow above 30%.

Sanchez: Digging into Newrez’s Q3, you were able to originate from your book when mortgage rates dipped. Is that the strategy for Newrez?

Silverstein: Yes, let’s keep it at that. We have a lot of terms for it, but it is certainly all about homeowner retention, right? You do a lot of work to basically bring that customer into your ecosystem and onto your servicing platform, no matter which channel that you’ve done the acquisition, whether it’s a large bulk acquisition of MSRs, or whether it’s a correspondent channel.

Our co-issue business, which is a new channel for us, or certainly in the wholesale side, and our direct to consumer channels that we have as well. There’s a lot of effort in boarding that customer. Not only is that all the work and basically introducing yourself, who you are and what you stand for from a brand perspective, but you also have capital.

So, you own the MSR. Retaining that customer is key, and that is where we focus on our technology initiatives, AI initiatives, and our branding initiatives are driving our 3.7 million homeowners and making sure that we’re presenting solutions. We’re presenting content that helps them throughout their homeownership journey.

There are lots of different terms that people use, but we obviously want to basically connect with customers the way that they want to be connected to. It starts with your self-service tools, digital tools, and it starts with you know making sure that we are making it as easy as possible for them throughout their homeownership journey. That’s what we’re focused on and that’s where the dollars are.

Does it mean that we can’t otherwise step into other channels? One of the channels that we haven’t really focused on is customer acquisition. Meaning, are we buying leads or thinking about broad-based advertising?

It doesn’t mean that we might not otherwise consider where we want to do that, but every dollar that we’re otherwise putting out there is focused on our existing customers. And, how do we basically have them want to stay with us, and how do they think about their homeownership journey? Then, how do they think about it from a friends and family perspective?

My family certainly knows who Newrez is, and they care about your resume. They like Newrez. My friends and family care about that as well, including some of my cousins who are buying homes, today. So, it’s important to make sure that you’re paying it forward. I do think that that is how I look at a big growth strategy for us.

When you think about some of the legacy platforms that we bought, it’s never been a core strategy. You need to make sure that everybody’s on board, and we’re delivering on behalf of our homeowners at all times to make sure that we can deliver our platform to them.

Sanchez: You mentioned friends and family. Does that mean you have a Newrez customer who’s happy, and you’re giving them an incentive to introduce you to their friends and family? Is that what you mean by that?

Silverstein: It starts with our employees and brand ambassadors. We have over 5,000 employees, and they’re our brand ambassadors. When you think about paying it forward, if there’s 5,000 employees in a family of four, that’s 20,000 people in their direct families. And then when you do it to their extended families, brothers, sisters, cousins and so forth, you can just kind of see to the extent that we can make sure that they can sell our brand to them.

Those are brand ambassadors who are going to continue to help you help deliver it. Now, if we can do that with our 3.7 million customers that deliver the strategy on a go-forward basis and from a cost perspective, that’s cool. Am I out there marketing and selling from a broad-based perspective?

And advertising, I’m not trying to say that those things are not important to make sure they’re still staying in front of your customers in that manner. But I think it’s a different thing to the extent that we’re delivering our brand and we’re doing everything we possibly can to make your homeownership experience as easy as possible. We do think that’ll pay forward for us.

Sanchez: Really interesting flywheel, and as you bring more servicing rights into your book and delight more customers, you potentially have more brand ambassadors.

Silverstein: You also have to think about it from an investment thesis, right? You’re spending money to bring in a customer from an MSR perspective, right? That’s capital and you’re effectively buying an IO. So, if that borrower goes somewhere else, that IO goes away and that capital just disappears. So, keeping and maintaining that capital is what’s important.

It is ensuring that you are doing what is best for that customer, and if you do a great job, that customer will consider you on anything that they otherwise may need, even from a recommendation perspective. So, from our view, that is what I’m going to tell you is our 2025 strategy. It’s about our customers today and focusing on our customers in the best way, whether it is from a CX perspective or delivering tools for our employees from a UX perspective to deliver that CX. That’s how we focus on AI as well — no different.

Sanchez: I was gonna ask about AI next. Great transition for me. You were on stage at HousingWire’s AI Summit about six months ago, where you talked about Newrez’s AI chatbot. Is Rezi still primarily deployed with your CSRs or have you expanded its footprint?

Silverstein: We’re very much focused on UX and CX. That’s what we’re focused on in our AI initiatives. The call center for us, it’s our complaint trackers, which is how we connect to customers and to the extent they call in and we see everything that they have otherwise done with us, or issues they may have had with us, or perhaps make it simple to solve their issue. And, we can do it timely and quickly, right? It’s just going to make for a better experience. So yes, that is what our focus is on.

We are obviously looking at it from an origination perspective, as well, but I don’t want to say that we’re not. We will look at it from every single aspect of how we attach to the customer. So, it’s not just so much focused on servicing, what I would say is all of our capital. For the short term, it is very much focused on our call centers and our customer attachments and our complaint tracking to the extent that we will continue to evaluate every one of these things as different technology initiatives.

And you even talked about M&A in the beginning. We are canvassing, so there’s a lot of discussions about what’s out there. How do we think about it, strategize, and make our platform better?

Sanchez: Is your tech roadmap for 25 mostly focused on AI, or are there other components to your tech strategy that you’d like to talk about?

Silverstein: Definitely no. We have Salesforce as a big partner of ours, and as a vendor. Also, there are multiple different initiatives that we have going on with them that will continue throughout 2025, and they’ve been a great partner of ours as we continue to build out.

We continue to look at multiple ways to think about process efficiency from an operating perspective, as well. But our key focuses are certainly going to be on the digital tool side. And, how we think about digital tools that allow for that self-service and digital tools make it easier for our customers to connect with us. And, those are going to definitely be our priority. So, it is not just AI focused. There are multiple different prioritizations that we have in technology.

Sanchez: Before we break, I have to ask how was the Dave Matthews concert at MSG? You made a very substantial donation to Hurricane Relief too.

Silverstein: We didn’t have the benefit concert. We sponsored the concert. It was amazing. We care about our communities that we serve. We care about the homeowners that we service. And we care about our employees, right? I mean, that’s what’s important. And those hurricanes — Helene and Milton — obviously caused a lot of damage, and they caused a lot of disruption to our homeowners and employees.

In Greenville, we have a large operating center there, and that certainly was noted. Those employees were out of power for almost two weeks, and it made us really think about how we were connected to them. Asheville’s obviously right next door. And, that’s the connection there. Dave Matthews is from Asheville, and myself and Michael have been longtime music kind of guys.

That connection seemed like it fit. The dollars that we were focused on was really giving back to the communities and giving back to our employees. And, that’s how we really wanted to make sure that we were focused. It was less about the music and more about giving back.

And even when you see what’s happening in Los Angeles right now, we think about it in the same way, right? We have branches there. One of the operating businesses in Rhythm — which is Genesis Capital. They’re located in LA and have been displaced. It’s been really tough for their employees, as well, to kind of work through this. And we’re going to think about it similarly as to how we think about giving back.

The Power House podcast brings the biggest names in housing to answer hard-hitting questions about industry trends, operational and growth strategy, and leadership. Join HousingWire president Diego Sanchez every Thursday morning for candid conversations with industry leaders to learn how they’re differentiating themselves from the competition. Hosted and produced by the HousingWire Content Studio.