MSR sales played a key role in nonbank profits in Q1

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During the first quarter of 2022, UWM sold MSRs “on loans with an aggregate UPB [unpaid principal balance] of approximately $56.6 billion for proceeds of … $656.7 million,” UWM’s first-quarter 2022 10Q filing with the U.S. Securities and Exchange Commission (SEC) states. “Additionally, on March 31, 2022, [UWM] entered into an agreement to sell MSRs with an aggregate UPB of approximately $16.1 billion for proceeds of approximately $215.1 million. …The initial proceeds were not received until April 1, 2022.”

Consequently, UWM recorded MSR sales of $656.7 million for Q1 2022, it’s SEC filing shows, with the $215.1 million in proceeds from the latter MSR sale expected to be reflected in UWM’s second-quarter results — offering the lender an earnings booster shot for that quarter.

The lender’s SEC filing indicates that the related “MSR assets [from the second MSR sale] remained on the balance sheet as of March 31, 2022,” which is the end of UWM’s first quarter. UWM’s filing reflects no MSR sales for the first quarter of 2021. 

For the first quarter of this year, the selling of MSRs did help to lift UWM’s fortunes. It recorded net income of $453.2 million on net revenue of $821.8 million for the quarter, which was marked by rapidly rising interest rates that cut into loan production, particularly refinancing, for most originators. By contrast, in the first quarter of 2021, UWM recorded net income of $860 million on net revenue of $1.19 billion.

The sale of the MSRs did contribute to trimming UWM’s servicing-portfolio size a tad. “The unpaid principal balance of mortgage loans serviced approximated $303.4 billion and $319.8 billion at March 31, 2022, and December 31, 2021, respectively,” UWM’s SEC filing states. 

Still, given the strong MSR market currently, the “fair value” of the lender’s MSR assets — the expected price the lender can command in the market for the assets — was up year over year, to $3.5 billion as of the end of the first quarter of 2022. That compares with $2.3 billion for the same period a year earlier.

Homepoint’s parent company recorded net income of $11.9 million on net revenue of $158.2 million for the first quarter of 2022, compared with net income of $149 million on net revenue of $421.9 million for the same period in 2021.

Homepoint’s bottom line also got a boost from the sale of MSRs during the first quarter of this year. “During the quarter, Homepoint completed sales of mortgage servicing rights portfolios of single-family mortgage loans for a total purchase price of approximately $434.5 million,” its SEC filing states.

The value of the lender’s MSR portfolio decreased from $123.4 billion as of year-end 2021 to $102 billion as of the end of Q1 2022, the SEC filing indicates. However, the “fair value” of its MSR assets remained essentially flat over the period, even with the big selloff — $1.52 billion as of year-end 2021, compared with $1.49 billion as of the end of the first quarter of this year.

“The MSR multiple [a measure of sales-price value] for the first quarter of 2022 of 5.6x increased from 3.8x in the first quarter of 2021 and 4.6x in the fourth quarter of 2021, primarily driven by slower prepayment speeds due to higher mortgage interest rates,” Homepoint’s financial filing with the SEC states.

Homepoint reported that its mortgage servicing generated $83.2 million in the first quarter of this year, up from $64.8 million in the first quarter of 2021 and $74.4 million for the final quarter of 2021. The lender also announced that ServiceMac is expected to begin subservicing loans for Homepoint in the second quarter of this year.

“Once ServiceMac begins subservicing loans for Homepoint, they will perform servicing functions on Homepoint’s behalf, but Homepoint will continue to hold the MSRs,” the lender’s SEC filing states.

Rocket Companies SEC filing offers sparser detail on its MSR portfolio activity during the first quarter of this year, but it does reflect that the lender’s “proceeds from the sale of MSRs” during the period totaled some $254 million, up from $10.2 million in Q1 2021.

Rocket recorded net income of $1 billion on net revenue of $2.7 billion for the first quarter of the year, compared with net income of $2.8 billion on revenue of $4.5 billion for the first quarter of 2021.

Even with the MSR sale, it appears Rocket — like UWM and Homepoint — still retained a healthy MSR portfolio, powered by rising interest rates. 

“The total UPB of mortgage loans serviced [by Rocket], excluding subserviced loans, at March 31, 2022, and December 31, 2021, was [$492.4 billion] and [$485.1 billion], respectively,” Rocket’s 10Q filing with the SEC states. “The portfolio primarily consists of high-quality performing agency and government (FHA and VA) loans.” As of March 31, 2021, the figure stood at $431.5 billion, the lender’s 10Q filing shows.

Rocket lists the fair value of its MSR portfolio at $6.4 billion as of the end of the first quarter of this year, up from $4.3 billion as of the end of the first quarter of 2021, it SEC filing shows.

Another nonbank bigfoot, loanDepot, recorded a net loss of $91.3 million on net revenue of $503.3 million on a consolidated basis for the first quarter of this year, compared with a net gain of $427.8 million on net revenue of $1.3 billion for the same period in 2021. The lender’s first-quarter 2022 downturn may have been even worse, however, absent a rather large sale of MSR assets during the period.

“The increase in cash and cash equivalents from December 31, 2021, [or over the first quarter of 2022] included $303.8 million in proceeds from the bulk sale of MSRs,” loanDepot’s first-quarter 2022 earnings filing with the SEC states.

Despite the sale — and thanks to increasing MSR values — loanDepot’s “servicing rights at fair value” stood at $2.1 billion as of the end of the first quarter of this year, up from $1.77 billion as of the same period in 2021.

The lender’s total MSR portfolio, based on the unpaid principal balance of loans serviced, was recorded at $153.4 billion as of March 31, 2022, down from $162.1 billion as of year-end 2021. “The decrease in unpaid principal balance of our servicing portfolio was driven primarily by sales of $23.8 billion of unpaid principal balance [in serviced loans] during the quarter,” a footnote in the lender’s quarterly financial filing with the SEC states.

The first quarter of 2022 “saw a fairly steep curve in the increase of MSR values from start to finish as reflected in every public company [mortgage lender] reporting improved MSR values to offset lower net income from originations,” Incenter’s Piercy said.

 “…The result,” Piercy added, “is a recent surge in offerings to the market with demand keeping up due to new buyers entering the space.”

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MSR sales played a key role in nonbank profits in Q1

During the first quarter of 2022, UWM sold MSRs “on loans with an aggregate UPB [unpaid principal balance] of approximately $56.6 billion for proceeds of … $656.7 million,” UWM’s first-quarter 2022 10Q filing with the U.S. Securities and Exchange Commission (SEC) states. “Additionally, on March 31, 2022, [UWM] entered into an agreement to sell MSRs with an aggregate UPB of approximately $16.1 billion for proceeds of approximately $215.1 million. …The initial proceeds were not received until April 1, 2022.”

Consequently, UWM recorded MSR sales of $656.7 million for Q1 2022, it’s SEC filing shows, with the $215.1 million in proceeds from the latter MSR sale expected to be reflected in UWM’s second-quarter results — offering the lender an earnings booster shot for that quarter.

The lender’s SEC filing indicates that the related “MSR assets [from the second MSR sale] remained on the balance sheet as of March 31, 2022,” which is the end of UWM’s first quarter. UWM’s filing reflects no MSR sales for the first quarter of 2021. 

For the first quarter of this year, the selling of MSRs did help to lift UWM’s fortunes. It recorded net income of $453.2 million on net revenue of $821.8 million for the quarter, which was marked by rapidly rising interest rates that cut into loan production, particularly refinancing, for most originators. By contrast, in the first quarter of 2021, UWM recorded net income of $860 million on net revenue of $1.19 billion.

The sale of the MSRs did contribute to trimming UWM’s servicing-portfolio size a tad. “The unpaid principal balance of mortgage loans serviced approximated $303.4 billion and $319.8 billion at March 31, 2022, and December 31, 2021, respectively,” UWM’s SEC filing states. 

Still, given the strong MSR market currently, the “fair value” of the lender’s MSR assets — the expected price the lender can command in the market for the assets — was up year over year, to $3.5 billion as of the end of the first quarter of 2022. That compares with $2.3 billion for the same period a year earlier.

Homepoint’s parent company recorded net income of $11.9 million on net revenue of $158.2 million for the first quarter of 2022, compared with net income of $149 million on net revenue of $421.9 million for the same period in 2021.

Homepoint’s bottom line also got a boost from the sale of MSRs during the first quarter of this year. “During the quarter, Homepoint completed sales of mortgage servicing rights portfolios of single-family mortgage loans for a total purchase price of approximately $434.5 million,” its SEC filing states.

The value of the lender’s MSR portfolio decreased from $123.4 billion as of year-end 2021 to $102 billion as of the end of Q1 2022, the SEC filing indicates. However, the “fair value” of its MSR assets remained essentially flat over the period, even with the big selloff — $1.52 billion as of year-end 2021, compared with $1.49 billion as of the end of the first quarter of this year.

“The MSR multiple [a measure of sales-price value] for the first quarter of 2022 of 5.6x increased from 3.8x in the first quarter of 2021 and 4.6x in the fourth quarter of 2021, primarily driven by slower prepayment speeds due to higher mortgage interest rates,” Homepoint’s financial filing with the SEC states.

Homepoint reported that its mortgage servicing generated $83.2 million in the first quarter of this year, up from $64.8 million in the first quarter of 2021 and $74.4 million for the final quarter of 2021. The lender also announced that ServiceMac is expected to begin subservicing loans for Homepoint in the second quarter of this year.

“Once ServiceMac begins subservicing loans for Homepoint, they will perform servicing functions on Homepoint’s behalf, but Homepoint will continue to hold the MSRs,” the lender’s SEC filing states.

Rocket Companies SEC filing offers sparser detail on its MSR portfolio activity during the first quarter of this year, but it does reflect that the lender’s “proceeds from the sale of MSRs” during the period totaled some $254 million, up from $10.2 million in Q1 2021.

Rocket recorded net income of $1 billion on net revenue of $2.7 billion for the first quarter of the year, compared with net income of $2.8 billion on revenue of $4.5 billion for the first quarter of 2021.

Even with the MSR sale, it appears Rocket — like UWM and Homepoint — still retained a healthy MSR portfolio, powered by rising interest rates. 

“The total UPB of mortgage loans serviced [by Rocket], excluding subserviced loans, at March 31, 2022, and December 31, 2021, was [$492.4 billion] and [$485.1 billion], respectively,” Rocket’s 10Q filing with the SEC states. “The portfolio primarily consists of high-quality performing agency and government (FHA and VA) loans.” As of March 31, 2021, the figure stood at $431.5 billion, the lender’s 10Q filing shows.

Rocket lists the fair value of its MSR portfolio at $6.4 billion as of the end of the first quarter of this year, up from $4.3 billion as of the end of the first quarter of 2021, it SEC filing shows.

Another nonbank bigfoot, loanDepot, recorded a net loss of $91.3 million on net revenue of $503.3 million on a consolidated basis for the first quarter of this year, compared with a net gain of $427.8 million on net revenue of $1.3 billion for the same period in 2021. The lender’s first-quarter 2022 downturn may have been even worse, however, absent a rather large sale of MSR assets during the period.

“The increase in cash and cash equivalents from December 31, 2021, [or over the first quarter of 2022] included $303.8 million in proceeds from the bulk sale of MSRs,” loanDepot’s first-quarter 2022 earnings filing with the SEC states.

Despite the sale — and thanks to increasing MSR values — loanDepot’s “servicing rights at fair value” stood at $2.1 billion as of the end of the first quarter of this year, up from $1.77 billion as of the same period in 2021.

The lender’s total MSR portfolio, based on the unpaid principal balance of loans serviced, was recorded at $153.4 billion as of March 31, 2022, down from $162.1 billion as of year-end 2021. “The decrease in unpaid principal balance of our servicing portfolio was driven primarily by sales of $23.8 billion of unpaid principal balance [in serviced loans] during the quarter,” a footnote in the lender’s quarterly financial filing with the SEC states.

The first quarter of 2022 “saw a fairly steep curve in the increase of MSR values from start to finish as reflected in every public company [mortgage lender] reporting improved MSR values to offset lower net income from originations,” Incenter’s Piercy said.

 “…The result,” Piercy added, “is a recent surge in offerings to the market with demand keeping up due to new buyers entering the space.”

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