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PennyMac Mortgage Lending Slips, Servicing Up

Quarterly residential loan production dipped at PennyMac Financial Services Inc. But the company’s mortgage servicing portfolio managed to eke out an increase.

During the three months that ended on March 31, 2016, mortgage originations came to $10.890 billion.

Business slowed from the final-three months of last year, when production totaled $11.058 billion.

Moorpark, California-based firm disclosed the performance statistics, in addition to other operational and financial results, in its first-quarter 2016 earnings report.

Home lending was better, however, than in the first-three months of last year, when $8.893 billion in loans were closed.

Refinance share widened to 28 percent from 27 percent in the final quarter of last year.

Correspondent acquisitions accounted for $9.683 billion of first-quarter 2016 production, down 3 percent from the prior quarter. But consumer-direct originations rose 17 percent to $1.207 billion.

Overall second-quarter originations are unlikely to be much different than first-quarter production based on total locks, which inched up to $12.6 billion in the first quarter of this year from $12.5 billion in the fourth-quarter 2015.

But while lock volume was down
2 percent for the correspondent channel, it was up 23 percent for the consumer-direct channel.

PennyMac finished March 2016 with 437 correspondent seller relationships, five more than at the end of 2015.

As of March 31, 2016, PennyMac serviced
$112.837 billion in residential loans.

The servicing portfolio grew from $110.603 billion at the conclusion of last year and $71.986 billion at the same point last year.

Another $45.940 billion was sub-serviced as of the most-recent date.

The report indicated that PennyMac “is uniquely positioned to be a successful acquirer of” mortgage servicing rights with the capacity to acquire MSRs on more than $200 billion in loans.

Sixty-day delinquency was 2.6 percent as of March 31, 2016, better than 2.9 percent as of year-end 2015.

Prior to the provision for income taxes, PennyMac earned $30 million.

Income sank from $77 million in the fourth-quarter 2015 and $53 million in the first-quarter 2015.

“The mortgage banking business is inherently sensitive to changes in interest rates, and PennyMac Financial has in place a comprehensive risk management approach designed to moderate the immediate impact of interest rate changes while taking into consideration the company-wide effect on revenue opportunities over time,” PennyMac Chairman and Chief Executive Officer Stanford L. Kurland explained in the report. “Interest rates declined during the first quarter which drove a significant value reduction in our MSRs, even after the offset from our interest rate risk management strategies.”

A staff of more than 2,500 employees was reported by PennyMac.

Headcount was
2,523 people at the end of last year.

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