PennyMac Financial Services Inc. sees opportunity in mortgage brokers and is about to launch a broker business. Quarterly originations increased as earnings declined.
The Westlake Village, California-based mortgage banking organization revealed in its second-quarter earnings report that its pre-tax income
totaled $58 million.
Income retreated from $62 million in the preceding three-month period. The decline was even larger versus the same three months in 2016, when pre-tax income was $84 million.
Quarter-over-quarter deterioration was attributed to valuation-related changes to mortgage-servicing rights.
Mortgage originations during the latest three-month period were $17.579 billion, climbing from $14.947 billion in the previous quarter. Business was also better than $16.109 billion the same three months last year.
Full first-half production was
$32.576 billion.
Second-quarter 2017 originations consisted of $1.268 billion in consumer-direct originations, ascending 23 percent from the first quarter, and $16.310 billion in correspondent acquisitions, up 17 percent.
PennyMac added 32 new correspondent seller relationships in the second quarter, leaving 589 in place.
The third quarter is poised for a further increase based on interest-rate lock commitments, which jumped to $20.5 billion from $ 16.3 billion in the first quarter.
PennyMac said that its broker channel is set to launch in the fourth quarter.
Mortgage brokers, which it says have a 10 percent share of the origination market, present a significant opportunity.
“Broker margins are typically higher than the correspondent channel since additional value-added services are provided in the broker origination transaction,” the report said.
After acquiring a Ginnie Mae portfolio of MSRs on $16.2 billion in mortgages,
the servicing portfolio was 1.102 million loans for $157.224 billion as of mid-2017. The portfolio grew from 1.031 million loans for $135.349 billion three months earlier and $117.037 billion one year earlier.
Another $64.925 billion was subserviced as of the latest date.
“PennyMac Financial has grown to become the largest issuer of new Ginnie Mae securities, the fourth-largest mortgage producer overall and a top-ten loan servicer.” PennyMac President and Chief Executive Officer David Spector said in the report.
Sixty-day delinquency fell to 2.5 percent at the end of the first-half 2017 from 2.7 percent as of March 31, 2017.
But there was no change in delinquency from a year earlier.
Staffing finished the first half at 3,028 people,
expanding from 2,918 employees at the end of the first quarter. At the same point last year, headcount was 2,600 people.
