Dallas-based Mr. Cooper Group presented its fourth-quarter 2024 earnings on Wednesday morning. The company had a robust end to the year in which it delivered a $204 million profit and $235 million in pretax operating income.
“The fourth quarter capped off an outstanding year for Mr. Cooper, with an operating ROTCE (return on tangible common equity) of 15.8% and substantial portfolio growth of 57% year-over-year. We enter 2025 with strong capital, liquidity and an outstanding team, energized to serve our customers, clients and stakeholders,” Jay Bray, the company’s chairman and CEO, said in a statement.
During the earnings call, Bray highlighted that Mr. Cooper’s tangible book value (TBV) grew 12% year over year to $71.61 per share, while its capital ratio was 24.4% and liquidity was $3.4 billion.
“These numbers demonstrate consistent, predictable performance,” Bray said. “And what’s especially notable is we delivered these results by closing on the acquisition of Flagstar mortgage banking operations and onboarding 1.1 million customers. This is by far the largest acquisition in our history and one of the largest customer transfers in the history of the mortgage industry.”
Drilling down into segments, Mr. Cooper’s servicing arm generated $318 million in pretax income, a figure that is up 39% year over year. Its servicing portfolio grew to $1.56 trillion, up 57% year over year and 26% higher than in Q3 2024.
Bray touted the company’s growth in mortgage servicing rights (MSRs).
“Over the last two years, we’ve acquired $440 billion of MSRs at cyclewide option-adjusted spreads (OAS), including the Homepoint and Flagstar transactions and many other pools,” Bray said during the call. “Today, our portfolio stands at $1.5 trillion, representing the loans of over 6 million customers, making us the largest servicer in the U.S. by a significant margin. In fact, we are more than 50% larger than No. 2.”
Company president Mike Weinbach commented during the call that 2024 was a “transformative” year for the lender.
“We’ve doubled in size, become the market leader in terms of share and [subservicing has] become the majority of our servicing book. A lot of factors contribute to our growth. … The Flagstar transaction was a significant driver, and you can see this added $275 billion of UPB in the fourth quarter,” Weinbach said.
Mr. Cooper funded 32,954 loans in the fourth quarter, totaling about $9.3 billion in unpaid principal balance (UPB). This included $2.6 billion in direct-to-consumer business and $6.7 billion in correspondent business.
Its funded volume increased 36% quarter over quarter, while its pull-through adjusted volume increased 21% quarter over quarter to $9.1 billion. The company’s originations segment earned a pretax income of $46 million and pretax operating income of $47 million in Q4 2024.
“The highlight this quarter was continued incredible execution by our correspondent team, who generated a 48% sequential increase in production following a very big third quarter,” Weinbach said. “Thanks to their efforts, Mr. Cooper is now a top-five correspondent lender, which marks a significant improvement in share from a year ago when we weren’t even in the top 10.”
In the direct-to-consumer channel, Mr. Cooper’s volume was up 16% quarter over quarter as the company helped nearly 2,000 customers tap into their home equity or lower their monthly payments by refinancing.
The company’s guidance is for $30 million to $50 million in earnings before taxes (EBT) from originations in the first quarter of 2025, with potential upside later in the year driven by growth in its servicing portfolio and a focus on enhancing the customer experience.
Its outlook also includes increasing its ROTCE guidance range to 16% to 20% for 2025 and 2026, up from the previous range of 14% to 18%.
The earnings call also included an update about its Agent IQ coaching platform.
“We piloted Agent IQ in the fourth quarter, and today it’s fully rolled out in the service and call center, where it’s now analyzing 400,000 calls per month,” Bray told analysts. “We plan to roll out Agent IQ to our originations team members a little later this year, as soon as we complete the telephony upgrade.”
Other highlights of the earnings call included Mr. Cooper being recognized as a top mortgage servicer with a 2024 SHARP Gold Award from Freddie Mac, and its master servicer rating was upgraded to RMS1- by Fitch Ratings.
