Mr. Cooper Group Inc. has recently released its 10-Q report, providing a detailed insight into its financial condition and operations. The company operates as a non-bank servicer of residential mortgage loans in the United States, with two primary segments – Servicing and Originations. The Servicing segment involves activities on behalf of investors or owners of mortgages, while the Originations segment focuses on originating residential mortgage loans through direct-to-consumer and correspondent channels. The company's strategy is to position itself for sustained growth, deliver a world-class customer experience, and increase its return on tangible equity into the high teens.
In the third quarter of 2024, Mr. Cooper's Servicing segment generated income before income tax expense of $177, with the servicing portfolio growing to $1.2 trillion, marking a 32% year-over-year increase. The Originations segment also outperformed projections with income before income tax expense of $69, driven by increased funded volume, which was up 80% from the prior quarter. The company expects the Originations segment to operate at normalized levels of profitability in the fourth quarter due to an uptick in mortgage rates since the low point in September 2024.
In terms of financial results, the consolidated operations for the three months ended September 30, 2024, showed revenues of $424 million, a decrease from the previous year due to negative mark-to-market adjustments driven by a decline in mortgage rates. However, for the nine months ended September 30, 2024, revenues increased to $1.57 billion primarily due to an increase in operational revenues driven by a larger servicing portfolio.
The Servicing segment's operational revenue for the three months ended September 30, 2024, was $616 million, up from $561 million in the same period of 2023. The increase was primarily due to a larger average MSR portfolio in 2024. However, mark-to-market adjustments for the same period showed a loss of $125 million, driven by a decrease in mortgage rates, compared to a gain of $63 million in 2023.
The company's focus on maintaining strong relationships with agencies, investors, regulators, and other counterparties, along with a strong reputation for compliance and customer service, is evident in its ratings. It holds strong ratings from Fitch, Moody's, and S&P, reflecting its operational capabilities and commitment to compliance.
These figures provide a detailed look at Mr. Cooper's financial performance and strategic initiatives, offering investors and stakeholders a comprehensive understanding of the company's operations and outlook. Today the company's shares have moved -4.1% to a price of $87.29. Check out the company's full 10-Q submission here.
