00009331362020FYfalseus-gaap:AccountingStandardsUpdate201613Memberus-gaap:OtherAssetsus-gaap:OtherAssetsus-gaap:AccountsPayableAndAccruedLiabilitiesCurrentAndNoncurrentus-gaap:AccountsPayableAndAccruedLiabilitiesCurrentAndNoncurrentP1Y0.08333300009331362020-01-012020-12-31xbrli:shares00009331362021-02-18iso4217:USD00009331362020-06-3000009331362020-12-3100009331362019-12-31iso4217:USDxbrli:shares00009331362019-01-012019-12-3100009331362018-08-012018-12-3100009331362018-01-012018-07-310000933136us-gaap:PreferredStockMember2017-12-310000933136us-gaap:CommonStockMember2017-12-310000933136us-gaap:AdditionalPaidInCapitalMember2017-12-310000933136us-gaap:RetainedEarningsMember2017-12-310000933136us-gaap:TreasuryStockMember2017-12-310000933136us-gaap:ParentMember2017-12-310000933136us-gaap:NoncontrollingInterestMember2017-12-3100009331362017-12-310000933136us-gaap:CommonStockMember2018-01-012018-07-310000933136us-gaap:AdditionalPaidInCapitalMember2018-01-012018-07-310000933136us-gaap:TreasuryStockMember2018-01-012018-07-310000933136us-gaap:ParentMember2018-01-012018-07-310000933136us-gaap:NoncontrollingInterestMember2018-01-012018-07-310000933136us-gaap:RetainedEarningsMember2018-01-012018-07-310000933136us-gaap:PreferredStockMember2018-07-310000933136us-gaap:CommonStockMember2018-07-310000933136us-gaap:AdditionalPaidInCapitalMember2018-07-310000933136us-gaap:RetainedEarningsMember2018-07-310000933136us-gaap:TreasuryStockMember2018-07-310000933136us-gaap:ParentMember2018-07-310000933136us-gaap:NoncontrollingInterestMember2018-07-3100009331362018-07-310000933136us-gaap:PreferredStockMember2018-08-010000933136us-gaap:CommonStockMember2018-08-010000933136us-gaap:AdditionalPaidInCapitalMember2018-08-010000933136us-gaap:RetainedEarningsMember2018-08-010000933136us-gaap:TreasuryStockMember2018-08-010000933136us-gaap:ParentMember2018-08-010000933136us-gaap:NoncontrollingInterestMember2018-08-0100009331362018-08-010000933136us-gaap:NoncontrollingInterestMember2018-08-022018-12-3100009331362018-08-022018-12-310000933136us-gaap:CommonStockMember2018-08-022018-12-310000933136us-gaap:AdditionalPaidInCapitalMember2018-08-022018-12-310000933136us-gaap:ParentMember2018-08-022018-12-310000933136us-gaap:RetainedEarningsMember2018-08-022018-12-310000933136us-gaap:PreferredStockMember2018-12-310000933136us-gaap:CommonStockMember2018-12-310000933136us-gaap:AdditionalPaidInCapitalMember2018-12-310000933136us-gaap:RetainedEarningsMember2018-12-310000933136us-gaap:TreasuryStockMember2018-12-310000933136us-gaap:ParentMember2018-12-310000933136us-gaap:NoncontrollingInterestMember2018-12-3100009331362018-12-310000933136us-gaap:CommonStockMember2019-01-012019-12-310000933136us-gaap:AdditionalPaidInCapitalMember2019-01-012019-12-310000933136us-gaap:ParentMember2019-01-012019-12-310000933136us-gaap:RetainedEarningsMember2019-01-012019-12-310000933136us-gaap:NoncontrollingInterestMember2019-01-012019-12-310000933136us-gaap:PreferredStockMember2019-12-310000933136us-gaap:CommonStockMember2019-12-310000933136us-gaap:AdditionalPaidInCapitalMember2019-12-310000933136us-gaap:RetainedEarningsMember2019-12-310000933136us-gaap:TreasuryStockMember2019-12-310000933136us-gaap:ParentMember2019-12-310000933136us-gaap:NoncontrollingInterestMember2019-12-310000933136us-gaap:CommonStockMember2020-01-012020-12-310000933136us-gaap:AdditionalPaidInCapitalMember2020-01-012020-12-310000933136us-gaap:ParentMember2020-01-012020-12-310000933136srt:CumulativeEffectPeriodOfAdoptionAdjustmentMemberus-gaap:RetainedEarningsMember2019-12-310000933136us-gaap:ParentMembersrt:CumulativeEffectPeriodOfAdoptionAdjustmentMember2019-12-310000933136srt:CumulativeEffectPeriodOfAdoptionAdjustmentMember2019-12-310000933136us-gaap:TreasuryStockMember2020-01-012020-12-310000933136us-gaap:RetainedEarningsMember2020-01-012020-12-310000933136us-gaap:NoncontrollingInterestMember2020-01-012020-12-310000933136us-gaap:PreferredStockMember2020-12-310000933136us-gaap:CommonStockMember2020-12-310000933136us-gaap:AdditionalPaidInCapitalMember2020-12-310000933136us-gaap:RetainedEarningsMember2020-12-310000933136us-gaap:TreasuryStockMember2020-12-310000933136us-gaap:ParentMember2020-12-310000933136us-gaap:NoncontrollingInterestMember2020-12-310000933136coop:PacificUnionFinancialLLCMember2019-02-012019-02-010000933136srt:CumulativeEffectPeriodOfAdoptionAdjustmentMemberus-gaap:RetainedEarningsMember2020-01-010000933136coop:CumulativeEffectPeriodofAdoptionAdjustmentAfterTaxMemberus-gaap:RetainedEarningsMember2020-01-010000933136srt:CumulativeEffectPeriodOfAdoptionAdjustmentMembercoop:AdvancesandOtherReceivablesReservesMember2020-01-010000933136srt:CumulativeEffectPeriodOfAdoptionAdjustmentMemberus-gaap:OtherAssetsMember2020-01-010000933136coop:MortgageServicingRightLiabilityMember2020-12-310000933136coop:MortgageServicingRightLiabilityMember2019-12-310000933136srt:MinimumMember2020-01-012020-12-310000933136srt:MaximumMember2020-01-012020-12-310000933136coop:MortgageServicingRightMember2020-12-310000933136coop:MortgageServicingRightMember2019-12-310000933136coop:MortgageServicingRightMember2019-12-310000933136coop:MortgageServicingRightMember2018-12-310000933136coop:MortgageServicingRightMember2020-01-012020-12-310000933136coop:MortgageServicingRightMember2019-01-012019-12-310000933136coop:MortgageServicingRightMember2020-12-310000933136coop:MortgageServicingRightMembercoop:PacificUnionFinancialLLCMember2019-12-310000933136coop:MortgageServicingRightMember2019-04-012019-06-300000933136coop:ForwardMSRsSoldMember2020-01-012020-12-310000933136coop:ForwardMSRsSoldMember2019-01-012019-12-310000933136coop:ForwardMSRsSoldSubservicingRetainedMember2020-12-310000933136coop:ForwardMSRsSoldSubservicingRetainedMember2019-12-310000933136coop:MortgageServicingRightMembercoop:AgencyMember2020-12-310000933136coop:MortgageServicingRightMembercoop:AgencyMember2019-12-310000933136coop:NonagencyMembercoop:MortgageServicingRightMember2020-12-310000933136coop:NonagencyMembercoop:MortgageServicingRightMember2019-12-310000933136coop:OneHundredBasisPointsMembercoop:MortgageServicingRightMember2020-12-310000933136coop:TwoHundredBasisPointsMembercoop:MortgageServicingRightMember2020-12-310000933136coop:OneHundredBasisPointsMembercoop:MortgageServicingRightMember2019-12-310000933136coop:TwoHundredBasisPointsMembercoop:MortgageServicingRightMember2019-12-310000933136coop:ReverseMortgagesMember2020-12-310000933136coop:ReverseMortgagesMember2019-12-310000933136coop:ReverseMortgageServicingRightsMember2019-12-310000933136coop:ReverseMortgageServicingRightsMember2018-12-310000933136coop:MortgageServicingRightLiabilityMember2018-12-310000933136coop:ReverseMortgageServicingRightsMember2020-01-012020-12-310000933136coop:MortgageServicingRightLiabilityMember2020-01-012020-12-310000933136coop:ReverseMortgageServicingRightsMember2019-01-012019-12-310000933136coop:MortgageServicingRightLiabilityMember2019-01-012019-12-310000933136coop:ReverseMortgageServicingRightsMember2020-12-310000933136coop:MortgageServicingRightMember2019-01-012019-12-310000933136coop:MortgageServicingRightMember2020-01-012020-12-310000933136coop:OneHundredBasisPointsMembercoop:ExcessSpreadFinancingMember2020-12-310000933136coop:TwoHundredBasisPointsMembercoop:ExcessSpreadFinancingMember2020-12-310000933136coop:ExcessSpreadFinancingMember2020-12-310000933136coop:OneHundredBasisPointsMembercoop:ExcessSpreadFinancingMember2019-12-310000933136coop:TwoHundredBasisPointsMembercoop:ExcessSpreadFinancingMember2019-12-310000933136coop:ExcessSpreadFinancingMember2019-12-3100009331362020-01-0100009331362020-01-022020-12-310000933136coop:AdvancesandOtherReceivablesReservesMember2020-01-012020-12-310000933136coop:AdvancesandOtherReceivablesReservesMember2020-12-310000933136coop:PurchaseDiscountMember2020-12-310000933136coop:ParticipatingInterestsinHMBSMember2020-01-012020-12-310000933136coop:ParticipatingInterestsinHMBSMember2019-01-012019-12-310000933136us-gaap:GovernmentNationalMortgageAssociationGnmaInsuredLoansMember2019-01-012019-12-310000933136us-gaap:GovernmentNationalMortgageAssociationGnmaInsuredLoansMember2020-01-012020-12-310000933136coop:A202001HECMSecuritizationMember2020-01-012020-12-310000933136coop:A201802And201803HECMSecuritizationMember2020-01-012020-12-310000933136coop:A201901And20192HECMSecuritizationMember2019-01-012019-12-310000933136coop:Trust20172andTrust20181Member2019-01-012019-12-310000933136coop:A201803HECMSecuritizationMember2019-01-012019-12-310000933136coop:ReverseMortgageInterestsUnsecuritizedMembercoop:HECMMember2020-01-012020-12-310000933136coop:ReverseMortgageInterestsUnsecuritizedMembercoop:HECMMember2019-01-012019-12-310000933136coop:HousingAndUrbanDevelopmentHomeEquityConversionMortgageLoansMember2020-01-012020-12-310000933136coop:HousingAndUrbanDevelopmentHomeEquityConversionMortgageLoansMember2019-01-012019-12-310000933136coop:GinnieMaeRepurchasedLoansMember2020-12-310000933136coop:GinnieMaeRepurchasedLoansMember2019-12-310000933136us-gaap:FurnitureAndFixturesMember2020-12-310000933136us-gaap:FurnitureAndFixturesMember2019-12-310000933136us-gaap:FurnitureAndFixturesMembersrt:MinimumMember2020-01-012020-12-310000933136us-gaap:FurnitureAndFixturesMembersrt:MaximumMember2020-01-012020-12-310000933136us-gaap:SoftwareDevelopmentMember2020-12-310000933136us-gaap:SoftwareDevelopmentMember2019-12-310000933136srt:MinimumMemberus-gaap:SoftwareDevelopmentMember2020-01-012020-12-310000933136srt:MaximumMemberus-gaap:SoftwareDevelopmentMember2020-01-012020-12-310000933136us-gaap:SoftwareAndSoftwareDevelopmentCostsMember2020-12-310000933136us-gaap:SoftwareAndSoftwareDevelopmentCostsMember2019-12-310000933136us-gaap:LeaseholdImprovementsMember2020-12-310000933136us-gaap:LeaseholdImprovementsMember2019-12-310000933136us-gaap:LeaseholdImprovementsMembersrt:MinimumMember2020-01-012020-12-310000933136us-gaap:LeaseholdImprovementsMembersrt:MaximumMember2020-01-012020-12-310000933136us-gaap:ComputerEquipmentMember2020-12-310000933136us-gaap:ComputerEquipmentMember2019-12-310000933136us-gaap:ComputerEquipmentMember2020-01-012020-12-310000933136srt:MinimumMember2020-12-310000933136srt:MaximumMember2020-12-31xbrli:pure0000933136us-gaap:FairValueMeasurementsRecurringMember2020-12-310000933136us-gaap:FairValueMeasurementsRecurringMember2019-12-310000933136us-gaap:FinancingReceivablesEqualToGreaterThan90DaysPastDueMemberus-gaap:PaymentDeferralMember2020-12-310000933136coop:ServicingSegmentMember2019-12-310000933136coop:ServicingSegmentMember2020-12-310000933136coop:OriginationsSegmentMember2020-12-310000933136coop:OriginationsSegmentMember2019-12-310000933136coop:XomeSegmentMember2019-12-310000933136coop:XomeSegmentMember2020-12-310000933136us-gaap:CustomerRelationshipsMember2020-12-310000933136us-gaap:CustomerRelationshipsMember2020-01-012020-12-310000933136us-gaap:SoftwareAndSoftwareDevelopmentCostsMember2020-12-310000933136us-gaap:SoftwareAndSoftwareDevelopmentCostsMember2020-01-012020-12-310000933136us-gaap:TradeNamesMember2020-12-310000933136us-gaap:TradeNamesMember2020-01-012020-12-310000933136us-gaap:CustomerRelationshipsMember2019-12-310000933136us-gaap:CustomerRelationshipsMember2019-01-012019-12-310000933136us-gaap:SoftwareAndSoftwareDevelopmentCostsMember2019-12-310000933136us-gaap:SoftwareAndSoftwareDevelopmentCostsMember2019-01-012019-12-310000933136us-gaap:TradeNamesMember2019-12-310000933136us-gaap:TradeNamesMember2019-01-012019-12-310000933136us-gaap:OtherIntangibleAssetsMember2019-12-310000933136us-gaap:OtherIntangibleAssetsMember2019-01-012019-12-310000933136us-gaap:CorporateNonSegmentMember2020-01-012020-12-310000933136us-gaap:CorporateNonSegmentMember2019-01-012019-12-310000933136coop:LoanSaleCommitmentMemberus-gaap:DerivativeFinancialInstrumentsAssetsMember2020-12-310000933136coop:LoanSaleCommitmentMemberus-gaap:DerivativeFinancialInstrumentsAssetsMember2020-01-012020-12-310000933136us-gaap:InterestRateLockCommitmentsMemberus-gaap:DerivativeFinancialInstrumentsAssetsMember2020-12-310000933136us-gaap:InterestRateLockCommitmentsMemberus-gaap:DerivativeFinancialInstrumentsAssetsMember2020-01-012020-12-310000933136us-gaap:LoanPurchaseCommitmentsMemberus-gaap:DerivativeFinancialInstrumentsAssetsMember2020-12-310000933136us-gaap:LoanPurchaseCommitmentsMemberus-gaap:DerivativeFinancialInstrumentsAssetsMember2020-01-012020-12-310000933136us-gaap:ForwardContractsMemberus-gaap:DerivativeFinancialInstrumentsAssetsMember2020-12-310000933136us-gaap:ForwardContractsMemberus-gaap:DerivativeFinancialInstrumentsAssetsMember2020-01-012020-12-310000933136us-gaap:DerivativeFinancialInstrumentsAssetsMember2020-12-310000933136us-gaap:DerivativeFinancialInstrumentsAssetsMember2020-01-012020-12-310000933136us-gaap:InterestRateLockCommitmentsMemberus-gaap:DerivativeFinancialInstrumentsLiabilitiesMember2020-12-310000933136us-gaap:InterestRateLockCommitmentsMemberus-gaap:DerivativeFinancialInstrumentsLiabilitiesMember2020-01-012020-12-310000933136us-gaap:DerivativeFinancialInstrumentsLiabilitiesMemberus-gaap:LoanPurchaseCommitmentsMember2020-12-310000933136us-gaap:DerivativeFinancialInstrumentsLiabilitiesMemberus-gaap:LoanPurchaseCommitmentsMember2020-01-012020-12-310000933136us-gaap:DerivativeFinancialInstrumentsLiabilitiesMemberus-gaap:ForwardContractsMember2020-12-310000933136us-gaap:DerivativeFinancialInstrumentsLiabilitiesMemberus-gaap:ForwardContractsMember2020-01-012020-12-310000933136us-gaap:DerivativeFinancialInstrumentsLiabilitiesMemberus-gaap:SwapMember2020-12-310000933136us-gaap:DerivativeFinancialInstrumentsLiabilitiesMemberus-gaap:SwapMember2020-01-012020-12-310000933136us-gaap:DerivativeFinancialInstrumentsLiabilitiesMember2020-12-310000933136us-gaap:DerivativeFinancialInstrumentsLiabilitiesMember2020-01-012020-12-310000933136coop:LoanSaleCommitmentMemberus-gaap:DerivativeFinancialInstrumentsAssetsMember2019-12-310000933136coop:LoanSaleCommitmentMemberus-gaap:DerivativeFinancialInstrumentsAssetsMember2019-01-012019-12-310000933136us-gaap:InterestRateLockCommitmentsMemberus-gaap:DerivativeFinancialInstrumentsAssetsMember2019-12-310000933136us-gaap:InterestRateLockCommitmentsMemberus-gaap:DerivativeFinancialInstrumentsAssetsMember2019-01-012019-12-310000933136us-gaap:LoanPurchaseCommitmentsMemberus-gaap:DerivativeFinancialInstrumentsAssetsMember2019-12-310000933136us-gaap:LoanPurchaseCommitmentsMemberus-gaap:DerivativeFinancialInstrumentsAssetsMember2019-01-012019-12-310000933136us-gaap:ForwardContractsMemberus-gaap:DerivativeFinancialInstrumentsAssetsMember2019-12-310000933136us-gaap:ForwardContractsMemberus-gaap:DerivativeFinancialInstrumentsAssetsMember2019-01-012019-12-310000933136us-gaap:DerivativeFinancialInstrumentsAssetsMemberus-gaap:EurodollarFutureMember2019-12-310000933136us-gaap:DerivativeFinancialInstrumentsAssetsMemberus-gaap:EurodollarFutureMember2019-01-012019-12-310000933136us-gaap:DerivativeFinancialInstrumentsAssetsMember2019-12-310000933136us-gaap:DerivativeFinancialInstrumentsAssetsMember2019-01-012019-12-310000933136us-gaap:InterestRateLockCommitmentsMemberus-gaap:DerivativeFinancialInstrumentsLiabilitiesMember2019-12-310000933136us-gaap:InterestRateLockCommitmentsMemberus-gaap:DerivativeFinancialInstrumentsLiabilitiesMember2019-01-012019-12-310000933136us-gaap:DerivativeFinancialInstrumentsLiabilitiesMemberus-gaap:LoanPurchaseCommitmentsMember2019-12-310000933136us-gaap:DerivativeFinancialInstrumentsLiabilitiesMemberus-gaap:LoanPurchaseCommitmentsMember2019-01-012019-12-310000933136us-gaap:DerivativeFinancialInstrumentsLiabilitiesMemberus-gaap:ForwardContractsMember2019-12-310000933136us-gaap:DerivativeFinancialInstrumentsLiabilitiesMemberus-gaap:ForwardContractsMember2019-01-012019-12-310000933136us-gaap:DerivativeFinancialInstrumentsLiabilitiesMemberus-gaap:EurodollarFutureMember2019-12-310000933136us-gaap:DerivativeFinancialInstrumentsLiabilitiesMemberus-gaap:EurodollarFutureMember2019-01-012019-12-310000933136us-gaap:DerivativeFinancialInstrumentsLiabilitiesMember2019-12-310000933136us-gaap:DerivativeFinancialInstrumentsLiabilitiesMember2019-01-012019-12-310000933136us-gaap:LoansPayableMembercoop:AdvanceFacilitiesMembercoop:A875AdvanceFacilityMembercoop:CorporateRateCPRATEMembersrt:MinimumMembercoop:ServicingSegmentMember2020-01-012020-12-310000933136us-gaap:LoansPayableMembercoop:AdvanceFacilitiesMembercoop:A875AdvanceFacilityMembercoop:CorporateRateCPRATEMembersrt:MaximumMembercoop:ServicingSegmentMember2020-01-012020-12-310000933136us-gaap:LoansPayableMembercoop:A875AdvanceFacilityMembercoop:AdvanceFacilitiesMembercoop:ServicingSegmentMember2020-12-310000933136us-gaap:LoansPayableMembercoop:A875AdvanceFacilityMembercoop:AdvanceFacilitiesMembercoop:ServicingSegmentMember2019-12-310000933136us-gaap:LondonInterbankOfferedRateLIBORMemberus-gaap:LoansPayableMembercoop:A640AdvanceFacilityMembercoop:AdvanceFinancingInternallyAllocatedMembercoop:ServicingSegmentMember2020-01-012020-12-310000933136us-gaap:LoansPayableMembercoop:A640AdvanceFacilityMembercoop:AdvanceFinancingInternallyAllocatedMembercoop:ServicingSegmentMember2020-12-310000933136us-gaap:LoansPayableMembercoop:A640AdvanceFacilityMembercoop:AdvanceFinancingInternallyAllocatedMembercoop:ServicingSegmentMember2019-12-310000933136us-gaap:LondonInterbankOfferedRateLIBORMemberus-gaap:LoansPayableMembercoop:A425AdvanceFacilityMembercoop:AdvanceFacilitiesMembersrt:MinimumMembercoop:ServicingSegmentMember2020-01-012020-12-310000933136us-gaap:LoansPayableMembercoop:A425AdvanceFacilityMembercoop:AdvanceFacilitiesMembercoop:ServicingSegmentMember2020-12-310000933136us-gaap:LoansPayableMembercoop:A425AdvanceFacilityMembercoop:AdvanceFacilitiesMembercoop:ServicingSegmentMember2019-12-310000933136us-gaap:LondonInterbankOfferedRateLIBORMemberus-gaap:LoansPayableMembercoop:AdvanceFacilitiesMembersrt:MinimumMembercoop:ServicingSegmentMembercoop:A250AdvanceFacilityMember2020-01-012020-12-310000933136us-gaap:LondonInterbankOfferedRateLIBORMemberus-gaap:LoansPayableMembercoop:AdvanceFacilitiesMembersrt:MaximumMembercoop:ServicingSegmentMembercoop:A250AdvanceFacilityMember2020-01-012020-12-310000933136us-gaap:LoansPayableMembercoop:AdvanceFacilitiesMembercoop:ServicingSegmentMembercoop:A250AdvanceFacilityMember2020-12-310000933136us-gaap:LoansPayableMembercoop:AdvanceFacilitiesMembercoop:ServicingSegmentMembercoop:A250AdvanceFacilityMember2019-12-310000933136us-gaap:LondonInterbankOfferedRateLIBORMembercoop:A100AdvanceFacilityMembercoop:AdvanceFacilitiesMembercoop:ServicingSegmentMemberus-gaap:NotesPayableToBanksMember2020-01-012020-12-310000933136coop:A100AdvanceFacilityMembercoop:AdvanceFacilitiesMembercoop:ServicingSegmentMemberus-gaap:NotesPayableToBanksMember2020-12-310000933136coop:A100AdvanceFacilityMembercoop:AdvanceFacilitiesMembercoop:ServicingSegmentMemberus-gaap:NotesPayableToBanksMember2019-12-310000933136coop:AdvanceFacilitiesMembercoop:ServicingSegmentMember2020-12-310000933136coop:AdvanceFacilitiesMembercoop:ServicingSegmentMember2019-12-310000933136us-gaap:LondonInterbankOfferedRateLIBORMembercoop:OriginationsSegmentMembercoop:A2000WarehouseFacilityDueSeptember2022Membercoop:WarehouseFacilitiesMemberus-gaap:NotesPayableToBanksMember2020-01-012020-12-310000933136coop:OriginationsSegmentMembercoop:A2000WarehouseFacilityDueSeptember2022Membercoop:WarehouseFacilitiesMemberus-gaap:NotesPayableToBanksMember2020-12-310000933136coop:OriginationsSegmentMembercoop:A2000WarehouseFacilityDueSeptember2022Membercoop:WarehouseFacilitiesMemberus-gaap:NotesPayableToBanksMember2019-12-310000933136us-gaap:LondonInterbankOfferedRateLIBORMembercoop:A1500WarehouseFacilityDueJune2021Membercoop:OriginationsSegmentMembercoop:WarehouseFacilitiesMemberus-gaap:NotesPayableToBanksMember2020-01-012020-12-310000933136coop:A1500WarehouseFacilityDueJune2021Membercoop:OriginationsSegmentMembercoop:WarehouseFacilitiesMemberus-gaap:NotesPayableToBanksMember2020-12-310000933136coop:A1500WarehouseFacilityDueJune2021Membercoop:OriginationsSegmentMembercoop:WarehouseFacilitiesMemberus-gaap:NotesPayableToBanksMember2019-12-310000933136us-gaap:LondonInterbankOfferedRateLIBORMembercoop:OriginationsSegmentMembersrt:MinimumMembercoop:WarehouseFacilitiesMembercoop:A1500WarehouseFacilityDueOctober2021Memberus-gaap:NotesPayableToBanksMember2020-01-012020-12-310000933136us-gaap:LondonInterbankOfferedRateLIBORMembercoop:OriginationsSegmentMembersrt:MaximumMembercoop:WarehouseFacilitiesMembercoop:A1500WarehouseFacilityDueOctober2021Memberus-gaap:NotesPayableToBanksMember2020-01-012020-12-310000933136coop:OriginationsSegmentMembercoop:A1500WarehouseFacilityDueOctober2021Membercoop:WarehouseFacilitiesMemberus-gaap:NotesPayableToBanksMember2020-12-310000933136coop:OriginationsSegmentMembercoop:A1500WarehouseFacilityDueOctober2021Membercoop:WarehouseFacilitiesMemberus-gaap:NotesPayableToBanksMember2019-12-310000933136us-gaap:LondonInterbankOfferedRateLIBORMembercoop:OriginationsSegmentMembersrt:MinimumMembercoop:WarehouseFacilitiesMembercoop:A1350WarehouseFacilityDueSeptember2022Memberus-gaap:NotesPayableToBanksMember2020-01-012020-12-310000933136us-gaap:LondonInterbankOfferedRateLIBORMembercoop:OriginationsSegmentMembersrt:MaximumMembercoop:WarehouseFacilitiesMembercoop:A1350WarehouseFacilityDueSeptember2022Memberus-gaap:NotesPayableToBanksMember2020-01-012020-12-310000933136coop:OriginationsSegmentMembercoop:WarehouseFacilitiesMembercoop:A1350WarehouseFacilityDueSeptember2022Memberus-gaap:NotesPayableToBanksMember2020-12-310000933136coop:OriginationsSegmentMembercoop:WarehouseFacilitiesMembercoop:A1350WarehouseFacilityDueSeptember2022Memberus-gaap:NotesPayableToBanksMember2019-12-310000933136us-gaap:LondonInterbankOfferedRateLIBORMembercoop:OriginationsSegmentMembersrt:MinimumMembercoop:A1200WarehouseFacilityDueNovember2021Membercoop:WarehouseFacilitiesMemberus-gaap:NotesPayableToBanksMember2020-01-012020-12-310000933136us-gaap:LondonInterbankOfferedRateLIBORMembercoop:OriginationsSegmentMembercoop:A1200WarehouseFacilityDueNovember2021Membersrt:MaximumMembercoop:WarehouseFacilitiesMemberus-gaap:NotesPayableToBanksMember2020-01-012020-12-310000933136coop:OriginationsSegmentMembercoop:A1200WarehouseFacilityDueNovember2021Membercoop:WarehouseFacilitiesMemberus-gaap:NotesPayableToBanksMember2020-12-310000933136coop:OriginationsSegmentMembercoop:A1200WarehouseFacilityDueNovember2021Membercoop:WarehouseFacilitiesMemberus-gaap:NotesPayableToBanksMember2019-12-310000933136us-gaap:LondonInterbankOfferedRateLIBORMembercoop:OriginationsSegmentMembersrt:MinimumMembercoop:WarehouseFacilitiesMembercoop:A750WarehouseFacilityDueOctober2021Memberus-gaap:NotesPayableToBanksMember2020-01-012020-12-310000933136us-gaap:LondonInterbankOfferedRateLIBORMembercoop:OriginationsSegmentMembersrt:MaximumMembercoop:WarehouseFacilitiesMembercoop:A750WarehouseFacilityDueOctober2021Memberus-gaap:NotesPayableToBanksMember2020-01-012020-12-310000933136coop:OriginationsSegmentMembercoop:WarehouseFacilitiesMembercoop:A750WarehouseFacilityDueOctober2021Memberus-gaap:NotesPayableToBanksMember2020-12-310000933136coop:OriginationsSegmentMembercoop:WarehouseFacilitiesMembercoop:A750WarehouseFacilityDueOctober2021Memberus-gaap:NotesPayableToBanksMember2019-12-310000933136us-gaap:LondonInterbankOfferedRateLIBORMembercoop:OriginationsSegmentMembercoop:A750WarehouseFacilityDueAugust2021Membercoop:WarehouseFacilitiesMemberus-gaap:NotesPayableToBanksMember2020-01-012020-12-310000933136coop:OriginationsSegmentMembercoop:A750WarehouseFacilityDueAugust2021Membercoop:WarehouseFacilitiesMemberus-gaap:NotesPayableToBanksMember2020-12-310000933136coop:OriginationsSegmentMembercoop:A750WarehouseFacilityDueAugust2021Membercoop:WarehouseFacilitiesMemberus-gaap:NotesPayableToBanksMember2019-12-310000933136us-gaap:LondonInterbankOfferedRateLIBORMembercoop:OriginationsSegmentMembercoop:A600WarehouseFacilityMembercoop:WarehouseFacilitiesMemberus-gaap:NotesPayableToBanksMember2020-01-012020-12-310000933136coop:OriginationsSegmentMembercoop:A600WarehouseFacilityMembercoop:WarehouseFacilitiesMemberus-gaap:NotesPayableToBanksMember2020-12-310000933136coop:OriginationsSegmentMembercoop:A600WarehouseFacilityMembercoop:WarehouseFacilitiesMemberus-gaap:NotesPayableToBanksMember2019-12-310000933136us-gaap:LondonInterbankOfferedRateLIBORMembercoop:OriginationsSegmentMembercoop:A500WarehouseFacilityDueMay2021Membersrt:MinimumMembercoop:WarehouseFacilitiesMemberus-gaap:NotesPayableToBanksMember2020-01-012020-12-310000933136us-gaap:LondonInterbankOfferedRateLIBORMembercoop:OriginationsSegmentMembercoop:A500WarehouseFacilityDueMay2021Membersrt:MaximumMembercoop:WarehouseFacilitiesMemberus-gaap:NotesPayableToBanksMember2020-01-012020-12-310000933136coop:OriginationsSegmentMembercoop:A500WarehouseFacilityDueMay2021Membercoop:WarehouseFacilitiesMemberus-gaap:NotesPayableToBanksMember2020-12-310000933136coop:OriginationsSegmentMembercoop:A500WarehouseFacilityDueMay2021Membercoop:WarehouseFacilitiesMemberus-gaap:NotesPayableToBanksMember2019-12-310000933136us-gaap:LondonInterbankOfferedRateLIBORMembercoop:OriginationsSegmentMembercoop:A300WarehouseFacilityDueJanuary2022Membercoop:WarehouseFacilitiesMemberus-gaap:NotesPayableToBanksMember2020-01-012020-12-310000933136coop:OriginationsSegmentMembercoop:A300WarehouseFacilityDueJanuary2022Membercoop:WarehouseFacilitiesMemberus-gaap:NotesPayableToBanksMember2020-12-310000933136coop:OriginationsSegmentMembercoop:A300WarehouseFacilityDueJanuary2022Membercoop:WarehouseFacilitiesMemberus-gaap:NotesPayableToBanksMember2019-12-310000933136us-gaap:LondonInterbankOfferedRateLIBORMembercoop:OriginationsSegmentMembersrt:MinimumMembercoop:A250WarehouseFacilityDueMarch2021Membercoop:WarehouseFacilitiesMemberus-gaap:NotesPayableToBanksMember2020-01-012020-12-310000933136us-gaap:LondonInterbankOfferedRateLIBORMembercoop:OriginationsSegmentMembercoop:A250WarehouseFacilityDueMarch2021Membersrt:MaximumMembercoop:WarehouseFacilitiesMemberus-gaap:NotesPayableToBanksMember2020-01-012020-12-310000933136coop:OriginationsSegmentMembercoop:A250WarehouseFacilityDueMarch2021Membercoop:WarehouseFacilitiesMemberus-gaap:NotesPayableToBanksMember2020-12-310000933136coop:OriginationsSegmentMembercoop:A250WarehouseFacilityDueMarch2021Membercoop:WarehouseFacilitiesMemberus-gaap:NotesPayableToBanksMember2019-12-310000933136us-gaap:LondonInterbankOfferedRateLIBORMembercoop:OriginationsSegmentMembercoop:A200WarehouseFacilityDueApril2021Membercoop:WarehouseFacilitiesMemberus-gaap:NotesPayableToBanksMember2020-01-012020-12-310000933136coop:OriginationsSegmentMembercoop:A200WarehouseFacilityDueApril2021Membercoop:WarehouseFacilitiesMemberus-gaap:NotesPayableToBanksMember2020-12-310000933136coop:OriginationsSegmentMembercoop:A200WarehouseFacilityDueApril2021Membercoop:WarehouseFacilitiesMemberus-gaap:NotesPayableToBanksMember2019-12-310000933136us-gaap:LondonInterbankOfferedRateLIBORMembercoop:OriginationsSegmentMembercoop:WarehouseFacilitiesMemberus-gaap:NotesPayableToBanksMembercoop:A200WarehouseFacilityDueNovember2020Member2020-01-012020-12-310000933136coop:OriginationsSegmentMembercoop:WarehouseFacilitiesMemberus-gaap:NotesPayableToBanksMembercoop:A200WarehouseFacilityDueNovember2020Member2020-12-310000933136coop:OriginationsSegmentMembercoop:WarehouseFacilitiesMemberus-gaap:NotesPayableToBanksMembercoop:A200WarehouseFacilityDueNovember2020Member2019-12-310000933136us-gaap:LondonInterbankOfferedRateLIBORMembercoop:OriginationsSegmentMembersrt:MinimumMembercoop:A50WarehouseFacilityDueApril2021Membercoop:WarehouseFacilitiesMemberus-gaap:NotesPayableToBanksMember2020-01-012020-12-310000933136us-gaap:LondonInterbankOfferedRateLIBORMembercoop:OriginationsSegmentMembersrt:MaximumMembercoop:A50WarehouseFacilityDueApril2021Membercoop:WarehouseFacilitiesMemberus-gaap:NotesPayableToBanksMember2020-01-012020-12-310000933136coop:OriginationsSegmentMembercoop:A50WarehouseFacilityDueApril2021Membercoop:WarehouseFacilitiesMemberus-gaap:NotesPayableToBanksMember2020-12-310000933136coop:OriginationsSegmentMembercoop:A50WarehouseFacilityDueApril2021Membercoop:WarehouseFacilitiesMemberus-gaap:NotesPayableToBanksMember2019-12-310000933136us-gaap:LondonInterbankOfferedRateLIBORMembercoop:OriginationsSegmentMembercoop:A40WarehouseFacilityDueJanuary2022Membercoop:WarehouseFacilitiesMemberus-gaap:NotesPayableToBanksMember2020-01-012020-12-310000933136coop:OriginationsSegmentMembercoop:A40WarehouseFacilityDueJanuary2022Membercoop:WarehouseFacilitiesMemberus-gaap:NotesPayableToBanksMember2020-12-310000933136coop:OriginationsSegmentMembercoop:A40WarehouseFacilityDueJanuary2022Membercoop:WarehouseFacilitiesMemberus-gaap:NotesPayableToBanksMember2019-12-310000933136coop:OriginationsSegmentMembercoop:WarehouseFacilitiesMember2020-12-310000933136coop:OriginationsSegmentMembercoop:WarehouseFacilitiesMember2019-12-310000933136us-gaap:LondonInterbankOfferedRateLIBORMembercoop:MSRFacilityMembercoop:OriginationsSegmentMembercoop:A450WarehouseFacilityDueMay2021Memberus-gaap:NotesPayableToBanksMember2020-01-012020-12-310000933136coop:MSRFacilityMembercoop:OriginationsSegmentMembercoop:A450WarehouseFacilityDueMay2021Memberus-gaap:NotesPayableToBanksMember2020-12-310000933136coop:MSRFacilityMembercoop:OriginationsSegmentMembercoop:A450WarehouseFacilityDueMay2021Memberus-gaap:NotesPayableToBanksMember2019-12-310000933136us-gaap:LondonInterbankOfferedRateLIBORMembercoop:OriginationsSegmentMembercoop:A260WarehouseFacilityDueAugust2022Memberus-gaap:NotesPayableToBanksMembercoop:MSRFinancingInternallyAllocatedMember2020-01-012020-12-310000933136coop:OriginationsSegmentMembercoop:A260WarehouseFacilityDueAugust2022Memberus-gaap:NotesPayableToBanksMembercoop:MSRFinancingInternallyAllocatedMember2020-12-310000933136coop:OriginationsSegmentMembercoop:A260WarehouseFacilityDueAugust2022Memberus-gaap:NotesPayableToBanksMembercoop:MSRFinancingInternallyAllocatedMember2019-12-310000933136us-gaap:LondonInterbankOfferedRateLIBORMembercoop:MSRFacilityMembercoop:OriginationsSegmentMembercoop:A200WarehouseFacilityDueAugust2021Memberus-gaap:NotesPayableToBanksMember2020-01-012020-12-310000933136coop:MSRFacilityMembercoop:OriginationsSegmentMembercoop:A200WarehouseFacilityDueAugust2021Memberus-gaap:NotesPayableToBanksMember2020-12-310000933136coop:MSRFacilityMembercoop:OriginationsSegmentMembercoop:A200WarehouseFacilityDueAugust2021Memberus-gaap:NotesPayableToBanksMember2019-12-310000933136us-gaap:LondonInterbankOfferedRateLIBORMembercoop:MSRFacilityMembercoop:A150WarehouseFacilityDueSeptember2022Membercoop:OriginationsSegmentMemberus-gaap:NotesPayableToBanksMember2020-01-012020-12-310000933136coop:A150WarehouseFacilityDueSeptember2022Membercoop:MSRFacilityMembercoop:OriginationsSegmentMemberus-gaap:NotesPayableToBanksMember2020-12-310000933136coop:A150WarehouseFacilityDueSeptember2022Membercoop:MSRFacilityMembercoop:OriginationsSegmentMemberus-gaap:NotesPayableToBanksMember2019-12-310000933136us-gaap:LondonInterbankOfferedRateLIBORMembercoop:MSRFacilityMembercoop:OriginationsSegmentMembercoop:A50WarehouseFacilityDueNovember2022Memberus-gaap:NotesPayableToBanksMember2020-01-012020-12-310000933136coop:MSRFacilityMembercoop:OriginationsSegmentMembercoop:A50WarehouseFacilityDueNovember2022Memberus-gaap:NotesPayableToBanksMember2020-12-310000933136coop:MSRFacilityMembercoop:OriginationsSegmentMembercoop:A50WarehouseFacilityDueNovember2022Memberus-gaap:NotesPayableToBanksMember2019-12-310000933136coop:MSRFacilityMembercoop:OriginationsSegmentMember2020-12-310000933136coop:MSRFacilityMembercoop:OriginationsSegmentMember2019-12-310000933136coop:OriginationsSegmentMembercoop:AdvanceWarehouseAndMSRFacilitiesMember2020-12-310000933136coop:OriginationsSegmentMembercoop:AdvanceWarehouseAndMSRFacilitiesMember2019-12-310000933136coop:AdvanceWarehouseAndMSRFacilitiesMember2020-12-310000933136coop:AdvanceWarehouseAndMSRFacilitiesMember2019-12-310000933136coop:LoansHeldForSaleMortgagesMembercoop:OriginationsSegmentMember2020-12-310000933136coop:LoansHeldForSaleMortgagesMembercoop:OriginationsSegmentMember2019-12-310000933136coop:OriginationsSegmentMembercoop:ReverseMortgagesMember2020-12-310000933136coop:OriginationsSegmentMembercoop:ReverseMortgagesMember2019-12-310000933136coop:OriginationsSegmentMembercoop:MortgageServicingRightsandOtherCollateralsMember2020-12-310000933136coop:OriginationsSegmentMembercoop:MortgageServicingRightsandOtherCollateralsMember2019-12-310000933136coop:MSRFacilityMembercoop:OriginationsSegmentMembercoop:A900WarehouseFacilityMemberus-gaap:NotesPayableToBanksMember2020-12-310000933136coop:OriginationsSegmentMembercoop:A1500WarehouseFacilityMembercoop:WarehouseFacilitiesMemberus-gaap:NotesPayableToBanksMember2020-12-310000933136coop:OriginationsSegmentMembercoop:A1500WarehouseFacilityMembercoop:WarehouseFacilitiesMemberus-gaap:NotesPayableToBanksMember2019-12-310000933136coop:UnsecuredSeniorNotes5500DueAugust2028Memberus-gaap:SeniorNotesMember2020-12-310000933136coop:UnsecuredSeniorNotes5500DueAugust2028Memberus-gaap:SeniorNotesMember2019-12-310000933136coop:A650FaceValue5125InterestRatePayableSemiAnnuallyDueDecember2030Memberus-gaap:SeniorNotesMember2020-12-310000933136coop:A650FaceValue5125InterestRatePayableSemiAnnuallyDueDecember2030Memberus-gaap:SeniorNotesMember2019-12-310000933136coop:UnsecuredSeniorNotes6.000DueJan2027Memberus-gaap:SeniorNotesMember2020-12-310000933136coop:UnsecuredSeniorNotes6.000DueJan2027Memberus-gaap:SeniorNotesMember2019-12-310000933136coop:UnsecuredSeniorNotes8.125DueJuly2023Memberus-gaap:SeniorNotesMember2020-12-310000933136coop:UnsecuredSeniorNotes8.125DueJuly2023Memberus-gaap:SeniorNotesMember2019-12-310000933136coop:UnsecuredSeniorNotes9.125DueJuly2026Memberus-gaap:SeniorNotesMember2020-12-310000933136coop:UnsecuredSeniorNotes9.125DueJuly2026Memberus-gaap:SeniorNotesMember2019-12-310000933136coop:UnsecuredSeniorNotesSixPointFivePercentDueJuly2021Memberus-gaap:SeniorNotesMember2020-12-310000933136coop:UnsecuredSeniorNotesSixPointFivePercentDueJuly2021Memberus-gaap:SeniorNotesMember2019-12-310000933136coop:UnsecuredSeniorNotesSixPointFivePercentDueJuly2022Memberus-gaap:SeniorNotesMember2020-12-310000933136coop:UnsecuredSeniorNotesSixPointFivePercentDueJuly2022Memberus-gaap:SeniorNotesMember2019-12-310000933136us-gaap:SeniorNotesMember2020-12-310000933136us-gaap:SeniorNotesMember2019-12-310000933136us-gaap:SeniorNotesMember2020-01-012020-12-310000933136us-gaap:SeniorNotesMember2019-01-012019-12-310000933136us-gaap:SeniorNotesMember2020-01-012020-12-310000933136srt:MinimumMembercoop:ParticipatingInterestFinancingMember2020-12-310000933136srt:MaximumMembercoop:ParticipatingInterestFinancingMember2020-12-310000933136coop:ParticipatingInterestFinancingMembercoop:NonrecourseDebtMember2020-12-310000933136coop:ParticipatingInterestFinancingMembercoop:NonrecourseDebtMember2019-12-310000933136coop:A202001HECMSecuritizationMembersrt:MinimumMember2020-12-310000933136coop:A202001HECMSecuritizationMembersrt:MaximumMember2020-12-310000933136coop:A202001HECMSecuritizationMembercoop:NonrecourseDebtMember2020-12-310000933136coop:A202001HECMSecuritizationMembercoop:NonrecourseDebtMember2019-12-310000933136coop:A201902HECMSecuritizationMembersrt:MinimumMember2020-12-310000933136coop:A201902HECMSecuritizationMembersrt:MaximumMember2020-12-310000933136coop:A201902HECMSecuritizationMembercoop:NonrecourseDebtMember2020-12-310000933136coop:A201902HECMSecuritizationMembercoop:NonrecourseDebtMember2019-12-310000933136coop:A201901HECMSecuritizationMembersrt:MinimumMember2020-12-310000933136coop:A201901HECMSecuritizationMembersrt:MaximumMember2020-12-310000933136coop:A201901HECMSecuritizationMembercoop:NonrecourseDebtMember2020-12-310000933136coop:A201901HECMSecuritizationMembercoop:NonrecourseDebtMember2019-12-310000933136srt:MinimumMembercoop:A201803HECMSecuritizationMember2020-12-310000933136srt:MaximumMembercoop:A201803HECMSecuritizationMember2020-12-310000933136coop:NonrecourseDebtMembercoop:A201803HECMSecuritizationMember2020-12-310000933136coop:NonrecourseDebtMembercoop:A201803HECMSecuritizationMember2019-12-310000933136srt:MinimumMembercoop:A201802HECMSecuritizationMember2020-12-310000933136srt:MaximumMembercoop:A201802HECMSecuritizationMember2020-12-310000933136coop:A201802HECMSecuritizationMembercoop:NonrecourseDebtMember2020-12-310000933136coop:A201802HECMSecuritizationMembercoop:NonrecourseDebtMember2019-12-310000933136coop:OtherMembercoop:NonrecourseDebtMember2020-12-310000933136coop:OtherMembercoop:NonrecourseDebtMember2019-12-310000933136coop:NonrecourseDebtMember2020-12-310000933136coop:NonrecourseDebtMember2019-12-310000933136us-gaap:SecuredDebtMembersrt:MinimumMembercoop:HECMSecuritizationsMember2020-01-012020-12-310000933136us-gaap:SecuredDebtMembersrt:MaximumMembercoop:HECMSecuritizationsMember2020-01-012020-12-310000933136coop:RestrictedCashMemberus-gaap:ResidentialMortgageMember2020-12-310000933136coop:RestrictedCashMemberus-gaap:ResidentialMortgageMember2019-12-310000933136us-gaap:AccountsReceivableMemberus-gaap:ResidentialMortgageMember2020-12-310000933136us-gaap:AccountsReceivableMemberus-gaap:ResidentialMortgageMember2019-12-310000933136coop:ReverseMortgagesMemberus-gaap:ResidentialMortgageMember2020-12-310000933136coop:ReverseMortgagesMemberus-gaap:ResidentialMortgageMember2019-12-310000933136us-gaap:ResidentialMortgageMember2020-12-310000933136us-gaap:ResidentialMortgageMember2019-12-310000933136coop:AdvanceAndWarehouseFacilitiesNetMemberus-gaap:ResidentialMortgageMember2020-12-310000933136coop:AdvanceAndWarehouseFacilitiesNetMemberus-gaap:ResidentialMortgageMember2019-12-310000933136us-gaap:ResidentialMortgageMemberus-gaap:AccountsPayableAndAccruedLiabilitiesMember2020-12-310000933136us-gaap:ResidentialMortgageMemberus-gaap:AccountsPayableAndAccruedLiabilitiesMember2019-12-310000933136coop:ParticipatingInterestFinancingMemberus-gaap:ResidentialMortgageMember2020-12-310000933136coop:ParticipatingInterestFinancingMemberus-gaap:ResidentialMortgageMember2019-12-310000933136coop:A202001HECMSecuritizationMembercoop:OtherNonRecourseDebtMemberus-gaap:ResidentialMortgageMember2020-12-310000933136coop:A202001HECMSecuritizationMembercoop:OtherNonRecourseDebtMemberus-gaap:ResidentialMortgageMember2019-12-310000933136coop:OtherNonRecourseDebtMembercoop:A201902HECMSecuritizationMemberus-gaap:ResidentialMortgageMember2020-12-310000933136coop:OtherNonRecourseDebtMembercoop:A201902HECMSecuritizationMemberus-gaap:ResidentialMortgageMember2019-12-310000933136coop:OtherNonRecourseDebtMembercoop:A201901HECMSecuritizationMemberus-gaap:ResidentialMortgageMember2020-12-310000933136coop:OtherNonRecourseDebtMembercoop:A201901HECMSecuritizationMemberus-gaap:ResidentialMortgageMember2019-12-310000933136coop:OtherNonRecourseDebtMembercoop:A201803HECMSecuritizationMemberus-gaap:ResidentialMortgageMember2020-12-310000933136coop:OtherNonRecourseDebtMembercoop:A201803HECMSecuritizationMemberus-gaap:ResidentialMortgageMember2019-12-310000933136coop:OtherNonRecourseDebtMembercoop:A201802HECMSecuritizationMemberus-gaap:ResidentialMortgageMember2020-12-310000933136coop:OtherNonRecourseDebtMembercoop:A201802HECMSecuritizationMemberus-gaap:ResidentialMortgageMember2019-12-31coop:installmentAnniversary0000933136us-gaap:PerformanceSharesMember2020-03-012020-03-310000933136us-gaap:PerformanceSharesMembersrt:MinimumMember2020-03-012020-03-310000933136us-gaap:PerformanceSharesMembersrt:MaximumMember2020-03-012020-03-310000933136us-gaap:PerformanceSharesMember2020-01-012020-12-310000933136us-gaap:StockAppreciationRightsSARSMember2020-12-310000933136us-gaap:StockAppreciationRightsSARSMember2020-01-012020-12-310000933136us-gaap:StockAppreciationRightsSARSMember2019-01-012019-12-310000933136us-gaap:StockAppreciationRightsSARSMember2018-01-012018-12-310000933136coop:DefinedContributionPlanTrancheOneMember2020-01-012020-12-310000933136coop:DefinedContributionPlanTrancheTwoMember2020-01-012020-12-3100009331362018-10-102018-10-100000933136us-gaap:DomesticCountryMember2020-12-310000933136us-gaap:StateAndLocalJurisdictionMember2020-12-310000933136us-gaap:DomesticCountryMember2019-12-3100009331362017-01-012017-12-3100009331362018-03-310000933136us-gaap:FairValueMeasurementsRecurringMemberus-gaap:FairValueInputsLevel1Member2020-12-310000933136us-gaap:FairValueMeasurementsRecurringMemberus-gaap:FairValueInputsLevel2Member2020-12-310000933136us-gaap:FairValueMeasurementsRecurringMemberus-gaap:FairValueInputsLevel3Member2020-12-310000933136us-gaap:FairValueMeasurementsRecurringMemberus-gaap:InterestRateLockCommitmentsMember2020-12-310000933136us-gaap:FairValueMeasurementsRecurringMemberus-gaap:InterestRateLockCommitmentsMemberus-gaap:FairValueInputsLevel1Member2020-12-310000933136us-gaap:FairValueMeasurementsRecurringMemberus-gaap:InterestRateLockCommitmentsMemberus-gaap:FairValueInputsLevel2Member2020-12-310000933136us-gaap:FairValueMeasurementsRecurringMemberus-gaap:InterestRateLockCommitmentsMemberus-gaap:FairValueInputsLevel3Member2020-12-310000933136us-gaap:FairValueMeasurementsRecurringMemberus-gaap:ForwardContractsMember2020-12-310000933136us-gaap:FairValueMeasurementsRecurringMemberus-gaap:ForwardContractsMemberus-gaap:FairValueInputsLevel1Member2020-12-310000933136us-gaap:FairValueMeasurementsRecurringMemberus-gaap:ForwardContractsMemberus-gaap:FairValueInputsLevel2Member2020-12-310000933136us-gaap:FairValueMeasurementsRecurringMemberus-gaap:ForwardContractsMemberus-gaap:FairValueInputsLevel3Member2020-12-310000933136us-gaap:FairValueMeasurementsRecurringMemberus-gaap:LoanPurchaseCommitmentsMember2020-12-310000933136us-gaap:FairValueMeasurementsRecurringMemberus-gaap:LoanPurchaseCommitmentsMemberus-gaap:FairValueInputsLevel1Member2020-12-310000933136us-gaap:FairValueMeasurementsRecurringMemberus-gaap:LoanPurchaseCommitmentsMemberus-gaap:FairValueInputsLevel2Member2020-12-310000933136us-gaap:FairValueMeasurementsRecurringMemberus-gaap:LoanPurchaseCommitmentsMemberus-gaap:FairValueInputsLevel3Member2020-12-310000933136us-gaap:FairValueMeasurementsRecurringMemberus-gaap:FairValueInputsLevel1Member2019-12-310000933136us-gaap:FairValueMeasurementsRecurringMemberus-gaap:FairValueInputsLevel2Member2019-12-310000933136us-gaap:FairValueMeasurementsRecurringMemberus-gaap:FairValueInputsLevel3Member2019-12-310000933136us-gaap:FairValueMeasurementsRecurringMemberus-gaap:InterestRateLockCommitmentsMember2019-12-310000933136us-gaap:FairValueMeasurementsRecurringMemberus-gaap:InterestRateLockCommitmentsMemberus-gaap:FairValueInputsLevel1Member2019-12-310000933136us-gaap:FairValueMeasurementsRecurringMemberus-gaap:InterestRateLockCommitmentsMemberus-gaap:FairValueInputsLevel2Member2019-12-310000933136us-gaap:FairValueMeasurementsRecurringMemberus-gaap:InterestRateLockCommitmentsMemberus-gaap:FairValueInputsLevel3Member2019-12-310000933136us-gaap:FairValueMeasurementsRecurringMemberus-gaap:ForwardContractsMember2019-12-310000933136us-gaap:FairValueMeasurementsRecurringMemberus-gaap:ForwardContractsMemberus-gaap:FairValueInputsLevel1Member2019-12-310000933136us-gaap:FairValueMeasurementsRecurringMemberus-gaap:ForwardContractsMemberus-gaap:FairValueInputsLevel2Member2019-12-310000933136us-gaap:FairValueMeasurementsRecurringMemberus-gaap:ForwardContractsMemberus-gaap:FairValueInputsLevel3Member2019-12-310000933136us-gaap:FairValueMeasurementsRecurringMemberus-gaap:LoanPurchaseCommitmentsMember2019-12-310000933136us-gaap:FairValueMeasurementsRecurringMemberus-gaap:LoanPurchaseCommitmentsMemberus-gaap:FairValueInputsLevel1Member2019-12-310000933136us-gaap:FairValueMeasurementsRecurringMemberus-gaap:LoanPurchaseCommitmentsMemberus-gaap:FairValueInputsLevel2Member2019-12-310000933136us-gaap:FairValueMeasurementsRecurringMemberus-gaap:LoanPurchaseCommitmentsMemberus-gaap:FairValueInputsLevel3Member2019-12-310000933136coop:MortgageServicingRightMemberus-gaap:FairValueMeasurementsRecurringMember2019-12-310000933136us-gaap:FairValueMeasurementsRecurringMemberus-gaap:InterestRateLockCommitmentsMember2019-12-310000933136us-gaap:LoanPurchaseCommitmentsMemberus-gaap:FairValueMeasurementsRecurringMember2019-12-310000933136coop:ExcessSpreadFinancingMemberus-gaap:FairValueMeasurementsRecurringMember2019-12-310000933136us-gaap:FairValueMeasurementsRecurringMembercoop:MortgageServicingRightLiabilityMember2019-12-310000933136coop:MortgageServicingRightMemberus-gaap:FairValueMeasurementsRecurringMember2020-01-012020-12-310000933136us-gaap:FairValueMeasurementsRecurringMemberus-gaap:InterestRateLockCommitmentsMember2020-01-012020-12-310000933136us-gaap:LoanPurchaseCommitmentsMemberus-gaap:FairValueMeasurementsRecurringMember2020-01-012020-12-310000933136coop:ExcessSpreadFinancingMemberus-gaap:FairValueMeasurementsRecurringMember2020-01-012020-12-310000933136us-gaap:FairValueMeasurementsRecurringMembercoop:MortgageServicingRightLiabilityMember2020-01-012020-12-310000933136coop:MortgageServicingRightMemberus-gaap:FairValueMeasurementsRecurringMember2020-12-310000933136us-gaap:FairValueMeasurementsRecurringMemberus-gaap:InterestRateLockCommitmentsMember2020-12-310000933136us-gaap:LoanPurchaseCommitmentsMemberus-gaap:FairValueMeasurementsRecurringMember2020-12-310000933136coop:ExcessSpreadFinancingMemberus-gaap:FairValueMeasurementsRecurringMember2020-12-310000933136us-gaap:FairValueMeasurementsRecurringMembercoop:MortgageServicingRightLiabilityMember2020-12-310000933136coop:MortgageServicingRightMemberus-gaap:FairValueMeasurementsRecurringMember2018-12-310000933136us-gaap:FairValueMeasurementsRecurringMembercoop:MortgageLoansHeldForInvestmentMember2018-12-310000933136coop:ExcessSpreadFinancingMemberus-gaap:FairValueMeasurementsRecurringMember2018-12-310000933136us-gaap:FairValueMeasurementsRecurringMembercoop:MortgageServicingRightLiabilityMember2018-12-310000933136coop:MortgageServicingRightMemberus-gaap:FairValueMeasurementsRecurringMember2019-01-012019-12-310000933136us-gaap:FairValueMeasurementsRecurringMembercoop:MortgageLoansHeldForInvestmentMember2019-01-012019-12-310000933136coop:ExcessSpreadFinancingMemberus-gaap:FairValueMeasurementsRecurringMember2019-01-012019-12-310000933136us-gaap:FairValueMeasurementsRecurringMembercoop:MortgageServicingRightLiabilityMember2019-01-012019-12-310000933136us-gaap:FairValueMeasurementsRecurringMembercoop:MortgageLoansHeldForInvestmentMember2019-12-310000933136srt:MinimumMembercoop:ForwardMSRMember2020-01-012020-12-310000933136coop:ForwardMSRMembersrt:MaximumMember2020-01-012020-12-310000933136srt:WeightedAverageMembercoop:ForwardMSRMember2020-01-012020-12-310000933136srt:WeightedAverageMembercoop:ForwardMSRMember2019-01-012019-12-310000933136us-gaap:InterestRateLockCommitmentsMembersrt:MinimumMember2020-01-012020-12-310000933136us-gaap:InterestRateLockCommitmentsMembersrt:MaximumMember2020-01-012020-12-310000933136srt:WeightedAverageMemberus-gaap:InterestRateLockCommitmentsMember2020-01-012020-12-310000933136srt:MinimumMembercoop:ExcessSpreadFinancingMember2020-01-012020-12-310000933136coop:ExcessSpreadFinancingMembersrt:MaximumMember2020-01-012020-12-310000933136srt:WeightedAverageMembercoop:ExcessSpreadFinancingMember2020-01-012020-12-310000933136srt:WeightedAverageMembercoop:ExcessSpreadFinancingMember2019-01-012019-12-310000933136srt:MinimumMembercoop:MSRFinancingLiabilityMember2020-01-012020-12-310000933136coop:MSRFinancingLiabilityMembersrt:MaximumMember2020-01-012020-12-310000933136srt:WeightedAverageMembercoop:MSRFinancingLiabilityMember2020-01-012020-12-310000933136srt:WeightedAverageMembercoop:MSRFinancingLiabilityMember2019-01-012019-12-310000933136us-gaap:FairValueMeasurementsNonrecurringMember2020-12-310000933136us-gaap:FairValueMeasurementsNonrecurringMemberus-gaap:FairValueInputsLevel1Member2020-12-310000933136us-gaap:FairValueInputsLevel2Memberus-gaap:FairValueMeasurementsNonrecurringMember2020-12-310000933136us-gaap:FairValueMeasurementsNonrecurringMemberus-gaap:FairValueInputsLevel3Member2020-12-310000933136coop:ParticipatingInterestFinancingMemberus-gaap:FairValueMeasurementsNonrecurringMember2020-12-310000933136coop:ParticipatingInterestFinancingMemberus-gaap:FairValueMeasurementsNonrecurringMemberus-gaap:FairValueInputsLevel1Member2020-12-310000933136coop:ParticipatingInterestFinancingMemberus-gaap:FairValueInputsLevel2Memberus-gaap:FairValueMeasurementsNonrecurringMember2020-12-310000933136coop:ParticipatingInterestFinancingMemberus-gaap:FairValueMeasurementsNonrecurringMemberus-gaap:FairValueInputsLevel3Member2020-12-310000933136coop:A202001HECMSecuritizationMemberus-gaap:FairValueMeasurementsNonrecurringMember2020-12-310000933136coop:A202001HECMSecuritizationMemberus-gaap:FairValueMeasurementsNonrecurringMemberus-gaap:FairValueInputsLevel1Member2020-12-310000933136coop:A202001HECMSecuritizationMemberus-gaap:FairValueInputsLevel2Memberus-gaap:FairValueMeasurementsNonrecurringMember2020-12-310000933136coop:A202001HECMSecuritizationMemberus-gaap:FairValueMeasurementsNonrecurringMemberus-gaap:FairValueInputsLevel3Member2020-12-310000933136coop:A201901HECMSecuritizationMemberus-gaap:FairValueMeasurementsNonrecurringMember2020-12-310000933136coop:A201901HECMSecuritizationMemberus-gaap:FairValueMeasurementsNonrecurringMemberus-gaap:FairValueInputsLevel1Member2020-12-310000933136coop:A201901HECMSecuritizationMemberus-gaap:FairValueInputsLevel2Memberus-gaap:FairValueMeasurementsNonrecurringMember2020-12-310000933136coop:A201901HECMSecuritizationMemberus-gaap:FairValueMeasurementsNonrecurringMemberus-gaap:FairValueInputsLevel3Member2020-12-310000933136coop:A201803HECMSecuritizationMemberus-gaap:FairValueMeasurementsNonrecurringMember2020-12-310000933136coop:A201803HECMSecuritizationMemberus-gaap:FairValueMeasurementsNonrecurringMemberus-gaap:FairValueInputsLevel1Member2020-12-310000933136coop:A201803HECMSecuritizationMemberus-gaap:FairValueInputsLevel2Memberus-gaap:FairValueMeasurementsNonrecurringMember2020-12-310000933136coop:A201803HECMSecuritizationMemberus-gaap:FairValueMeasurementsNonrecurringMemberus-gaap:FairValueInputsLevel3Member2020-12-310000933136us-gaap:FairValueMeasurementsNonrecurringMember2019-12-310000933136us-gaap:FairValueMeasurementsNonrecurringMemberus-gaap:FairValueInputsLevel1Member2019-12-310000933136us-gaap:FairValueInputsLevel2Memberus-gaap:FairValueMeasurementsNonrecurringMember2019-12-310000933136us-gaap:FairValueMeasurementsNonrecurringMemberus-gaap:FairValueInputsLevel3Member2019-12-310000933136coop:ParticipatingInterestFinancingMemberus-gaap:FairValueMeasurementsNonrecurringMember2019-12-310000933136coop:ParticipatingInterestFinancingMemberus-gaap:FairValueMeasurementsNonrecurringMemberus-gaap:FairValueInputsLevel1Member2019-12-310000933136coop:ParticipatingInterestFinancingMemberus-gaap:FairValueInputsLevel2Memberus-gaap:FairValueMeasurementsNonrecurringMember2019-12-310000933136coop:ParticipatingInterestFinancingMemberus-gaap:FairValueMeasurementsNonrecurringMemberus-gaap:FairValueInputsLevel3Member2019-12-310000933136coop:A201902HECMSecuritizationMemberus-gaap:FairValueMeasurementsNonrecurringMember2019-12-310000933136coop:A201902HECMSecuritizationMemberus-gaap:FairValueMeasurementsNonrecurringMemberus-gaap:FairValueInputsLevel1Member2019-12-310000933136coop:A201902HECMSecuritizationMemberus-gaap:FairValueInputsLevel2Memberus-gaap:FairValueMeasurementsNonrecurringMember2019-12-310000933136coop:A201902HECMSecuritizationMemberus-gaap:FairValueMeasurementsNonrecurringMemberus-gaap:FairValueInputsLevel3Member2019-12-310000933136coop:A201901HECMSecuritizationMemberus-gaap:FairValueMeasurementsNonrecurringMember2019-12-310000933136coop:A201901HECMSecuritizationMemberus-gaap:FairValueMeasurementsNonrecurringMemberus-gaap:FairValueInputsLevel1Member2019-12-310000933136coop:A201901HECMSecuritizationMemberus-gaap:FairValueInputsLevel2Memberus-gaap:FairValueMeasurementsNonrecurringMember2019-12-310000933136coop:A201901HECMSecuritizationMemberus-gaap:FairValueMeasurementsNonrecurringMemberus-gaap:FairValueInputsLevel3Member2019-12-310000933136coop:A201803HECMSecuritizationMemberus-gaap:FairValueMeasurementsNonrecurringMember2019-12-310000933136coop:A201803HECMSecuritizationMemberus-gaap:FairValueMeasurementsNonrecurringMemberus-gaap:FairValueInputsLevel1Member2019-12-310000933136coop:A201803HECMSecuritizationMemberus-gaap:FairValueInputsLevel2Memberus-gaap:FairValueMeasurementsNonrecurringMember2019-12-310000933136coop:A201803HECMSecuritizationMemberus-gaap:FairValueMeasurementsNonrecurringMemberus-gaap:FairValueInputsLevel3Member2019-12-310000933136coop:A201802HECMSecuritizationMemberus-gaap:FairValueMeasurementsNonrecurringMember2019-12-310000933136coop:A201802HECMSecuritizationMemberus-gaap:FairValueMeasurementsNonrecurringMemberus-gaap:FairValueInputsLevel1Member2019-12-310000933136coop:A201802HECMSecuritizationMemberus-gaap:FairValueInputsLevel2Memberus-gaap:FairValueMeasurementsNonrecurringMember2019-12-310000933136coop:A201802HECMSecuritizationMemberus-gaap:FairValueMeasurementsNonrecurringMemberus-gaap:FairValueInputsLevel3Member2019-12-310000933136coop:LitigationAndRegulatoryMattersMember2020-01-012020-12-310000933136coop:LitigationAndRegulatoryMattersMember2019-01-012019-12-310000933136coop:LitigationAndRegulatoryMattersMembersrt:MinimumMember2020-12-310000933136coop:LitigationAndRegulatoryMattersMembersrt:MaximumMember2020-12-310000933136coop:ReverseMortgageServicingRightsExcludingSubservicingMember2020-12-310000933136coop:ReverseMortgageServicingRightsExcludingSubservicingMember2019-12-310000933136us-gaap:OperatingSegmentsMembercoop:ServicingSegmentMember2020-01-012020-12-310000933136coop:OriginationsSegmentMemberus-gaap:OperatingSegmentsMember2020-01-012020-12-310000933136us-gaap:OperatingSegmentsMembercoop:XomeSegmentMember2020-01-012020-12-310000933136us-gaap:OperatingSegmentsMembercoop:ServicingSegmentMember2020-12-310000933136coop:OriginationsSegmentMemberus-gaap:OperatingSegmentsMember2020-12-310000933136us-gaap:OperatingSegmentsMembercoop:XomeSegmentMember2020-12-310000933136us-gaap:CorporateNonSegmentMember2020-12-310000933136us-gaap:OperatingSegmentsMembercoop:ServicingSegmentMember2019-01-012019-12-310000933136coop:OriginationsSegmentMemberus-gaap:OperatingSegmentsMember2019-01-012019-12-310000933136us-gaap:OperatingSegmentsMembercoop:XomeSegmentMember2019-01-012019-12-310000933136us-gaap:OperatingSegmentsMembercoop:ServicingSegmentMember2019-12-310000933136coop:OriginationsSegmentMemberus-gaap:OperatingSegmentsMember2019-12-310000933136us-gaap:OperatingSegmentsMembercoop:XomeSegmentMember2019-12-310000933136us-gaap:CorporateNonSegmentMember2019-12-310000933136us-gaap:OperatingSegmentsMembercoop:ServicingSegmentMember2018-08-012018-12-310000933136coop:OriginationsSegmentMemberus-gaap:OperatingSegmentsMember2018-08-012018-12-310000933136us-gaap:OperatingSegmentsMembercoop:XomeSegmentMember2018-08-012018-12-310000933136us-gaap:CorporateNonSegmentMember2018-08-012018-12-310000933136us-gaap:OperatingSegmentsMembercoop:ServicingSegmentMember2018-12-310000933136coop:OriginationsSegmentMemberus-gaap:OperatingSegmentsMember2018-12-310000933136us-gaap:OperatingSegmentsMembercoop:XomeSegmentMember2018-12-310000933136us-gaap:CorporateNonSegmentMember2018-12-310000933136us-gaap:OperatingSegmentsMembercoop:ServicingSegmentMember2018-01-012018-07-310000933136coop:OriginationsSegmentMemberus-gaap:OperatingSegmentsMember2018-01-012018-07-310000933136us-gaap:OperatingSegmentsMembercoop:XomeSegmentMember2018-01-012018-07-310000933136us-gaap:IntersegmentEliminationMember2018-01-012018-07-310000933136us-gaap:OperatingSegmentsMember2018-01-012018-07-310000933136us-gaap:CorporateNonSegmentMember2018-01-012018-07-310000933136us-gaap:OperatingSegmentsMembercoop:ServicingSegmentMember2018-07-310000933136coop:OriginationsSegmentMemberus-gaap:OperatingSegmentsMember2018-07-310000933136us-gaap:OperatingSegmentsMembercoop:XomeSegmentMember2018-07-310000933136us-gaap:IntersegmentEliminationMember2018-07-310000933136us-gaap:OperatingSegmentsMember2018-07-310000933136us-gaap:CorporateNonSegmentMember2018-07-31
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
_____________________________________________________________________________________________________________
FORM 10-K
|
|
|
☒
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
|
For the fiscal year ended December 31, 2020
or
|
|
|
☐
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
|
For the transition period from
to
Commission file number: 001-35449
_____________________________________________________________________________________________________________
Mr. Cooper Group Inc.
(Exact name of registrant as specified in its charter)
|
|
|
|
|
|
|
|
|
Delaware |
|
91-1653725 |
(State or other jurisdiction of incorporation or
organization) |
|
(I.R.S. Employer Identification No.) |
8950 Cypress Waters Blvd, Coppell, TX
|
|
75019 |
(Address of principal executive offices) |
|
(Zip Code) |
Registrant’s telephone number, including area code: (469)
549-2000
Securities registered pursuant to Section 12(b) of the
Act:
|
|
|
|
|
|
|
|
|
Title of each class |
Trading Symbol(s) |
Name of each exchange on which registered |
Common Stock, $0.01 par value per share |
COOP |
The Nasdaq Stock Market |
Securities registered pursuant to Section 12(g) of the Act:
None
____________________________________________________________________________________________________________
Indicate by check mark if the registrant is a well-known seasoned
issuer, as defined in Rule 405 of the Securities Act.
Yes ☐ No
☒
Indicate by check mark if the registrant is not required to file
reports pursuant to Section 13 or Section 15(d) of the
Act. Yes
☐ No
☒
Indicate by check mark whether the registrant (1) has filed
all reports required to be filed by Section 13 or
15(d) of the Securities Exchange Act of 1934 during the
preceding 12 months (or for such shorter period that the registrant
was required to file such reports), and (2) has been subject
to such filing requirements for the past 90 days.
Yes
☒ No
☐
Indicate by check mark whether the registrant has submitted
electronically every Interactive Data File required to be submitted
pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter)
during the preceding 12 months (or for such shorter period that the
registrant was required to submit such files).
Yes
☒ No
☐
Indicate by check mark whether the registrant is a large
accelerated filer, an accelerated filer, a non-accelerated filer, a
smaller reporting company, or an emerging growth company. See the
definitions of “large accelerated filer,” “accelerated filer,”
“smaller reporting company,” and “emerging growth company” in Rule
12(b)-2 of the Exchange Act.
|
|
|
|
|
|
|
|
|
|
|
|
Large Accelerated Filer |
☒ |
Accelerated Filer |
☐ |
Non-Accelerated Filer |
☐ |
Smaller reporting company |
☐ |
|
|
Emerging growth company |
☐ |
If an emerging growth company, indicate by check mark if registrant
has elected not to use the extended transition period for complying
with any new or revised financial accounting standards provided
pursuant to Section 13(a) of the Exchange Act.
☐
Indicate by check mark whether the registrant has filed a report on
and attestation to its management’s assessment of the effectiveness
of its internal control over financial reporting under Section
404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the
registered public accounting firm that prepared or issued its audit
report. ☒
Indicate by check mark whether the registrant is a shell company
(as defined in Rule 12b-2 of the Exchange
Act). Yes ☐ No
☒
Number of shares of common stock, $0.01 par value, outstanding as
of February 18, 2021 was
89,456,683.
As of June 30, 2020 (the last business day of the registrant’s most
recently completed second fiscal quarter), the aggregate market
value of the registrant’s common stock held by non-affiliates of
the registrant
was $942,662,596 based on the closing sales price of $12.44 as
reported
on the Nasdaq Stock Market.
DOCUMENTS INCORPORATED BY REFERENCE
Portions of our definitive Proxy Statement, to be filed with the
Securities and Exchange Commission pursuant to Regulation 14A
within 120 days of the Company’s fiscal year-end, are incorporated
by reference into Part III, Items 10-14 of this Annual Report on
Form 10-K.
MR. COOPER GROUP INC.
ANNUAL REPORT ON FORM 10-K
TABLE OF CONTENTS
|
|
|
|
|
|
|
|
|
|
|
Page
|
|
|
|
Item 1. |
|
|
Item 1A. |
Risk Factors
|
|
Item 1B. |
|
|
Item 2. |
|
|
Item 3. |
|
|
Item 4. |
|
|
|
|
|
|
|
|
Item 5. |
|
|
Item 6. |
|
|
Item 7. |
|
|
Item 7A. |
|
|
Item 8. |
|
|
Item 9. |
|
|
Item 9A. |
|
|
Item 9B. |
|
|
|
|
|
|
|
|
Item 10. |
|
|
Item 11. |
|
|
Item 12. |
|
|
Item 13. |
|
|
Item 14. |
|
|
Item 15. |
|
|
Item 16. |
|
|
|
|
|
PART I.
Item 1. Business
The disclosures set forth in this item are qualified by Item 1A.
Risk Factors and the section within Item 1, captioned “Caution
Regarding Forward-Looking Statements”. Management’s Discussion and
Analysis of Financial Condition and Results of Operations of this
report and other cautionary statements set forth elsewhere in this
report.
OVERVIEW
Mr. Cooper Group Inc., including our consolidated subsidiaries
(collectively, “Mr. Cooper,” the “Company,” “we,” “us” or “our”),
is the largest non-bank servicer of residential mortgage loans in
the U.S. according to Inside Mortgage Finance, a major mortgage
originator and provides title, real estate owned (“REO”)
disposition, and other services through its subsidiary, Xome. We
have provided a glossary of terms, which defines certain
industry-specific and other terms that are used herein, in
Item 7,
Management’s Discussion and Analysis of Financial Condition and
Results of Operations (“MD&A”),
of this Form 10-K.
Mr. Cooper is a corporation duly organized and existing under the
laws of the state of Delaware since May 11, 2015. On July 31, 2018,
Wand Merger Corporation (“Merger Sub”), a wholly owned subsidiary
of WMIH Corp. (“WMIH”), merged with and into Nationstar Mortgage
Holdings Inc. (“Nationstar”), with Nationstar continuing as a
wholly owned subsidiary of WMIH (the “Merger”). Prior to the
Merger, Nationstar was a leading non-bank mortgage servicer, while
WMIH had limited operations and was focused primarily on
acquisitions.
Our success ultimately depends on working with residential mortgage
borrowers, government sponsored and private investors, and business
partners, to help customers achieve home ownership and manage what
is typically their largest and most important financial asset.
Investors primarily include government sponsored enterprises
(“GSE”) such as the Federal National Mortgage Association (“Fannie
Mae” or “FNMA”) and the Federal Home Loan Mortgage Corp (“Freddie
Mac” or “FHLMC”), investors in private-label securitizations, the
Government National Mortgage Association (“Ginnie Mae” or “GNMA”),
as well as organizations owning mortgage servicing rights (“MSR”)
which engage us to subservice. We are regulated both at the Federal
and individual state levels.
BUSINESS SEGMENTS
We conduct our operations through three operating segments:
Servicing, Originations and Xome®.
See Part II, Item 7,
Management’s Discussion and Analysis of Results of Operations and
Segment Results,
and
Note 20, Segment Information
of the Notes to Consolidated Financial Statements in Part II, Item
8, for additional financial information about our
segments.
Servicing
As of December 31, 2020, we served approximately 3.5 million
customers with an aggregate unpaid principal balance (“UPB”) of
approximately $626 billion, consisting of approximately $271
billion in forward loans, $337 billion in subservicing and other,
and $18 billion in reverse mortgage loans. According to Inside
Mortgage Finance, we were the largest non-bank servicer and third
largest residential mortgage servicer in the United States in the
fourth quarter of 2020. During 2020, we boarded $217 billion UPB of
loans, with $142 billion of UPB related to subservicing.
We service loans on behalf of investors or owners of the underlying
mortgages. Servicing consists of collecting loan payments,
remitting principal and interest payments to investors, managing
escrow funds for the payment of mortgage-related expenses, such as
taxes and insurance, performing loss mitigation activities on
behalf of investors and otherwise administering our mortgage loan
servicing portfolio.
Forward servicing
Where we own the right to service loans, we recognize MSR assets in
our consolidated financial statements and have elected to mark this
portfolio to fair value each quarter. We primarily generate
recurring revenue through contractual servicing fees, which include
late payment, modification, and other ancillary fees and interest
income on custodial deposits. As the MSR owner, we are obligated to
make servicing advances to fund scheduled principal, interest, tax
and insurance payments when the mortgage loan borrower has failed
to make the scheduled payments and to cover foreclosure costs and
various other items that are required to preserve the assets being
serviced. As the MSR owner, we generally have the right to solicit
our customers for refinance opportunities, which are processed
through our direct-to-consumer channel in our Originations segment.
Additionally, we may be able to modify or refinance loans pursuant
to government programs and earn incentive fees or gain-on-sale
revenues from redelivering modified loans to existing
securitizations.
Subservicing
We service loans on behalf of clients who own the underlying
servicing rights. In these cases, since we do not own the right to
service the loan, we do not recognize an asset in our consolidated
financial statements. We primarily generate revenue based upon a
stated fee per loan that varies based on the loan’s delinquency
status. As a subservicer, we may be obligated to make servicing
advances; however, advances are generally limited, with recoveries
typically following within 30 days. Capital requirements for
subservicing arrangements are lower than for owned MSRs.
Additionally, our exposure to foreclosure-related costs and losses
is generally limited in our subservicing relationships as those
risks are retained by the owner of the MSR.
In 2020, we continued to expand our subservicing portfolio, which
grew from $324 billion to $337 billion UPB and accounted
for 54% of the total servicing portfolio as of December 31,
2020. We believe the expansion of subservicing operations allows us
to leverage the scale of our technology and labor capital to
provide cost effective servicing to customers while limiting the
use of cash resources, thereby producing a higher return on
equity.
Reverse servicing
Included within owned MSRs are the rights to service reverse
residential mortgage, which were acquired by Nationstar from third
parties in prior years.
We do not originate reverse mortgages. Accordingly, our portfolio
is in run-off. Our reverse portfolio accounted for 3% of our total
servicing UPB as of December 31, 2020.
Focus on the Customer
We are focused on providing quality service to our customers and
building strong, lasting relationships. We have developed a culture
of customer advocacy and celebrate and reward our team members for
providing excellent service that helps our customers achieve their
goal of homeownership and manage their largest financial
asset.
Additionally, we have invested significantly in technology
solutions to improve the customer experience.
For each loan we service, we utilize a customer-centric model
designed to increase borrower performance and to decrease borrower
delinquencies. Keys to this model include frequent borrower
interactions and utilization of multiple loss mitigation
strategies, particularly in the early stages of default. We train
our customer service representatives to find solutions that work
for homeowners when circumstances allow. We believe this commitment
to continued home ownership helps preserve neighborhoods and home
values and improves asset performance for our
investors.
Originations
Our Originations segment provides refinance opportunities to our
existing servicing customers through our direct-to-consumer
channel, and purchases loans from originators through our
correspondent channel. According to Inside Mortgage Finance, we
were the 14th largest overall mortgage loan originator, funding $63
billion for the year ended December 31, 2020. We generate
revenue through gain-on-sale and fees associated with originating
and selling mortgage loans sourced through our direct-to-consumer
and correspondent channels. We originate and purchase conventional
mortgage loans conforming to the underwriting standards of the
GSEs. We also originate and purchase government-insured mortgage
loans, which are insured by the Federal Housing Administration
(“FHA”), Department of Veterans Affairs (“VA”) and U.S. Department
of Agriculture (“USDA”).
We utilize warehouse facilities to fund originated loans. After we
sell originated mortgage loans to secondary market investors, we
generally retain the servicing rights on mortgage loans sold. The
mortgage loans are typically sold within 30 days of origination in
order to both mitigate credit risk and minimize the capital
required. The majority of our mortgage loans were sold to, or were
sold pursuant to, programs sponsored by Fannie Mae, Freddie Mac or
Ginnie Mae.
Direct-to-Consumer Channel
We originate loans directly with borrowers through our
direct-to-consumer channel. This channel utilizes our call centers,
website and mobile apps, specially-trained teams of licensed
mortgage originators, predictive analytics and modeling utilizing
proprietary data from our servicing portfolio to reach those of our
existing 3.5 million servicing customers who may benefit from a new
mortgage. Depending on borrower eligibility, we will refinance
existing loans into conventional, government or non-agency
products. Through lead campaigns and direct marketing, the
direct-to-consumer channel seeks to convert leads into loans in a
cost-efficient manner. We earn gain-on-sale revenues from
securitizing newly-originated loans.
Our direct-to-consumer channel represented 56% and 41% of our
mortgage originations for the years ended December 31, 2020
and 2019, respectively, based on funded volume. Pull through
adjusted lock volume for this channel increased to $37.9 billion in
2020 from $18.2 billion in 2019.
Mr. Cooper Group Inc. - 2020 Annual Report on Form 10-K
4
Correspondent Channel
We purchase closed mortgage loans from community banks, credit
unions, mortgage brokers and independent mortgage bankers. We
primarily generate revenue from the receipt of underwriting fees
from correspondents earned on a per-unit loan basis, as well as the
gain on sale of loans sold into the secondary market. The
correspondent channel serves as a cost-effective means of acquiring
new customer relationships for our servicing
portfolio.
Our correspondent channel represented 43% and 53% of our mortgage
originations for the years ended December 31, 2020 and 2019,
respectively, based on funded volume. Pull through adjusted lock
volume for this channel increased to $30.6 billion in 2020 from
$24.2 billion in 2019.
Xome
Xome provides integrated, scalable real estate solutions across the
entire loan lifecycle to Mr. Cooper and third-party mortgage
companies. Xome’s operations are comprised of three divisions:
Exchange, Title and Solutions.
Exchange is a national technology-driven platform that facilitates
the management and selling of residential properties through our
website, Xome.com. This platform leverages our proprietary auction
technology and was designed to increase transparency, reduce fraud
risk and provide better execution of property sales as evidenced by
generally higher sales price and lower average days to sell,
compared to traditional sales. Core services include traditional
non-distressed sales, REO auctions, short sales and foreclosure
trustee sales.
Title is a leading national tech-enabled platform and offers an
extensive product suite including origination, home equity, and
default with centralized title production. Title insurance workflow
is enhanced via X1 Analytics proprietary automated title data and
decision engine. Title’s mobile signing service connects 5,000
qualified notaries with a nationwide network of lenders, title
companies, and settlement service providers. In the years ended
December 31, 2020 and 2019, Title completed approximately
905,000 and 906,000 title and close orders,
respectively.
Solutions provides field services, collateral valuation, recapture,
and data analytics solutions to improve purchase, refinance and
default transactions. We continue to serve existing third-party
customers and capture refinance and default transactions generated
by our Servicing and Originations segments. Our data and analytics
business helps improve client recapture using a full suite of real
estate tools, including white-label home search sites,
client-specific intelligence for use in marketing, as well as
aggregated real estate data to support clients’ real estate product
production needs. In the year ended December 31, 2020, the
Solutions division completed a total of approximately
2.3 million orders compared to approximately 2.0 million
in 2019.
Competition
Our Servicing segment primarily competes against large financial
institutions and non-bank servicers. The subservicing market in
which we operate is also highly competitive and we face competition
related to subservicing pricing and service delivery. Our
competitive position is also dependent on our ability to provide
excellent customer service, manage delinquent loans and mitigate
investor losses, demonstrate compliance with local, state, federal
and investor regulations, and improve technology and processes
while controlling our costs.
Our Originations segment competes based on product offerings,
rates, fees and customer service. Many of our competitors consist
of large banks or other financial institutions with greater
financial resources, more diverse funding sources with lower
funding costs, and less reliant on the sale of mortgage loans into
the secondary markets to maintain their liquidity.
Our primary competitive strength flows from our ability to market
our products to our servicing portfolio customers. Our origination
capabilities also provide a significant advantage compared to other
subservicers. Our Originations segment is highly dependent on our
customer relationships. Many smaller and mid-sized financial
institutions may find it difficult to compete in the mortgage
industry due to the significant market share of the largest
competitors, along with the continual need to invest in technology
in order to reduce operating costs while maintaining compliance
with more restrictive underwriting standards and dynamic regulatory
requirements. Our ability to win new clients and maintain existing
customers is largely driven by the level of customer service we
provide and our ability to comply and adapt to an increasingly
complex regulatory environment.
Competitive factors in the Xome segment include the quality and
timeliness of our services, the size and competence of our network
of vendors, the breadth of the services we offer, the quality of
the technology-based application or service, pricing and the
ability to comply with licensing and regulatory requirements. The
industry verticals in which the Xome segment engages are highly
competitive and generally consist of a few national companies, as
well as a large number of regional, local and in-house providers,
resulting in a fragmented market with disparate service offerings.
Our Exchange unit competes with national and regional third-party
service providers and in-house servicing operations of large
mortgage lenders and servicers. We also compete with companies
providing online real estate auction services and real estate
brokerage firms.
5
Mr. Cooper Group Inc. - 2020 Annual Report on Form
10-K
Government Regulation
The residential mortgage industry is highly regulated. We are
required to comply with a wide array of federal, state and local
laws and regulations that regulate, among other things, the manner
in which we conduct our servicing, originations and ancillary
business and the fees we may charge. These regulations directly
impact our business and require constant compliance. Changes in
existing regulation may significantly increase our compliance costs
or reduce the amount of ancillary revenues, including late fees
that we may charge borrowers, which could materially adversely
affect our business, financial condition and results of
operations.
Human Capital Resources
Over the last few years, we have transformed from the inside and
cultivated a people-first culture, utilizing team member feedback
to drive new initiatives. Mr. Cooper Group empowers our
approximately 9,800 employees as of December 31, 2020 across
the U.S. and India because we believe that a happy team leads to
happy customers, and that is good for everyone.
As a Company, Mr. Cooper Group is grounded in a set of intangible
values - being challengers of convention, champions for our
customers and cheerleaders for our team. Our most recent engagement
survey, which led to our second Great Place to Work certification,
shows how these intentional efforts are making a difference, with
our overall Employee Engagement Index measuring 88% participation
and approximately 87% of team members have said that Mr. Cooper
Group is a great place to work.
Diversity and Inclusion Initiatives:
Our success as a business is directly tied to our ongoing efforts
to attract and retain diverse talent and maintain an inclusive and
progressive environment where each team member can thrive. We
established our internal Office of Diversity and Inclusion to serve
as a driver and a resource for our team members. Since its
inception, the Office of Diversity and Inclusion has spearheaded
numerous programs including the formation of nearly 20 Resource
Teams comprised of team members who have similar interests and
backgrounds. In 2020, the Office of Diversity and Inclusion and the
Resource Teams facilitated approximately 500 team member events and
trainings and contributed $371,000 to social justice
organizations.
Talent Management:
We invest in attracting, developing and retaining the best talent,
and we know that focusing on a holistic experience will continue to
be key in our journey from better to best, so we operate an
overarching Talent Management function, which combines our
Training, Leadership Development and Talent Acquisition teams in
one group. Over the past year, we offered our employees
approximately 437,000 hours of training across a broad range of
categories, including leadership, inclusion, professional skills,
and performance management.
Performance Management and Compensation:
We abide by a pay for performance philosophy, which is a model in
which rewards are linked to a team member’s performance. Rewards
are differentiated, which results in top performers receiving
higher rewards, showing team members they are being compensated
based on their individual contributions. To ensure our compensation
practices are fair and market competitive, we evaluate our pay
ranges every year using data from several industry
surveys.
Total Rewards:
We are proud to offer team members a variety of benefits to attract
and retain top talent, and we are committed to giving our team
greater transparency and choice in the benefits available to them.
To provide more insight into the value of all the Company benefits
they receive at Mr. Cooper Group, each team member has access to a
personalized Total Rewards statement, which provides a simple,
complete picture of a team member’s pay, medical benefits, life
insurance, retirement plan, tax-free spending accounts, family
benefits, career development opportunities and more. We believe
that our unique benefits help us to attract and retain top talent,
including the following offerings: Healthcare Exchange, which
provides a choice of competitive insurance options, Team Member
Mortgage Loan Program, Down Payment Assistance Program and Team
Member Relief Fund.
Additional Information
To learn more about Mr. Cooper Group Inc., please visit our website
at
www.mrcoopergroup.com.
From time to time, we use our website as a channel of distribution
of material Company information. We make our Annual Reports on Form
10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K
and amendments to those reports filed or furnished pursuant to
Section 13(a) or 15(d) of the Securities Exchange Act of 1934
(“Exchange Act”) available free of charge under the Investor
Information section of our website as soon as reasonably
practicable after we electronically file the reports with, or
furnish them to, the Securities and Exchange Commission (“SEC”).
Our reports, proxy and information statements and other information
filed electronically with the SEC can also be accessed at
www.sec.gov.
Mr. Cooper Group Inc. - 2020 Annual Report on Form 10-K
6
Our website also provides access to reports filed by our directors,
executive officers and certain significant stockholders pursuant to
Section 16 of the Exchange Act. In addition, our Corporate
Governance Guidelines, Code of Business Conduct and Ethics, Code of
Ethics, and charters for the standing committees of our Board of
Directors are available on our website. Any information on our
website is not incorporated by reference into this Annual Report on
Form 10-K.
7
Mr. Cooper Group Inc. - 2020 Annual Report on Form
10-K
CAUTIONS REGARDING FORWARD-LOOKING STATEMENTS
This report contains forward-looking statements within the meaning
of the U.S. federal securities laws. These forward-looking
statements include, without limitation, statements concerning
plans, objectives, goals, projections, strategies, core
initiatives, future events or performance, and underlying
assumptions and other statements, which are not statements of
historical facts. When used in this discussion, the words
“anticipate,” “appears,” “believe,” “foresee,” “intend,” “should,”
“expect,” “estimate,” “project,” “plan,” “may,” “could,” “will,”
“are likely” and similar expressions are intended to identify
forward-looking statements. These statements involve predictions of
our future financial condition, performance, plans and strategies,
and are thus dependent on a number of factors including, without
limitation, assumptions and data that may be imprecise or
incorrect. Specific factors that may impact performance or other
predictions of future actions have, in many but not all cases, been
identified in connection with specific forward-looking statements.
As with any projection or forecast, forward-looking statements are
inherently susceptible to uncertainty and changes in circumstances,
and we are under no obligation to, and expressly disclaim any
obligation to, update or alter our forward-looking statements,
whether as a result of new information, future events or
otherwise.
A number of important factors exist that could cause future results
to differ materially from historical performance and these
forward-looking statements. Factors that might cause such a
difference include, but are not limited to:
•Economic,
financial and public health disruptions caused by the COVID-19
pandemic and federal, state and local governmental responses to the
pandemic;
•our
ability to maintain or grow the size of our servicing
portfolio;
•our
ability to maintain or grow our originations volume and
profitability;
•our
ability to recapture voluntary prepayments related to our existing
servicing portfolio;
•our
shift in the mix of our servicing portfolio to subservicing, which
is highly concentrated;
•delays
in our ability to collect or be reimbursed for servicing
advances;
•our
ability to obtain sufficient liquidity and capital to operate our
business;
•changes
in prevailing interest rates;
•our
ability to finance and recover costs of our reverse servicing
operations;
•our
ability to successfully implement our strategic
initiatives;
•our
ability to realize anticipated benefits of our previous
acquisitions;
•our
ability to use net operating loss carryforwards and other tax
attributes;
•changes
in our business relationships or changes in servicing guidelines
with Fannie Mae, Freddie Mac and Ginnie Mae;
•Xome’s
ability to compete in highly competitive markets;
•our
ability to pay down debt;
•our
ability to manage legal and regulatory examinations and enforcement
investigations and proceedings, compliance requirements and related
costs;
•our
ability to prevent cyber intrusions and mitigate cyber risks;
and
•our
ability to maintain our licenses and other regulatory
approvals.
All of these factors are difficult to predict, contain
uncertainties that may materially affect actual results and may be
beyond our control. New factors emerge from time to time, and it is
not possible for our management to predict all such factors or to
assess the effect of each such factor on our business. Although we
believe that the assumptions underlying the forward-looking
statements contained herein are reasonable, any of the assumptions
could be inaccurate, and any of these statements included herein
may prove to be inaccurate. Given the significant uncertainties
inherent in the forward-looking statements included herein, the
inclusion of such information should not be regarded as a
representation by us or any other person that the results or
conditions described in such statements or our objectives and plans
will be achieved. Please refer to Item 1A,
Risk Factors,
and Item 7,
Management’s Discussion and Analysis of Financial Condition and
Results of Operations,
sections of this report for further information on these and other
factors affecting our business.
Mr. Cooper Group Inc. - 2020 Annual Report on Form 10-K
8
Item 1A. Risk
Factors
You should carefully consider the following risk factors together
with all of the other information included in this report,
including the financial statements and related notes, when deciding
to invest in us. The risks and uncertainties described below could
materially adversely affect our business, financial condition and
results of operations in future periods and are not the only risks
facing our Company. Additional risks not currently known to us or
that we currently deem to be immaterial also may materially
adversely affect our business, financial condition and results of
operations in future periods.
Risk Factor Summary
Financial Reporting, Credit and Liquidity Risks
•We
may be unable to obtain sufficient capital to operate our business,
and our substantial indebtedness may limit our financial and
operating activities and our ability to incur additional debt to
fund future needs.
•Our
earnings may decrease because of changes in prevailing interest
rates.
•If
our estimates or assumptions in our financial models prove to be
incorrect, it may affect our earnings.
•We
may not realize all of the anticipated benefits of previous or
potential acquisitions and dispositions.
•We
may not be able to fully utilize our NOLs, the IRS could challenge
our NOL carry forwards and changes in legislation could negatively
affect our ability to use the tax benefits associated with our NOL
carry forwards.
•Our
hedging strategies may not be successful in mitigating our risks
associated with interest rates.
•We
have third-party credit and servicer risks.
•Changes
in the method of determining LIBOR or the replacement of LIBOR may
adversely affect interest rates.
Business & Operational Risks
•The
COVID-19 pandemic has created economic, financial and public health
disruptions that may adversely affect, our business, financial
condition and results of operations.
Servicing
•A
significant increase in delinquencies for the loans, including as a
result of the COVID-19 pandemic, that we own and service could have
a material impact on our revenues, expenses and liquidity and on
the valuation of our MSRs.
•We
may not maintain or grow our business if we do not acquire MSRs or
enter into favorable subservicing agreements.
•We
service higher risk loans which are more expensive to service than
conventional mortgage loans.
•We
are required to make servicing advances that can be subject to
delays in recovery or may not be recoverable.
•Our
counterparties may terminate our servicing rights and subservicing
contracts.
•We
service reverse mortgages, which subjects us to additional
risks.
•We
could have a downgrade in our servicer ratings.
Originations
•We
may not be able to maintain the volumes in our loan originations
business.
•We
may be required to indemnify or repurchase loans we sold, or will
sell, if these loans fail to meet certain criteria.
•We
are highly dependent upon loan programs administered by the
Agencies to generate revenues.
Xome
•Xome
participates in highly competitive markets and has pressure from
existing and new companies.
•Xome
may be accused of infringing intellectual property rights of third
parties.
•Xome
is subject to extensive government regulation at the federal, state
and local levels.
•Xome’s
revenue from clients in the mortgage and real estate industries is
affected by the strength of the economy and the housing market
generally, including the volume of real estate
transactions.
•We
could have, appear to have or be alleged to have conflicts of
interest with Xome.
9
Mr. Cooper Group Inc. - 2020 Annual Report on Form
10-K
General Business & Operational Risks
•We
may not be successful in implementing certain strategic
initiatives.
•Technology
failures or cyber-attacks against us or our vendors could damage
our business operations, and new laws and regulations could
increase our costs.
•Our
capital investments in technology may not achieve anticipated
returns.
•We
and our vendors have operations in India that could be adversely
affected by changes in political or economic stability or by
government policies.
•Our
vendor relationships subject us to a variety of risks.
•Our
risk management policies and procedures may not be
effective.
•Our
business could suffer if we fail to attract, or retain, highly
skilled employees and changes in our executive management team may
be disruptive to our business.
•Negative
public opinion could damage our reputation and adversely affect our
business.
•We
may have lapses in disclosure controls and procedures or internal
control over financial reporting.
•Our
business is subject to the risks of natural catastrophic
events.
Regulatory and Legal Risks
•We
operate within a highly regulated industry on federal, state and
local levels.
•We
are subject to numerous legal proceedings, federal, state or local
governmental examinations and enforcement
investigations.
•We
are subject to state licensing and operational requirements that
result in substantial compliance costs.
•Our
business would be adversely affected if we lose our
licenses.
•We
may incur increased litigation costs and related losses if a court
overturns a foreclosure or if a loan we are servicing becomes
subordinate to a Home Owners Association lien.
•Delays
in residential mortgage foreclosure proceedings could have a
negative effect on our ability to liquidate loans timely and slow
the recovery of advances and thus impact our earnings or
liquidity.
Risks Related to the Owning our Stock
•Our
common stock and the Series A Preferred Stock are subject to
transfer restrictions.
•Anti-takeover
provisions in our charter and under Delaware law could limit
certain stockholder actions.
•Affiliates
of KKR own a substantial amount of equity interests in us, have
other substantial interests in us and agreements with us, and may
have conflicts of interest with us or the other holders of our
capital stock.
•Neither
KKR nor its director appointees are required to present us with
investment opportunities and may pursue them separately or
otherwise compete with us.
•The
market price of our common stock may decrease, resulting in a loss
for investors.
Risk Factors
Financial Reporting, Credit and Liquidity Risks
We may be unable to obtain sufficient capital to operate our
business.
Our financing strategy includes the use of significant leverage
because, in order to make servicing advances and fund originations,
we require liquidity in excess of the capital generated by our
operations. Accordingly, our ability to finance our operations
depends on our ability to secure financing on acceptable terms and
to renew and/or replace existing financings as they expire. These
financings may not be available on acceptable terms or at all. If
we are unable to obtain these financings, we may need to raise the
funds we require in the capital markets or through other means, any
of which may increase our cost of funds.
We are generally required to renew a significant portion of our
debt financing arrangements each year, which exposes us to
refinancing and interest rate risks. Our ability to refinance
existing debt and borrow additional funds is affected by a variety
of factors including:
•the
available liquidity in the credit markets;
•prevailing
interest rates;
Mr. Cooper Group Inc. - 2020 Annual Report on Form 10-K
10
•an
event of default, a negative ratings action by a rating agency and
limitations imposed on us under the indentures governing our
current debt that contain restrictive covenants and borrowing
conditions that may limit our ability to raise additional
debt;
•the
strength of the lenders from which we borrow; and
•limitations
on borrowings on advance facilities imposed by the amount of
eligible collateral pledged, which may be less than the borrowing
capacity of the advance facility.
If we are unable to obtain sufficient capital on acceptable terms
for any of the foregoing reasons, this could adversely affect our
business, financial condition and results of
operations.
Our substantial indebtedness may limit our financial and operating
activities and our ability to incur additional debt to fund future
needs.
As of December 31, 2020, the aggregate principal amount of our
unsecured senior notes was $2,100. Although we and our subsidiaries
have substantial indebtedness, we believe we have the ability to
incur additional indebtedness in the future, subject to the
limitations contained in the agreements governing our indebtedness.
These agreements generally restrict us and our restricted
subsidiaries from incurring additional indebtedness; however, these
restrictions are subject to important exceptions and
qualifications. If we incur additional debt, the related risks
could be magnified and could limit our financial and operating
activities.
Our current and any future indebtedness could:
•require
us to dedicate a substantial portion of cash flow from operations
to the payment of principal and interest on our current
indebtedness and any indebtedness we may incur in the future,
thereby reducing the funds available for other
purposes;
•make
it more difficult for us to satisfy and comply with our obligations
with respect to the unsecured senior notes;
•subject
us to increased sensitivity to increases in prevailing interest
rates;
•place
us at a competitive disadvantage to competitors with relatively
less debt in economic downturns, adverse industry conditions or
catastrophic external events; or
•reduce
our flexibility in planning for or responding to changing business,
industry and economic conditions.
In addition, our substantial level of indebtedness could limit our
ability to obtain financing or additional financing on acceptable
terms to fund future acquisitions, working capital, capital
expenditures, debt service requirements, general corporate and
other purposes, which could have a material adverse effect on our
business and financial condition. Our liquidity needs could vary
significantly and may be affected by general economic conditions,
industry trends, performance and many other factors outside of our
control. Our substantial obligations could have other important
consequences. For example, our failure to comply with the
restrictive covenants in the agreements governing our indebtedness,
which limit our ability to incur liens, to incur debt and to sell
assets, could result in an event of default that, if not cured or
waived, could harm our business or prospects and could result in
our bankruptcy.
Our earnings may decrease because of changes in prevailing interest
rates.
Our profitability is directly affected by changes in prevailing
interest rates. The following are certain material risks we face
related to changes in interest rates:
Servicing:
•a
decrease in interest rates may increase prepayment speeds which may
lead to (i) increased amortization expense; (ii) decrease in
servicing fees; and (iii) decrease in the value of our
MSRs;
•an
increase in interest rates, together with an increase in monthly
payments when an adjustable mortgage loan’s interest rate adjusts
upward from an initial fixed rate or a low introductory rate, may
cause increased delinquency, default and foreclosure. Increased
mortgage defaults and foreclosures may adversely affect our
business as they increase our expenses and reduce the number of
mortgages we service;
11
Mr. Cooper Group Inc. - 2020 Annual Report on Form
10-K
Originations:
•an
increase in interest rates could adversely affect our loan
originations volume because refinancing an existing loan would be
less attractive for homeowners and qualifying for a purchase money
loan may be more difficult for consumers;
•an
increase in interest rates could also adversely affect our
production margins due to increased competition among
originators;
Xome:
•a
substantial and sustained increase in prevailing interest rates
could adversely affect the loan origination volumes of Xome’s
clients since refinancing and purchase loans would be less
attractive to borrowers, which would in turn adversely impact Xome
Solutions’ valuation and Xome Title’s title order
volume;
•an
increase in interest rates could adversely affect Xome Exchange’s
property sales, particularly non-distressed sales, as financing may
become less attractive to borrowers;
Other:
•an
increase in interest rates would increase the cost of servicing our
outstanding debt, including our ability to finance servicing
advances and loan originations and for borrowing for acquisitions;
and
•a
decrease in interest rates could reduce our earnings from our
custodial deposit accounts.
Any of the foregoing could adversely affect our business, financial
condition and results of operations.
We use financial models that rely heavily on estimates in
determining the fair value of certain assets and liabilities, such
as MSRs and excess spread, and if our estimates or assumptions
prove to be incorrect, it may affect our earnings.
We use internal financial models that utilize, wherever possible,
market participant data to value certain of our assets, including
our MSRs and MSR financing liabilities and for purposes of
financial reporting. These models are complex and use
asset-specific collateral data and market inputs for interest and
discount rates. In addition, the modeling requirements of MSRs are
complex because of the high number of variables that drive cash
flows associated with MSRs. Even if the general accuracy of our
valuation models is validated, valuations are highly dependent upon
the reasonableness of our assumptions and the predictability of the
relationships that drive the results of the models. In determining
value for MSRs we make certain assumptions, many of which are
beyond our control, including, among other things:
•the
rates of prepayment and repayment within the underlying pools of
mortgage loans and our ability to recapture mortgage prepayments
through the origination platform;
•projected
rates of delinquencies, defaults and liquidations;
•future
interest rates;
•cost
to service the loans;
•ancillary
revenues; and
•amounts
of future servicing advances.
If these assumptions or relationships prove to be inaccurate, if
market conditions change or if errors are found in our models, the
value of certain assets and liabilities could materially vary,
which could impact our ability to satisfy minimum net worth
covenants and borrowing conditions in our debt agreements and
adversely affect our business, financial condition and results of
operations.
We may not realize all of the anticipated benefits of previous or
potential acquisitions and dispositions.
Our ability to realize the anticipated benefits of previous or
potential acquisitions, including the acquisition of assets, will
depend, in part, on our ability to scale-up to appropriately
service these assets and integrate the businesses of the acquired
companies with our business.
Mr. Cooper Group Inc. - 2020 Annual Report on Form 10-K
12
The risks associated with acquisitions include, among
others:
•unknown
or contingent liabilities;
•unanticipated
issues in integrating information, management style, controls and
procedures, servicing practices, communications and other systems
including information technology systems;
•unanticipated
incompatibility of purchasing, logistics, marketing and
administration methods;
•not
retaining key employees or clients; and
•inaccuracy
of valuation and/or operating assumptions supporting our purchase
price.
In the event that we acquire a platform, we may elect to operate
this platform in addition to our current platform for a period of
time or indefinitely. Individually or collectively, these
transactions could substantially increase the UPB, or alter the
composition of our portfolio of mortgage loans that we service or
have an otherwise significant impact on our business. Additionally,
we may make potentially significant acquisitions which could expose
us to greater risks than we currently experience in servicing our
current portfolio and adversely affect our business, financial
condition and results of operations.
The risks associated with disposition include, among other
things:
•difficulty
in finding buyers or alternative exit strategies on acceptable
terms in a timely manner;
•destabilization
of the applicable operations;
•loss
of key personnel;
•ability
to obtain necessary governmental or regulatory
approvals;
•post-disposal
disputes and indemnification obligations;
•access
by purchasers to certain of our systems and tools during transition
periods;
•the
migration of data and separation of systems; and
•data
privacy matters.
We can provide no assurances that we will enter into any such
agreements or as to the timing of any potential strategic
transactions. The strategic transaction process may disrupt our
business including diverting management’s attention from ongoing
business concerns. We also may not realize all of the anticipated
benefits of potential future strategic transactions, which could
adversely affect our business, financial condition and results of
operations.
13
Mr. Cooper Group Inc. - 2020 Annual Report on Form
10-K
We may not be able to fully utilize our net operating loss (“NOL”)
and other tax carry forwards.
As of December 31, 2012, we had U.S. federal NOLs of approximately
$7.5 billion, of which approximately $6.0 billion was allocated to
the portion of 2012 after the ownership change described below,
that, if unused, will begin to expire in 2031. As of December 31,
2020, we had U.S. federal NOLs of approximately $2.6 billion, of
which $2.5 billion were not subject to limitation under Section 382
of the United States Internal Revenue Code of 1986, as amended (the
“Code”). Our ability to utilize NOLs and other tax carry forwards
to reduce taxable income in future years could be limited for
various reasons, including if projected future taxable income is
insufficient to recognize the full benefit of such NOL carry
forwards prior to their expiration and/or the Internal Revenue
Service (“IRS”) challenges that a transaction or transactions were
concluded with the principal purpose of evasion or avoidance of
Federal income tax. There can be no assurance that we will have
sufficient taxable income in later years to enable us to use the
NOLs before they expire, or that the IRS will not challenge the use
of all or any portion of the NOLs. Although we have certain
transfer restrictions in place under our Certificate of
Incorporation, our Board could issue additional shares of stock or
permit or effect future conversions, amendments or redemptions of
our stock, which, depending on their magnitude, could result in
ownership changes that would trigger the imposition of additional
limitations on the utilization of our NOLs under Sections 382 and
383 of the Code. In an attempt to minimize the likelihood of an
additional ownership change occurring, our Certificate of
Incorporation contains transfer restrictions limiting the
acquisition (and disposition) of our stock or any other instrument
treated as stock for purposes of Section 382 by persons or group of
persons treated as a single entity under Treasury Regulation
Section 1.382-3 owning (actually or constructively), or who would
own as a result of the transaction, 4.75% of the total value of our
stock (including any other interests treated as stock for purposes
of Section 382). Nevertheless, it is possible that we could undergo
an ownership change, either by events within or outside of the
control of our Board, e.g., indirect changes in the ownership of
persons owning 5% of our stock. In the event of a subsequent
ownership change, all or part of the NOLs from 2012 and subsequent
years that were not previously subject to limitations under Section
382 could also become subject to an annual limitation. Section 384
may also apply in the event of an ownership change resulting from
an acquisition, which would limit the utilization of our NOLs to
only certain income or gains generated from assets owned subsequent
to the acquisition.
The IRS could challenge the amount, timing and/or use of our NOL
carry forwards.
The amount of our NOL carry forwards has not been audited or
otherwise validated by the IRS. Among other things, the IRS could
challenge whether an ownership change occurred with the merger with
Nationstar, as well as the amount, the timing and/or our use of our
NOLs. Any such challenge, if successful, could significantly limit
our ability to utilize a portion or all of our NOL carry forwards.
In addition, calculating whether an ownership change has occurred
within the meaning of Section 382 is subject to inherent
uncertainty, both because of the complexity of applying Section 382
and because of limitations on a publicly traded Company’s knowledge
as to the ownership of, and transactions in, its securities.
Therefore, the calculation of the amount of our utilizable NOL
carry forwards could be changed as a result of a successful
challenge by the IRS or as a result of new information about the
ownership of, and transactions in, our securities.
Possible changes in legislation could negatively affect our ability
to use the tax benefits associated with our NOL carry
forwards.
The rules relating to U.S. federal income taxation are periodically
under review by persons involved in the legislative and
administrative rulemaking processes, by the IRS and by the U.S.
Department of the Treasury, resulting in revisions of regulations
and revised interpretations of established concepts as well as
statutory changes, including decreases in the tax rate. Future
revisions in U.S. federal tax laws and interpretations thereof
could adversely impact our ability to use some or all of the tax
benefits associated with our NOL carry forwards.
Our hedging strategies may not be successful in mitigating our
risks associated with interest rates.
In our Originations segment, we use various derivative financial
instruments to provide a level of protection against interest rate
risks, but no hedging strategy can protect us completely. We may
hedge MSRs in certain rate environments. The nature and timing of
hedging transactions influence the effectiveness of these
strategies. Poorly designed strategies, improperly executed and
documented transactions or inaccurate assumptions could increase
our risks and losses. In addition, hedging strategies involve
transaction and other costs. Our hedging strategies and the
derivatives that we use may not be able to adequately offset the
risks of interest rate volatility, and our hedging transactions may
result in or magnify losses. Furthermore, interest rate derivatives
may not be available on favorable terms or at all, particularly
during economic downturns. Any of the foregoing risks could
adversely affect our business, financial condition and results of
operations.
Mr. Cooper Group Inc. - 2020 Annual Report on Form 10-K
14
We have third-party credit and servicer risks which could have a
material adverse effect on our business, liquidity, financial
condition and results of operation.
Consumer Credit Risk:
We provide representations and warranties to purchasers and
insurers of the loans that we sell that typically are in place for
the life of the loan. In the event of a breach of these
representations and warranties, we may be required to repurchase a
mortgage loan or indemnify the purchaser, and any subsequent loss
on the mortgage loan may be borne by us. Our loss estimates are
affected by factors both internal and external in nature,
including, level of loan sales, as well as to whom the loans are
sold, the expectation of credit loss on repurchases and
indemnifications, our success rate at appealing repurchase demands,
our ability to recover any losses from third parties, the overall
economic condition in the housing market, the economic condition of
borrowers, the political environment at investor agencies and the
overall U.S. and world economies. Many of the factors are beyond
our control and may lead to judgments that are susceptible to
change. In adverse market conditions, loans may decrease in value
due to an increase in delinquencies, borrower defaults and
non-payments. In addition, property values may experience losses at
liquidation due to extensions in foreclosure and REO sales
timelines as well as home price depreciation.
Counterparty Credit Risk:
We are exposed to counterparty credit risk in the event of
non-performance by counterparties to various agreements. Although
certain credit facilities and warehouse lines are committed, we may
experience a disruption in operations due to a lender withholding a
funding of a borrowing requested on the respective credit
facility.
Prior Servicer Risk:
We service mortgage loans under guidelines set forth by regulatory
agencies and GSEs. Failure to meet stipulations of the servicing
guidelines can result in the assessment of fines and loss of
reimbursement of loan related advances, expenses, interest and
servicing fees. When the servicing of a portfolio is assumed either
through purchase of servicing rights or through a subservicing
arrangement, various loans in the acquired portfolio may have been
previously serviced in a manner that will contribute towards our
not meeting certain servicing guidelines. If not recovered from a
prior servicer, such events frequently lead to the eventual
realization of a loss to us. The recovery process against a prior
servicer can be prolonged based upon the time required by us to
meet minimum loss deductibles under the indemnification provisions
in our agreements with the prior servicer and for the time
requirements by the prior servicer to review underlying loss events
and our request for indemnification. The amounts ultimately
recovered from prior servicers may differ from our estimated
recoveries recorded based on the prior servicer’s interpretation of
responsibility for loss, which could lead to our realization of
additional losses.
Correspondent Risk:
We purchase closed loans from correspondent lenders. The failure of
these correspondent lenders to comply with any applicable laws,
regulations and rules may subject us to monetary penalties or other
losses. Although we have controls and procedures designed to assess
areas of risk with respect to these acquired loans, including,
without limitation, diligence regarding compliance with
underwriting guidelines and applicable laws or regulations, we may
not detect every violation of law by these correspondent
lenders.
Any of the above could adversely affect our business, liquidity,
financial condition and results of operations.
Changes in the method of determining the London Inter-Bank Offered
Rate (“LIBOR”), or the replacement of LIBOR with an alternative
reference rate, may adversely affect interest rates and financial
markets as a whole.
On July 27, 2017, the United Kingdom’s Financial Conduct Authority,
which regulates LIBOR, announced that it intends to phase out LIBOR
by the end of 2021. On November 30, 2020, ICE Benchmark
Administration (“IBA”), the administrator of LIBOR, with the
support of the United States Federal Reserve and the United
Kingdom’s Financial Conduct Authority, announced plans to consult
on ceasing publication of USD LIBOR on December 31, 2021 for only
the one week and two month USD LIBOR tenors, and on June 30, 2023
for all other USD LIBOR tenors. While this announcement extends the
transition period to June 2023, the United States Federal Reserve
concurrently issued a statement advising banks to stop new USD
LIBOR issuances by the end of 2021. In light of these recent
announcements, the future of LIBOR at this time is uncertain and
any changes in the methods by which LIBOR is determined or
regulatory activity related to LIBOR’s phaseout could cause LIBOR
to perform differently than in the past or cease to exist. As we
renew or replace our debt facilities that currently incorporate
LIBOR, we will need to work with our counterparties to incorporate
alternative benchmarks. Since there is presently substantial
uncertainty relating to the process and timeline for developing
LIBOR alternatives, how widely any given alternative will be
adopted by parties in the financial markets, and the extent to
which alternative benchmarks may be subject to volatility or
present risks and challenges that LIBOR does not, it is difficult
to predict what effect, if any, the phase-out of LIBOR and the use
of alternative benchmarks may have on our business or on the
overall financial markets. In 2020, the Company ended originating
LIBOR loans in advance of the GSEs and GNMA announcing they will no
longer be purchasing these loans.
15
Mr. Cooper Group Inc. - 2020 Annual Report on Form
10-K
Business & Operational Risks
The COVID-19 pandemic has created economic, financial and public
health disruptions that may adversely affect, our business,
financial condition and results of operations.
The COVID-19 pandemic has had, and continues to have, a significant
impact on the national economy and the communities in which we
operate. While the pandemic's effect on the macroeconomic
environment has yet to be fully determined and could continue for
months or years, the pandemic and governmental programs created as
a response to the pandemic has affected and will continue to affect
our business, and such effects, if they continue for a prolonged
period, may have a material adverse effect on our business,
financial conditions and results of operations.
The COVID-19 pandemic has affected and will continue to affect our
Servicing operations. As part of the federal response to the
COVID-19 pandemic, the CARES Act allows borrowers with
federally-backed loans to request temporary payment forbearance in
response to increased borrower hardships resulting from the
COVID-19 pandemic. Delinquent loans reduce our servicing fee
revenues and are more costly to service. An increase in loans in
forbearance, an increase in delinquencies, and further declines in
market or mortgage rates would also further decrease the fair value
of our MSR portfolio. In addition, as a servicer, we are required
to advance unpaid principal and interest to investors and to make
advances for unpaid taxes and insurance and other costs to the
extent that we determine that such amounts are recoverable. An
increase in loans in forbearance or an increase in delinquencies
would increase our servicing advances and may increase the related
interest expense.
The COVID-19 pandemic is also impacting Xome’s Exchange division
which consists of the Xome.com auction platform that provides the
efficient execution for sales of foreclosed properties. States,
agencies and regulators have issued forbearance programs and placed
a moratorium on foreclosures and evictions starting in March 2020
and still in effect as of December 31, 2020. If these measures stay
in place for an extended period of time, Xome’s revenues may
continue to be adversely impacted.
Although we have experienced record pre-tax income and funded
volume in Originations, the COVID-19 pandemic may impact our
origination of mortgages. If the COVID-19 pandemic leads to a
prolonged economic downturn with sustained high unemployment rates,
real estate transactions could decrease. Any such slowdown may
materially decrease the number and volume of mortgages we
originate.
Multiple forbearance programs, moratoria of foreclosure and
eviction and other requirements to assist borrowers enduring
financial hardship due to COVID-19 are being issued by states,
agencies and regulators. These measures could stay in place for an
extended period of time. Additionally, the CFPB iteratively adopted
rules over the course of several years regarding mortgage servicing
practices that required us to make modifications and enhancements
to our mortgage servicing processes and systems. While the CFPB
announced its flexible supervisory and enforcement approach during
the COVID-19 pandemic on certain consumer communications required
by the mortgage servicing rules, managing to the CFPB's loss
mitigation rules with CARES Act forbearance requests is
challenging. If we are unable to comply with, or face allegations
that we are in breach of, applicable laws, regulations or other
requirements, we may face regulatory action, including fines,
penalties, and restrictions on our business. In addition, we could
face litigation and reputational damage.
Additionally, the COVID-19 pandemic may affect the productivity of
our team members. As a result of the pandemic, we transitioned to a
remote working environment for over 98% of our team members. While
our team members have transitioned well to working from home, over
time such remote operations could impact employees’ productivity
and bring increased risks from potentially less secure and less
private work environments.
Servicing
A significant increase in delinquencies for the loans, including as
a result of the COVID-19 pandemic, that we own and service could
have a material impact on our revenues, expenses and liquidity and
on the valuation of our MSRs.
•Revenue.
An increase in delinquencies will result in lower revenue for loans
we service for GSEs and Ginnie Mae because we only collect
servicing fees from GSEs and Ginnie Mae for performing loans.
Additionally, while increased delinquencies generate higher
ancillary revenues, including late fees, these fees do not offset
the higher cost to service a delinquent loan and are not likely to
be recoverable in the event that the loan is liquidated. In
addition, an increase in delinquencies reduces cash held in
collections and other accounts and lowers the interest income we
receive.
•Expenses.
An increase in delinquencies will result in a higher cost to
service due to the increased time and effort required to collect
payments from delinquent borrowers and an increase in interest
expense as a result of an increase in our advancing
obligations.
Mr. Cooper Group Inc. - 2020 Annual Report on Form 10-K
16
•Liquidity.
An increase in delinquencies could also negatively impact our
liquidity because of an increase in servicing advances resulting in
an increase in borrowings under advance facilities and/or
insufficient financing capacity to fund increases in
advances.
•Valuation
of MSRs.
We base the price we pay for MSRs on, among other things, our
projections of the cash flows from the related pool of mortgage
loans. Our expectation of delinquencies is a significant assumption
underlying those cash flow projections. If delinquencies were
significantly greater than expected, the estimated fair value of
our MSRs could be diminished. If the estimated fair value of MSRs
is reduced, we would record a loss which would adversely impact our
ability to satisfy borrowing conditions in our debt agreements
which could have a negative impact on our financial
results.
An increase in delinquency rates could therefore adversely affect
our business, financial condition and results of
operations.
We may not be able to maintain or grow our business if we do not
acquire MSRs or enter into additional subservicing agreements on
favorable terms.
Our servicing portfolio is subject to “run off,” meaning that
mortgage loans serviced by us may be prepaid prior to maturity or
repaid through standard amortization of principal. As a result, our
ability to maintain the size of our servicing portfolio depends on
our ability to acquire the right to service additional pools of
residential mortgages, enter into additional subservicing
agreements or to retain the servicing rights on newly originated
mortgages. We have also shifted the mix of our servicing portfolio
to a greater mix of subserviced loans. While we expect this
strategy to have longer-term benefits, in the short-term, since
subservicing revenues are earned on a fee per loan basis, this
shift in our servicing portfolio to subservicing could reduce our
revenue and earnings. In addition, we may not be able to maintain
our pipeline of subservicing opportunities.
The Federal Housing Finance Agency (“FHFA”) could enact more
stringent requirements on the GSEs, or other federal or state
agencies may enact additional requirements that are more stringent
regarding the purchase or sale of MSRs. Additionally, if we do not
comply with our seller/servicer obligations, the investors may not
consent to approve future transfers of MSRs.
If we do not acquire MSRs or enter into additional subservicing
agreements on terms favorable to us, our business, financial
condition and results of operations could be adversely
affected.
Some of the loans we service are higher risk loans, which are more
expensive to service than conventional mortgage loans and may lead
to liquidity challenges.
Some of the mortgage loans we service are higher risk loans,
meaning that the loans are to less credit worthy borrowers,
delinquent or for properties the value of which has decreased.
These loans are more expensive to service because they require more
frequent interaction with customers and greater monitoring and
oversight. Additionally, in connection with the ongoing mortgage
market reform and regulatory developments, servicers of higher risk
loans are subject to increased scrutiny by state and federal
regulators and will experience higher compliance and regulatory
costs, which could result in a further increase in servicing costs.
We may not be able to pass along any of the additional expenses we
incur in servicing higher risk loans to our servicing clients. The
greater cost of servicing higher risk loans, which may be further
increased through regulatory reform, consent decrees or
enforcement, could adversely affect our business, financial
condition and results of operations. We have a portfolio of
higher-risk loans guaranteed by Ginnie Mae. In an adverse economic
scenario where defaults rise rapidly and unexpectedly, we may have
funding challenges since Ginnie Mae does not allow the separate
utilization of advances as a form of collateral, and we may not be
able to secure financing for advances on acceptable terms or at
all. If we are unable to obtain these financings, we may need to
raise the funds we require in the capital markets or through other
means, any of which may increase our cost of funds. Additionally,
Ginnie Mae issued new guidelines on early buyouts of reperforming
loans which could affect our liquidity.
17
Mr. Cooper Group Inc. - 2020 Annual Report on Form
10-K
We are required to make servicing advances that can be subject to
delays in recovery or may not be recoverable in certain
circumstances.
Forward Mortgage Servicing Rights:
During any period in which a borrower is not making payments, we
are required under most of our servicing agreements to advance our
own funds to meet contractual principal and interest remittance
requirements for investors, pay property taxes and insurance
premiums, legal expenses and other protective advances. We also
advance funds to maintain, repair and market real estate properties
on behalf of investors. As home values change, we may have to
reconsider certain of the assumptions underlying our decisions to
make advances, and in certain situations our contractual
obligations may require us to make certain advances for which we
may not be reimbursed. In addition, when a mortgage loan serviced
by us defaults or becomes delinquent, the repayment to us of the
advance may be delayed until the mortgage loan is repaid or
refinanced or liquidation occurs. Market disruptions such as the
COVID-19 pandemic and the response by the CARES Act and the GSEs,
through which a temporary period of forbearance is being offered
for customers unable to pay on certain mortgage loans as a result
of the COVID-19 pandemic may also increase the number of defaults,
delinquencies or forbearances related to the loans we service,
increasing the advances we make for such loans.
We have sold to a joint venture capitalized by certain entities
formed and managed by New Residential Investment Corp. (“New
Residential”) and certain third-party investors the rights to
mortgage servicing rights and servicer advances related to certain
loan pools. In connection with these transactions, New Residential
purchased the equity of wholly owned special purpose subsidiaries
of Mr. Cooper Group that issued limited recourse funding to finance
the advances. We continue to service these loans. In the event that
New Residential receives requests for advances in excess of amounts
that they or their co-investors are willing or able to fund, we are
obligated to fund these advance requests. Since we have transferred
the related advance facilities to New Residential, we may have to
obtain other sources of financing which may not be available. Our
inability to fund these advances could result in a termination
event under the applicable servicing agreement, an event of default
under the advance facilities and a breach of our purchase agreement
with New Residential. Our inability to fund these advance requests
could adversely affect our business, financial condition and
results of operations.
Reverse Mortgages:
As a reverse mortgage servicer, we are also responsible for funding
draws due to borrowers in a timely manner, remitting to investors
interest accrued and paying for interest shortfalls. Advances on
reverse mortgages are typically greater than advances on forward
residential mortgages. They are typically recovered upon weekly or
monthly reimbursement or from securitizations in the market. In the
event we receive requests for advances in excess of amounts we are
able to fund, we may not be able to fund these advance requests,
which could materially and adversely affect our business
operations. A delay in our ability to collect an advance may
adversely affect our liquidity, and our inability to be reimbursed
for an advance could adversely affect our business, financial
condition and results of operations.
Our counterparties may terminate our servicing rights and
subservicing contracts.
The owners of the loans we service and the primary servicers of the
loans we subservice may, under certain circumstances, terminate our
MSRs or subservicing contracts, respectively.
Agency Servicing:
We are party to seller/servicer agreements and/or subject to
guidelines and regulations (collectively, seller/servicer
obligations) with both of the GSEs, FHA and Ginnie Mae. As is
standard in the industry, under the terms of these seller/servicer
agreements, the agencies have the right to terminate us as servicer
of the loans we service on their behalf at any time and also have
the right to cause us to sell the MSRs to a third
party.
We are subject to minimum financial eligibility requirements
established by the Agencies. These minimum financial requirements,
include net worth, capital ratio and/or liquidity criteria in order
to set a minimum level of capital needed to adequately absorb
potential losses and a minimum amount of liquidly needed to service
Agency mortgage loans and MBS and cover the associated financial
obligations and risks. To meet these minimum financial
requirements, we are required to maintain cash and cash equivalents
in amounts that could impede us from growing our business and place
us at a competitive disadvantage in relation to federally chartered
banks and certain other financial institutions. These
seller/servicer obligations include financial covenants that
include capital requirements related to tangible net worth.
Additionally, effective September 1, 2019, Ginnie Mae amended its
MBS Guide to prescribe that issuers with secured debt to gross
tangible asset ratios greater than 60%, as described in the MBS
Guide, may, at Ginnie Mae’s sole discretion, be subject to
additional financial and operational requirements prior to
receiving approval for various transactions within the MBS program,
including, but not limited to, requests for commitment authority
and approval of Transfers of Issuer Responsibility. In addition,
issuers with a Ginnie Mae single-family servicing portfolio that
exceeds $75 billion in UPB will be required to obtain an external
primary servicer rating and issuer credit ratings from two
different rating agencies and receive a minimum rating of a B or
its equivalent. To the extent that these capital and liquidity
requirements are not met, the applicable agency may suspend or
terminate these agreements, which would prohibit us from further
servicing these specific types of mortgage loans or being an
approved servicer. If we are unable to meet these capital and
liquidity requirements, this could adversely affect our business,
financial condition and results of operations.
Mr. Cooper Group Inc. - 2020 Annual Report on Form 10-K
18
Subservicing:
Our subservicing portfolio is highly concentrated with a small
number of parties who may elect to transfer their subservicing
relationship to other counterparties or may go out of business. As
of December 31, 2020, 90% of our subservicing portfolio is with six
counterparties. Under our subservicing contracts, the primary
servicers for which we conduct subservicing activities have the
right to terminate our subservicing contracts with or without
cause, with limited notice and with no termination fee upon a
change of control. Entering into additional subservicing contracts
will expose us to similar risks with new
counterparties.
If our servicing rights or subservicing contracts are terminated on
a material portion of our servicing portfolio, this could adversely
affect our business, financial condition and results of
operations.
We service reverse mortgages, which subjects us to additional risks
and could have a material adverse effect on our business,
liquidity, financial condition and results of
operations.
The reverse mortgage business is subject to substantial risks,
including market, interest rate, liquidity, operational,
reputational and legal risks. Loan defaults on reverse mortgages
leading to foreclosures may occur if borrowers fail to maintain
their property, fail to pay taxes or home insurance premiums, die
or fail to occupy their property for 12 consecutive months. Higher
than anticipated foreclosures could result in increased losses
primarily related to operational deficiencies and transactional
costs incurred as a result of REO sale. We use financial models
that rely heavily on estimates to forecast loss exposure related to
certain reverse mortgage assets and liabilities. These models are
complex and use asset specific collateral data and market inputs
for mortality, interest rates and prepayments. In addition, the
models use investor and state required timelines for certain
default related activities. Even if the general accuracy of our
loss models is validated, loss estimates are highly dependent upon
the reasonableness of our assumptions and the predictability of the
relationships that drive the results of the models. If these
assumptions or relationships prove to be inaccurate or if market
conditions change, the actual loss experience could be higher than
modeled. Additionally, we could become subject to negative
reputational risk in the event that loan defaults on reverse
mortgages lead to foreclosures or evictions of elderly
homeowners.
We could have a downgrade in our servicer ratings.
Standard & Poor’s and Fitch rate us as a residential loan
servicer. Favorable ratings from these agencies are important to
the conduct of our loan servicing business. Downgrades in servicer
ratings could:
•adversely
affect our ability to finance servicing advances and maintain our
status as an approved servicer by Fannie Mae, Freddie Mac, Ginnie
Mae, and other investors;
•lead
to the early termination of existing advance facilities and affect
the terms and availability of advance facilities that we may seek
in the future;
•cause
our termination as servicer in our servicing agreements that
require that we maintain specified servicer ratings;
and
•further
impair our ability to consummate future servicing
transactions.
Any of the above could adversely affect our business, financial
condition and results of operations.
Originations
We may not be able to maintain the volumes in our loan originations
business, which would adversely affect our ability to replenish our
servicing business.
The volume of loans funded within our loan originations business is
subject to multiple factors, including changes in interest rates
and availability of government programs. Volume in our originations
business is based in large part on the refinancing of existing
mortgage loans that we service, which is highly dependent on
interest rates and other macroeconomic factors. Our loan
origination volume may decline if interest rates increase, if
government programs terminate and are not replaced with similar
programs or if we cannot replace this volume with other loan
origination channels such as Correspondent, new customer
acquisitions or purchase money loans. Additionally, if the COVID-19
pandemic leads to a prolonged economic downturn with sustained high
unemployment rates, real estate transaction volume could decrease.
Any such slowdown may materially decrease the number and volume of
mortgages we originate. If we are unable to maintain our loan
originations volume, our business, financial condition and results
of operations could be adversely affected.
19
Mr. Cooper Group Inc. - 2020 Annual Report on Form
10-K
We may be required to indemnify or repurchase loans we sold, or
will sell, if these loans fail to meet certain criteria or
characteristics or under other circumstances.
The indentures governing our securitized pools of loans and our
contracts with purchasers of our whole loans contain provisions
that require us to indemnify or repurchase the related loans under
certain circumstances. While our contracts vary, they contain
provisions that require us to repurchase loans if:
•our
representations and warranties concerning loan quality and loan
circumstances are inaccurate, including representations concerning
the licensing of a mortgage broker;
•we
fail to secure adequate mortgage insurance within a certain period
after closing;
•a
mortgage insurance provider denies coverage;
•we
fail to comply, at the individual loan level or otherwise, with
regulatory requirements in the current dynamic regulatory
environment; or
•the
borrower fails to make certain initial loan payments due to the
purchaser.
We are subject to repurchase claims and may continue to receive
claims in the future. If we are required to indemnify or repurchase
loans that we originate or have previously originated and sell or
securitize that result in losses that exceed our reserve, this
could adversely affect our business, financial condition and
results of operations.
We are highly dependent upon loan programs administered by Fannie
Mae, Freddie Mac, the Federal Housing Administration, the
Department of Veterans Affairs, the US Department of Agriculture
and Ginnie Mae (collectively, the “Agencies”) to generate revenues
through mortgage loan sales to institutional
investors.
There are various proposals which deal with GSE reform, including
winding down the GSEs and reducing or eliminating over time the
role of the GSEs in guaranteeing mortgages and providing funding
for mortgage loans, as well as proposals to implement reforms
relating to borrowers, lenders and investors in the mortgage
market, including reducing the maximum size of loans that the GSEs
can guarantee, phasing in a minimum down payment requirement for
borrowers, improving underwriting standards and increasing
accountability and transparency in the securitization process. In
September 2019, the Trump Administration’s Treasury Department
released its report on mortgage finance reform that commits to move
the GSEs out of conservatorship and shrink their role and that of
any possible additional chartered guarantors in the overall housing
finance market. The Biden Administration is expected to reverse the
Trump Administration’s plans to end the conservatorship of the
GSEs. Thus, the long-term future of the GSEs is still
uncertain.
Our ability to generate revenues through mortgage loan sales to
institutional investors depends to a significant degree on programs
administered by the Agencies that facilitate the issuance of
mortgage-backed securities in the secondary market. These Agencies
play a critical role in the residential mortgage industry, and we
have significant business relationships with many of them. Almost
all of the conforming loans we originate qualify under existing
standards for inclusion in guaranteed mortgage securities backed by
one of these Agencies. We also derive other material financial
benefits from these relationships, including the assumption of
credit risk on loans included in such mortgage securities in
exchange for our payment of guarantee fees and the ability to avoid
certain loan inventory finance costs through streamlined loan
funding and sale procedures. If it is not possible for us to
complete the sale or securitization of certain of our mortgage
loans due to changes in Agency programs, we may lack liquidity
under our mortgage financing facilities to continue to fund
mortgage loans, and our revenues and margins on new loan
originations would be materially and negatively
impacted.
Any discontinuation of, or significant reduction in, the operation
of these Agencies or any significant adverse change in the level of
activity in the secondary mortgage market or the underwriting
criteria of these Agencies could materially and adversely affect
our business, liquidity, financial position and results of
operations.
Mr. Cooper Group Inc. - 2020 Annual Report on Form 10-K
20
Xome
Xome participates in highly competitive markets and pressure from
existing and new companies could adversely affect Xome’s
businesses.
The markets for Xome’s services are very competitive, and Xome’s
success depends on its ability to continue to attract additional
customers, consumers and real estate professionals to its offerings
including exchange, title, and solutions. Any of Xome’s future or
existing competitors may introduce different products that provide
services similar to our own but with either better user interfaces,
branding and marketing resources, or at a lower price. In addition,
the time and expense associated with switching from Xome’s
competitors’ services and technologies to ours, and the reluctance
of loan servicers or originators to add new vendors in light of
declining revenues or economics in their sectors may limit Xome’s
growth. If we are unable to continue to innovate and grow our
market share or the number of end-users of Xome’s offerings, we may
not remain competitive or may face downward pricing pressures, and
our business and financial performance could suffer. Furthermore,
in the Business to Business area, Xome may not be able to attract
and retain clients who view themselves as Mr. Cooper’s competitors
due to perceived conflict of interest concerns.
Xome may be accused of infringing intellectual property rights of
third parties.
Third parties may assert claims against Xome, asserting that Xome’s
content, website processes or software applications infringe their
intellectual property rights. For example, Xome settled a
proceeding where the plaintiff alleged that Xome misappropriated
plaintiff’s intellectual property for the purpose of replicating
plaintiff’s products. If any infringement claim is successful, Xome
may be required to pay substantial damages, obtain a license from
the third party or be prohibited from using content that
incorporates the challenged intellectual property, which could
materially and adversely affect our business, liquidity, financial
position and results of operations.
Xome is subject to extensive government regulation at the federal,
state and local levels, and any failure to comply with existing or
new regulations may adversely impact us, our clients and our
results of operations.
Xome is subject to licensing and regulation as a real estate
broker, auctioneer, appraisal management Company, title agent
and/or insurance agent in a number of states and may be subject to
new licensing and regulation as it expands service offerings. Xome
is subject to audits and examinations that are conducted by federal
and state regulatory authorities and, as a vendor, is also subject
to similar audit requirements imposed on its clients, including us.
Our employees and subsidiaries may be required to be licensed by
various state licensing authorities for the particular type of
service provided and to participate in regular background checks,
fingerprinting requirements and continuing education programs. We
may incur significant ongoing costs to comply with governmental
regulations, and new laws and regulations may be adopted that
prohibit us from engaging Xome as a vendor, which could adversely
affect our business, financial condition and results of
operations.
Xome’s revenue from clients in the mortgage and real estate
industries is affected by the strength of the economy and the
housing market generally, including the volume of real estate
transactions.
Real estate markets are subject to fluctuations, due to factors
such as the relative relationship of supply to demand, the
availability of alternative investment products, the unemployment
rate, real wage increases, inflation and the general economic
environment. An economic slowdown or recession, in addition to
other non-economic factors such as an excess supply in properties,
a change in consumer preferences towards rental properties or
declining consumer confidence in the economy, could have a material
adverse effect on values of residential real estate properties. The
volume of mortgage origination, mortgage refinancing and
residential real estate transactions is highly variable. The level
of real estate transactions is primarily affected by the average
price of real estate sales, the availability of funds to finance
purchases, mortgage interest rates, consumer confidence in the
economy and general economic factors affecting the real estate
markets. Reductions in these transaction volumes could have a
material adverse effect on Xome’s business, financial condition and
results of operations. The COVID-19 pandemic has impacted and
continues to impact Xome’s Exchange division which consists of the
Xome.com auction platform that provides the efficient execution for
sales of foreclosed properties. States, agencies and regulators
have issued forbearance programs and placed a moratorium on
foreclosures and evictions. If these measures stay in place for an
extended period of time, Xome’s revenues may continue to be
adversely affected.
21
Mr. Cooper Group Inc. - 2020 Annual Report on Form
10-K
We could have, appear to have or be alleged to have conflicts of
interest with Xome.
Xome provides services to us which could create, appear to create
or be alleged to create conflicts of interest. By obtaining
services from a subsidiary, there is risk of possible claims of
collusion or claims that such services are not provided by Xome
upon market terms. We have adopted policies, procedures and
practices that are designed to identify and address conflicts of
interest. In addition, we undertake practices to identify and deal
with potential conflicts. Further, we have engaged an independent
third party to conduct a pricing study in an attempt to ensure that
the fees charged are customary and reasonable. However, there can
be no assurance that such measures will be effective in eliminating
all conflicts of interest or that third parties will refrain from
making such allegations. Appropriately identifying and dealing with
conflicts of interest is complex and difficult, and our reputation,
which is one of our most important assets, could be damaged and the
willingness of counterparties to enter into transactions with us
may be affected if we fail, or appear to fail, to identify,
disclose and deal appropriately with conflicts of interest. In
addition, potential or perceived conflicts could give rise to
litigation or regulatory enforcement actions.
General Business & Operational Risks
We may not be successful in implementing certain strategic
initiatives.
Certain strategic initiatives, which are designed to improve our
results of operations and drive long-term stockholder value,
include:
•Strengthen
our balance sheet by building capital and liquidity, and managing
interest rate and other forms of risk;
•Improve
efficiency by driving continuous improvement in unit costs for
Servicing and Originations, as well as by taking corporate actions
to eliminate costs throughout the organization;
•Grow
our servicing portfolio and customer by acquiring new customers and
retaining existing customers;
•Reinvent
the customer experience by acting as the customer’s advocate and by
harnessing technology to deliver user-friendly digital
solutions;
•Sustain
the talent of our people and the culture of our organization;
and
•Maintain
strong relationships with agencies, investors, regulators, and
other counterparties and a strong reputation for compliance and
customer service.
There is no assurance that we will be able to successfully
implement these strategic initiatives, that we will be able to
realize all of the projected benefits of our plans or that we will
be able to compete successfully in new markets and our efforts may
be more expensive and time consuming than we expect, which could
adversely affect our business, financial condition and results of
operations.
Mr. Cooper Group Inc. - 2020 Annual Report on Form 10-K
22
Technology failures or cyber-attacks against us or our vendors
could damage our business operations, and new laws and regulations
could increase our costs.
The financial services industry as a whole is characterized by
rapidly changing technologies, and system disruptions and failures
caused by fire, power loss, telecommunications failures, system
misuse, unauthorized intrusion (cyber-attack), computer viruses and
disabling devices, natural disasters, health pandemics and other
similar events may interrupt or delay our ability to provide
services to our borrowers. As a part of conducting business, we
receive, transmit and store a large volume of personally
identifiable information and other user data. Additionally, Xome is
highly dependent on information technology networks and systems to
securely process, transmit and store sensitive electronic
information. Cybersecurity risks for the financial services
industry have increased significantly in recent years due to new
technologies, the reliance on technology to conduct financial
transactions and the increased sophistication of organized crime
and hackers. Those parties also may attempt to misrepresent
personal or financial information to obtain loans or other
financial products from us or attempt to fraudulently induce
employees, customers, or other users of our systems to disclose
confidential information in order to gain access to our data or
that of our customers. We and others in our industry are regularly
the subject of attempts by attackers to gain unauthorized access to
our networks, systems, and data, or to obtain, change, or destroy
confidential data (including personal identifying information of
individuals) through a variety of means, including computer
viruses, malware, phishing and other attack vectors. These attacks
may result in unauthorized individuals obtaining access to our
confidential information or that of our customers, or otherwise
accessing, damaging, or disrupting our systems or infrastructure.
In addition, to access our products and services, including our
Home Intelligence app, our customers may use personal smartphones,
tablet PCs, and other mobile devices that are beyond our control
systems. Third parties with which we do business or that facilitate
our business activities or vendors that provide services or
security solutions for our operations could also be sources of
operational risk and information security risk to us, including
from cyber-attacks, information breaches or loss, breakdowns,
disruptions or failures of their own systems or infrastructure, or
any deficiencies in the performance of their responsibilities.
Security breaches, acts of vandalism and developments in computer
intrusion capabilities could cause our financial, accounting, data
processing or other operating systems and facilities to fail to
operate properly or become disabled and could result in a
compromise or breach of the technology that we or our vendors use
to protect our borrowers’ personal information and transaction
data.
Despite our efforts to ensure the integrity of our systems, it is
possible that we may not be able to anticipate or implement
effective preventive measures against all internal and external
security breaches, especially because the techniques used change
frequently, are becoming more sophisticated and are not recognized
until launched, and because security attacks can originate from a
wide variety of sources. This is especially applicable in the
current response to the COVID-19 pandemic and the shift to having
most of our team members work from their homes for the time being,
as our team members access our secure networks through their home
networks. These risks may increase in the future as we continue to
increase our reliance on telecommunication technologies (including
mobile devices), the internet and use of web-based product
offerings.
While we have implemented policies and procedures designed to help
mitigate cybersecurity risks and cyber intrusions, there can be no
assurance that any such cyber intrusions, whether external or
internal, will not occur or, if they do occur, that they will be
adequately addressed. A successful penetration or circumvention of
the security of our or our vendors’ systems or a defect in the
integrity of our or our vendors’ systems or cybersecurity could
cause serious negative consequences for our business, including
significant disruption of our operations, misappropriation of our
confidential information or that of our customers, or damage to our
computers or operating systems and to those of our customers and
counterparties. Any of the foregoing events could result in
violations of applicable privacy and other laws, financial loss to
us or to our customers, loss of confidence in our security
measures, customer dissatisfaction, significant litigation exposure
and harm to our reputation, all of which could adversely affect our
business, financial condition and results of operations. This risk
is enhanced in certain jurisdictions with stringent data privacy
laws. For example, the California Consumer Privacy Act of 2018
which went into effect in January 2020, as amended by the
California Privacy Rights Act, which goes into effect in January
2023 (collectively, the “Privacy Acts”), provide data privacy
rights for consumers and operational requirements for us. The
Privacy Acts include a statutory damages framework and private
rights of action against businesses that fail to comply with
certain Privacy Acts terms or implement reasonable security
procedures and practices to prevent data breaches. Several other
states have enacted or are considering similar legislation.
Additionally, while we have obtained insurance to cover us against
certain cybersecurity risks and information theft, there can be no
guarantee that all losses will be covered or that the insurance
limits will be sufficient to cover such losses.
In addition, increasing attention is being paid by the media,
regulators and legislators to matters relating to cybersecurity,
and regulators and legislators may enact laws or regulations
regarding cybersecurity. For example, the New York Department of
Financial Services has adopted regulations that are far-ranging in
scope, including not only specific technical safeguards but also
requirements regarding governance, incident planning, data
management and system testing. New laws and regulations could
result in significant compliance costs, which may adversely affect
our cash flows and net income.
23
Mr. Cooper Group Inc. - 2020 Annual Report on Form
10-K
Our capital investments in technology may not achieve anticipated
returns.
Our business is becoming increasingly reliant on technology
investments, and the returns on these investments are less
predictable. We are currently making, and will continue to make,
significant technology investments to support our service offering,
implement improvements to our customer-facing technology and evolve
our information processes, and computer systems to more efficiently
run our business and remain competitive and relevant to our
customers. These technology initiatives might not provide the
anticipated benefits or may provide them on a delayed schedule or
at a higher cost. We must monitor and choose the right investments
and implement them at the right pace. Failing to make the best
investments or making an investment commitment significantly above
or below our needs, could result in the loss of our competitive
position and adversely impact our financial condition and results
of operations.
We and our vendors have operations in India that could be adversely
affected by changes in political or economic stability or by
government policies.
We currently have operations located in India, which is subject to
relatively higher degrees of political and social instability and
may lack the infrastructure to withstand political unrest or
natural disasters. The political or regulatory climate in the
United States, or elsewhere, also could change so that it would not
be lawful or practical for us to use international operations in
the manner in which we currently use them. If we or our vendors had
to curtail or cease operations in these countries and transfer some
or all of these operations to another geographic area, we would
incur significant transition costs as well as higher future
overhead costs that could materially and adversely affect our
results of operations. In many foreign countries, particularly in
those with developing economies, it may be common to engage in
business practices that are prohibited by laws and regulations
applicable to us, such as The Foreign Corrupt Practices Act of
1977, as amended (“FCPA”). Any violations of the FCPA or local
anti-corruption laws by us, our subsidiaries or our local agents
could have an adverse effect on our business and reputation and
result in substantial financial penalties or other
sanctions.
Our vendor relationships subject us to a variety of
risks.
We have significant vendors that, among other things, provide us
with financial, technology and other services to support our
businesses. With respect to vendors engaged to perform activities
required by the applicable servicing criteria, we assess compliance
with the applicable servicing criteria for the applicable vendor
(or in certain cases require vendors to provide their own
assessments and attestations) and are required to have procedures
in place to provide reasonable assurance that the vendor’s
activities comply in all material respects with servicing criteria
applicable to the vendor. In the event that a vendor’s activities
do not comply with the servicing criteria, it could negatively
impact our servicing agreements. In addition, if our current
vendors were to stop providing services to us on acceptable terms,
including as a result of one or more vendor bankruptcies, we may be
unable to procure alternatives from other vendors in a timely and
efficient manner and on acceptable terms, or at all. Further, we
may incur significant costs to resolve any such disruptions in
service and this could adversely affect our business, financial
condition and results of operations.
Our risk management policies and procedures may not be
effective.
Our risk management framework seeks to mitigate risk and
appropriately balance risk and return. We have established policies
and procedures intended to identify, monitor and manage the types
of risk to which we are subject, including credit risk, market and
interest rate risk, liquidity risk, cyber risk, regulatory, legal
and reputational risk. Although we have devoted significant
resources to develop our risk management policies and procedures
and expect to continue to do so in the future, these policies and
procedures, as well as our risk management techniques such as our
hedging strategies, may not be fully effective. There may also be
risks that exist, or that develop in the future, that we have not
appropriately anticipated, identified or mitigated. As regulations
and markets in which we operate continue to evolve, our risk
management framework may not always keep sufficient pace with those
changes. If our risk management framework does not effectively
identify or mitigate our risks, we could suffer unexpected losses
and could be materially adversely affected.
Our business could suffer if we fail to attract, or retain, highly
skilled employees and changes in our executive management team may
be disruptive to our business.
Our future success will depend on our ability to identify, hire,
develop, motivate and retain highly qualified personnel for all
areas of our organization. Trained and experienced personnel in the
mortgage industry are in high demand and may be in short supply.
Many of the companies with which we compete for experienced
employees are large banks who have greater resources than we have
and may be able to offer more attractive terms of employment. In
addition, we invest significant time and expense in training our
employees, which increases their value to competitors who may seek
to recruit them. We may not be able to attract, develop and
maintain an adequate skilled workforce necessary to operate our
businesses and labor expenses may increase as a result of a
shortage in the supply of qualified personnel. If we are unable to
attract and retain such personnel, we may not be able to take
advantage of acquisitions and other growth opportunities that may
be presented to us and this could materially affect our business,
financial condition and results of operations.
Mr. Cooper Group Inc. - 2020 Annual Report on Form 10-K
24
Additionally, the experience of our executive management team is a
valuable asset to us. Our executive management team has significant
experience in the residential loan originations and servicing
industry and would be difficult to replace. Disruptions in
management continuity could result in operational or administrative
inefficiencies and added costs, which could adversely impact our
results of operations and stock price, and may make recruiting for
future management positions more difficult or costly.
Negative public opinion could damage our reputation and adversely
affect our business.
Reputational risk, or the risk to our business, earnings and
capital from negative public opinion, is inherent in our business.
Negative public opinion can result from our actual or alleged
conduct in any number of activities, including lending and debt
collection practices, foreclosures or evictions of elderly
homeowners who default on reverse mortgages, technology failures,
corporate governance, and actions taken by government regulators
and community organizations in response to those activities.
Negative public opinion can also result from media coverage,
whether accurate or not. Additionally, the proliferation of social
media websites as well as the personal use of social media by our
employees and others, including personal blogs and social network
profiles, also may increase the risk that negative, inappropriate
or unauthorized information may be posted or released publicly that
could harm our reputation or have other negative consequences,
including as a result of our employees interacting with our
customers in an unauthorized manner in various social media
outlets. Negative public opinion can adversely affect our ability
to attract and retain customers, trading counterparties and
employees and can expose us to litigation and regulatory
action.
Lapses in disclosure controls and procedures or internal control
over financial reporting could materially and adversely affect our
operations, profitability or reputation.
Our disclosure controls and procedures may not be effective in
every circumstance. Similarly, we may experience a material
weakness or significant deficiency in internal control over
financial reporting. Any lapses or deficiencies may materially and
adversely affect our business and results of operations or
financial condition, restrict our ability to access the capital
markets, require us to spend significant resources to correct the
lapses or deficiencies, expose us to regulatory or legal
proceedings, subject us to fines, penalties or judgments, harm our
reputation, or otherwise cause a decline in investor
confidence.
Our business is subject to the risks of earthquakes, hurricanes,
fires, floods, health pandemics and other natural catastrophic
events.
Earthquakes, hurricanes, fires, floods, health pandemics and
similar events could have a material adverse effect on the macro
economy and affect our loan servicing costs, increase our
recoverable and our non-recoverable servicing advances, increase
servicing defaults and negatively affect the value of our
MSRs.
Regulatory and Legal Risks
We operate within a highly regulated industry on federal, state and
local levels and our business results are significantly impacted by
the laws and regulations to which we are subject, as well as
scrutiny from governmental or regulatory agencies.
As a national mortgage services firm, we are subject to extensive,
complex and comprehensive regulation under federal, state and local
laws in the United States, as well as governmental scrutiny from
regulators and law enforcement agencies. These laws, regulations
and governmental inquiries can significantly affect the way that we
do business, can restrict the scope of our existing businesses,
limit our ability to expand our product offerings or to pursue
acquisitions, or can make our costs to service or originate loans
higher, which could impact our financial results.
Federal, state and local governments have recently proposed or
enacted numerous laws, regulations and rules related to mortgage
loans. Due to the highly regulated nature of the residential
mortgage industry, we are required to comply with a wide array of
federal, state and local laws and regulations that regulate, among
other things, the manner in which we conduct our servicing,
originations and ancillary business and the fees we may charge.
These regulations directly impact our business and require constant
compliance, which includes enhancing our compliance program,
procedures and controls, monitoring and internal and external
audits. A failure in maintaining an effective compliance program or
a material failure to comply with any of these laws or regulations
could subject us to lawsuits or governmental actions, which could
materially adversely affect our business, financial condition and
results of operations. In addition, there continue to be changes in
legislation and licensing, which require technology changes and
additional implementation costs for loan originators. We expect
legislative changes will continue in the foreseeable future, which
may increase our operating expenses. Furthermore, there continue to
be changes in state laws that are adverse to mortgage servicers
that increase costs and operational complexity of our business and
impose significant penalties for violation. Any of these changes in
law could adversely affect our business, financial condition and
results of operations.
25
Mr. Cooper Group Inc. - 2020 Annual Report on Form
10-K
Regulatory requirements or changes to existing requirements that
the CFPB or other federal or state agencies, including HUD and the
FCC, may promulgate could require changes in our business, result
in increased compliance and operational costs and impair the
profitability of such business. For example, Regulation C of the
Home Mortgage Disclosure Act (“HMDA”) requires us to collect and
report certain mortgage data for every loan application. These
requirements for gathering and submitting large amounts of data
regarding loan applications to regulators and the public is
complex. Thus, any inadvertent errors in our gathering or reporting
the data could result in fines or penalties being levied by the
CFPB or other regulators against us. In addition, the authority of
state attorneys general to bring actions to enforce federal
consumer protection legislation, as a result of the Dodd-Frank Wall
Street Reform and Consumer Protection Act of 2010 (“Dodd-Frank
Act”), could be expanded and we could be subject to additional
state lawsuits and enforcement actions, thereby further increasing
our legal and compliance costs. The cumulative effect of these
changes could result in a material impact on our earnings. The
implementation of the originations and servicing rules by the CFPB
and the CFPB’s continuing examinations of our business, including
Xome, could increase our regulatory compliance burden and
associated costs and place restrictions on our operations, which
could in turn adversely affect our business, financial condition
and results of operations.
We could be subject to additional regulatory requirements or
changes under the Dodd-Frank Act beyond those currently proposed,
adopted or contemplated. There also continues to be discussion of
potential GSE reform which would likely affect markets for
mortgages and mortgage securities in ways that cannot be predicted.
In addition, FHFA initiatives may be implemented by the GSEs that
could materially affect the market for conventional and/or
government insured loans.
Individual states have also been active, as have other regulatory
organizations such as the Multi-State Mortgage Committee, as well
as various state Attorneys General. We also believe there has been
a shift among certain regulators towards a broader view of the
scope of regulatory oversight responsibilities with respect to
mortgage originators and servicers. In addition to their
traditional focus on consumer protection laws, licensing and
examination matters, certain regulators have begun to make
observations, recommendations or demands with respect to such areas
as corporate governance, safety and soundness, and risk and
compliance management.
Certain regulators took steps to block the acquisition of MSRs by
one of our competitors. It is possible that we could become subject
to similar actions with respect to our acquisition of MSRs or other
key business operations such as entering into subservicing
contracts, which could adversely affect our business, financial
condition and results of operations.
The recent influx of new laws, regulations, and other directives
adopted in response to the recent COVID-19 pandemic exemplifies the
ever-changing and increasingly complex regulatory landscape we
operate in. While some regulatory reactions to COVID-19 relaxed
certain compliance obligations, the forbearance requirements
imposed on mortgages servicers in the CARES Act added new
regulatory responsibilities. The GSEs and the FHFA, Ginnie Mae,
HUD, various investors and others have also issued guidance
relating to COVID-19. We have received inquiries from various
federal and state lawmakers, attorneys general and regulators
seeking information on our COVID-19 response and its impact on our
business, team members, and clients. Future regulatory scrutiny and
enforcement resulting from COVID-19 is unknown.
We are subject to numerous legal proceedings, federal, state or
local governmental examinations and enforcement investigations.
Some of these matters are highly complex and slow to develop, and
results are difficult to predict or estimate.
Legal Proceedings:
We are routinely and currently involved in a significant number of
legal proceedings concerning matters that arise in the ordinary
course of our business. There is no assurance that the number of
legal proceedings will not increase in the future, including
certified class or mass actions. These legal proceedings range from
actions involving a single plaintiff to putative class action
lawsuits with potentially tens of thousands of class members. These
actions and proceedings are generally based on alleged violations
of consumer protection, securities, employment, contract, tort,
common law fraud and numerous other laws, including, but not
limited to, the Equal Credit Opportunity Act, Fair Debt Collection
Practices Act, Fair Credit Reporting Act, Real Estate Settlement
Procedures Act, National Housing Act, Homeowners Protection Act,
Servicemember’s Civil Relief Act, Telephone Consumer Protection
Act, Truth in Lending Act, Financial Institutions Reform, Recovery,
and Enforcement Act of 1989, unfair, deceptive or abusive acts or
practices in violation of the Dodd-Frank Act, the Securities Act of
1933, the Securities Exchange Act of 1934, the Home Mortgage
Disclosure Act, the Bankruptcy Code, False Claims Act and Making
Home Affordable loan modification programs (while MHA programs have
ended, claims may continue to arise). Additionally, along with
others in our industry, we are subject to repurchase and
indemnification claims and may continue to receive claims in the
future, regarding alleged breaches of representations and
warranties relating to the sale of mortgage loans, the placement of
mortgage loans into securitization trusts or the servicing of
mortgage loans securitizations. We are also subject to legal
actions or proceedings related to loss sharing and indemnification
provisions of our various acquisitions. Certain of the pending or
threatened legal proceedings include claims for substantial
compensatory, punitive and/or, statutory damages or claims for an
indeterminate amount of damages.
Mr. Cooper Group Inc. - 2020 Annual Report on Form 10-K
26
Litigation and other proceedings may require that we pay settlement
costs, legal fees, damages, including punitive damages, penalties
or other charges, or be subject to injunctive relief affecting our
business practices, any or all of which could adversely affect our
financial results. In particular, ongoing and other legal
proceedings brought under federal or state consumer protection
statutes may result in a separate fine for each violation of the
statute, which, particularly in the case of class action lawsuits,
could result in damages substantially in excess of the amounts we
earned from the underlying activities and that could have a
material adverse effect on our liquidity, financial position and
results of operations. The costs of responding to the
investigations can be substantial.
Regulatory Matters:
We operate within highly regulated industries on a federal, state
and local level. In the normal and ordinary course of our business,
we are routinely subject to extensive examinations, investigations,
subpoenas, inquiries and reviews by various federal, state and
local governmental, regulatory and enforcement agencies, including
CFPB, the Securities and Exchange Commission, the Department of
Justice, the Office of the Special Inspector General for the
Troubled Asset Relief Program, the U.S. Department of Housing and
Urban Development, various State mortgage banking regulators and
various State Attorneys General, related to our residential loan
servicing and origination practices, our financial reporting and
other aspects of our businesses. For example, we recently reached a
resolution of certain legacy regulatory matters with the CFPB, the
multi-state committee of mortgage banking regulators and various
State Attorneys General, and the Executive Office of the United
States Trustee, all of which involved findings from examinations
and discussions that were completed in 2014 and 2015, and related
to certain loan servicing practices which occurred during 2010
through 2015. Several large mortgage originators or servicers have
been subject to similar matters, which have resulted in the payment
of fines and penalties, changes to business practices and the entry
of consent decrees or settlements. The trend of large settlements
with governmental entities may adversely affect the outcomes for
other financial institutions, including us. We continue to manage
our response to each matter, but it is not possible for us to
confidently or reliably predict the outcome of any of them,
including predicting any possible losses resulting from any
judgments or fines, which can lead to substantial disparities
between legal reserves and subsequent settlements or
penalties.
Responding to these matters requires us to devote substantial legal
and regulatory resources, resulting in higher costs and lower net
cash flows. Adverse results in any of these matters could further
increase our operating expenses and reduce our revenues, require us
to change business practices, limit our ability to grow and
otherwise materially and adversely affect our business, reputation,
financial condition and results of operation. To the extent that an
examination or other regulatory engagement reveals a failure by us
to comply with applicable law, regulation or licensing requirement
this could lead to (i) loss of our licenses and approvals to engage
in our businesses, (ii) damage to our reputation in the industry
and loss of client relationships, (iii) governmental investigations
and enforcement actions, (iv) administrative fines and penalties
and litigation, (v) civil and criminal liability, including class
action lawsuits, and actions to recover incentive and other
payments made by governmental entities, (vi) enhanced compliance
requirements, (vii) breaches of covenants and representations under
our servicing, debt or other agreements, (viii) inability to raise
capital and (ix) inability to execute on our business strategy. Any
of these occurrences could further increase our operating expenses
and reduce our revenues, require us to change business practices
and procedures and limit our ability to grow or otherwise
materially and adversely affect our business, reputation, financial
condition and results of operation.
Moreover, regulatory changes resulting from the Dodd-Frank Act,
other regulatory changes such as the CFPB having its own
examination and enforcement authority and the “whistleblower”
provisions of the Dodd-Frank Act and guidance on whistleblowing
programs issued by the NYDFS could further increase the number of
legal and regulatory enforcement proceedings against us. In
addition, while we take numerous steps to prevent and detect
employee misconduct, such as fraud, employee misconduct cannot
always be deterred or prevented and could subject us to additional
liability.
We establish reserves for pending or threatened legal proceedings
when it is probable that a liability has been incurred and the
amount of such loss can be reasonably estimated. Legal proceedings
are inherently uncertain, and our estimates of loss are based on
judgments and information available at that time. Our estimates may
change from time to time for various reasons, including factual or
legal developments in these matters. There cannot be any assurance
that the ultimate resolution of our litigation and regulatory
matters will not involve losses, which may be material, in excess
of our recorded accruals or estimates of reasonably probable
losses.
27
Mr. Cooper Group Inc. - 2020 Annual Report on Form
10-K
Unlike competitors that are national banks, we are subject to state
licensing and operational requirements that result in substantial
compliance costs.
Because we are not a depository institution, we do not benefit from
a federal exemption to state mortgage banking, loan servicing or
debt collection licensing and regulatory requirements. We must
comply with state licensing requirements and varying compliance
requirements in all 50 states and the District of Columbia, and we
are sensitive to regulatory changes that may increase our costs
through stricter licensing laws, disclosure laws or increased fees
or that may impose conditions to licensing that we or our personnel
are unable to meet. In addition, we are subject to periodic
examinations by state regulators, which can result in refunds to
borrowers of certain fees earned by us, and we may be required to
pay substantial penalties imposed by state regulators due to
compliance errors. Future state legislation and changes in existing
regulation may significantly increase our compliance costs or
reduce the amount of ancillary revenues, including late fees that
we may charge to borrowers. This could make our business
cost-prohibitive in the affected state or states and could
materially affect our business.
Our business would be adversely affected if we lose our
licenses.
Our operations are subject to regulation, supervision and licensing
under numerous federal, state and local statutes, ordinances and
regulations. In most states in which we operate, a regulatory
agency regulates and enforces laws relating to mortgage servicing
companies and mortgage originations companies such as us as well as
regulating our ancillary service providers. These rules and
regulations generally provide for licensing as a mortgage servicing
Company, mortgage originations Company or third-party debt default
specialist, title insurance agency, appraisal management Company,
licensed auctioneer, and other similar types of requirements as to
the form and content of contracts and other documentation,
licensing of our employees and employee hiring background checks,
licensing of independent contractors with which we contract,
restrictions on certain practices, disclosure and record-keeping
requirements and enforcement of borrowers’ rights. We are subject
to periodic examination by state regulatory
authorities.
We believe that we maintain all material licenses and permits
required for our current operations and are in substantial
compliance with all applicable federal, state and local laws,
rules, regulations and ordinances. We may not be able to maintain
all requisite licenses and permits, and the failure to satisfy
those and other regulatory requirements could result in a default
under our servicing or other agreements and have a material adverse
effect on our operations. The states that currently do not provide
extensive regulation of our businesses may later choose to do so,
and if such states so act, we may not be able to obtain or maintain
all requisite licenses and permits. The failure to satisfy those
and other regulatory requirements could result in a default under
our servicing agreements and have a material adverse effect on our
operations. Furthermore, the adoption of additional, or the
revision of existing, rules and regulations could adversely affect
our business, financial condition and results of
operations.
We may incur increased litigation costs and related losses if a
court overturns a foreclosure or if a loan we are servicing becomes
subordinate to a Home Owners Association lien.
We may incur costs if we are required to, or if we elect to,
execute or re-file documents or take other action in our capacity
as a servicer in connection with pending or completed foreclosures.
In addition, if a court rules that the lien of a Home Owners
Association takes priority over the lien we service, we may incur
legal liabilities and costs to defend such actions. If a court
dismisses or overturns a foreclosure because of errors or
deficiencies in the foreclosure process, we may have liability to
the loan owner, a borrower, title insurer or the purchaser of the
property sold in foreclosure. These costs and liabilities may not
be legally or otherwise reimbursable to us, particularly to the
extent they relate to securitized mortgage loans. A significant
increase in litigation costs could adversely affect our liquidity,
and our inability to be reimbursed for an advance could adversely
affect our business, financial condition and results of
operations.
Residential mortgage foreclosure proceedings in certain states have
been delayed due to lack of judicial resources and legislation and
as a result of the COVID-19 pandemic, all of which could have a
negative effect on our ability to liquidate loans timely and slow
the recovery of advances and thus impact our earnings or
liquidity.
In some states, such as New York, our industry has faced, and may
continue to face, increased delays and costs caused by state law
and local court rules and processes. In addition, California and
Nevada have enacted Homeowner’s Bill of Rights legislation to
establish complex mandatory loss mitigation practices for
homeowners which cause delays in foreclosure proceedings. Delays in
foreclosure proceedings could also require us to make additional
servicing advances by drawing on our servicing advance facilities,
or delay the recovery of advances, all or any of which could
materially affect our earnings and liquidity and increase our need
for capital. The CARES Act and the federal agencies subject to the
CARES Act, have currently paused all foreclosures. Many state
governors issued orders, directives, guidance or recommendations
halting foreclosure activity including evictions. This will
increase our operating costs, extend the time we advance for
delinquent taxes and insurance and could delay our ability to seek
reimbursement from the investor to recoup some or all of the
advances.
Mr. Cooper Group Inc. - 2020 Annual Report on Form 10-K
28
Risks Related to the Owning our Stock
Our common stock, and any other instruments treated as stock for
purposes of Section 382, including the Series A Preferred Stock,
are subject to transfer restrictions under our Certificate of
Incorporation which, if not complied with, could result in the
forfeiture of such stock and related distributions.
Our Certificate of Incorporation contains significant transfer
restrictions in relation to the transfer of our common stock and
any other instruments treated as stock for purposes of Section 382
(including the Series A Preferred Stock). These transfer
restrictions have been adopted in order to minimize the likelihood
that we will be deemed to have an “ownership change” within the
meaning of Section 382 that could limit our ability to utilize our
NOLs under and in accordance with regulations promulgated by the
IRS.
In particular, without the approval of our Board, (i) no person or
group of persons treated as a single entity under Treasury
Regulation Section 1.382-3 will be permitted to acquire, whether
directly or indirectly, and whether in one transaction or a series
of related transactions, any of our common stock or any other
instrument treated as stock for purposes of Section 382, to the
extent that after giving effect to such purported acquisition (a)
the purported acquirer or any other person by reason of the
purported acquirer’s acquisition would become a Substantial Holder
(as defined below), or (b) the percentage stock ownership of a
person that, prior to giving effect to the purported acquisition,
is already a Substantial Holder would be increased; and (ii) no
Substantial Holder may dispose, directly or indirectly, of any
class of stock or any other instrument treated as stock for
purposes of Section 382. A “Substantial Holder” is a person that
owns (as determined for purposes of Section 382) at least 4.75% of
the total value of our stock, including any instrument treated as
stock for purposes of Section 382.
Because of the complexity of applying Section 382, and because the
determination of ownership for purposes of Section 382 does not
correspond to SEC beneficial ownership reporting on Schedules 13D
and 13G, holders and potential acquirers of our securities should
consult with their legal and tax advisors prior to making any
acquisition or disposition of our securities. Pursuant to Article
VIII of our Certificate of Incorporation, the Board has the sole
power to determine compliance with the transfer restrictions, and
we cannot assure you that the Board will concur with any
conclusions reached by any holder of our securities or their
respective advisors, and/or approve or ratify any proposed
acquisitions or dispositions of our securities. Under Article VIII,
Section 3(b), of our Certificate of Incorporation, if the Board
determines that a Prohibited Transfer (as defined in our
Certificate of Incorporation) has occurred, such Prohibited
Transfer shall, to the fullest extent permitted by law, be
void ab initio
and have no legal effect, and upon written demand by us, the
Purported Transferee (as defined in our Certificate of
Incorporation) shall disgorge or cause to be disgorged our
securities, together with any dividends or distributions received,
with respect to such securities.
Anti-takeover provisions in our Certificate of Incorporation and
Amended and Restated Bylaws (“Bylaws”) and under Delaware law, as
well as certain existing contractual arrangements, make a
third-party acquisition of us difficult.
Our Certificate of Incorporation, including Article VIII thereof,
and Bylaws, as well as certain contractual arrangements with KKR,
contain provisions that make it difficult for a third party to
acquire us, even if doing so might be deemed beneficial by our
stockholders. These provisions could limit the price that investors
might be willing to pay in the future for shares of our common
stock.
Affiliates of KKR own a substantial amount of equity interests in
us, have other substantial interests in us and agreements with us,
and may have conflicts of interest with us or the other holders of
our capital stock.
As of February 18, 2021, affiliates of KKR held shares of our stock
representing approximately 18% of our voting power on an
as-converted basis. Affiliates of KKR are parties to the Investment
Agreement and the Investor Rights Agreement. As a result,
affiliates of KKR may have substantial influence over our decisions
to enter into any corporate transaction, including with respect to
any acquisition, and may have the ability to prevent any
transaction that requires the approval of stockholders regardless
of whether other holders of our capital stock believe that any such
transactions are in their own best interests. KKR will not provide
oversight of or have control over or be involved with the
investment activities or other operations of the
Company.
Neither KKR nor its director appointees are required to present us
with investment opportunities and may pursue them separately or
otherwise compete with us.
Our Certificate of Incorporation provides that we renounce our
interest or expectancy in any corporate opportunity in which KKR or
its director appointees seek to participate unless such opportunity
(i) was first presented to KKR’s director appointees solely in
their capacity as directors of the Company or (ii) is identified by
KKR or its director appointees solely through the disclosure of
information by or on behalf of us.
29
Mr. Cooper Group Inc. - 2020 Annual Report on Form
10-K
Additionally, KKR is in the business of making investments in
companies and may from time to time acquire and hold interests in
businesses that compete directly or indirectly with us or that
compete with us for acquisitions. KKR may also pursue acquisition
opportunities that may be complementary to our business and, as a
result, those acquisition opportunities may not be available to us.
In addition, KKR’s interest in its portfolio companies could impact
our ability to pursue acquisition opportunities.
The market price of our common stock may decrease, and you may lose
all or part of your investment.
The market price of our common stock could decrease, and you may
not be able to resell your shares at or above the price at which
your shares were acquired. Those fluctuations could be based on
various factors, including:
•our
operating performance and the performance of our competitors and
fluctuations in our operating results;
•macro-economic
trends, including changes in interest rates and economic growth and
unemployment;
•the
public’s reaction to our press releases, our other public
announcements and our filings with the SEC;
•changes
in earnings estimates or recommendations by research analysts who
follow us or other companies in our industry;
•global,
national or local economic, legal and regulatory factors unrelated
to our performance;
•announcements
of negative news by us or our competitors, such as announcements of
poorer than expected results of operations, data breaches or
significant litigation;
•actual
or anticipated variations in our or our competitors’ operating
results, and our or our competitors’ growth rates;
•failure
by us or our competitors to meet analysts’ projections or guidance
we or our competitors may give the market;
•changes
in laws or regulations, or new interpretations or applications of
laws and regulations, that are applicable to our
business;
•changes
in accounting standards, policies, guidance, interpretations or
principles;
•the
departure of key personnel;
•the
number of shares publicly traded;
•the
converted Series B preferred stockholders selling their shares;
and
•other
developments affecting us, our industry or our
competitors.
In addition, in recent years the stock market has experienced
significant price and volume fluctuations that have affected and
continue to affect the market prices of equity securities of many
companies. These fluctuations have often been unrelated or
disproportionate to the operating performance of those companies.
These broad market fluctuations, as well as general economic,
political and market conditions such as recessions or interest rate
changes, may cause declines in the market price of our common
stock, and you may not realize any return on your investment in us
and may lose some or all of your investment.
Item 1B. Unresolved
Staff Comments
None.
Mr. Cooper Group Inc. - 2020 Annual Report on Form 10-K
30
Item 2. Properties
We lease and maintain our principal executive office in one
building totaling approximately 176,000 square feet in Coppell,
Texas. Our business operations and support offices are in leased
facilities in various other locations in the United States,
including Texas, Arizona, California, Pennsylvania, Nebraska and
Colorado, as well as locations in India. We believe that our
facilities are adequate for our current requirements and are being
appropriately utilized. We periodically review our space
requirements, and we believe we will be able to acquire new space
and facilities as and when needed on reasonable terms. We also look
to consolidate and dispose of facilities we no longer need, as and
when appropriate.
Item 3. Legal
Proceedings
For a description of our material legal proceedings, see
Note 19, Commitments and Contingencies
of the Notes to the Consolidated Financial Statements
within Part II, Item 8.
Financial Statements and Supplementary Data,
of this Form 10-K.
Item 4. Mine
Safety Disclosures
Not applicable.
31
Mr. Cooper Group Inc. - 2020 Annual Report on Form
10-K
PART II.
On November 19, 2020, the Securities and Exchange Commission
adopted amendments to certain financial disclosure requirements in
Regulation S-K in an effort to modernize and simplify financial
disclosures. Most notably, the amendments (i) eliminate the
requirements to provide five years of selected financial data and
tabular disclosure of contractual obligations, (ii) limit the
circumstances in which quarterly supplemental financial information
must be presented, (iii) clarify the objectives of Management’s
Discussion & Analysis of Financial Condition and Results of
Operations (“MD&A”) and codify previous MD&A guidance and
(iv) require registrants to explicitly disclose critical accounting
estimates in MD&A. Although we are not required to comply with
these amendments until our annual report filed for the fiscal year
ended December 31, 2021, we have early adopted the amended rules in
our Form 10-K for the year ended December 31, 2020.
Item 5. Market
for Registrant’s Common Equity, Related Stockholder Matters and
Issuer Purchases of Equity Securities
Market Information and Stockholders
Our common stock has been traded on the Nasdaq Stock Market under
the ticker symbol “COOP” since October 10, 2018. From September 28,
2015 until October 9, 2018, WMIH’s common stock had traded under
the ticker symbol “WMIH”.
As of February 18, 2021, there were
2,675
stockholders of record of our common stock. A substantially greater
number of holders of our common stock are “street name” or
beneficial holders, whose shares are held by banks, brokers and
other financial institutions.
Dividends
We have not declared or paid cash dividends on our common stock,
and we currently do not expect to declare or pay any cash dividends
in the foreseeable future. The timing and amount of any future
dividends, if any, will be determined by the Board of Directors and
will depend, among other factors, upon our earnings, financial
condition, cash requirements, the capital requirements of
subsidiaries and investment opportunities at the time any such
transaction is considered.
Issuer Purchases of Equity Securities
On July 30, 2020, we announced that our Board of Directors
authorized the repurchase of up to $100 million of our outstanding
common stock. The stock repurchase program may be suspended,
modified or discontinued at any time at our discretion. During the
three months ended December 31, 2020, we have repurchased shares of
our common stock at a total cost of $34 million under our share
repurchase program. The number and average price of shares
purchased are set forth in the table below:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Period |
|
(a) Total Number of Shares Purchased (in thousands) |
|
(b) Average Price Paid per Share |
|
(c) Total Number of Shares Purchased as Part of Publicly Announced
Plan or Program (in thousands) |
|
(d) Maximum Dollar Value of Shares that May Yet Be Purchased Under
the Plan or Program (in millions)
|
October 2020 |
|
— |
|
|
$ |
— |
|
|
— |
|
|
$ |
76 |
|
November 2020 |
|
797 |
|
|
$ |
23.38 |
|
|
797 |
|
|
$ |
58 |
|
December 2020 |
|
600 |
|
|
$ |
26.70 |
|
|
600 |
|
|
$ |
42 |
|
Total |
|
1,397 |
|
|
|
|
1,397 |
|
|
|
Stockholder Return Performance
The following graph shows a comparison of the cumulative total
stockholder return for our common stock, as adjusted for the
1-for-12 reverse stock split that occurred in October 2018, our
peer group index, the S&P SmallCap 600 Financials Index and the
S&P 500 Index from December 31, 2015 through December 31,
2020. In 2020, we revised our peer group index and our new peer
group index is composed of the following companies: PennyMac
Financial Services, Inc., Ocwen Financial Corporation, Flagstar
Bancorp, Inc., New Residential Investment Corp., and Rocket
Companies, Inc. We changed our peer group index from the S&P
SmallCap 600 Financials Index to a peer group index of industry
competitors to provide a comparison of stock performance more
specific to the mortgage industry. This data assumes an
investment
of $100 on
December 31, 2015.
Mr. Cooper Group Inc. - 2020 Annual Report on Form 10-K
32
Comparative results for Mr. Cooper (formerly WMIH) common stock,
the S&P 500 Index, our peer group index and S&P SmallCap
600 Financials Index are presented below:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31, |
|
2015 |
|
2016 |
|
2017 |
|
2018 |
|
2019 |
|
2020 |
Mr. Cooper (formerly WMIH) |
$ |
100 |
|
|
$ |
60 |
|
|
$ |
33 |
|
|
$ |
38 |
|
|
$ |
40 |
|
|
$ |
100 |
|
S&P 500 Index |
100 |
|
|
110 |
|
|
131 |
|
|
123 |
|
|
158 |
|
|
184 |
|
Peer Group Index(1)
|
100 |
|
|
90 |
|
|
80 |
|
|
53 |
|
|
70 |
|
|
107 |
|
S&P SmallCap 600 Financials Index |
100 |
|
|
132 |
|
|
139 |
|
|
127 |
|
|
154 |
|
|
138 |
|
(1)Rocket
Companies, Inc. is included in the peer group index for 2020 data
only.
Item 6. Selected
Financial Data
Not applicable.
33
Mr. Cooper Group Inc. - 2020 Annual Report on Form
10-K
Item 7. Management’s
Discussion and Analysis of Financial Condition and Results of
Operations
The following discussion should be read in conjunction with the
information contained in our consolidated financial statements,
including the notes thereto. The following discussion contains, in
addition to the historical information, forward-looking statements
that include risks and uncertainties (see discussion of
“Forward-Looking Statements” included elsewhere in this Annual
Report on Form 10-K). Our actual results may differ materially from
those anticipated in these forward-looking statements as a result
of certain factors, including those factors set forth under Item
1A.
Risk Factors
and elsewhere in this Annual Report on Form 10-K. All dollar
amounts presented herein are in millions, except per share data and
other key metrics, unless otherwise noted.
Basis of Presentation
The below presentation discusses the results of the operations for
the year ended December 31, 2020 compared to the year ended
December 31, 2019. For a discussion of results of operations for
the year ended December 31, 2019, compared to the year ended
December 31, 2018, please refer to Part II, Item
7,
Management's Discussion and Analysis of Financial Condition and
Results of Operations,
in our Annual Report on Form 10-K for the year ended December
31, 2019.
We are a leading servicer and originator of residential mortgage
loans, and a provider of real estate services through our Xome
subsidiary. Our purpose is to keep the dream of homeownership
alive, and we do this as a servicer by helping mortgage borrowers
manage what is typically their largest financial asset, and by
helping our investors maximize the returns from their portfolios of
residential mortgages. We have a track record of significant
growth, having expanded our servicing portfolio from $10 billion in
2009 to $626 billion as of December 31, 2020. We believe this
track record reflects our strong operating capabilities, which
include a proprietary low-cost servicing platform, strong loss
mitigation skills, a commitment to compliance, a customer-centric
culture, a demonstrated ability to retain customers, growing
origination capabilities, and significant investment in
technology.
Our strategy to position the Company for continued, sustainable
long-term growth includes initiatives to improve profitability and
generate a return on tangible equity of 12% or higher. Key
strategic initiatives include the following:
•Strengthen
our balance sheet by building capital and liquidity, and managing
interest rate and other forms of risk;
•Improve
efficiency by driving continuous improvement in unit costs for
Servicing and Originations segments, as well as by taking corporate
actions to eliminate costs throughout the
organization;
•Grow
our servicing portfolio and customer base by acquiring new
customers and retaining existing customers;
•Reinvent
the customer experience by acting as the customer’s advocate and by
harnessing technology to deliver user-friendly digital
solutions;
•Sustain
the talent of our people and the culture of our organization;
and
•Maintain
strong relationships with agencies, investors, regulators, and
other counterparties and a strong reputation for compliance and
customer service.
Mr. Cooper Group Inc. - 2020 Annual Report on Form 10-K
34
Impact of the COVID-19 Pandemic
The COVID-19 pandemic introduces unprecedented uncertainty in the
economy, including the risk of a significant employment shock and
recessionary conditions, with implications for the health and
safety of our employees, borrower delinquency rates, servicing
advances, origination volumes, the availability of financing, and
our overall profitability and liquidity. We have taken aggressive
steps to address these risks, including moving in excess of 95% of
our staff to work-from-home status as well as implementing other
practices for mitigating the risk of the pandemic, including
restrictions on non-essential travel and face-to-face meetings and
enhanced sanitization of our facilities. We have also implemented
the provisions of the Coronavirus Aid, Relief, and Economic
Security Act (CARES Act), which makes available forbearance plans
for up to one year for borrowers under government and government
agency mortgage programs, which we have extended to borrowers in
our private label mortgage servicing portfolio. As of February
18th, 2021, approximately 5.5% of our customers were on a
forbearance plan, down from a peak of 7.2%. More customers are now
exiting forbearance than are entering. We include loans in
forbearance
related to the CARES Act, whereby no payments have been received
from borrowers for greater than 90 days, in loans subject to
repurchase right from Ginnie Mae in other assets and payables and
other liabilities on a gross basis. The
balance was $5,879 loans as of December 31, 2020.
See liquidity discussion related to the COVID-19 pandemic in
Liquidity and Capital Resources
section in MD&A.
Anticipated Trends
Our Servicing segment continued to experience portfolio run-off
from elevated prepayment speeds in the low interest rate
environment, which was more than replenished by record
correspondent volume. We expect to see continued growth in the
first quarter of 2021, primarily from correspondent and flow
originations as well as UPB growth from a new subservicing
relationship. Additionally, we benefited from early-buyout gains in
the fourth quarter of 2020 as we helped customers exit forbearance.
We expect a similar level of contributions from early-buyout
volumes in the first quarter of 2021.
Our Originations segment has experienced volume growth and higher
margins as a result of the lower interest rate environment, which
more than offset the decline in our Servicing segment. As the
pandemic began to impact the mortgage capital markets, our
Originations segment took several steps to rapidly de-risk the
pipeline. During the second quarter of 2020, we slowed down
correspondent production as we evaluated the environment. However,
since then, we ramped our correspondent production and had record
correspondent volume during the fourth quarter of 2020. We expect a
similar level of funded volumes for the first quarter of
2021.
Our Xome segment revenue from the Title division has benefited from
the lower interest rate environment and increase in origination
volume. Xome’s revenue from the Exchange division has been, and is
expected to continue to be, negatively impacted, as the foreclosure
process is currently on hold, with moratoriums in place at the
national level and in some local markets. As the foreclosure
moratoriums have been extended through June 2021, we expect
continued negative impact in the first quarter of 2021. Once the
moratoriums are lifted, we expect Exchange to ramp up and Xome to
contribute meaningfully to our consolidated results.
35
Mr. Cooper Group Inc. - 2020 Annual Report on Form
10-K
Results of Operations
|
|
|
Table 1. Consolidated Operations
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended December 31, |
|
|
|
|
2020 |
|
2019 |
|
$ Change |
|
% Change |
Revenues - operational(1)
|
$ |
3,412 |
|
|
$ |
2,512 |
|
|
$ |
900 |
|
|
36 |
% |
Revenues - mark-to-market |
(679) |
|
|
(505) |
|
|
(174) |
|
|
34 |
% |
Total revenues |
2,733 |
|
|
2,007 |
|
|
726 |
|
|
36 |
% |
Total expenses |
1,831 |
|
|
1,851 |
|
|
(20) |
|
|
(1) |
% |
Total other expenses, net |
(503) |
|
|
(159) |
|
|
(344) |
|
|
216 |
% |
Income (loss) before income tax expense (benefit) |
399 |
|
|
(3) |
|
|
402 |
|
|
NM |
Less: Income tax expense (benefit) |
92 |
|
|
(273) |
|
|
365 |
|
|
NM |
Net income |
307 |
|
|
270 |
|
|
37 |
|
|
14 |
% |
Less: Net income (loss) attributable to non-controlling
interests |
2 |
|
|
(4) |
|
|
6 |
|
|
NM |
Net income attributable to Mr. Cooper |
$ |
305 |
|
|
$ |
274 |
|
|
$ |
31 |
|
|
11 |
% |
(1)Revenues
- operational consists of total revenues, excluding
mark-to-market.
NM = Not meaningful
The increase in net income for the year ended December 31, 2020
compared to 2019 was primarily driven by higher revenues from our
Originations segment, offset by an increase in negative
mark-to-market adjustments primarily due to lower interest rates,
and an increase in total other expenses, net. The increase in total
other expenses, net was impacted by lower interest income driven by
lower interest rates and the loss on redemption of unsecured senior
notes. For more information on our segment results, see
below.
For the years ended December 31, 2020 and 2019, we had an
income tax expense of $92 and income tax benefit of $273,
respectively. The effective tax rate for the year ended
December 31, 2020 was 23.0%. The change in the effective tax
rate in 2020 as compared to 2019 was primarily attributable to the
release of the valuation allowance associated with the pre-Merger
net operating loss carryforwards in 2019, the relative tax impacts
of state adjustments, and permanent differences such as
nondeductible executive compensation and nondeductible
penalties.
Our operations are conducted through three segments: Servicing,
Originations, and Xome.
•The
Servicing segment performs operational activities on behalf of
investors or owners of the underlying mortgages, including
collecting and disbursing borrower payments, investor reporting,
customer service, modifying loans where appropriate to help
borrowers stay current, and, when necessary, performing
collections, foreclosures, and the sale of REO.
•The
Originations segment originates residential mortgage loans through
our direct-to-consumer channel, which provides refinance options
for our existing customers, and through our correspondent channel,
which purchases or originates loans from mortgage bankers and
brokers. Our wholesale channel was shut down during the three
months ended June 30, 2020 and subsequently ceased originating
loans and funded out the remaining pipeline.
•The
Xome segment provides a variety of real estate services to mortgage
originators, mortgage and real estate investors, and mortgage
servicers, including title, valuation, and field services, and
operates an exchange which facilitates the sale of foreclosed
properties.
Refer to
Note 20, Segment Information,
in the Notes to Consolidated Financial Statements for a summary of
segment results.
Mr. Cooper Group Inc. - 2020 Annual Report on Form 10-K
36
The Servicing segment’s strategy is to generate income by growing
the portfolio and maximizing the servicing margin. We believe
several competitive strengths have been critical to our long-term
growth as a servicer, including our low-cost platform, our skill in
mitigating losses for investors, our commitment to strong customer
service and regulatory compliance, our history of successfully
boarding new loans, and the ability to retain existing customers by
offering attractive refinance options. We believe that our
operational capabilities are reflected in strong servicer
ratings.
|
|
|
Table 2. Servicer Ratings
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fitch(1)
|
|
Moody’s(2)
|
|
S&P(3)
|
Rating date |
January 2020 |
|
September 2020 |
|
December 2020 |
|
|
|
|
|
|
Residential |
RPS2- |
|
Not Rated |
|
Above Average |
Master Servicer |
RMS2+ |
|
SQ2 |
|
Above Average |
Special Servicer |
RSS2- |
|
Not Rated |
|
Above Average |
Subprime Servicer |
RPS2- |
|
Not Rated |
|
Above Average |
(1)Fitch
Rating Scale of 1 (Highest Performance) to 5 (Low/No
Proficiency)
(2)Moody’s
Rating Scale of SQ1 (Strong Ability/Stability) to SQ5 (Weak
Ability/Stability)
(3)S&P
Rating Scale of Strong to Weak
37
Mr. Cooper Group Inc. - 2020 Annual Report on Form
10-K
The following table sets forth the results of operations for the
Servicing segment:
|
|
|
Table 3. Servicing Segment Results of Operations
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended December 31, |
|
|
|
|
|
|
|
|
2020 |
|
2019 |
|
$ Change |
|
% Change |
|
Amt |
|
bps(1)
|
|
Amt |
|
bps(1)
|
|
Amt |
|
bps |
|
Amt |
|
bps |
Revenues |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operational |
$ |
1,206 |
|
20 |
|
|
$ |
1,273 |
|
21 |
|
|
$ |
(67) |
|
(1) |
|
|
(5) |
% |
|
(5) |
% |
Amortization, net of accretion |
(420) |
|
(7) |
|
|
(236) |
|
(4) |
|
|
(184) |
|
(3) |
|
|
78 |
% |
|
75 |
% |
Mark-to-market |
(679) |
|
(11) |
|
|
(505) |
|
(8) |
|
|
(174) |
|
(3) |
|
|
34 |
% |
|
38 |
% |
Total revenues |
107 |
|
2 |
|
|
532 |
|
9 |
|
|
(425) |
|
(7) |
|
|
(80) |
% |
|
(78) |
% |
Expenses |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Salaries, wages and benefits |
313 |
|
5 |
|
|
346 |
|
5 |
|
|
(33) |
|
— |
|
|
(10) |
% |
|
— |
% |
General and administrative |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Servicing support fees |
109 |
|
2 |
|
|
121 |
|
2 |
|
|
(12) |
|
— |
|
|
(10) |
% |
|
— |
% |
Corporate and other general and administrative expenses |
130 |
|
2 |
|
|
162 |
|
3 |
|
|
(32) |
|
(1) |
|
|
(20) |
% |
|
(33) |
% |
Foreclosure and other liquidation related (recoveries) expenses,
net |
(33) |
|
— |
|
|
42 |
|
1 |
|
|
(75) |
|
(1) |
|
|
NM |
|
(100) |
% |
Depreciation and amortization |
20 |
|
— |
|
|
19 |
|
— |
|
|
1 |
|
— |
|
|
5 |
% |
|
— |
% |
Total general and administrative expenses |
226 |
|
4 |
|
|
344 |
|
6 |
|
|
(118) |
|
(2) |
|
|
(34) |
% |
|
(33) |
% |
Total expenses |
539 |
|
9 |
|
|
690 |
|
11 |
|
|
(151) |
|
(2) |
|
|
(22) |
% |
|
(18) |
% |
Other income (expense) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income earned on reverse mortgage interests |
176 |
|
3 |
|
|
313 |
|
5 |
|
|
(137) |
|
(2) |
|
|
(44) |
% |
|
(40) |
% |
Other interest income |
61 |
|
1 |
|
|
187 |
|
3 |
|
|
(126) |
|
(2) |
|
|
(67) |
% |
|
(67) |
% |
Interest income |
237 |
|
4 |
|
|
500 |
|
8 |
|
|
(263) |
|
(4) |
|
|
(53) |
% |
|
(50) |
% |
Reverse mortgage interests expense |
(174) |
|
(3) |
|
|
(236) |
|
(4) |
|
|
62 |
|
1 |
|
|
(26) |
% |
|
(25) |
% |
Advance interest expense |
(26) |
|
— |
|
|
(29) |
|
— |
|
|
3 |
|
— |
|
|
(10) |
% |
|
— |
% |
Other interest expense |
(242) |
|
(4) |
|
|
(204) |
|
(3) |
|
|
(38) |
|
(1) |
|
|
19 |
% |
|
33 |
% |
Interest expense |
(442) |
|
(7) |
|
|
(469) |
|
(7) |
|
|
27 |
|
— |
|
|
(6) |
% |
|
— |
% |
Other income, net |
— |
|
— |
|
|
4 |
|
— |
|
|
(4) |
|
— |
|
|
(100) |
% |
|
— |
% |
Total other (expenses) income, net |
(205) |
|
(3) |
|
|
35 |
|
1 |
|
|
(240) |
|
(4) |
|
|
NM |
|
NM |
Loss before income tax benefit |
$ |
(637) |
|
(10) |
|
|
$ |
(123) |
|
(1) |
|
|
$ |
(514) |
|
(9) |
|
|
NM |
|
NM |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average cost - advance facilities |
2.9 |
% |
|
|
|
3.9 |
% |
|
|
|
(1.0) |
% |
|
|
|
(26) |
% |
|
|
Weighted average cost - excess spread financing |
9.0 |
% |
|
|
|
8.9 |
% |
|
|
|
0.1 |
% |
|
|
|
1 |
% |
|
|
(1)Calculated
basis points (“bps”) are as follows: Annual dollar amount/Total
average UPB X 10000.
NM = Not meaningful
Mr. Cooper Group Inc. - 2020 Annual Report on Form 10-K
38
|
|
|
Table 4. Servicing - Revenues
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended December 31, |
|
|
|
|
|
|
|
|
|
2020 |
|
2019 |
|
$ Change |
|
% Change |
|
Amt |
|
bps(1)
|
|
Amt |
|
bps(1)
|
|
Amt |
|
bps |
|
Amt |
|
bps |
Forward MSR Operational Revenue |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Base servicing fees |
$ |
942 |
|
|
16 |
|
|
$ |
999 |
|
|
16 |
|
|
$ |
(57) |
|
|
— |
|
|
(6) |
% |
|
— |
% |
Modification fees(2)
|
10 |
|
|
— |
|
|
17 |
|
|
— |
|
|
(7) |
|
|
— |
|
|
(41) |
% |
|
— |
% |
Incentive fees(2)
|
9 |
|
|
— |
|
|
15 |
|
|
— |
|
|
(6) |
|
|
— |
|
|
(40) |
% |
|
— |
% |
Late payment fees(2)
|
69 |
|
|
1 |
|
|
84 |
|
|
2 |
|
|
(15) |
|
|
(1) |
|
|
(18) |
% |
|
(50) |
% |
Other ancillary revenues(2)
|
247 |
|
|
4 |
|
|
172 |
|
|
3 |
|
|
75 |
|
|
1 |
|
|
44 |
% |
|
33 |
% |
Total forward MSR operational revenue |
1,277 |
|
|
21 |
|
|
1,287 |
|
|
21 |
|
|
(10) |
|
|
— |
|
|
(1) |
% |
|
— |
% |
Base subservicing fees and other subservicing
revenue(2)
|
276 |
|
|
5 |
|
|
239 |
|
|
4 |
|
|
37 |
|
|
1 |
|
|
15 |
% |
|
25 |
% |
Reverse servicing fees |
24 |
|
|
— |
|
|
31 |
|
|
— |
|
|
(7) |
|
|
— |
|
|
(23) |
% |
|
— |
% |
Total servicing fee revenue |
1,577 |
|
|
26 |
|
|
1,557 |
|
|
25 |
|
|
20 |
|
|
1 |
|
|
1 |
% |
|
4 |
% |
MSR financing liability costs |
(33) |
|
|
— |
|
|
(41) |
|
|
— |
|
|
8 |
|
|
— |
|
|
(20) |
% |
|
— |
% |
Excess spread costs - principal |
(338) |
|
|
(6) |
|
|
(243) |
|
|
(4) |
|
|
(95) |
|
|
(2) |
|
|
39 |
% |
|
50 |
% |
Total operational revenue |
1,206 |
|
|
20 |
|
|
1,273 |
|
|
21 |
|
|
(67) |
|
|
(1) |
|
|
(5) |
% |
|
(5) |
% |
Amortization, net of accretion |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Forward MSR amortization |
(778) |
|
|
(13) |
|
|
(527) |
|
|
(9) |
|
|
(251) |
|
|
(4) |
|
|
48 |
% |
|
44 |
% |
Excess spread accretion |
338 |
|
|
6 |
|
|
243 |
|
|
4 |
|
|
95 |
|
|
2 |
|
|
39 |
% |
|
50 |
% |
Reverse MSL accretion |
20 |
|
|
— |
|
|
47 |
|
|
1 |
|
|
(27) |
|
|
(1) |
|
|
(57) |
% |
|
(100) |
% |
Reverse MSR amortization |
— |
|
|
— |
|
|
1 |
|
|
— |
|
|
(1) |
|
|
— |
|
|
NM |
|
NM |
Total amortization, net of accretion |
(420) |
|
|
(7) |
|
|
(236) |
|
|
(4) |
|
|
(184) |
|
|
(3) |
|
|
78 |
% |
|
75 |
% |
Mark-to-Market Adjustments |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
MSR MTM(3)
|
(878) |
|
|
(14) |
|
|
(669) |
|
|
(11) |
|
|
(209) |
|
|
(3) |
|
|
31 |
% |
|
27 |
% |
Excess spread / financing MTM |
199 |
|
|
3 |
|
|
164 |
|
|
3 |
|
|
35 |
|
|
— |
|
|
21 |
% |
|
— |
% |
Total MTM adjustments |
(679) |
|
|
(11) |
|
|
(505) |
|
|
(8) |
|
|
(174) |
|
|
(3) |
|
|
34 |
% |
|
38 |
% |
Total revenues - Servicing |
$ |
107 |
|
|
2 |
|
|
$ |
532 |
|
|
9 |
|
|
$ |
(425) |
|
|
(7) |
|
|
(80) |
% |
|
(78) |
% |
(1)Calculated
basis points (“bps”) are as follows: Annual dollar amount/Total
average UPB X 10000.
(2)Certain
ancillary and other non-base fees related to subservicing
operations are separately presented as other subservicing
revenues.
(3)The
amount of MSR MTM includes the impact of negative modeled cash
flows which have been transferred to reserves on advances and other
receivables. The negative modeled cash flows relate to advances and
other receivables associated with inactive and liquidated
loans that are no longer part of the MSR portfolio. The impact of
negative modeled cash flows was $28 and $62 for the years ended
December 31, 2020 and 2019, respectively.
NM = Not meaningful
Servicing Segment Revenues
The following provides the changes in revenues for the Servicing
segment:
Forward
- Due to the decrease of the forward MSR portfolio’s UPB, base
servicing fee revenue decreased for the year ended December 31,
2020 as compared to 2019. Late payment fees and incentive fees
decreased due to loan forbearance related to the CARES Act. Other
ancillary revenues increased primarily due to the $80 gain on sale
associated with loans bought out of a GNMA securitization, modified
and redelivered following GNMA guidelines.
Forward MSR amortization increased for the year ended December 31,
2020 as compared to 2019, primarily due to higher prepayments
driven by the lower interest rate environment.
Total negative MTM adjustments increased in the year ended December
31, 2020 as compared to 2019, primarily due to the low interest
rate environment during 2020.
Subservicing
- Subservicing fees increased for the year ended December 31, 2020
as compared to 2019, due to a higher average subservicing portfolio
UPB and higher fees earned on delinquent loans.
39
Mr. Cooper Group Inc. - 2020 Annual Report on Form
10-K
Servicing Segment Expenses
Total expenses decreased during the year ended December 31, 2020
compared to 2019, primarily driven by the change in foreclosure and
other liquidation (recoveries) expenses, net. The change in
foreclosure and other liquidation (recoveries) expenses, net was
primarily due to operational improvements of the reverse portfolio
with respect to assignments and adherence to HUD curtailment
guidelines, in addition to $46 on loss recoveries related to a
settlement with a government agency and improved performance of $15
on loss recoveries related to settlement with a prior servicer.
Salaries, wages and benefits decreased in 2020 compared to 2019
primarily due to operational efficiencies driven by cost saving
initiatives, which included consolidation of one of our servicing
centers. The decrease in corporate and other general and
administrative expenses in 2020 was primarily driven by lower
temporary labor costs and occupancy expenses due to cost saving
initiatives.
Servicing Segment Other Income (Expenses), net
During the year ended December 31, 2020 we had total other
expenses, net of $205 compared to total other income, net of $35 in
2019. The change was primarily due to a lower income earned on
reverse mortgage interests due to decline in the reverse mortgage
interests balance and the amortization of a net asset premium into
income. Other interest income decreased due to lower interest
income earned on custodial balances due to lower LIBOR rates.
Interest expense decreased during the year ended December 31, 2020
as compared to 2019 primarily due to a decrease in reverse mortgage
interests expense primarily driven by the decline in the reverse
mortgage interests portfolio, partially offset by an increase in
other interest expense primarily driven by higher compensating
interest expense and bank fees.
Mr. Cooper Group Inc. - 2020 Annual Report on Form 10-K
40
|
|
|
Table 5. Servicing Portfolio - Unpaid Principal
Balances
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended December 31, |
|
|
|
|
|
|
|
|
2020 |
|
2019 |
Average UPB |
|
|
|
|
|
|
|
|
|
|
|
Forward MSRs |
|
|
|
|
|
|
|
|
$ |
286,159 |
|
|
$ |
311,601 |
|
Subservicing and other(1)
|
|
|
|
|
|
|
|
|
305,063 |
|
|
283,743 |
|
Reverse loans |
|
|
|
|
|
|
|
|
20,477 |
|
|
25,270 |
|
Total average UPB |
|
|
|
|
|
|
|
|
$ |
611,699 |
|
|
$ |
620,614 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31, 2020 |
|
December 31, 2019 |
|
UPB |
|
Carrying Amount |
|
bps |
|
UPB |
|
Carrying Amount |
|
bps |
Ending UPB |
|
|
|
|
|
|
|
|
|
|
|
Forward MSRs |
|
|
|
|
|
|
|
|
|
|
|
Agency |
$ |
227,136 |
|
|
$ |
2,305 |
|
|
101 |
|
$ |
240,688 |
|
|
$ |
2,944 |
|
|
122 |
Non-agency |
44,053 |
|
|
398 |
|
|
90 |
|
56,094 |
|
|
552 |
|
|
98 |
Total Forward MSRs |
271,189 |
|
|
2,703 |
|
|
100 |
|
296,782 |
|
|
3,496 |
|
|
118 |
|
|
|
|
|
|
|
|
|
|
|
|
Subservicing and other(1)
|
|
|
|
|
|
|
|
|
|
|
|
Agency |
321,858 |
|
|
N/A |
|
|
|
308,532 |
|
|
N/A |
|
|
Non-agency |
14,655 |
|
|
N/A |
|
|
|
15,451 |
|
|
N/A |
|
|
Total subservicing and other |
336,513 |
|
|
N/A |
|
|
|
323,983 |
|
|
N/A |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reverse loans |
|
|
|
|
|
|
|
|
|
|
|
MSR |
1,961 |
|
|
5 |
|
|
|
|
2,508 |
|
|
6 |
|
|
|
MSL |
10,870 |
|
|
(41) |
|
|
|
|
13,994 |
|
|
(61) |
|
|
|
Securitized loans |
5,260 |
|
|
5,253 |
|
|
|
|
6,223 |
|
|
6,279 |
|
|
|
Total reverse portfolio serviced |
18,091 |
|
|
5,217 |
|
|
|
|
22,725 |
|
|
6,224 |
|
|
|
Total ending UPB |
$ |
625,793 |
|
|
$ |
7,920 |
|
|
|
|
$ |
643,490 |
|
|
$ |
9,720 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Forward MSRs UPB Encumbrance |
|
|
|
|
|
|
|
December 31, 2020 |
|
December 31, 2019 |
Forward MSRs - unencumbered |
|
|
|
|
|
|
|
|
$ |
104,798 |
|
|
$ |
83,557 |
|
Forward MSRs - encumbered(2)
|
|
|
|
|
|
|
|
|
166,391 |
|
|
213,225 |
|
Total Forward MSRs |
|
|
|
|
|
|
|
|
$ |
271,189 |
|
|
$ |
296,782 |
|
(1)Subservicing
and other includes (i) loans we service for others, (ii)
residential mortgage loans originated but have yet to be sold, and
(iii) agency REO balances for which we own the mortgage servicing
rights.
(2)The
encumbered forward MSRs consist of residential mortgage loans
included within our excess spread financing transactions and MSR
financing liability.
As of December 31, 2020, when measuring the fair value of the
portfolio as a basis point of the unpaid principal balance, our
total forward MSRs decreased in value compared to 2019 primarily
due to higher forecasted prepayment speeds as a result of the
declining interest rate environment in 2020.
41
Mr. Cooper Group Inc. - 2020 Annual Report on Form
10-K
The following table provides a rollforward of our forward MSR and
subservicing and other portfolio UPB:
|
|
|
Table 6. Forward Servicing and Subservicing and Other Portfolio UPB
Rollforward
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended December 31, |
2020 |
|
2019 |
Forward MSR |
|
Subservicing and Other |
|
Total |
|
Forward MSR |
|
Subservicing and Other |
|
Total |
Balance - beginning of year |
$ |
296,782 |
|
|
$ |
323,983 |
|
|
$ |
620,765 |
|
|
$ |
295,481 |
|
|
$ |
223,886 |
|
|
$ |
519,367 |
|
Additions: |
|
|
|
|
|
|
|
|
|
|
|
Originations |
58,734 |
|
|
4,331 |
|
|
63,065 |
|
|
37,969 |
|
|
1,386 |
|
|
39,355 |
|
Acquisitions / Increase in subservicing(1)
|
1,506 |
|
|
154,718 |
|
|
156,224 |
|
|
39,392 |
|
|
171,246 |
|
|
210,638 |
|
Deductions: |
|
|
|
|
|
|
|
|
|
|
|
Dispositions |
(110) |
|
|
(27,765) |
|
|
(27,875) |
|
|
(14,592) |
|
|
(20,412) |
|
|
(35,004) |
|
Principal reductions and other |
(10,722) |
|
|
(10,754) |
|
|
(21,476) |
|
|
(11,702) |
|
|
(10,090) |
|
|
(21,792) |
|
Voluntary reductions(2)
|
(73,691) |
|
|
(107,762) |
|
|
(181,453) |
|
|
(46,423) |
|
|
(41,260) |
|
|
(87,683) |
|
Involuntary reductions(3)
|
(991) |
|
|
(238) |
|
|
(1,229) |
|
|
(3,043) |
|
|
(773) |
|
|
(3,816) |
|
Net changes in loans serviced by others |
(319) |
|
|
— |
|
|
(319) |
|
|
(300) |
|
|
— |
|
|
(300) |
|
Balance - end of year |
$ |
271,189 |
|
|
$ |
336,513 |
|
|
$ |
607,702 |
|
|
$ |
296,782 |
|
|
$ |
323,983 |
|
|
$ |
620,765 |
|
(1)Includes
transfers to/from Subservicing and Other.
(2)Voluntary
reductions are related to loan payoffs by customers.
(3)Involuntary
reductions refer to loan chargeoffs.
During the year ended December 31, 2020, our ending forward MSR UPB
decreased primarily due to increased voluntary reductions in a low
interest rate environment, partially offset by increased
origination volumes. During the year ended December 31, 2020, our
subservicing and other portfolio ending UPB increased primarily due
to portfolio growth, partially offset by higher voluntary
reductions in the low interest rate environment.
The table below summarizes the overall performance of the forward
servicing and subservicing portfolio:
|
|
|
Table 7. Key Performance Metrics - Forward Servicing and
Subservicing Portfolio(1)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31, 2020 |
|
December 31, 2019 |
Loan count(2)
|
3,373,066 |
|
|
3,588,162 |
|
Average loan amount(3)
|
$ |
180,165 |
|
|
$ |
172,980 |
|
Weighted average coupon - agency(4)
|
4.2 |
% |
|
4.5 |
% |
Weighted average coupon - non-agency(4)
|
4.5 |
% |
|
4.7 |
% |
60+ delinquent (% of loans)(5)
|
5.8 |
% |
|
2.0 |
% |
90+ delinquent (% of loans)(5)
|
5.3 |
% |
|
1.7 |
% |
120+ delinquent (% of loans)(5)
|
4.5 |
% |
|
1.5 |
% |
|
|
|
|
|
|
|
Year Ended December 31, |
|
2020 |
|
2019 |
Total prepayment speed (12-month constant prepayment
rate) |
27.1 |
% |
|
14.7 |
% |
(1)Characteristics
and key performance metrics of our servicing portfolio exclude UPB
and loan counts acquired but not yet boarded and currently serviced
by others.
(2)As
of December 31, 2020, loan count includes 199,118 loans in
forbearance related to the CARES Act.
(3)Average
loan amount is presented in whole dollar amounts.
(4)The
weighted average coupon amounts are only reflective of our owned
forward MSR portfolio that is reported at fair value.
(5)Loan
delinquency is based on the current contractual due date of the
loan. In the case of a completed loan modification, delinquency is
based on the modified due date of the loan. Loan delinquency
includes loans in forbearance.
Mr. Cooper Group Inc. - 2020 Annual Report on Form 10-K
42
Delinquency is an assumption in determining the mark-to-market
adjustment and is a key indicator of MSR portfolio performance.
Delinquent loans contribute to lower MSR values due to higher costs
to service and increased carrying costs of advances. Due to the
COVID-19 pandemic and implementation of the CARES Act, loans
greater than 60 days, 90 days and 120 days delinquent have
increased as of December 31, 2020 compared to
2019.
|
|
|
Table 8. Forward Loan Modifications and Workout Units
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended December 31, |
|
|
|
|
|
2020 |
|
2019 |
|
Amount Change |
|
% Change |
Modifications(1)
|
21,674 |
|
|
20,694 |
|
|
980 |
|
|
5 |
% |
Workouts(2)
|
42,867 |
|
|
19,669 |
|
|
23,198 |
|
|
118 |
% |
Total modification and workout units |
64,541 |
|
|
40,363 |
|
|
24,178 |
|
|
60 |
% |
(1)Modifications
adjust the terms of the loan.
(2)Workouts
are other loss mitigation options which do not adjust the terms of
the loan. For the year ended December 31, 2020, workouts exclude
loans which did not miss a contractual payment during forbearance
related to the CARES Act.
Total modifications and workouts during the year ended December 31,
2020 increased compared to 2019 primarily due to an increase in
workouts related to loans impacted by the COVID-19 pandemic which
successfully exited their forbearance plans.
Servicing Portfolio and Liabilities
The following table sets forth the activities of forwards
MSRs:
|
|
|
Table 9. Forward MSRs - Fair Value Rollforward
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended December 31, |
|
2020 |
|
2019 |
Fair value - beginning of year |
$ |
3,496 |
|
|
$ |
3,665 |
|
Additions: |
|
|
|
Servicing resulting from mortgage loans sold |
687 |
|
|
434 |
|
Purchases of servicing rights |
124 |
|
|
858 |
|
Dispositions: |
|
|
|
Sales and cancellation of servicing assets |
(9) |
|
|
(408) |
|
Changes in fair value: |
|
|
|
Due to changes in valuation inputs or assumptions used in the
valuation model: |
|
|
|
Agency |
(709) |
|
|
(556) |
|
Non-agency |
(180) |
|
|
(33) |
|
Other changes in fair value: |
|
|
|
Scheduled principal payments |
(94) |
|
|
(94) |
|
Disposition of negative MSRs and other(1)
|
72 |
|
|
64 |
|
Prepayments |
|
|
|
Voluntary prepayments |
|
|
|
Agency |
(635) |
|
|
(366) |
|
Non-agency |
(39) |
|
|
(41) |
|
Involuntary prepayments |
|
|
|
Agency |
(9) |
|
|
(24) |
|
Non-agency |
(1) |
|
|
(3) |
|
Fair value - end of year |
$ |
2,703 |
|
|
$ |
3,496 |
|
(1)Amounts
primarily represent negative fair values reclassified from the MSR
asset to reserves as underlying loans are removed from the MSR and
other reclassification adjustments.
43
Mr. Cooper Group Inc. - 2020 Annual Report on Form
10-K
See
Note 3, Mortgage Servicing Rights and Related Liabilities
and
Note 17, Fair Value Measurements,
in the Notes to Consolidated Financial Statements, for additional
information regarding the range of assumptions and sensitivities
related to the fair value measurement of forward MSRs as of
December 31, 2020 and 2019.
Excess Spread Financing
As further disclosed in
Note 3, Mortgage Servicing Rights and Related
Liabilities,
in the Notes to Consolidated Financial Statements, we have entered
into sale and assignment agreements treated as financing
arrangements whereby the acquirer has the right to receive a
specified percentage of the excess cash flow generated from an
MSR.
The servicing fees associated with an MSR can be segregated into
(i) a base servicing fee and (ii) an excess servicing fee. The base
servicing fee, along with ancillary income and other revenues, is
designed to cover costs incurred to service the specified pool plus
a reasonable margin. The remaining servicing fee is considered
excess. We sell a percentage of the excess fee, as a method for
efficiently financing acquired MSRs and the purchase of loans. We
do not currently utilize these transactions as a primary source of
financing due to the availability of lower cost sources of
funding.
Excess spread financings are recorded at fair value, and the impact
of fair value adjustments on future revenues and capital resources
varies primarily due to (i) prepayment speeds and (ii) our ability
to recapture prepayments through the origination platform.
See
Note 3, Mortgage Servicing Rights and Related Liabilities
and
Note 17, Fair Value Measurements,
in the Notes to Consolidated Financial Statements, for additional
information regarding the range of assumptions and sensitivities
related to the fair value measurement of the excess spread
financing liability as of December 31, 2020 and
2019.
The following table sets forth the change in the excess spread
financing:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Table 10. Excess Spread Financing - Rollforward
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended December 31, |
|
2020 |
|
2019 |
Fair value - beginning of year |
$ |
1,311 |
|
$ |
1,184 |
Additions: |
|
|
|
New financings |
24 |
|
542 |
Deductions: |
|
|
|
Settlements and repayments |
(207) |
|
(246) |
Changes in fair value: |
|
|
|
Agency |
(195) |
|
(176) |
Non-Agency |
1 |
|
7 |
Fair value - end of year |
$ |
934 |
|
$ |
1,311 |
Reverse - MSRs, MSLs and Participating Interests in Reverse
Mortgages - Amortized Cost
The table below provides detail of the characteristics and key
performance metrics of the reverse servicing portfolio, which is
included in reverse MSRs, MSLs and participating interests in
reverse mortgages. Such assets are recorded at amortized
cost.
|
|
|
Table 11. Reverse Mortgage Portfolio Characteristics
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31, 2020 |
|
December 31, 2019 |
Loan count |
149,536 |
|
|
165,364 |
|
Ending unpaid principal balance |
$ |
18,091 |
|
|
$ |
22,725 |
|
Average loan amount(1)
|
$ |
120,981 |
|
|
$ |
137,426 |
|
Average coupon |
2.1 |
% |
|
3.6 |
% |
Average borrower age |
80.6 years |
|
80.0 years |
(1)Average
loan amount is presented in whole dollar amounts.
Mr. Cooper Group Inc. - 2020 Annual Report on Form 10-K
44
Historically, we acquired servicing rights and participating
interests in reverse mortgage portfolios; however, the portfolio is
no longer regarded as a core business and is currently in run-off.
Reverse mortgage loans, most commonly HECMs, provide seniors 62 and
older with a loan upon which draws can be made periodically. The
draws are secured by the equity in the borrower’s home. For
acquired servicing rights, an MSR or MSL is established on the
acquisition date at fair value, as applicable, based on the
expected discounted cash flow from servicing the reverse
portfolio.
Each quarter, we accrete the MSL of the respective portfolios
run-off to revenues - service related, net. The MSL is assessed for
increased obligation based on its fair value, using a variety of
assumptions, with the key assumptions being discount rates,
prepayment speeds and the borrower life expectancy. The MSLs are
stratified based on predominant risk characteristics of the
underlying serviced loans. Impairment, if any, represents the
excess of amortized cost of an individual stratum over its
estimated fair value and is recognized through an increase in the
valuation allowance.
Based on our assessment, no impairment or increased obligation was
required to be recorded for reverse MSRs and MSLs, respectively, as
of December 31, 2020 and 2019.
The strategy of our Originations segment is to originate or acquire
new loans for the servicing portfolio at a more attractive cost
than purchasing MSRs in bulk transactions and to retain our
existing customers by providing them with attractive refinance
options. The Originations segment plays a strategically important
role because its profitability is typically counter cyclical to
that of the Servicing segment. Furthermore, by originating or
acquiring loans at a more attractive cost than would be the case in
bulk MSR acquisitions, the Originations segment improves our
overall profitability and cash flow. Growing the Originations
segment has been a strategic focus for us for several years. The
Originations segment includes two channels: Our direct-to-consumer
(“DTC”) and correspondent lending channel. See Part I, Item
1,
Business,
for description of our channels.
45
Mr. Cooper Group Inc. - 2020 Annual Report on Form
10-K
The following table sets forth the results of operations for the
Originations segment:
|
|
|
Table 12. Originations Segment Results of Operations
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended December 31, |
|
|
|
|
|
2020 |
|
2019 |
|
$ Change |
|
% Change |
Revenues |
|
|
|
|
|
|
|
Service related, net - Originations(1)
|
$ |
105 |
|
|
$ |
80 |
|
|
$ |
25 |
|
|
31 |
% |
Net gain on mortgage loans held for sale |
|
|
|
|
|
|
|
Net gain on loans originated and sold(2)
|
1,437 |
|
|
562 |
|
|
875 |
|
|
156 |
% |
Capitalized servicing rights(3)
|
674 |
|
|
420 |
|
|
254 |
|
|
60 |
% |
Provision for repurchase reserves, net of release |
(23) |
|
|
(19) |
|
|
(4) |
|
|
21 |
% |
Total net gain on mortgage loans held for sale |
2,088 |
|
|
963 |
|
|
1,125 |
|
|
117 |
% |
Total revenues |
2,193 |
|
|
1,043 |
|
|
1,150 |
|
|
110 |
% |
Expenses |
|
|
|
|
|
|
|
Salaries, wages and benefits |
540 |
|
|
375 |
|
|
165 |
|
|
44 |
% |
General and administrative |
|
|
|
|
|
|
|
Loan origination expenses |
77 |
|
|
58 |
|
|
19 |
|
|
33 |
% |
Corporate and other general and administrative expenses |
64 |
|
|
61 |
|
|
3 |
|
|
5 |
% |
Marketing and professional service fees |
47 |
|
|
53 |
|
|
(6) |
|
|
(11) |
% |
Depreciation and amortization |
18 |
|
|
18 |
|
|
— |
|
|
— |
% |
Loss on impairment of assets |
— |
|
|
3 |
|
|
(3) |
|
|
(100) |
% |
Total general and administrative |
206 |
|
|
193 |
|
|
13 |
|
|
7 |
% |
Total expenses |
746 |
|
|
568 |
|
|
178 |
|
|
31 |
% |
Other income (expenses) |
|
|
|
|
|
|
|
Interest income |
95 |
|
|
98 |
|
|
(3) |
|
|
(3) |
% |
Interest expense |
(78) |
|
|
(98) |
|
|
20 |
|
|
(20) |
% |
Other income, net |
— |
|
|
4 |
|
|
(4) |
|
|
(100) |
% |
Total other income (expenses), net |
17 |
|
|
4 |
|
|
13 |
|
|
325 |
% |
Income before income tax expense |
$ |
1,464 |
|
|
$ |
479 |
|
|
$ |
985 |
|
|
206 |
% |
|
|
|
|
|
|
|
|
Weighted average note rate - mortgage loans held for
sale |
3.3 |
% |
|
4.3 |
% |
|
(1.0) |
% |
|
(23) |
% |
Weighted average cost of funds (excluding facility
fees) |
2.7 |
% |
|
4.1 |
% |
|
(1.4) |
% |
|
(34) |
% |
(1)Service
related revenues, net - Originations refers to fees collected from
customers for originated loans and from other lenders for loans
purchased through the correspondent channel, and includes loan
application, underwriting, and other similar fees.
(2)Net
gain on loans originated and sold represents the gains and losses
from the origination, purchase, and sale of loans and related
derivative instruments. Gains from the origination and sale of
loans are affected by the volume and margin of our originations
activity and are impacted by fluctuations in interest
rates.
(3)Capitalized
servicing rights represents the fair value attributed to mortgage
servicing rights at the time in which they are retained in
connection with the sale of loans during the period.
Mr. Cooper Group Inc. - 2020 Annual Report on Form 10-K
46
|
|
|
Table 13. Originations - Key Metrics
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended December 31, |
|
|
|
|
|
2020 |
|
2019 |
|
$ Change |
|
% Change |
Key Metrics |
|
|
|
|
|
|
|
Consumer direct lock pull through adjusted
volume(1)
|
$ |
37,940 |
|
|
$ |
18,151 |
|
|
$ |
19,789 |
|
|
109 |
% |
Other locked pull through adjusted volume(1)
|
30,631 |
|
|
24,242 |
|
|
6,389 |
|
|
26 |
% |
Total pull through adjusted lock volume |
$ |
68,571 |
|
|
$ |
42,393 |
|
|
$ |
26,178 |
|
|
62 |
% |
Funded volume |
$ |
63,212 |
|
|
$ |
40,182 |
|
|
$ |
23,030 |
|
|
57 |
% |
Volume of loans sold |
$ |
64,114 |
|
|
$ |
40,092 |
|
|
$ |
24,022 |
|
|
60 |
% |
Recapture percentage(2)
|
27.2 |
% |
|
26.2 |
% |
|
1.0 |
% |
|
4 |
% |
Refinance recapture percentage(3)
|
33.2 |
% |
|
40.0 |
% |
|
(6.8) |
% |
|
(17) |
% |
Purchase as a percentage of funded volume |
17.7 |
% |
|
41.5 |
% |
|
(23.8) |
% |
|
(57) |
% |
Value of capitalized servicing on retained settlements |
134 |
bps |
|
147 |
bps |
|
(13) |
bps |
|
(9) |
% |
|
|
|
|
|
|
|
|
Originations Margin |
|
|
|
|
|
|
|
Revenue |
$ |
2,193 |
|
|
$ |
1,043 |
|
|
$ |
1,150 |
|
|
110 |
% |
Pull through adjusted lock volume |
$ |
68,571 |
|
|
$ |
42,393 |
|
|
$ |
26,178 |
|
|
62 |
% |
Revenue as a percentage of pull through adjusted lock
volume(4)
|
3.20 |
% |
|
2.46 |
% |
|
0.74 |
% |
|
30 |
% |
|
|
|
|
|
|
|
|
Expenses(5)
|
$ |
729 |
|
|
$ |
564 |
|
|
$ |
165 |
|
|
29 |
% |
Funded volume |
$ |
63,212 |
|
|
$ |
40,182 |
|
|
$ |
23,030 |
|
|
57 |
% |
Expenses as a percentage of funded volume(6)
|
1.15 |
% |
|
1.40 |
% |
|
(0.25) |
% |
|
(18) |
% |
|
|
|
|
|
|
|
|
Originations Margin |
2.05 |
% |
|
1.06 |
% |
|
0.99 |
% |
|
93 |
% |
(1)Pull
through adjusted volume represents the expected funding from locks
taken during the period.
(2)Recapture
percentage includes new loan originations for both purchase and
refinance transactions where borrower retention and/or property
retention occurs as a result of a loan payoff from our servicing
portfolio. Excludes loans we are contractually unable to
solicit.
(3)Refinance
recapture percentage includes new loan originations for refinance
transactions where borrower retention and property retention occurs
as a result of a loan payoff from our servicing portfolio. Excludes
loans we are contractually unable to solicit.
(4)Calculated
on pull-through adjusted lock volume as revenue is recognized at
the time of loan lock.
(5)Expenses
include total expense and total other income (expenses),
net.
(6)Calculated
on funded volume as expenses are incurred based on closing of the
loan.
47
Mr. Cooper Group Inc. - 2020 Annual Report on Form
10-K
Income before income tax increased for the year ended December 31,
2020 as compared to 2019 primarily due to an increase in revenues
driven by origination volume growth, predominately in the DTC
channel. In response to the COVID-19 pandemic, we temporarily
slowed operations in the correspondent channel in order to
prioritize cash build and de-risk the pipeline. As the market
stabilized, we returned to normal correspondent activity in the
third quarter of 2020. The growth in the origination volume was due
to declining interest rates. The Originations Margin for the year
ended December 31, 2020 increased as compared to 2019 primarily due
to higher revenue as a percentage of pull through adjusted lock
volume driven by an increase in volume from the DTC channel, along
with a lower expenses ratio as a percentage of funded volume
primarily due to operational efficiencies.
Originations Segment Revenues
Total revenues increased for the year ended December 31, 2020
compared to 2019 primarily driven by the higher originations
volumes in a declining interest rate environment, primarily from
the DTC channel. Total revenue increased $1,150 or 110% over the
prior year as consumer direct pull through adjusted volume
increased 109% during the same period. There were no material
changes to repurchase reserves.
Originations Segment Expenses
Total expenses for the year ended December 31, 2020 increased when
compared to 2019 primarily due to growth in origination volumes,
which was driven by the low interest rate environment. The
origination volume growth contributed to the increase in salaries,
wages and benefits due to increased compensation and headcount
related costs, and loan origination expenses.
Originations Segment Other Income (Expenses), Net
Interest income relates primarily to mortgage loans held for sale.
Interest expense is associated with the warehouse facilities
utilized to finance newly originated loans.
Interest expense for the year ended December 31, 2020 decreased
when compared to 2019 primarily driven by a lower cost of funds.
The decrease in interest expense was partially offset by a decrease
in other income, net. Other income, net was higher in 2019 due to
recognition of incentives we received related to our financing of
certain loans satisfying certain customer relief characteristics
under to a master repurchase agreement that expired during
2019.
Mr. Cooper Group Inc. - 2020 Annual Report on Form 10-K
48
Xome is a real estate data and services Company that provides
services for mortgage originators and servicers, including Mr.
Cooper, as well as mortgage and real estate investors. Xome
generates fee income that complements our servicing and origination
businesses without requiring a significant amount of capital or
exposing us to the same level of interest rate or credit risk. Xome
is organized into three divisions: Exchange, Title, and Solutions.
See
Item 1, Business,
for description of our divisions.
The following table sets forth the results of operations for the
Xome segment:
|
|
|
Table 14. Xome Segment Results of Operations
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended December 31, |
|
|
|
|
|
2020 |
|
2019 |
|
$ Change |
|
% Change |
Xome - Operations |
|
|
|
|
|
|
|
Revenues: |
|
|
|
|
|
|
|
Exchange |
$ |
38 |
|
|
$ |
79 |
|
|
$ |
(41) |
|
|
(52) |
% |
Title |
212 |
|
|
131 |
|
|
81 |
|
|
62 |
% |
Solutions |
183 |
|
|
212 |
|
|
(29) |
|
|