Despite a decline in loan production, Mr. Cooper’s MSR portfolio boosted its Q4 profit
Mr. Cooper announced a profit of $1 million in the fourth quarter of 2022, attributing this success to its servicing business and the increased value of its owned mortgage servicing rights (MSRs).
In its earnings statement released Friday, Mr. Cooper revealed that its servicing segment generated a pre-tax income of $98 million, including other mark-to-market of $58 million. At the end of Q4, Mr. Cooper’s servicing portfolio was at $870 billion in UPB, and the carrying value of its MSR portfolio was $6.65 billion.
Chris Marshall, vice chairman and president, commented: “Over the last year, we’ve continued to drive greater efficiencies throughout the company and especially in our servicing platform, which is key to the low-cost leadership strategy that’s driving customer growth and positioning us to deliver a higher return on equity.”
“The company produced exceptional results in 2022, growing the portfolio by 23% year-over-year and tangible book value per share by 29%, despite a very challenging year for the industry,” said Jay Bray, chairman and CEO of Mr. Cooper. “This is a clear validation of our balanced business model, the investments we’ve made in technology, and the incredible talent and hard work of our people.”
Despite this achievement, the Dallas-based lender saw a decline in loan originations in the fourth quarter, with loan production totaling $3.17 billion – down 44.8% quarter over quarter. Mr. Cooper’s gain-on-sale margin also dropped, with 200 basis points in the October-December period compared to 258 basis points in the third quarter of 2022.
Mr. Cooper also incurred $23 million in expenses for severance payments to laid-off workers and property consolidation, as well as a $10 million loss related to equity investments.
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