In April, we’ll go deep on money and finance for a special theme month, by talking to leaders about where the mortgage market is heading and how technology and business strategies are evolving to suit the needs of buyers now. Inman’s Best of Finance returns for 2025, celebrating the leaders in this space. And subscribe to Mortgage Brief for weekly updates all year long.
Loan servicing giant Mr. Cooper saw the pool of loans it collects payments on shrink for the first time in two years during the first quarter — a trend that could continue into Q2 following a decision by the nation’s largest lender to pull its business.
While net income was down 57 percent from Q4, to $88 million, Mr. Cooper executives said first quarter results released Wednesday demonstrate the company’s ability to deliver “consistent, recurring and predictable results.”
Mr. Cooper remains on track to be acquired by Rocket Companies during the fourth quarter, a deal that the companies claim will create the industry’s leading integrated homeownership platform, Mr. Cooper Chairman and CEO Jay Bray said.
Jay Bray
“By pooling our talent, data and technology, we are going to totally reimagine the homeownership journey from start to finish, and harness the transformative power of AI to bring our customers a truly amazing experience for our investors,” Bray said on a call with investment analysts.
TAKE THE INMAN INTEL INDEX SURVEY FOR APRIL
Mr. Cooper is the nation’s largest mortgage loan servicer, collecting monthly payments from 6.5 million homeowners on behalf of lenders and investors in mortgage-backed securities, a business that generated $214 million in pre-tax income in Q1.
But Mr. Cooper’s pending $9.4 billion acquisition by Rocket Companies has ruffled the feathers of United Wholesale Mortgage, which famously won’t do business with mortgage brokers who work with rival Rocket Mortgage.
Bray is slated to become president and CEO of Rocket Mortgage when the deal closes, reporting to Rocket Companies CEO Varun Krishna. Rocket also has its sights set on acquiring real estate brokerage Redfin for $1.75 billion, a deal it says could save consumers $20,000 per transaction by unifying home search, buying, selling, mortgage, title and loan servicing.
UWM — which surpassed Rocket Mortgage as the nation’s largest mortgage lender in 2022 — pulled its subservicing contract with Mr. Cooper this month, and will no longer sell mortgage servicing rights to the Dallas-based loan servicer, UWM confirmed to Inman.
At the end of last year, UWM owned the servicing rights on 692,908 mortgages totalling $225.8 billion, a business that generated $636.7 million in income last year. It’s not clear how many of those borrowers were subserviced by Mr. Cooper.
Aided by the $1.3 billion acquisition of Flagstar Bank’s servicing business last fall, Mr. Cooper ended the year with a $1.556 trillion mortgage servicing rights portfolio, up 57 percent from a year ago. That included $736 billion in owned mortgage servicing rights (owned MSRs) and $820 billion in subservicing Mr. Cooper performs for others.
Mr. Cooper’s $1.5T mortgage servicing portfolio
Source: Mr. Cooper earnings reports.
Even before UWM cut ties with Mr. Cooper, the loan servicer saw its subservicing portfolio shrink by $40 billion during the first quarter of 2024, to $780 billion.
Mr. Cooper President Mike Weinbach said the shrinkage was due to expected transfers of $60 billion in subservicing business that Mr. Cooper acquired from Flagstar to other servicers.
Mike Weinbach
“Outside of these de-boardings, our subservicing portfolio grew organically by 2 percent quarter over quarter,” Weinbach said on Wednesday’s earnings call. “We’re growing with our clients, which includes some of the strongest originators and investors in the industry.”
He said Mr. Cooper is in “advanced discussions with potential new clients and optimistic about winning new books of business.”
Mr. Cooper’s owned MSR portfolio also shrank by $2 billion during Q1, to $734 billion.
All told, Mr. Cooper was collecting payments on $1.514 trillion in loans as of March 31, down 3 percent from Q4 but up 33 percent from a year ago.
Mortgage originations down 10% from Q4 2024
Source: Mr. Cooper earnings reports.
Mortgage servicers are also in a good position to offer refinancing to borrowers, and Mr. Cooper funded 32,296 loans in the first quarter totaling $8.3 billion, down 10 percent from Q4 but up 186 percent from a year ago.
Most of the company’s mortgage originations ($6.4 billion) came through Mr. Cooper’s correspondent channel, which Weinbach said has benefited from “a number of investments and operational enhancements over the last 18 months.”
In the direct-to-consumer channel, Weinbach said Mr. Cooper enjoyed “very strong momentum” with cash-out refinancing, which made up 46 percent of the $1.9 billion in volume, and second liens, which accounted for another 21 percent of direct loans.
“During the quarter, we helped over 9,000 customers access equity in their homes, and helped nearly 2,000 customers reduce their monthly payments or purchase a new home,” Weinbach said.
Mr. Cooper sold its wholesale and non-delegated correspondent mortgage business to Ft. Lauderdale, Florida-based A&D Mortgage LLC, on April 1.
Get Inman’s Mortgage Brief Newsletter delivered right to your inbox. A weekly roundup of all the biggest news in the world of mortgages and closings delivered every Wednesday. Click here to subscribe.
