Mr. Cooper Advances Toward $1 Trillion MSR Portfolio Goal

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Mr. Cooper Advances Toward $1 Trillion MSR Portfolio Goal

Aug 10, 2023 | News | 0 comments

Dallas-based Mr. Cooper Group has successfully acquired Home Point Capital and Roosevelt Management Company, progressing towards its $1 trillion mortgage servicing rights goal. After extending the deadline twice, Mr. Cooper concluded a tender offer for Home Point’s shares, with 98.5% of shares tendered and paid at $2.333 per share.

In a statement, Jay Bray, the Chairman and CEO of Mr. Cooper, expressed that the acquisition contributes to their platform’s expansion, moving them nearer to the $1 trillion strategic objective. He emphasized the benefits of increased yields and favorable operating leverage for improved returns.

Initially revealed in May, the agreement involves Homepoint’s complete acquisition by Mr. Cooper, set to conclude in Q3 2023. Mr. Cooper will pay $324 million in cash and take on $500 million in existing Home Point 5% senior notes due by February 2026, making Homepoint a wholly-owned subsidiary.

In a statement, Chris Marshall, Vice Chairman and President of Mr. Cooper, noted that the deal encompasses taking on $500 million in bonds with a favorable rate. Consequently, he affirmed that the acquisition’s effect on the company’s liquidity, already robust and near-record, is anticipated to be immaterial.

Furthermore, on Tuesday, Mr. Cooper confirmed the finalization of the Roosevelt acquisition, encompassing its associated entities such as a registered investment advisor and a licensed owner of mortgage servicing rights (MSR). Initially announced in February, the agreement’s anticipated conclusion was set for the latter part of 2023.

Established in 2008, the New York-based private firm oversees third-party capital for investors including insurance companies, pension funds, and hedge funds.

Marshall stated that substantial MSR trading with appealing yields persists in the market. He emphasized their asset management approach to extend these yields to institutional investors, fostering customer growth and operational expansion concurrently.

As per its second-quarter 2023 earnings report published last week, Mr. Cooper concluded June with an unpaid principal balance (UPB) of $882 billion, marking an increase from $853 billion at the end of March.

The expansion of the servicing portfolio was attributed to the acquisition of Rushmore’s special servicing platform. Further augmenting the portfolio to a potential $957 billion are additional agreements, encompassing $83 billion from Home Point Capital’s acquisition and $25 billion from pending bulk acquisitions.