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Mr. Cooper Posts Q1 Gains

Dallas-based mortgage servicer Mr. Cooper Group Inc., which principally operates under the Mr. Cooper and Xome brands, has reported a Q1 2022 net income of $658 million.

Led by the recent “attractively priced acquisition opportunities” including the closing of a deal with Sagent—which netted the company a $223 million gain—the company’s servicing unpaid balance (UPB) grew to $796 billion, up 27% year-over-year.

The deal with Sagent, originally announced in February, allows Sagent to buy certain intellectual property rights related to Mr. Cooper’s proprietary, cloud-based technology platform for mortgage servicing, and Mr. Cooper will receive an equity stake in Sagent. Sagent has integrated Mr. Cooper’s platform into a cloud-native core and licensed the resulting cloud-based servicing platform to Mr. Cooper and other servicers, including Sagent’s large customer base of banks and independent mortgage companies. Sagent will begin marketing the cloud-based servicing platform to other mortgage companies in 2023.

Mr. Cooper’s servicing segment currently contains 3.9 million customers, and recorded a pretax income of $558 million in Q1. Mr. Cooper’s servicing generated pretax operating income, excluding other mark-to-market, of $7 million. At the close of Q1, the carrying value of the Mortgage Servicing Rights (MSRs) was $6,006 million equivalent to 146 bps of MSR UPB.

“During the quarter, we were able to react quickly and take advantage of attractively priced acquisition opportunities, and we were awarded sizeable subservicing mandates, which together produced spectacular growth in our servicing portfolio, which reached $796 billion,” said Mr. Cooper Chairman and CEO Jay Bray. “We now have 3.9 million customers, and nothing is more important to us than delighting every single customer with a personalized, friction-free experience that helps them achieve their goals.”

The company’s origination segment earned a pretax income of $155 million, with a pretax operating income of $157 million, which excluded $2 million in charges related to severance.

In total, Mr. Cooper funded 46,933 loans in Q1, earning approximately $11.6 billion UPB, comprised of $7.8 billion in direct-to-consumer and $3.8 billion in correspondent. Funded volume decreased 33% quarter-over-quarter, while pull through adjusted volume decreased 30% quarter-over-quarter to $10.3 billion.

“While the sharp rise in interest rates will place pressure on the originations industry, we are in a much better position than most, as we stand to benefit from significant improvements in servicing profitability during 2022,” said Chris Marshall, Mr. Cooper’s Vice Chairman and President.

Also in Q1, Mr. Cooper Group added Jaime Gow as EVP and Chief Financial Officer, succeeding Chris Marshall, who has served as Vice Chairman and President of the company since June 2021. As CFO, Gow will continue to report to Marshall. Gow joined Mr. Cooper Group in 2019 as SVP Accounting, Financial Planning and Analysis, and he most recently served as Deputy CFO.

About Author: Eric C. Peck

Eric C. Peck has 20-plus years’ experience covering the mortgage industry, he most recently served as Editor-in-Chief for The Mortgage Press and National Mortgage Professional Magazine. Peck graduated from the New York Institute of Technology where he received his B.A. in Communication Arts/Media. After graduating, he began his professional career with Videography Magazine before landing in the mortgage space. Peck has edited three published books and has served as Copy Editor for Entrepreneur.com.
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