Servicing rights might be its bread and butter, but Mr. Cooper Group Inc. is smiling about its second quarter originations income too.
The Texas-based company reported second-quarter net income of $142 million, up from $37 million in the first quarter. Year-over-year net income was down from $151 million in the second quarter of 2022. The company said it had a profit of $2.07 per share, which beat Wall Street's expectations.
Over the second quarter, the company funded 13,406 loans, adding up to about $3.8 billion in unpaid principal balance. This included $1.6 billion from the direct-to-consumer channel and $2.2 billion from the correspondent channel. There was a 40% quarter-over-quarter increase in the funded volume, while the pull-through adjusted volume also grew by 25% quarter-over-quarter.
“We’re totally focused on returns and completely channel agnostic,” Chris Marshall, vice chairman and president, said. However, he added that “more rational pricing in correspondent is creating a more compelling environment.”
Servicing recorded pretax income of $243 million, including other mark-to-market of $61 million. The servicing portfolio ended the quarter at $882 billion in unpaid principal balance (UPB). Servicing generated pretax operating income, excluding other mark-to-market, of $182 million.
Two recent acquisitions also are expected to boost Mr. Cooper's bottom line. In May, it announced it has signed a definitive agreement to acquire all outstanding shares of Home Point Capital Inc. for approximately $324 million in cash. And in April it entered an agreement to buy Rushmore Loan Management Services LLC’s residential mortgage servicing platform, which includes 250,000 customers with a total of $37 billion in unpaid principal balance.
In addition to a reduction in operating costs, both deals are expected to keep the company profitable through the end of 2023 and beyond. Year-over-year, the company reported that operating costs are down 45% from $338 million in 2022
