Mr. Cooper moves closer to $1 trillion MSR portfolio target

Dallas, Texas-based Mr. Cooper Group on Tuesday announced it has completed the acquisitions of Home Point Capital and Roosevelt Management Company. With the deals, Mr. Cooper has moved closer to its $1 trillion mortgage servicing rights (MSR) portfolio target. 

Mr. Cooper concluded on Monday a tender offer for Home Point’s outstanding shares after extending the deadline twice. According to Equiniti Trust Company, the depository and paying agent for the tender offer, 136,532,192 shares of Home Point were tendered and not validly withdrawn (98.5% of the total). Mr. Cooper paid $2.333 per share. 

“This acquisition adds scale to our platform, bringing us closer to our $1 trillion strategic target while enhancing returns due to attractive yields and positive operating leverage,” Jay Bray, Mr. Cooper’s chairman and CEO, said in a statement.

The deal – which will result in Homepoint becoming a wholly subsidiary of Mr. Cooper – was first announced in May and was expected to close in the third quarter of 2023. Mr. Cooper is paying $324 million in cash and assuming $500 million in outstanding Home Point 5% senior notes due in February 2026. 

“The transaction includes the assumption of $500 million in bonds with an attractive rate, and as a result, we do not expect the acquisition to have a material impact on the company’s liquidity, which remains at robust and near-record levels,” Chris Marshall, Mr. Cooper’s vice chairman and president, said in a statement. 

Also on Tuesday Mr. Cooper announced it completed the acquisition of Roosevelt and its affiliated subsidiaries, which include a registered investment advisor and licensed mortgage servicing rights (MSR) owner. The expectation was that the deal would close in the second half of 2023. The deal was announced in February.

The private New York-based company, founded in 2008, manages third-party capital on behalf of insurance companies, pension funds, hedge funds and other investors. 

“We continue to see significant volumes of MSRs trading in the marketplace with attractive yields. Our asset management strategy is designed to make these yields available to institutional investors while continuing to grow our customer base and operational scale,” Marshall said. 

Mr. Cooper ended June with $882 billion in unpaid principal balance (UPB), compared to $853 billion at the end of March, according to its second-quarter 2023 earnings released last week. 

The servicing portfolio grew because of Rushmore’s special servicing platform acquisition. But other deals may bring the servicing portfolio to $957 billion, including $83 billion from the acquisition of Home Point Capital and $25 billion in pending bulk acquisitions. 

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