Mr. Cooper delivers $181M profit in Q1 2024 

Company CEO Jay Bray is bullish on artificial intelligence, with the company utilizing its partnership with Sagent to strong effect

Mr. Cooper Group unveiled strong financial results during the first quarter of 2024, buoyed in part by a strong servicing and subservicing business. The firm reported $564 million in revenue and $181 million in net income during the first three months of the year. 

Additionally, its return on tangible common equity rose to 14.5% in Q1 2024, up from 12.5% in the fourth quarter of 2023.

“The company has started the year with excellent momentum, including return on tangible common equity rising to 14.5%,” Chairman and CEO Jay Bray said in a statement. “Thanks to our strategic emphasis on technology, including years of investment in AI and the cloud, Mr. Cooper is well positioned to provide our customers with world-class service, operate as a trusted counterparty for our industry stakeholders, and grow and sustain investor returns.”

During a call with analysts on Wednesday morning, Bray touted the merits of Sagent’s new servicing software platform, Dara. The software boasts a single real-time database and user experience across the entire core, consumer and default servicing life cycle, according to the company. 

“In order to implement AI, you need a state-of-the-art platform,” Bray told analysts on Wednesday. “We embraced the cloud much earlier than our peers. In fact, we built our servicing platform to be cloud-native from the start.”

Mr. Cooper and Sagent signed a multiyear agreement in February 2022. Mr. Cooper sold certain intellectual property rights for its cloud-based technology platform to Sagent and received a minority equity stake in the fintech company.

Per the terms of the contract, Sagent was tasked with integrating Mr. Cooper’s consumer-first platform into a cloud-native core, then licensing the resulting cloud-based platform to banks and independent mortgage companies.

Bray also reintroduced Pyro, Mr. Cooper’s patented mortgage-centric AI platform that the company has been developing since 2019 in partnership with Google. The platform harnesses the power of machine learning and Google Cloud Document AI capabilities to identify and sort thousands of important documents. 

“By picking the right partner for cloud and technology, we were able to reallocate resources to other strategically important projects, including building proprietary tools for customer retention, loan modification and onboarding portfolios,” Bray said. “We’ve also allocated resources to further digitize our processes in origination and servicing.”

Mr. Cooper funded 11,599 loans in the first quarter, totaling approximately $2.9 billion in unpaid principal balance (UPB). This included $1.4 billion in direct-to-consumer originations and $1.5 billion in correspondent volume. On a quarterly basis, funded volume increased 8%, while pull-through adjusted volume increased 16% to $3 billion. Total originations generated an operating income of $32 million.

Meanwhile, the company’s servicing portfolio ended the quarter at $1.136 trillion, with UPB of $631 billion in owned mortgage servicing rights (MSRs) and $505 billion in subservicing. Servicing generated pretax operating income, excluding other mark-to-market, of $273 million in Q1 2024.

“This environment is playing to the strengths of our balanced business model, as we are enjoying strong momentum with subservicing clients and seeing attractive opportunities to acquire MSRs, while our originations team has been very nimble in helping customers save money and access the equity they’ve built up in their homes,” Mr. Cooper President Mike Weinbach said in a statement.

On Tuesday, Mr. Cooper Group named former Wells Fargo Home Lending executive Ranjit Bhattacharjee and former Piper Sandler analyst Kevin Barker to its leadership team. 

Bhattacharjee will officially join Mr. Cooper on May 6 as its executive vice president and chief investment officer. He will be responsible for oversight of capital markets and correspondent lending, reporting directly to chairman and CEO Jay Bray. Barker’s hiring for the role of senior vice president of corporate finance is effective immediately.

Mr. Cooper Group also acquired Home Point Capital and Roosevelt Management Co. in 2023 while managing the fallout from a cyberattack late last year.

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