Overall,
Mr.
Cooper
delivered
$88
million
in
net
income
in
the
first
quarter,
which
include
a
negative
hit
of
$82
million
on
its
mortgage
servicing
rights
(MSR)
portfolio.
Profits
declined
from
$204
million
in
the
previous
quarter. 

“The
integration
teams
are
already
synched
and
planning
for
how
to
bring
our
business
together
once
the
transaction
closes,”
Bray
told
analysts. 

It
all
starts
with
a
$1.514
billion
servicing
portfolio
in
the
first
quarter,
down
from
$1.556
billion
in
the
fourth
quarter
of
2024.
That
was
tied
to
the
shift
of
$60
million
in
sub-serviced
loans
to
other
firms
amid
the
closure
of
its


Flagstar
deal
at
the
end
of
the
year
—
the
biggest
acquisition
in
Mr.
Cooper’s
history.

Still,
that’s
the
largest
portfolio
in
the
industry,
and
it
offers
ample
opportunity
to
originate

refinances
when
interest
rates
drop,
along
with
other
products
while
they
are
still
at
higher
levels.
In
total,
Mr.
Cooper
had
6.5
million

servicing
customers
in
the
first
quarter.

From
January
to
March,
Mr.
Cooper’s
servicing
portfolio
delivered
$214
million
in
pretax
income,
including
$82
million
in
mark-to-market.
The
performance
was
at
the
high
end
of
investor
guidance
due
to
a
slower-than-expected
prepayment
rate
and
lower
amortization.

Meanwhile,
servicing
operating
expenses
declined
as
a
share
of
the
portfolio
by
36
basis
points
on
a
year-over-year
basis. 

Servicing
loans
opens
the
opportunity
to
offer
clients
more
products.
Executives
said
Mr.
Cooper
sees
momentum
in

home
equity
loans
and
cash-out
refinances,
which
have
massive
long-term
growth
potential
regardless
of
the
interest
rate
environment,
they
say. 

Mike
Weinbach,
president
of
Mr.
Cooper
Group,
said
these
products
are
“turning
out
to
be
a
very
popular
method
for
customers
to
tap
the
equity
in
their
homes.”
In
total,
94%
of
Mr.
Cooper’s
customers
have
at
least
20%
equity
in
their
homes.

“They
typically
use
this
liquidity
for
debt
consolidation,

home
improvements
and
other
major
expenses,”
Weinbach
added.
“Regardless
of
the
use,
these
products
cost
much
less
than
most
credit
cards,
and
that’s
even
before
considering
the
tax
deductibility
of
mortgage
interest.” 

While
the
current
environment
offers
limited
opportunity
for
rate-and-term
refis,
the
firm’s
refinance

recapture
rate
was
a
little
over
50%
in
the
first
quarter.
Second
liens
were
not
included
in
the
ratio.

“As
of
quarter
end,
21%
of
our
portfolio
had
note
rates
of
6%
or
higher,
which
is
indicative
of
a
sizable
opportunity
when
rates
next
rally,”
Weinbach
said. 

Mr.
Cooper’s
origination
segment
earned
$45
million
in
pretax
income,
in
line
with
the
previous
quarter.
It
funded
$8.3
billion
in
loans
across
32,296
loans
in
the
first
quarter,
with
$1.9
tied
to
its
direct-to-consumer
channel
and
$6.4
billion
from
correspondent
business.
Total
volume
shrank
from
$9.2
billion
in
the
fourth
quarter
of
2024.

Regarding
the
company’s
portfolio,

delinquencies
were
at
1.1%.
Customers
have
an
average
FICO
score
of
736,
and
loan-to-value
ratios
averaged
52%.

“I’d
like
to
call
out
our
exceptional
performance
with

Ginnie
Mae
loans,
where
delinquencies
fell
by
50
basis
points
for
both

FHA
and
VA
loans,
significantly
outperforming
the
industry,”
said
Curt
Johnson,
the
company’s
executive
vice
president
and
chief
financial
officer.

Johnson
said
the
company
“doesn’t
try
to
forecast
overall
consumer
credit
cycles.”
Bray
added
that
“balance-sheet
strength
is
non-negotiable
for
industry
leaders,
and
it’s
especially
important
during
periods
of

elevated
uncertainty
such
as
the
markets
are
currently
experiencing.”

Mr.
Cooper’s
liquidity
was
up
14%
quarter
over
quarter
to
$3.8
billion,
including
$784
million
in
cash.