COOP - Earnings call transcript Q4 2024

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Operator

Good morning. Welcome to Mr. Cooper Group Fourth Quarter 2024 Earnings Conference Call. [Operator Instructions]

Please be advised that today's conference is being recorded.

to conference like to now would hand over the Mr. I Group. Cooper

Kenneth Posner

and are and and Jay Good My Cooper CFO. Group's of name Weinbach, to Fourth Mr. Johnson, Ken CEO; Investor With morning, today and and President; Strategic Bray, Chairman welcome Mike Posner, Executive Quarter Planning SVP I'm me Relations. is Kurt Earnings and Call. Vice President

this call is reminder, a As recorded. being

on slides can Investor web page the investors.mrcoopergroup.com. You at Relations our find

non-GAAP to slide measures, are During may filings. the by refer call, that identified the should the may GAAP risk to to make you we've SEC in affected in deck. which results could which we reconciled we be our understand factors other forward-looking XX-K appendix statements, Also, and

commitment these change. update not We statements any are undertaking conditions if to

to I'll turn call now the Jay. over

Jay Bray

Good call. our for morning, you and everyone, joining thank

was operating grew And share. summarize, start capital XX.X%. $XXX liquidity million. X results. Let's Slide ratio billion. And on was ROTCE I'll Tangible a review quarter $XX.XX income was per was year-over-year fourth to XX.X%. of book pretax our with $X.X Operating XX% value

largest by notable exceptionally consistent, predictable especially in history customers. mortgage industry. million numbers far pleased transfers largest These delivered by of the the customer is the mortgage the in on and demonstrate acquisition we our and with these what's And I'm onboarding X.X acquisition performance. these history one results of Flagstar's closing operations results. banking This the of is

Servicing XX% segments, million up year-over-year. down pretax generated in $XXX into income, Drilling

continuing throughout cash strong we portfolio level XXXX our low thereafter. the Given prepayments, from project of and long flows

Thanks position. outpacing top volumes sequentially, have sell-off sharp million to climbed a generating and the $XX remained of into correspondent channel. of work in very team in market clients, the significantly EBT. reflecting despite X grew our Funded our Originations market, correspondent share execution trust we strong December, hard the resilient in XX% the the

mentioned make channels. I structure buyer on and retention in As our all call, best cost the MSRs us our last of

to proudly won the servicers. other quality, recognition comment in reflects Mac's I'd which the performance. highest on positives for management like risk some to commitment and SHARP our Award, Freddie is This Gold quarter. award We

helped level Additionally, through delivered the several our achieve subservicing partners we of on performance recognition we portfolios. goal strong their

sustained income. loan X- Our master high-tech income team which of exceptional [ is servicing and mortgage personal will the behalf business the service, solutions on Master Fitch is providing huge meaningful the comments other of that story. whole on is earned a ] oversees of third-party a a an By from a business to servicers received has becoming investors. upgrade how our servicing in fee which market. some endorsement. performance revenue part and Mike valuable securitization servicing master generates fee our and add share #X I'll position rating,

our hedge we return were Moody's place a of and and they corporate our program on scale Finally, the positive. They as strength assets solid outlook. cited franchise, our and positive on our commented rating on pleased strong growing liquidity, see credit to

year culmination the for if of Slide capped a that journey. Mr. quarter amazing And X, XXXX you'll Fourth turn an see was you'll X-year to Cooper.

to This and Fed than one a all severe We've of shocks tightening mortgage doubling. XXXX the record, we on decisive with reorient shot the more rate remember, responded with put XXX us with swift our rates by As anticipate action ended turmoil in platforms industry. position and the significant nimble opportunities. most new in points execution to interest our created basis and

XXXX. increase you'll fourth Acquisitions, entitled, steep for peaking in with Opportunities a projecting XXXX investor MSR our If in see you chart slide presentation, go a Wide a Expecting MSR quarter to sales back Cycle

exit call originators On and And MSRs, good divestitures speak we're as That was we themselves. the the we results bulked into point supply/demand now margin a for ongoing imbalance. to serious the banks strategic on squeeze. and explained had facing call, how of a and contributing up a

cycle margin. acquired of Over Point we've and the largest the $XXX transactions servicer last billion U.S. many pools. us a years, million trillion, of X spreads, the MSRs X customers, $X.X representing OAS wide in stands the portfolio our other the Today, at Flagstar by and making significant including Home loans at over

XX% In larger than fact, than #X. we are more

over also took in the We subservicing. lead

and however, results allowed sizable those on to has the advantage tangible and the of depth show promise and leverage we're competitive Our experiencing, our returns the technology equity. technology people, momentum of enthusiasm and scale talent you, moat. is don't operating What of rising the us our generate now positive our

to outlook. with Slide turning X, me wrap the high-level Now some on let up thoughts

of XX% XX% Given to our to range XX%. is our and increasing momentum, which we're XX% ROTCE to higher than guidance our for guidance 'XX, previous 'XX

have manage immune we a is more adverse are rate resilient shifts, of a the also we're through built that positioned not we well model cycle. macro to Although and in to interest face balanced volatility,

Work confidence culture in a our held record to X-day improving years, and trust weeks Let's is progress we ago, and experience. recent we've talk X is Great as high be propositions made see best models results delight rave center plan for customers, our relationship, We're call certified In new the that huge are and anytime we But to [ which was outlook. Mike changing for ] which ahead a years couple energy our senior generating has A to this well about AI the incredible. years we one on processing. the of light tangible and on may our journey the customer it new reviews our world. I'll large that and we of of a exploring of technology add been And turnover. is you is whole is Cooper culture of tremendous members. for from in will the our creating Sagent Place with leaders a low in today, update some opportunities a the new value. off-site add company's frontier the cloud what's peers several team true us. applications of rollout, value implement Mr. just Investing language in for and real-time, driving environment. focus row, year. the to the the our for AgentiQ

next drivers, consistently. years, summarize, direction you've key remind our you the on strategic of the To X us which seen deliver over I'd

costs. stay unit First, we leveraging will our in laser-focused on technology. lead

share. origination correspondent and platforms, Second, DTC we'll generate and higher our investing to volumes both keep gain in market

new for for subservicing, by and servicing winning a manner, wallet. we'll by master to larger winning and we'll a value. services of businesses, our finally, other in analyze thoughtful revenues Third, clients acquisitions market disciplined And looking grow the opportunities continue and for to fee share create

take the over operating Weinbach, I'll President, through to you with And our turn results. to call Mike that, our

Michael Weinbach

and rapid that income like on up $XXX low portfolio Thanks, year-over-year, as favorable morning, credit strong operating segment and reported of to well in with million, growth as Slide environment the We and which our a I'd Jay, good prepayment reviewing leverage is pretax everyone. X. start resulted. the speeds by Servicing XX% the reflecting

substantial Turning portfolio. acquisition to drove scale. in a Flagstar increase the The

UPB, acquired have with we subservicing clients of side, strategic whom owned net is relationships. in we to $XX billion $XX the we On which sold billion

benefits retaining value-added were subservicing a providing we incremental opportunity sales, these able to keep to the by the while scale our With unique clients.

Recognition SHARP Our is in Gold ability platform our transactions these our the that the reflected Freddie arrange as to of is competitive advantage kinds clients Jay and for as distinct a of mentioned. quality us

about we're little. see which targets. a pipeline yields growing levels, growth new under Also, continue year. And opportunities profit seeing normal return within now we've activity competition, co-issue see remain throughout opportunities margins outlook, our for have the year XXXX. the pressure, rising in In but terms started we'd if to and we're the in originator bulk, returned correspondent small to the of excited is in expect levels of growth a plenty MSRs to we there's and Market with

been our doubled book. of contributing transformative. size, are We've has the In terms majority and terms become to servicing share a in the lot of year of factors become the leader growth. market our of subservicing, last in There has

Flagstar all of of when the this significant fourth added a billion and transfers the driver, in can Flagstar UPB the slightly servicers. was see of you completed course, to QX in contemplated decline the moving $XXX as some transaction quarter. transaction Of other are This will the loans

partners we this pleased in were do joint is driver new they talks welcome in business. originations XXXX what they're whether to additional than of of overall, growth is put, best winning. partners to Another on the Servicing and the proud in we're are platform, organic most asset add best-in-class XXXX. clients focus are clients, faster But new in By growth. management, Simply our and or can what they is our which that's leveraging banking, driving our growing industry retail and growth

At we drive business. Turning as continue in well current leverage to is earnings. very XXXX mortgage the and beyond strong rates, through to this outlook operating

we range of you of guide million quarter, $XXX EBT. first For to to a $XXX million

customer which to If that's update to the next an better AI real millions an generates on agents of it our information in members AgentiQ customer [ privacy what's at and insights to AgentiQ center for intent sentiment this laws is all quarter. of application give providing [indiscernible] we fetch summary, calls, helps I'd talked steps, agent's X, analyzing in team and and which you agentic and model to you'll designed of and with in you'll is call and Slide on We've our compliance the detect including to last course, ] transcript AgentiQ, fingertips, suggestions relevant policy. time. about assist framework like it delivering responsible call turn us called by conversations a service. trends, trained support put recall allows

getting in fully in today, it's members, where including per AgentiQ piloted month, reviews our veterans. out from rolled analyzing the center, both team enthusiastic the calls we're and call now XXX,XXX newer fourth it's and servicing and quarter, very agents We

quick, from their of improved to answers higher resolved questions clear Our customers the questions a on benefit percentage call. and experience first with

for also AgentiQ a powerful management. tool is

This we will wider of of calls. control call specific assist and summaries cast less improves tool center, For Most than issues rates. you, to example, a priorities to can drill we and on a issues functions net individual automated now develop to way into our the quality from took down the mission and higher important, of tool And to processes surprise with the them. year. much sampling this may this accelerate conceptualization our but this better the ongoing get deployment, engagement can get customer in where automated down full identify individual compliance all now summaries topical and a mouse, with the customer we click

a We we a this and excellent technologists. year have standards very team as soon later supremely as roll plan tech talented complete the AgentiQ a of our out team We data members robust stack, upgrade. to telephony a originations little

now XX% the team who significant rise we with year the move million was So increase and production marks from that XX. improvement quarter. lender, a to a even incredible weren't on X a Jay in Slide top I'd the a a highlight is third following Thanks top mortgage let's about generated continued sequential to Cooper execution in quarter. this when Mr. by generated echo share $XX X Originations, their in very consistent the during in quarter correspondent correspondent now where we in EBT, talk efforts. rates ago big which our

As existing I'll improved market relationship portal, and our our expanded for with client pricing models, of The and credit particularly add revamping platform. we're costs as bids, to speak we our shifted a reduce building capital series Flagstar strategies unions. with included client These with to energy customers, out new our servicing to The network every happy that and and reviewing also acquisition our prospect. relentlessly margins a upgrading results of our efforts banks our our well. themselves, enhancements

quarter. the brief let's XX% as on funded X, in loans volumes where third locked focus Slide rally to during we up were DTC, Turning quarter-over-quarter

purchased Just to of quarter, X,XXX X,XXX during nearly great helped kind we of X,XXX It's the that customers. company put this lower new about benefits, feel to monthly payments, equity over customers a value in homes. their access in our delivering their homes customer we over context and

impact move our Now atypical unusual dropped And portfolio rate, you'll is an an in which the driving we notice XX%. single acquired refinance profile large to had that what's last a we recapture year. with this of

contractual deal customers was priced to the safeguards limited for would we early it the payouts. an Specifically, and we recapture, and at-the-money deal, knew included solicit against originators protect aggressively. We their us

ratio. result did impact to recapture didn't MSR in impact it value, the this While a material our

this been volumes which would what refinances quarter. is in term our expect, the XX% rate Excluding with the refi recapture consistent would and have heavier we of portfolio, given

given the on $XX mortgage by potential guide $XX later upside enhancing million the current rates, first the quarter Looking you ahead, in in with we to the in portfolio growth of million focus our level servicing driven experience. our year, and EBT customer combined to

XX% which the as rates third means X% For brief, have our capitalize higher, note even you of customers some positioned they're on rallies, in perspective, saw we're of quarter. if well or just to

to $XXX at customer another billion is numbers the equity has customers growth driver. XX% for which and be XX%. value. our customers. need equates our out here, in customers equity and XX% loans source our recurring are cash steady nearly a this This or scenario, Home interesting. us refinances to our want and of in for value monetize a they should average longer in have And access pretty equity, of business should theory least equity, higher for Even home could

coming about comments about a last master is income little of more information growing importance related like subservicing, Jay's to thing and businesses. The our the client-related the to revenues of I'd servicing to composition cover other share fee from

can you'll total originations contribution revenue. and owned percentage you to If servicing, to fee the Slide see turn XX, income our of

including other special by fees income master of our platform, biggest businesses, servicing, well, technology Fee businesses market-leading client servicing, is subservicing in service-related partnership contribute of is a number as solutions and generated but the Xome. which

fee double-digit growing pace up more total been X revenues our For $XXX the XXXX service-related XX% than years. and at this for total, which totaled the stream in million, made of last revenue, has a revenue

on any capital return contributing Importantly, or common equity. growing not to material do these businesses our liquidity require tangible

it hand over to I'll that, With Kurt.

Kurt Johnson

million, a earnings morning. and positive on good mark a was net Slide net I'll million $XXX $XX Thanks, XX in start which recap summarize, operating and million income our Mike, $XXX of To with of pretax brief million. adjustments financials. hedge, $XX of included

those unpack me Let adjustments.

a there's shutdown facility for costs. $XX First, million charge

we to our favorable when we celebrate. Given savings and for exit the which Dallas our a space provide together meaningful invest headquarters, area, and in home-centric to reduced were us need come in leases, very with should to will vibrant to office forward significantly X going model, more terms able which our large renovating and funds to experience contribute we collaborate negotiate

connection $XX associated Second, legacy a we lawsuit accrued million and in business. with the court the ruling with

Third, release to miscellaneous there smaller there $X reserve was acquisition. a positive Home charges. related Point were a the few million Then

operating Included vesting this Corporate would and covered year-end Servicing, segment, million a your write-off, terms larger technology incurred I In Mike drag which are and slightly number overall the this draw expenses. Xome a of quarter. the in small and Originations attention in to stock accruals, was $XX results, incentive some and

anticipate to corporate million the more we stock quarter. of second annual remaining $XX a to compensation in down timing of run due before first million to expenses level rate For settling the quarter, $XX the normalized at this

marked mark-to-market with to results. equates MSR last multiple the base hedge the XX% and We reflect interest lower quarter hedges tracked Offsetting in stable our fairly over UPB to extremely to which basis coverage, million of to servicing XX% gain losses, X which to end $XXX expectations the the closely above target. We're rising contributed quarters, valuation leading were the Turning rates and pleased predictable target the has X.X of somewhat this or and for points strip. XXX line. of a CPRs, up performance,

briefly on credit. to Now turn Slide if I'll XX, comment you'll

efforts, to slightly continued delinquencies X.X%, in portfolio with our loss alive. ongoing very up homeownership our mortgage reflect declining by construction, and which workouts, basis extremely quite dream scores high-quality level loan as a and Low XX perform industry the evident that keep remains well, our to customers thoughtful metrics. can XX% our you is well see of and modifications which mission a part to LTV peer as year-over-year MSR of important the strong in increase mitigation a portfolio points to delinquencies FICO ratios in Our compared for rising

delinquency types close industry-wide deterioration Mae for notable product across on eye and Ginnie we've keep loans which We consistent in performance especially already small, noticed but and trends, is which have a modifications. all a through vintages, gone

You past is thus X% I this grown see represents by portfolio, exposure. in and Mae our can note XX% and total in only Ginnie trend has than But loan our not that this today the delinquencies, year, portfolio a too. less material of would

Now turning Slide XX. to

of on you quarter quarter third the of lines ended our mortgage acquisition million $X.X consisted which billion, from capacity, the We the down in Liquidity and utilized principally is metrics. of in immediately in fourth we the billion balance unrestricted fund Let in Flagstar, assets fully liquidity me $X.X line available. from consisted which to servicing MSR remaining rights. key collateralized cash, with MSR billion which is update sheet the as $X.X of with $XXX

as for to increase the tangible down capital higher assets, ended loans due the quarter net at in MSR by ratio, sale from to and worth measured XX.X%, reflecting growth. assets correspondent strong Our both held fourth XX.X%,

environment that our We and of range, within level on the operating mix for is now target balance appropriate we our comfortably the assets are believe current sheet.

our reliant note, range to liquidity. leverage final decreasing not robust earlier on comment expanding mentioned I'll ROTCE that a XX% that Jay the XX% On or is

for the Ken listening Q&A. now back And Thanks for call to I'll to our turn report.

Kenneth Posner

start Thanks, And Q&A Marvin, you could the process? Kurt. now

Operator

Barclays. our And of Ma comes line from Instructions] first question of Terry [Operator the

Terry Ma

range. target ROE revised the with starting just Maybe

is maybe the How hit it can Or that even you were of touched stay drivers to on much end dependent? if talk get of rate could kind you of that target kind can XX%? about a environment? the in But rate high You this to we actually little you just bit.

Kurt Johnson

question. Thanks Kurt. Terry, it's for the

touched higher this income, I called and on we services I set go that into light fee-based of nature. which it ROTCE, given we've that equity a segment light bit. little drive as well that we're and originations that out works environment times it's us, you But environment, better couple a originations a to in before, well saw the think and rate essentially asset and environment longer to again, generate higher us obviously, we've in That, QX, nature generates, But the can for the quarter have we the fee-based Mike could that what we can within think income higher of of a in for as and the if that's so be ROTCE. going end range like. regardless looks think

Jay Bray

would say, We the think couple if we added leverage of about that. think the years, I of power less XX people. operating I $XXX than to would just billion in I added you add the organization. servicing I last and of mean

Jay we a the leverage, that. It's just tremendous incredible. middle we're his head better tremendous cost your on innings in day. focused think think that. around and We team. and So great a customer every And pretty It's and of there's wrap Jones candidly, job we're by that experience,

that's be as to well. think I key going So driver a

Michael Weinbach

it's rates. just not last The it's I'll add thing interest execution, is

about environment, business. the a and in on interest part rate can model we're really the of So -- feel just happening good lot targets we about in of of momentum have balanced of our what's we the terms deliver regardless return we business every

our in we to large clients Awards proud the servicing, where gold significant. Jay see whether the on to just think there's we growth seeing medium significant smaller in equity origination talked quite growth were And category, subservice servicer opportunity, as is whom categories. it's highlighted seen which the the and in huge mentioned, And validation, win we about increase home the direct-to-consumer SHARP BXB business. for in we gold servicer to not and win continue as we've our So we execute correspondent, super but we in Freddie

gold. sweep the clean of a So

And do and we of going if working every So higher in we're execution, on be we're could it range, that's continue the end to what well, day. the we momentum. to do focus to hard the keep

Terry Ma

earnings a just of maybe targeting just mean services Got longer there view. the sustain higher if And stream going can just it. term, follow-up state revenue what's my kind mix And the fee in I I'm stream maybe is that revenue. on you're forward? that for of revenue that's of then you then kind target? growth curious, that a steady services a double-digit multiple

So imagine that you I somewhat. would to want maximize would

Michael Weinbach

proud to Yes. the revenue good of of things and to I mean do taking there's other to revenue. But And about, available industry. that fee-based you we refer at showed it's it that it the services, we about volatility really with I think as a essentially percentage talked our of it as we're overall parts what you the we stream. that. showed, is all some often of asked of revenue most our as and rest And making we've we're in

You how originations steady can much big 'XX volatility. 'XX the over level stream but services 'XX quite was revenue is changed of that that and and of and have and see how shouldn't 'XX, in

it's that enormous there's for to -- number there's grow to that the of with with. we that a new And business. in continue more think we discussions do we're clients to clients opportunity work already So

saying, high we see a other higher single-digit sustain with we multiple tend with yes, growth the lot in guess, today. companies can I than that And we it. of way multiple agree the and of businesses a It's attract think these we forward do business long a earnings you. and have opportunity So that to

Operator

Mark next Deutsche from of And of question Bank. comes our DeVries the line

Mark DeVries

tangible net Can here? you're of the the MSR range platform have on lot flexibility. you still assets, whole about for and worth I you a just within like bulk seems sales capital talk mean now the it your while pipeline

set X up there XX% they what to years? the to targeted XX% look Are of like? sizing a sense just kind and well, of the that the next want So kind range as also you've to accretive kind get returns you're for still of how of opportunity

Jay Bray

Yes.

Kurt going attractive we're and And levels. is more market if the about at -- to coming for going to you're longer to that as see environment, the mentioned, think think help because certainly if market, in higher think will you that certainly are originators I sell. I need back a bulk bulk

throughout going and So starting that's grow to there. are year, we the see more think to certainly we activity

from my standpoint, still there's be in selective at going fundamentally be very seen in that believe and us to there's opportunities. And think view, acquisition disciplined I to be But those I are pretty looking to our going going I'm consolidation very industry. bullish an And in you've be opportunities that attractive.

so again, and we will will continue, And that. be of a think, consolidation I part

Kurt Johnson

the of we're in may best returns mean I -- there's think saw And but returns. terms ago, that of returns, couple I seeing still we risk-adjusted the be cycle solid still not years a they

hedging up well. Our really has held

that we've that think to as we always to said be we so continue about and do XX% be purchases acquiring, range, going to our and way. disciplined into chase we're XX% And not we'll we're yields, very

Mark DeVries

Great. Okay.

presentation, that monetizing your kind marketplace pointed you the now? the stream. picture out you you of it countercyclical real countercyclical thinking Are a servicing auction Or Is business potentially revenue kind you revenue about kind just of like of in digital improves? Xome hedge? special if do give estate As and still nice

Jay Bray

No.

investments Xome's and -- the at a of done the increased I made our we've market think we look, share. We've -- job end there. great

market it point, As your to asset. is to turns, valuable very be the going a

sense our discussed, makes all monetization we've to of capture part able of all sort to business as or some cetera, of think do et we just et it, be for cetera. ultimately, think I

strategically, But have extract some patient. around think our We point, don't going We'll We're there. the we value value like I at some will shifted So them. right be get to for thoughts the it. business.

Operator

line Piper of of And our from Sandler. Love next comes the question Crispin

Crispin Love

servicing X.X you drive continue Expenses expenses, servicing on to were at and there. improvements of First the efficiencies bps portfolio.

X.X forward, that scale, to look that you tech, time? do a there other and to over period drive through is you believe Or that you can AI bps lower continue expect where flatten you As areas?

Jay Bray

they jump if think, really I in I innings at you think I as be in They and very we're continue 'XX please to we're there. cost in. I possible I scalable said Look, us allow Flash able to to Mike, we are investments, a look 'XX But where of and said, process-centric earlier, and as what's to the drive our No. mean to way. AI centric. continue believe are grow out. going grow middle And

there of there's and making we're think we as speak. So we investments a opportunity lot

Michael Weinbach

I'll technology just add. is of the And investments has team we in that The making investing more feel so Yes. level And we're increasing. comfortable executed because more well.

scale, do on little serve ahead can want, that things we our effective. And things make those of about all that we're things things us. customers more who can up improvements how opportunities so are they thinking our team continued every can better bullish customers how members the our we all you It's adding to the investment, we're and seeing, up relentlessly just for waking themselves customers, day, how for the we mentioned, let do

Crispin Love

should you XXXX? dependent. the would following the X midpoint the rate ago quarter, comfortable And for say guide hitting curious today Great. on you upward of it you guide? X just of just over the next of on the midpoint view XX%. I you at changes that which course, then sloping new prior be said very about the being from Or major driving were months ROTCE Would the and, as appreciate on you're to comfortable years what been have And up Last some new that. of guide. guide,

Kurt Johnson

Yes, it's question. great a

the we're said even we're That the XX%. to mean every at be low But that comfortable X for XX% XX% I midpoint point. quarter to that years. in the I we've or at So XX% doesn't think to is potentially going the mean or above

And It's result what over at. the we're we've X that. of of that services incremental work scale continue adding we're is from after operational perspective we're seeing that ROTCE and after that you're what all of of I sort to as think day just what think good you'll perspective. see day I We're that business a a day. it's years going done, to driving an efficiency incremental climb the course on from

Operator

comes Our UBS. Harter next of from question Doug of the line

Douglas Harter

in if to recapture you kind see Can business and of refi maintain the the about your Origination the ability talk when opportunity? rates we and capacity next

Michael Weinbach

Yes.

bit our working in it were again As buffer refi and our in rates about earnings. able and a to we've little we expected kept saw in nice rate dropped, through be we rate XXXX, hard saw when it. term a in on we're able have talked has rates. of we become fill we to a most dips as And -- position have increase to And much the excess September in rates be and of opportunity to capacity capitalize handle smaller, originations and risen capacity, term to

big and in opportunity in the as home we customers we their have already with equity. quarter majority our increased, home first saw the in quarter it X%. has part we're the values home our The is the of have and with The that of portfolio, early rates of amount equity seeing grown see, And still it. it below

card debt. want So consolidate want carrying for customers other home that do to debt, to they They renovations. are credit

home But are, the at -- away years it's is majority Home we steadily great we've getting equity our they're that if that product opportunity. grown equity a ago, represents where customers since we And loans, getting and are us. a we're look still of launch. -- this we grown from launched still X

an capture enhancements fill opportunities able customers' year we're feel capacity be we when idea and making every we'll ready be needs. want with volatile be see investments will increasing the confident that keep to our of opportunity of we new products becoming because enormous to to we customers it's to through products to and share our a the this we and doing, And buffer continuing they help like come. in So the day and rates we're and that what meet the

Jay Bray

The few would -- that significant the in investments have But thing servicing. every we that only of Doug, effectively made years, business, I aspect in to as say, in investments origination last almost origination talked is origination process. componentizing much about haven't the as we the made we've like platform over and the the we've

was those it good we day scale night we X pretty scale next. can And we've And years make investments can ago. up today the and quickly to So has there. where our But the with year to to ability team is this in continue done job compared now we made. and a

and more efficient scalable there. going we're to only So become more

Operator

from the KBW. Bose next line comes of of George Our question

Bose George

On a since see end market good share, increase meaningfully. to closed about up obviously, Flagstar month Is of one of Also the it's share Do run of October? you corresponding kind this room further from we think that production for should more here? deal rate?

Jay Bray

Yes.

Bose. I good think -- morning,

like expect us think that correspondent, grow At on focus, going and absolutely, leadership. I cost really complicated, continue said, to should super the on and our mean continue I to to right? we're day, you we end grow it's share. not our the to of the scale

focus costs retention. continue driving best we on we're ultimately, to down, And MSRs. So we're buyer of think, the

at continue scale very so the think And with you we power Kurt, can the opportunity the now attractive of to more. correspondent lot and going be platform grow a comment, the to And platform, returns. of of there's to

Kurt Johnson

On which is October yes, is, pretty Flagstar. Flagstar we simple, XX. closed

X, QX. months had in in So X we months X QX,

think, pretty that, simple a to Bose. answer, I So

Bose George

guys side? Great. then fit the looks Okay. And it you did into PPO recently what sold -- Flagstar you on the do that origination that not like want Is to business.

Jay Bray

took were finding We members. look something it intentional Yes, the that but not and look forward and thought finding channel hard a at we that yes, partner -- home wanted Yes. a and jump made broker very, can strategically. team a about that, and it about Mike, a to ultimately the look for was decision But with. in, we move we you at said very having that, great

that. team we team a Flagstar good job commitment India there. great strategically. a and the did that's Mr. will a about great it them we to that that made like so members Cooper But thought we on real and was And for happen And home is things how feel

Operator

the Our Derek next question from of comes line of Sommers Jefferies.

Derek Sommers

how kind the mix of think margins shift. you near in channel, channel just we how I disclose you of color provide guys the Could term? that don't kind know by on given about those some trended and directional should but

Kurt Johnson

the Yes, were channel, and quarter, they consistent in channel didn't drop it. increase -- see real change the to didn't first in really rates Look, Derek, materially. a the I'll the from in at they've quarter margins. QX, by Even about we realistically, of They consistent. been fourth the margins take end

channel we've hold, product and So consistent that's margins by seen and through. pretty way by the all

Derek Sommers

have wallet I in bit? about kind And clients. sits you subservicing among earlier it. historically, where guys of know Got kind comments, mix we that and share your the subservicing given Should about owned targeted a of changing a target increasing think XX-XX MSR. of portfolio But

Michael Weinbach

that upfront where you really servicing. mean, known growth subservicing the a mentioned shift strong we some larger organic in in are we're in I I Yes see of we're as business. than And the now comments, seeing

partner but due big the customer the business best So and as going quickly that the use there their we're them. us the market. of what that benefiting for they're the clients experience, feel rest quality, a more we to increase subservicing Flagstar, superior seeing are is than of And to was our about a happened grow efficiency, to lot from be grow with

so of percentage business, see grow growth But both bit own than parts of may sheet. more our balance requires which the of see we capital servicing, obviously And use little the for opportunities quickly in frankly. subservicing a liquidity, we

Operator

the Our next of Eric of question comes Hagen from BTIG. line

Eric Hagen

rates that the option-adjusted then an about value? us MSR factored I the the conditions this to I lines, rabbit those is to how along guys a spread hole. And in is way of think a When going or one down to about key think sensitive assumptions inputs there estimate, fair market remind we spread and rate for a Is that mean the you other same complicated market? can there's noticed recapture the without inputs used you in valuation, it environment? Hopefully, into which Just the is valuation. maybe use if

Kurt Johnson

Eric, Kurt. it's

not we whether value, won't into the it's take in but is lot model ago recapture implied in yes, it. explicit traded do in And I'd But, of down of the model moved to of discount do at us reality mean model the I that is it, into in MSR rate we almost our love of these that's that yes. because -- lower, are do And that the factor terms way days. So or because hole it I'll here I in for to now. and the optionality factor coupon everybody's and the spread, X because the option-adjusted all. recapture, implicit realistically, or doesn't a years to rabbit try for is loans the those loans that

a in just you deep that bit, look essentially the kind option we vary widened portfolio loans fixed that we at of at yield Whereas all that of much. out to looking doesn't you're that purchasing that's and straight and So see loans were are money, and the 'XX. a closer that's why on way little the spread the discount a lot adjusted 'XX

Eric Hagen

Okay. Great. see How maybe any of dismantling in Interesting color. changing maybe do at your business resources the you direction? either CFPB

Jay Bray

the we helping I is know, view about goals of them our think same the We think the -- they view regulators. with think it. to Look, consistently, is, customers you way going as we're work the about way as

of imminently as anything we'll unfold. be So mean, see them, changing and navigate very but engaged, I involved and we that kind we obviously with things will don't

Operator

of the Our next Goberman JMP. line Citizens comes of Mikhail question from

Mikhail Goberman

what continued just the of happen provided be guys million so guys between think Would DTC cause of I quarter. upper to million be momentum $XX quarter a the guess sort hit -- that guys you in about to And correspondent that of would upper for range? sort band space? that of two? fourth of I And end increase the range? do the fantastic how first you you you guidance in guys a would for the quarter follow If those in originations of that in it the in could space? up on you it $XX mix hit what an the thinking, Would range need had to the to kind you the

Michael Weinbach

interest Yes. part feeding, a drop grow. business really I part low it originations of It's important is mean relatively business. answer it our the short going to rates. continue makes of smaller earnings, servicing would is margin, corresponding be so a to biggest but in driver is up a The the the

customers For cash-out of guidance have take really through our there any to advantage feel their we'll ready in the good it quickly that payments. have should and right direct-to-consumer lot to as to it, opportunity of lower well be very help as happened within equity were range refinance we by, -- they rate operate refinances We isn't if equity for mortgage our a opportunities value drop there business X%, take that, September, But on help the now being our like rates a if standing were customers for through monthly advantage and originations able with home over of based purchase. And about speak to of. our rate-term in their business. add there the homes customers

Jay Bray

lot we of and seeing we there's point mean and seen and -- from growing a we've think standpoint, earlier, DTC. a we lien we're massive to will the second there, results of opportunity. that say, in And we've quarter. -- are progress business a a I Mike's positive lot I made

as could that I some you to as be range. those -- think drivers well about the think of So kind

Kurt Johnson

material the investors been any we've because more from we're product that really for years, delivering Yes. and getting with are way is in more second only it and our the in X.X now comfortable all about customers. And lien product

great and So accelerate our and just excellent. us I that been we allowing getting customers, the which is going give performance performance know has And great to cycle. to more, more the that's prices think We're execution. to

Operator

of of comes Bologna Compass next from Point. the question Our Giuliano line

Giuliano Anderes-Bologna

the continued [indiscernible] on performance. Congratulations

assume of dollars and stock you're couple but not too call it, ROTCE, The and first question have, million I complicated, burdens if even the or of at it's if midpoint are hundred XX% back a I XX% you're to the hopefully growing. buying XX%

growing mid-teens. the as teens the unless somewhere in even high as book you're MSR delevering still You'd the be and probably

to UPB going to Yes. at you're could market think the So when correspondent. is Should that focused growth in be digits, and bit I of growth I'm you trying the think just roughly go deals growth double term? be medium the more should -- But to full your about the about and realize higher? it where less probably in least near servicing you be in in think the on of a it curious the UPB There's changing. like terms we UPB. low mid-double about in rate thinking digits,

Kurt Johnson

comment Thanks Kurt. for the it's and question. for Giuliano, the

you're think I right.

really, growth we're PE. think we And at of I forward at still -- well, an going I not But in and double really about we're stock with chasing mean, know earlier, it obviously, has yield. trading our in Xx as pleased performed the said looking be but digits. kind to we the low that, we're

we in not to we are delever And improve of your investors stock. ready opportunities going be when to be again. seeing a point, we're use great powder now, if active repurchasing dry the for So and kind bit, to still little keep things some opportunity

have our low opportunistic that it. in And kind around double-digit growth, in we while be of of to so terms we're plan going

Giuliano Anderes-Bologna

that's obviously side, UPB up is is DTC That's XX% very helpful. internally about year. then origination the And focused. channel thinking And this the

you've kind curious on So of I'm opportunities points acceleration working basis you that in book. assume that Would recapture and and Flagstar the of growth? Is over XXX I of points, start strong or see stabilize kind DTC accelerating basis opinion? what needle would kind the the to portfolio growth have environment acquired you assume fair the a of still still regardless in even really XX -- within you there's grow next as few the in any you you then need it DTC real the level of volumes And quarters? terms portfolio of integrate some kind should would pretty move where your rate

Michael Weinbach

Yes, at There's continues wind grow. as back portfolio the mean, Giuliano, the answer yes. short to our is I

that growth we that beyond are expect talked throughout very about. things opportunities the the we'd So And the much it's year.

in business. drive to continuing We're Continued in of equity, scalability execution, that there. we making the investments the the cost opportunity leadership see our huge we're home

So to to we course cost year. over down go the expect our originate of the

add able If use now able to in in used our self-service do be we're rates them capacity, new and than people quickly get investing up ramped to much we digital and to when to more start We're tools. and drop, we past. the

So customers investing in automation. help can themselves. We're

and growth in with really investments we ahead we the this in So portfolio we're the great you business. the about making the opportunities see feel put

Operator

I'm closing back further at questions Kenneth would to to showing turn it for like remarks. no now Posner time. I this

Kenneth Posner

them. Great. Thanks here for have reach please very follow-up Thank We're questions, you. joining us. if the to you much answer out to Investor And Relations team.

Jay Bray

you. Thank

Operator

conference. for the you your today's participation in Thank This conclude does program.

You may now disconnect.

Mr. Cooper (COOP) 12 Feb 252024 Q4 Earnings call transcript