$215 Billion UPB Excess MSR Transaction

On January 6, 2013, Newcastle Investment Corp. ("Newcastle"), through a newly formed joint venture in which Newcastle holds a 50% interest, entered into definitive agreements (the "BofA Acquisition Agreements") with Nationstar Mortgage LLC ("Nationstar"), an affiliate of Newcastle's manager, to acquire excess mortgage servicing rights ("Excess MSRs"). Also on January 6, 2013, Nationstar entered into an agreement to acquire mortgage servicing rights ("MSRs") on residential mortgage loans with a total unpaid principal balance ("UPB") of approximately $215 billion as of November 30, 2012 (the "BofA Portfolio") from Bank of America.

Under the Acquisition Agreements, Newcastle agreed to purchase one-third of the Excess MSRs on the BofA Portfolio for approximately $340 million. Newcastle will be required to pay an earnest money deposit of approximately $21.3 million (the "Deposit"). For each respective pool within the BofA Portfolio, Newcastle shall pay to Nationstar 50% of their share of the remaining portion of the purchase price of the Excess MSRs (net of the Deposit) upon closing of the purchase thereof, and 50% upon Nationstar's assumption of servicing responsibilities from Bank of America. Newcastle expects a majority of the investment to close in the first quarter of 2013. Nationstar will retain all ancillary income associated with the servicing of the BofA Portfolio and one-third of the Excess MSRs. Approximately 47% of the loans in the BofA Portfolio are owned, insured or guaranteed by Fannie Mae (as defined below), Freddie Mac (as defined below) or the Government National Mortgage Association ("Ginnie Mae") and the remaining 53% of loans are non-conforming loans in private label securitizations. Nationstar will be the servicer of the loans and will provide all servicing and advancing functions for the BofA Portfolio. Newcastle will not own the servicing rights and therefore will not have any prior or ongoing servicing duties, liabilities or obligations associated with the servicing of the BofA Portfolio.

On January 6, 2013, Newcastle also entered into future spread agreements (the "BofA Recapture Agreements") with Nationstar. Under the BofA Recapture Agreements, if Nationstar refinances any loan in the BofA Portfolio, subject to certain limitations, Nationstar will be required to transfer a new loan into a portfolio with respect to which Newcastle and Nationstar will share the related Excess MSRs in the same proportion as their interest in the BofA Portfolio.

The transaction is subject to customary closing conditions, including certain regulatory approvals and third party consents. The BofA Acquisition Agreements provide that each party will indemnify the other for breaches of representations and warranties and covenants and certain other matters, subject to the limitations set forth therein.

The foregoing summary of the BofA Acquisition Agreements and BofA Recapture Agreements does not purport to be a complete description and is qualified in its entirety by the BofA Acquisition Agreements and BofA Recapture Agreements, which will be filed as exhibits to Newcastle's Annual Report on Form 10-K for the fiscal year ending December 31, 2012.

$13 Billion UPB Excess MSR Transaction

On January 4, 2013, Newcastle, through a newly formed joint venture in which Newcastle holds a 50% interest, entered into a servicing spread acquisition agreement (the "Ginnie Mae Acquisition Agreement") with Nationstar to acquire Excess MSRs. On November 16, 2012, Nationstar entered into an agreement to acquire MSRs on residential mortgage loans with a UPB of approximately $13 billion as of November 30, 2012 (the "Ginnie Mae Portfolio") from Bank of America.

Pursuant to the Ginnie Mae Acquisition Agreement, Newcastle agreed to purchase one-third of the Excess MSRs on the Ginnie Mae Portfolio for approximately $27 million. Nationstar will retain all ancillary income associated with the servicing of the Ginnie Mae Portfolio and one-third of the Excess MSRs. The Portfolio is comprised of loans in Ginnie Mae pools. Nationstar will be the servicer of the loans and will provide all servicing and advancing functions for the Ginnie Mae Portfolio. Newcastle will not own the servicing rights and therefore will not have any prior or ongoing servicing duties, liabilities or obligations associated with the servicing of the Ginnie Mae Portfolio.

On January 4, 2013, Newcastle also entered into a future spread agreement (the "Ginnie Mae Recapture Agreement") with Nationstar. Under the Ginnie Mae Recapture Agreement, if Nationstar refinances any loan in the Ginnie Mae Portfolio, subject to certain limitations, Nationstar will be required to transfer a new loan into a portfolio with respect to which Newcastle and Nationstar will share the related Excess MSRs in the same proportion as their interest in the Ginnie Mae Portfolio.

The foregoing summary of the Ginnie Mae Acquisition Agreement and the Ginnie Mae Recapture Agreement does not purport to be a complete description and is qualified in its entirety by the Ginnie Mae Acquisition Agreement and Ginnie Mae Recapture Agreement, which will be filed as exhibits to Newcastle's Annual Report on Form 10-K for the fiscal year ending December 31, 2012.

Newcastle is disclosing under this Item 7.01 certain information that was included in the prospectus supplement filed today with the Securities and Exchange Commission (the "SEC") in connection with the Offering described under Item 8.01 below. Certain of this information has not previously been made publicly available by Newcastle and may be deemed to be material. This Current Report on Form 8-K also updates certain information previously reported by Newcastle.

The information furnished pursuant to this Item 7.01 shall not be deemed to be "filed" for the purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), or otherwise subject to the liabilities of such section, nor will such information be deemed incorporated by reference in any filing under the Securities Act of 1933, as amended, or the Exchange Act, except as may be expressly set forth by specific reference in such filing.

Investments in Non-Agency Securities

Newcastle is actively seeking investments in non-Agency residential mortgage-backed securities ("non-Agency RMBS"). Since the beginning of the second quarter of 2012, Newcastle purchased non-Agency RMBS outside of its collateralized debt obligations ("CDOs") with an aggregate face amount of approximately $309 million and a fair value of approximately $200 million as of September 30, 2012. Subsequent to September 30, 2012, Newcastle acquired an additional $136 million face amount of non-Agency RMBS for approximately $88 million.

In July 2012, Newcastle financed two of the securities with approximately $59 million of repurchase agreements at a cost of one-month LIBOR plus 200 basis points and a 65% advance rate. These repurchase agreements, which contain customary margin call provisions, had an initial 90-day term, which was extended on October 11, 2012 to January 26, 2013. On October 11, 2012, the repurchase agreements had an outstanding principal balance of approximately $60.6 million.

In December 2012, Newcastle financed previously acquired non-Agency RMBS with approximately $90.2 million of repurchase agreements at a cost of one-month LIBOR plus 200 basis points. The weighted average advance rate for these repurchase agreements is approximately 65%. These repurchase agreements, which contain customary margin call provisions, have an initial term ending on January 28, 2013.

Newcastle intends to include these assets in a portfolio of residential real estate related assets that it expects to separate from Newcastle in the first quarter of 2013, as described under Item 8.01 below.

Uninvested Cash Balance during the Fourth Quarter

Newcastle's preliminary estimates indicate that its average balance of uninvested, unrestricted cash during the fourth quarter may negatively affect its per-share results relative to the third quarter of 2012. Although as of the date hereof, Newcastle had committed or deployed substantially all of its uninvested cash for investments in Excess MSRs, senior living facilities, RMBS and other investments, the delay in deploying such cash, which was due in part to Newcastle's potential co-investment in Excess MSRs from Residential Capital, LLC ("ResCap"), resulted in a higher average balance during the beginning of the fourth quarter. Certain events in the fourth quarter, such as the breakup fee related to the termination of the ResCap agreements, will offset a portion of the impact of Newcastle's uninvested cash during the quarter.

Spin-Off of Certain Residential Assets

Newcastle's board of directors has determined that a spin-off of certain of its residential real estate assets is in its best interests. The spin-off will be effected as a distribution to the holders of Newcastle's common stock of shares of New Residential Investment Corp. ("New Residential"), which is currently a wholly-owned subsidiary of Newcastle. New Residential intends to elect and qualify to be taxed as a real estate investment trust ("REIT") and to be listed on the New York Stock Exchange ("NYSE"). New Residential will be externally managed by Newcastle's manager pursuant to a new management agreement. Following the spin-off, Newcastle's business strategy will be focused on commercial real estate related investments in, among others, commercial real estate debt and senior housing, as well as pursuing strategic opportunities to liquidate, or "collapse," its CDOs.

New Residential will target investments in residential real estate related investments, including, but not limited to, Excess MSRs, RMBS, servicing advances and non-performing loans. New Residential's initial portfolio will include all of Newcastle's investments in Excess MSRs to date and any investments in Excess MSRs that Newcastle makes with the proceeds of the Offering or otherwise prior to the spin-off. New Residential's initial portfolio will also include the non-Agency RMBS Newcastle has acquired since the second quarter of 2012 and certain Agency RMBS.

Newcastle expects the spin-off of New Residential to be completed in the first quarter of 2013. However, there can be no assurance that the spin-off will be completed as anticipated or at all. Newcastle's ability to complete the spin-off is subject to, among other things, the SEC declaring the registration statement filed with regard to the spin-off effective, the filing and approval of an application to list New Residential's common stock on the NYSE and the formal declaration of the distribution by Newcastle's board of directors. Failure to complete the spin-off could negatively affect the price of the shares of Newcastle's common stock. Stockholder approval will not be required or sought in connection with the spin-off.

Pro forma financial information regarding the impact of the spin-off is attached hereto as Exhibit 99.1.

Public Offering of Common Stock

On January 7, 2013, Newcastle also issued a press release announcing the commencement of a public offering of 40,000,000 shares of its common stock (the "Offering"). In connection with the Offering, Newcastle intends to grant the underwriters an option for 30 days to purchase up to an additional 6,000,000 shares of common stock. The press release announcing the commencement of the Offering is attached hereto as Exhibit 99.2 and is incorporated by reference herein.

Risk Factors

Newcastle is filing the below risk factors for the purpose of updating the risk factor disclosure contained in its public filings, including those discussed under the caption "Risk Factors" in its Quarterly Report on Form 10-Q for the quarterly period ended September 30, 2012, which was filed with the SEC on October 26, 2012. All references to "we," "our," "us," "the Company" and "Newcastle" in the follow risk factors mean Newcastle Investment Corp. and its consolidated subsidiaries, except where it is made clear that the term means only the parent company.

We do not know what impact the Dodd-Frank Act will have on our business.

On July 21, 2010, the United States enacted the Dodd-Frank Wall Street Reform and Consumer Protection Act (the "Dodd-Frank Act" or "Act"). The Dodd-Frank Act affects almost every aspect of the U.S. financial services industry, including certain aspects of the markets in which we operate. The Act imposes new regulations on us and how we conduct our business. For example, the Act will impose additional disclosure requirements for public companies and generally require issuers or originators of asset-backed securities to retain at least five percent of the credit risk associated with the securitized assets. In addition, as a result of the Act, we were required to register as an investment adviser with the SEC, which increases our regulatory compliance costs and subjects us to the Investment Advisers Act of 1940, as amended (the "Advisers Act"). The Advisers Act imposes numerous obligations on registered investment advisers, including record-keeping, reporting, operational and marketing requirements, disclosure obligations and prohibitions on fraudulent activities. The SEC is authorized to institute proceedings and impose sanctions for violations of the Advisers Act, ranging from fines and censure to termination of an investment adviser's registration. Investment advisers also are subject to certain state securities laws and regulations. Non-compliance with the Advisers Act or other federal and state securities laws and regulations could result in investigations, sanctions, disgorgement, fines and reputational damage.

The Act will impose mandatory clearing, exchange-trading and margin requirements on many derivatives transactions (including formerly unregulated over-the-counter derivatives) in which we may engage. The Act also creates new categories of regulated market participants, such as "swap-dealers," "security-based swap dealers," "major swap participants" and "major security-based swap participants," who will be subject to significant new capital, registration, recordkeeping, reporting, disclosure, business conduct and other regulatory requirements that will give rise to new administrative costs.

Even if certain new requirements are not directly applicable to us, they may still increase our costs of entering into transactions with the parties to whom the requirements are directly applicable. Moreover, new exchange-trading and trade reporting requirements may lead to reductions in the liquidity of derivative transactions, causing higher pricing or reduced availability of derivatives, or the reduction of arbitrage opportunities for us, which could adversely affect the performance of certain of our trading strategies. Importantly, many key aspects of the changes imposed by the Act will be established by various regulatory bodies and other groups over the next several years. As a result, we do not know how significantly the Act will affect us. It is possible that the Act could, among other things, increase our costs of operating as a public company, impose restrictions on our ability to securitize assets and reduce our investment returns on securitized assets.

We do not know what impact certain U.S. government programs intended to stabilize the economy and the financial markets will have on our business.

In recent years, the U.S. government has taken a number of steps to attempt to strengthen the financial markets and U.S. economy, including direct government investments in, and guarantees of, troubled financial institutions as well as government-sponsored programs such as the Term Asset-Backed Securities Loan Facility program (TALF) and the Public Private Investment Partnership Program (PPIP). The U.S. government continues to evaluate or implement an array of other measures and programs intended to help improve U.S. financial and market conditions. While conditions appear to have improved relative to the depths of the global financial crisis, it is not clear whether this improvement is real or will last for a significant period of time. It is not clear what impact the government's future actions to improve financial and market conditions will have on our business. To

Legislation that permits modifications to the terms of outstanding loans has negatively affected our business, financial condition and results of operations.

The U.S. government has enacted legislation that enables government agencies to . . .

(d) Exhibits

Exhibit
Number                                     Description

99.1        Pro Forma Financial Information.

99.2        Press Release, dated January 7, 2013, announcing the commencement of the
            Offering.