The tide is starting to turn in favor of servicing sales where higher note rates are involved. Don’t expect premium prices or a tsunami of deals, but at least it’s an outlet.
First the good news: Several shops are experiencing a strong second quarter, with production on the rise sequentially. Then again, the first quarter was notably weak. As for the rest of the year, executives are hopeful rates are about to peak.
With production expenses rising to more than $13,000 per loan, and four straight quarters of negative net income, mortgage lenders struggle to find ways to stay in business.
Banks are less aggressive these days when it comes to buying MSRs. But not all. JPMorgan recently acquired a $21 billion package of servicing rights from Rocket, the nation’s fifth-largest processor of loans.
Chase’s top officials shed light this week on how First Republic Bank’s high-quality mortgage assets and affluent borrowers fit right into the megabank’s wheelhouse.
Subservicer ServiceMac stands to lose a large contract down the road once Mr. Cooper swallows the Home Point portfolio. But that’s the nature of the beast when it comes to being a third-party vendor.
The FDIC closed First Republic Bank this week and JPMorgan Chase acquired substantially all of the bank, with help from a loss-sharing agreement provided by the FDIC.
Merger and acquisition activity is heating up, but most of it centers on mortgage servicing rights, huge blocks of it. Not only is SPS in play, but so too is SLS.
Mr. Cooper hopes to surpass the $1 trillion mark as a servicer/subservicer, an event that could happen by yearend if it keeps gobbling up portfolios. Meanwhile, there’s plenty of MSRs to buy.
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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