Rithm Joins Varde in Snapping Up Goldman’s Consumer Loan Book

Real estate investment trust Rithm Capital took on $1.4 billion of loans from Goldman Sachs Group Inc. as the Wall Street giant rid itself of consumer borrowings from its Marcus unit.

(Bloomberg) — Real estate investment trust Rithm Capital took on $1.4 billion of loans from Goldman Sachs Group Inc. as the Wall Street giant rid itself of consumer borrowings from its Marcus unit.

Rithm, which invests in financial services assets, bought the bank’s unsecured consumer loans at a discount to face value, according to Chief Executive Officer Michael Nierenberg, who disclosed the size of the purchase. The portfolio of loans Rithm purchased were to borrowers with an average FICO score of 735, he said. 

Rithm is the second asset manager known to have picked up Goldman’s unwanted consumer loans in the prior quarter. Bloomberg previously reported that credit-focused investment firm Varde Partners bought about $1 billion of loans from the bank. 

“They’re pretty healthy borrowers who were just consolidating debt,” said Nierenberg, adding that he’s assuming losses between 8% to 10%. “It’s an opportunistic acquisition; we don’t see pools like this come across very often.” 

A representative for Goldman declined to comment.

Goldman said during its second-quarter earnings on Wednesday that it recognized a gain of about $100 million from the sale of substantially all of the remaining Marcus loan portfolio. At the end of the first quarter, the bank had moved its remaining Marcus borrowings to a held-for-sale portfolio and took a writedown tied to that. 

Read more: Goldman Sachs CEO Ditches Dream of Consumer Domination

Organized as a real estate investment trust for tax purposes, Rithm has assets under management of $32 billion and owns a portfolio of companies including a mortgage lender, a business lender and an appraisal company, according to its website. The New York-based firm was previously known as New Residential Investment Corp. and was tied to Fortress Investment Group before internalizing management in 2022.

Nierenberg said Rithm is also looking to move into direct lending as banks face tightening regulations. 

“If the regional banks continue to pull back, it could be an opportunity,” he said.

–With assistance from Sridhar Natarajan.

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