Rithm takes minority stake in servicing platform Valon

Rithm Capital is boosting its investment in servicing technology provider Valon, taking a minority equity ownership stake and expanding on their existing business partnership.

With the move, Rithm expects to reduce costs for its home finance subsidiary, Newrez, and further scale development of Valon's artificial intelligence-backed operating system "to modernize the $13 trillion mortgage servicing industry," it said.

An early investor in the New York-based fintech, Newrez plans to make use of Valon's platform for 4 million of its servicing customers. Newrez will begin the transition to ValonOS in 2027, it said.

"Early on, Rithm recognized Valon's potential to redefine mortgage servicing, and we are now doubling down on that conviction. We believe ValonOS will bring real operational efficiency, scalability and innovation to Newrez and its clients," said Michael Nierenberg, CEO of Rithm Capital, a real estate investment trust and alternative asset management firm, in a press release. 

Financial terms of the agreement were not disclosed

In addition to Newrez, Rithm owns and operates multiple companies across financial services and has made frequent investments and acquisitions of various businesses over the past four years. 

"This is exactly the kind of early-stage opportunity we look for — where technology and vision can create outsized value over the long term," Nierenberg continued.

For Valon, which also serves as a residential lender, servicer and subservicer, the deal also carries with it the opportunity to expand development of its software and demonstrate its capabilities to the mortgage industry. 

"Newrez — one of the nation's largest mortgage servicers and a leader in technology — is the ideal partner to help accelerate adoption and prove it works at scale for even the most regulated servicers," said Valon CEO Andrew Wang.

The company was founded in 2019 and has raised $230 million in venture capital, according to VC market intelligence firm Tracxn.  

The changing servicing landscape

Newrez's move is the latest instance of large mortgage lenders making changes to servicing strategy through significant investments or acquisitions in the past year, as the battle for market share heats up.

The 2025 merger between mortgage giant Rocket Cos. and leading servicer Mr. Cooper subsequently drove lenders to re-examine operations and heighten focus on customer-retention efforts. Rather than give existing providers-turned-competitors the chance to capture their borrower clients by handing them over as servicing customers, some big names opted for the merger-and-acquisition route themselves. 

Shortly after the Rocket-Mr. Cooper deal was struck, Bayview Asset Management and Guild Mortgage Co. agreed to a similar merger, leading to reprivatization of the latter. 

United Wholesale Mortgage helped closed out 2025 with its pending deal to purchase Two Harbors Investment Corp. Known as Two, the company is the parent of Roundpoint Mortgage Servicing. The deal was signed after UWM, a former Mr. Cooper client, opted to move servicing in-house following Rocket's announcement.  

Recent Newrez AI developments

For Rithm and Newrez, the new ownership stake marks the second major business agreement it has signed with an AI-backed platform this year.

In early January, the mortgage lender and servicer laid out plans for a new strategic investment into Homevision, the underwriting software provider that already had Newrez as a customer. 

Newrez's agreements with emerging fintech companies like Homevision and Valon bears resemblance to a move previously made by pre-merger Mr. Cooper. In 2022, the servicer took a minority stake in technology firm Sagent, providing capital to help it scale and also giving Mr. Cooper the chance to be the first to implement and test new features, as well as guide future development.

Newrez also revealed plans last month to allow consideration of digital currencies as borrower assets to qualify for nonagency loans. The decision makes it the largest lender to introduce cryptocurrency in mortgage underwriting. 

Rithm Capital's other M&A moves

No stranger to the M&A scene itself, parent company Rithm Capital last year made two new corporate acquisitions. A third-quarter deal to purchase alternative asset investment firm Crestline Management brought insurance services into Rithm's portfolio of businesses. Just weeks later, the company, which was formerly known as New Residential Investment Corp., announced it came to a formal merger agreement with commercial REIT Paramount Group. 

Both transactions closed in December.