Mortgage servicing volume drops for the first time in 7 quarters, company eyes long-term gains
Mr. Cooper’s mortgage servicing portfolio shrank in the first quarter of 2025, marking the first decline after seven consecutive quarters of growth.
The nonbank lender ended March with a total unpaid principal balance (UPB) of $1.51 trillion, a 2.7% drop from the end of 2024. The decrease was primarily driven by a reduction in subservicing volume.
The company posted net income of $88 million, down from $204 million in the previous quarter. Despite the overall decline in income, both the servicing and originations segments remained profitable on a pre-tax basis. Adjusted pre-tax operating income came in at $255 million, while reported pre-tax income was $95 million, reflecting mark-to-market adjustments of $82 million tied to servicing values.
“This was another strong quarter, highlighting the power of our platform to deliver consistent, recurring, and predictable results,” said Jay Bray, chairman and CEO. “I'm proud of our team for their hard work, which has positioned Mr. Cooper to join forces with Rocket to create the industry’s leading integrated homeownership platform. We have formed an integration team and are already working closely with Rocket on post-close planning.”
Rocket Companies announced last month a definitive agreement to acquire Mr. Cooper Group Inc. in an all-stock transaction valued at $9.4 billion. The combined entity will service over $2.1 trillion in loan volume across nearly 10 million clients. The transaction is expected to generate annual run-rate revenue and cost synergies of approximately $500 million.
Bray will become president and CEO of Rocket Mortgage, reporting to Rocket Companies CEO Varun Krishna. The acquisition is anticipated to close in the fourth quarter of 2025.
Read next: Should brokers be worried about Rocket's Mr. Cooper purchase?
The servicing segment recorded pre-tax income of $214 million, which included $82 million in mark-to-market adjustments. Excluding those, pre-tax operating income reached $332 million. Mr. Cooper currently services 6.5 million customers and reported the carrying value of its mortgage servicing rights (MSRs) at $11.35 billion, or 155 basis points of MSR UPB.
Originations remained a bright spot for the company despite a slowdown in volume. Mr. Cooper originated $8.3 billion in loans during the first quarter, a 10.8% decrease from the previous quarter. The business generated $45 million in pre-tax income and $53 million in pre-tax operating income.
Of the total originations, $6.4 billion came through the correspondent channel, and $1.9 billion through the direct-to-consumer channel. In total, the company funded 32,296 loans. Pull-through adjusted volume also dipped slightly by 2%, coming in at $8.8 billion.
“Our originations team did a tremendous job helping customers access liquidity through cash-out refis and second liens,” Mr. Cooper president Mike Weinbach said in a Press release.
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