Mr. Cooper Group Inc., the nation’s largest mortgage servicer, announced in its fourth quarter earnings call, yesterday, the company's plans to redirect focus on improving AI and automation to boost its retail service rather than its TPO platform.
In January, Mr. Cooper let go of Flagstar's third-party originator (TPO) platform Non-QM lender A&D Mortgage after CEO Jay Bray decided "the broker channel was not something that we wanted to move forward with."
Moving Forward With Fintech
On an earnings call with investors Wednesday morning, Mike Weinbach, the company’s president, provided an update on Agent IQ, Mr. Cooper’s agentic framework application designed to assist call center members by analyzing conversations in real time.
“Agent IQ helps detect customer intent and sentiment trends, providing insights to support agents in delivering better service,” Weinbach said.
The Agent IQ model has been trained on millions of customer calls, he noted, and can “fetch” relevant information and put it at call center agents’ fingertips. The app also generates a transcript and call summary.
“We piloted Agent IQ in the fourth quarter, and today it's fully rolled out in the servicing call center where it's now analyzing 400,000 calls per month,” Weinbach said on the call, adding, “We're getting very enthusiastic reviews from our team members, including both newer agents and veterans.”
Noted company Chairman and CEO Jay Bray: “AI is changing the world, and it may well be that one of the best applications for large language models is in the call center environment.”
Weinbach said Agent IQ has already proven a powerful management tool.
“We now get automated summaries of topical issues in the call center and we can drill down into specific issues with the click of a mouse all the way down to individual calls,” he noted. That improves compliance and quality control, he said, “and most importantly, this tool will accelerate our ongoing mission to identify customer priorities and develop better processes to assist them.”
“We plan to roll out Agent IQ to our originations team members a little later this year as soon as we complete a telephony upgrade,” Weinbach added.
Speaking on the company's investments in 2025 and 2026, Bray noted, “They are AI-centric. They are process-centric where we're going to continue to be able to drive cost out, and ... allow us to continue to grow in a very scalable way.”
Fourth Quarter Earnings
Mr. Cooper reported net income of $204 million for the fourth quarter of 2024, up from $80 million for the third quarter. Excluding other mark-to-market and other adjustments, the company reported pretax operating income of $235 million.
Mr. Cooper’s mortgage servicing portfolio grew to $1.56 trillion, up 57% year-over-year and 26% from the third quarter. Servicing generated $318 million pretax operating income and originations generated $47 million pretax operating income, with funded volume up 38% from the third quarter to $9.3 billion.
“These numbers demonstrate consistent, predictable performance, and what's especially notable is we delivered these results by closing on the acquisition of Flagstar [Bank]'s mortgage banking operations and onboarding 1.1 million customers,” Bray said. “This is by far the largest acquisition in our history and one of the largest customer transfers in the history of the mortgage industry.”
In January, however, Mr. Cooper entered into a definitive agreement to sell Flagstar’s TPO platform to A&D Mortgage. “We took a hard look at that and thought about it strategically, and ultimately made a decision that the broker channel was not something that we wanted to move forward with,” Bray said of that transaction.
“We were very, very intentional about finding a great partner and finding a home for the team members,” he contended.
Weinbach pointed to “transformative” change in 2024 for Mr. Cooper in terms of mortgage sub-servicing. “We've doubled in size, become the market leader in terms of share, and it has become the majority of our servicing book,” he said, again pointing to the acquisition of Flagstar’s banking operations but also organic growth.
“Simply put, our clients are winning by leveraging our best in class servicing platform,” Weinbach said. “They can focus on what they do best, and whether that's asset management, retail originations, or banking, they're growing faster than the industry overall, which is driving our joint growth.”
Regarding the year to come, Bray joined many others in pointing to likely mortgage rate volatility and uncertainty. He also said he believes there will be further consolidation in the industry.
“I think consolidation will continue, and we will be a part of it,” Weinbach added.
