MReport Jan 2019

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TH E M R EP O RT | 51 SERVICING THE LATEST O R I G I NAT I O N S E R V I C I N G DATA G O V E R N M E N T S E C O N DA R Y M A R K E T LOCAL EDITION SERVICING real differences in people's lives. "We welcome the opportunity to connect with socially conscious investment advisers, their clients, and foundations to invest in the offering. Together, their inputs and contributions will help fulfill our mission while delivering a return that really matters." Mr. Cooper's Wild Ride CEO JAY BRAY REMARKS AN "EXTRAORDINARY" QUARTER FOR THE SERVICER. TEXAS // Q 3 was a busy quarter for Texas-based Mr. Cooper Group. The company, which operates mainly as Mr. Cooper and Xome, saw $64 million in predecessor GAAP losses in Q 3 and $1 bil- lion in successor GAAP income. Altogether, that brought Mr. Cooper Group to $54 million in adjusted income during the quarter in which the company rebranded itself and completed a big merger. "This was an extraordinary quar- ter for our company," said Jay Bray, chairman and CEO of Mr. Cooper Group Inc. "We completed the WMIH Corp. merger and renamed the company. We've made strides in all our business segments." The merger was the acquisition of Assurant Mortgage Solutions (Xome), which Bray said increased Xome's profitability by 56 percent in the quarter. That was due to steady income in the origination side. In its Q 3 report, the company also announced that it is working out the acquisition of Pacific Union Financial. "We believe this acquisition is complementary to our business and significantly increases our originations volume and capabili- ties," Bray said. "Subject to regula- tory approvals, the transaction will also allow us to grow our servic- ing portfolio by approximately $25 billion upon closing in early 2019." The company's servicing business earned $81 million in combined adjusted pretax income, or 6.5 basis points of adjusted prof- itability in Q 3. Combined adjusted pretax profitability improved 12 percent from the prior quarter, while expenses improved by $9 million, according to the report. The company said that was pri- marily due to a decrease in interest expense related to MSR financing and higher float income. Mr. Cooper boarded $37 billion UPB in the quarter to close the third quarter servicing portfolio at $514 billion UPB. That puts the company on track to reach its goal of 5 percent growth for the year, with an expectation to end the year at $535 billion UPB. Mr. Cooper remains confident in achieving adjusted servicing profitability over 6.0 basis points on average for the full year 2018 which will be propelled by a lower prepayment environment and continued efficiencies. Originations earned $33 million in combined adjusted pretax income in Q 3, mainly due to gain on sale revenue, the report stated. The com- pany claimed nearly 23,000 loans in the third quarter, totaling approxi- mately $5.1 billion UPB. About $2.4 billion came from the consumer direct channel and $2.7 billion from the correspondent channel. In the consumer direct channel, refinance recapture increased 8 percent quarter-over-quarter to 57 percent. The correspondent channel has grown over the past year making Mr. Cooper the 10th largest cor- respondent lender in the U.S. The report also stated that Xome "will continue to focus on the AMS integration and trans- formation throughout 2019, and expects to fully ramp up the cap- ture of Mr. Cooper's field services opportunities by mid-2019." Where's Property Preservation Heading? INDUSTRY PANEL DISCUSSES THE HOT TOPICS THAT ARE IMPACTING PROPERTY PRESERVATION, AS WELL THE MARKET AS A WHOLE. MARYLAND // In November, Ed Delgado, President and CEO of the Five Star Institute led a discus- sion on the state of the housing industry at the 2018 National Property Preservation Conference in Baltimore. "The National Property Preservation Conference has been an important forum for the indus- try to discuss and build consensus over policies and services impacting the mortgage market," Delgado said. "I attribute its continued success over the past 15 years to the tireless efforts of Robert Klein, Founder of Safeguard Properties, who passed this year, to bring the industry together for this important discus- sion. I am honored to participate in this conference and help carry on his legacy of industry partnership fostered by this event." The discussion centered on an expert panel of industry thought leaders focusing on the important issues impacting the economy and the housing market today and looked at what the future may hold. After giving his assessment on the state of the market, Delgado turned it over to the panel to hear their thoughts. Answering questions on the state of the housing market, Rick Sharga, EVP, Carrington Mortgage Holdings and Alan Jaffa, CEO, Safeguard Properties touched upon hot topics such as the rising interest rates, the return of subprime mortgages and the cooling of home value growth as well as home affordability. Giving insights into the cur- rent and future trends in property preservation, Jaffa was joined by Caroline Reaves, CEO, Mortgage Contracting Services, Jake Williamson, VP of Single Family Real Estate, Fannie Mae, and Oscar Posadas, VP, Property Management of Vendor Management, Wells Fargo as they discussed the health of the property preservation industry, the steps that the industry should be taking to combat urban blight, and the latest legislation and cases on the preservation of vacant and abandoned properties. "Fannie Mae remains committed on partnering with servicers and vendors on improving the inspec- tion and preservation processes of vacant properties as well as eradicating community blight that could be potentially caused by vacant properties," Williamson said. "NPPC is a great event to discuss and resolve some of these challenges and opportunities. Similar to what's happening across the entire mortgage industry, we need to continue to push the use of technology tools such as data digitization and mobile technol- ogy to tackle this objective more efficiently and effectively." Williamson and Sharga, along with Ivery Himes, Director, Office of Single-Family Asset Management, HUD then gave the audience an update on the govern- ment programs that are helping and impacting the housing and mortgage industry. Some of the topics included the standardiza- tion of servicing and preservation guidelines between HUD and the GSEs and the impediments to implementing these regulations. The conversation then flowed into disaster recovery and the les- sons learned by the industry and how they have improved the di- saster response this year. Delgado ended the session by asking the panel if they could define the single greatest challenge that faces the housing industry today. "The National Property Preservation Conference has been an important forum for the industry to discuss and build consensus over policies and services impacting the mortgage market." — Ed Delgado, President and CEO, the Five Star Institute

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