Material Event Form 8 K

Item 8.01 Other Events.

On October 9, 2024, Onity Group Inc. (the "Company" or "Onity") and its subsidiary PHH Mortgage Corporation ("PMC") entered into agreements with Mortgage Assets Management, LLC ("MAM"), a mortgage servicer, and certain investment funds managed by Waterfall Asset Management, LLC that own MAM (collectively "Waterfall"), to acquire substantially all of MAM's assets, which have an estimated aggregate net asset value of approximately $55 million (such transaction, including the issuance of preferred stock as described below, the "MAM Asset Acquisition"). The acquired assets include Home Equity Conversion Mortgage ("HECM") reverse mortgage loans and mortgage servicing rights with a projected unpaid principal balance of approximately $3.0 billion (which assets are expected to be reflected on Onity's balance sheet at approximately that amount in accordance with GAAP, together with the related HECM mortgage-backed securities borrowings), as well as approximately $20 million in cash and other related assets. All of the mortgage assets to be acquired are currently subserviced by PMC. Onity expects that the cash acquired in the MAM Asset Acquisition, together with proceeds from future debt financing secured by the mortgage assets acquired from MAM, will result in total cash proceeds to Onity of approximately $46 million.

In consideration of the MAM Asset Acquisition, Onity intends to issue to Waterfall shares of a new series of non-convertible, perpetual preferred stock (the "Series B Preferred Stock"), with an aggregate liquidation preference of approximately $52.7 million, subject to certain adjustments. Each share of Series B Preferred Stock will have a liquidation preference of $25.00, plus an amount equal to any accumulated and unpaid dividends thereon. The Series B Preferred Stock will accrue cumulative dividends initially at a rate of 7.875% per annum for the first five years, then increasing by 2.5% per annum each year thereafter up to a maximum rate of 15.0% per annum, which dividends will be payable in cash and in arrears on a quarterly basis when, as and if declared by the board of directors of Onity. After September 15, 2028, Onity will be able to redeem the Series B Preferred Stock, in whole or in part, for cash at a redemption price equal to the liquidation preference plus an amount equal to any accumulated and unpaid dividends thereon. If Onity experiences a change of control (as defined in the Articles of Designation for the Series B Preferred Stock), it would be required to offer to repurchase all of the shares of Series B Preferred Stock at a purchase price equal to 100% of the liquidation preference plus an amount equal to any accumulated and unpaid dividends thereon.

Onity expects to consummate the MAM Asset Acquisition during the fourth quarter of 2024, subject to the completion and execution of certain ancillary documents, and other customary closing conditions, including necessary consents and approvals from Ginnie Mae, although there can be no assurance that the MAM Asset Acquisition will be consummated on this timing, or at all.