Two key acquisitions—Pacific Union Financial and the Seterus mortgage servicing platform—that were closed in February, fuelled Mr. Cooper's business growth during the year. On Thursday, the company reported that its servicing portfolio grew to $548 billion in 2018, up 7 percent quarter-over-quarter and 8 percent on a year-over-year basis.
While the company reported a full-year combined net income of $1,038 million, it reported a net loss of $136 million for the fourth quarter, principally driven by a loss of $188 million on the net fair value mark-to-market of its mortgage servicing rights (MSR) portfolio. The change in fair value mark-to-market revenue compared to the prior period was primarily due to a lower interest rate environment, the company said in its filing.
"The Company is coming off a period of strong growth and a very high level of activity in 2018, including the WMIH merger, the name change to Mr. Cooper Group, and three acquisitions. Now it’s time for us to integrate these transactions and focus on profitability," said Jay Bray, Chairman and CEO of Mr. Cooper Group Inc.
On the servicing side, the company said that at year-end, the carrying value of MSR was approximately $3.7 billion. Excluding the mark-to-market, the servicing side of the business earned $88 million in pretax income during the quarter.
Mr. Cooper said that excluding $5 million in business shutdown costs, its originations side of the business earned a pretax income of $16 million in the fourth quarter. For the full year, originations earned a combined pretax income of $94 million. Funded loans totaled approximately $5.4 billion, up 5 percent quarter-over-quarter, with $2.3 billion from the consumer direct channel and $3.2 billion from the correspondent channel, the company said.
"Our fourth quarter results showcased the growth and margins of the company’s market-leading servicing platform, and by executing on our servicing transformation initiative, project Titan, we intend to drive further efficiencies and improve the servicing experience for team members and customers,” said Chris Marshall, Vice Chairman of Mr. Cooper Group Inc.
Mr. Cooper subsidiary Xome, which provides real estate solutions including property disposition and field services to Mr. Cooper and third-party clients recorded a pretax loss of $2 million in Q4 2018, Mr. Cooper said in its filing. The decline in pretax income quarter-over-quarter was driven by the integration of Assurant Mortgage Solutions (AMS) and lower exchange property listings sold.