Origination giant Rocket is purchasing servicing behemoth Mr. Cooper at a premium. The biggest risk for Rocket is that mortgage rates might finally decline markedly in the coming quarters. Or is that an advantage?
One bidder recently agreed to pay north of 6.25 times the servicing fee for a high dollar volume of agency MSR. Sound crazy? Maybe, but servicing prices are at a 25-year high for low-coupon product.
Rocket Mortgage believes the $1.75 billion acquisition will boost its purchase origination volume and lower the cost of customer acquisitions. It will also add new data to Rocket’s artificial intelligence algorithm.
Rate is contemplating selling its title unit, a move that comes amid some states capping how much coverage providers can charge consumers. Meanwhile, the nonbank is selling MSRs on a regular basis.
WaFd Bank is ending its mortgage origination activity; TD Bank is considering selling jumbo mortgages; some banks are still increasing their mortgage business; President Trump issues order on housing, freezes regulatory efforts.
This year will yield fewer sales than the two previous years but those were aberrations. Small MSR portfolios are available, but nothing in the “mega” $10 billion range.
The creation of a U.S. sovereign wealth fund could grease the skids for an end to the conservatorships of Fannie Mae and Freddie Mac.
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