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Mortgages

Recap: Mortgage lenders bounce back to profits in Q1

By Riley Edenbeck
June 6, 2024 6:07 PM

Despite a disheartening interest rate and refinancing environment, a majority of publicly traded mortgage companies from lenders to tech firms reported their return to the black after losses closing out 2023. 

Still, many companies are reworking their strategies in an attempt to stay profitable, looking to keep consumers motivated to use their services when making moves, or when rates drop, refinance their mortgages.

Here are the first quarter results from across the industry explained:

These articles were reported by Brad Finkelstein, Bonnie Sinnock, Spencer Lee, Maria Volkova and Andrew Martinez.

Rocket reports unsustainable profit in Q1 from gain on sale

Rocket returned to profitability, benefitting in Q1 from reported gains in net gain on sale and net servicing income. But management expects the growth will not be sustainable and will return to the previous year's levels. Its executives were optimistic, however, that elevated interest rates could allow Rocket to gain and capitalize off of market share from banks as those depositories grapple with profitability challenges. 

Read the full story here.

UWM recovers from losses on strong home purchase activity

The Detroit-area lender also got back to the black in Q1 after reporting the most purchase volume over the three-month period, bringing in gain-on-sale margins of 108 basis points. UWM earned $108.5 million, compared to $461 million in losses in the fourth quarter, falling on the upper end of its executives' predictions. 

Read the full story here.

Mr. Cooper bounces back with tripled profit, thanks to rate scenario

Mr. Cooper had a solid first quarter, recovering from the previous period's earnings decline as high interest rates benefited servicing. It posted $181 million in net profit, a triple increase from $46 million at the end of the fourth quarter when it faced with a cyberattack and lower valuations of mortgage servicing rights. 

Read the full story here.

Finance of America posts loss while ironing out details with AAG

Finance of America posted a net loss of $20.3 million, a narrowed loss compared to the previous year. To help return to profitability, the company embarked on a new branding strategy to blend its new acquisition, American Advisors Group, with its own Finance of America Reverse to create a seamless single reverse-mortgage business. 

Read the full story here.

Guild Mortgage leaves the red, continues expanding market share

Guild made its way out of the red, posting a positive net income this quarter of $28.5 million after reporting a net loss of $93 million at the end of Q4. Its growth plan is continuing with the purchase of Waterton Insurance, with potentially more deals to come. Executives are optimistic about Guild's ability to navigate challenges ahead as it expands its market share nationwide. It has acquired five lenders since 2022. 

Read the full story here.

Loandepot continues work to cut expenses after widened loss

Loandepot did not share in the success of its counterparts. Its January data breach required expenses that posed challenges in turning a profit. Its losses grew to $71.5 million despite pre-cyberhack efforts to reduce expenses, a nearly 20% increase from the final quarter of 2023. Executives assured stakeholders that the company has restored operations and doesn't expect the breach to affect future profits. In spite of the breach, quarterly expenses were 2.1% lower than this time last year. 

Read the full story here.

Onity Group, formerly Ocwen, sees recovery from servicing gains

Ocwen Financial, which rebranded as Onity Group as of May 28, got out of the woods as well. It reported $30 million in net income, up from a $47 million loss last quarter. Cost cutting and servicing gains were to thank for the recovery, as well as a one-time improvement in valuations. All of its origination channels were profitable again in Q1. Servicing was its main source of profit, but executives are finding it more beneficial to sell some of its MSRs. 

Read the full story here.

Better remains optimistic about strategy despite mirrored loss

Despite still landing in the red, Better took home more revenue and loan volume compared to Q4, brightening the outlook at the troubled company. Management expects it to grow through the year, requiring a 27% increase in marketing expenses. It reported $51 million in losses, mirroring the quarter prior, but saw revenue increases of 26% thanks to investment activity. The shop originated nearly 2,000 loans, boosting the total up by $134 million from the end of 2023. Executives said its cash position is better than competitors of its size and will support the company's growth. 

Read the full story here.

PennyMac erases its Q4 loss

PennyMac Financial Services saw some success in recovering earnings through its origination business. It posted nearly $39.3 million in profit, rebounding from a $36.8 million net loss closing out 2023. Despite $170 million in MSR fair value gains, nearly $300 million in hedging declines tanked that progress. Executives explained the company was more exposed to interest rate volatility. 

Read the full story here.

Rithm Capital sees earnings boost from mortgage operations

Rithm Capital leaned on mortgage operations to start 2024 in the black. The real estate investment trust reported $261.6 million in net income for the first quarter, or 54 cents per share, recovering from a $87.5 million loss in Q4 amid decline in the fair value of MSRs. As this improved, its mortgage originations and servicing segment brought in $311 million in net income. Its earnings exceeded consensus estimates, and executives expect current trends will continue to bring growth within servicing. 

Read the full story here.

PrimeLending widens loss in Q1

Executives of Hilltop Holdings' mortgage business had hoped to see improvement in the company's origination volume this quarter, but it remained in the red. It reported a widened pretax loss of $16.45 million – compared to $15.9 million in losses to close 2023 – despite seeing improvement in its gain-on-sale margin. Executives blamed the loss on industry-wide trends, as well as a $7 million value adjustment on its MSR asset, and acknowledged the industry will remain challenged in the coming quarters. 

Read the full story here.

Fannie Mae new loan purchases down, but still has earnings boost

Fannie Mae hit a low in single-family loan purchase volume that hasn't been seen since 2000. It purchased $62 billion worth in Q1, down nearly $10 million from the end of the year prior. The rate environment has made refinancing and new loans look unattractive to consumers, according to executives. Other strengths like guarantee fee increases helped to increase quarterly earnings to $4.3 billion, up from $3.9 billion last quarter. 

Read the full story here.

Freddie Mac posts earnings drop, touts historic high in first-time buyer loans

Freddie saw lower earnings and volume than in the previous quarter, but benefitted from a historic boost in first-time buyer loans, unlike its competitor. It posted $2.8 billion in Q1 earnings, only $10 million down from the previous quarter but showing an increase of 39% from the first quarter of 2023. The GSE wants to build on the amount of first-time home buyer loans coming in and attract buyers in the ESG market, according to executives. 

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ICE narrows losses, expects low growth in 2024

ICE's mortgage tech unit reported narrowed operating losses by 35% from the end of 2023, finishing the first quarter down $48 million compared to $74 million. It's sharing in the pain of other mortgage-related companies as interest rates rise, and executives expect low growth in 2024. ICE Mortgage Technology generated $499 million in revenue, more than double its $236 million on an annual basis. 

Read the full story here.

Two Harbors posts recovered income, plans to offer DTC loans

The investment corporation finished the first quarter with a net income of $192 million, bouncing back from nearly $445 million in losses at the end of 2023. Leaders credited MSR values increasing on high mortgage rates. Come the second quarter, executives expect to be securing loans through a direct-to-consumer channel in an attempt to prepare for a refinance environment ahead of time. 

Read the full story here. 

Title insurers post profit

The four largest title insurers, Fidelity, First American, Stewart and Old Republic, reported profits in Q1. The title industry saw opposition from the Federal Housing Finance Agency, which is making efforts to waive the requirements for a lender policy on certain refinancings and make lenders pay for their portion of the title policy. Executives had mixed opinions on the prospect. Old Republic was close to reaching the red despite posting $2.3 million in profit. Fidelity saw the greatest gain in earnings with $248 million compared to losses of $69 million last quarter. Meanwhile, Doma, in the process of being taken private, continued to report losses.

Read the full story here. 

Big banks see stability in Q1 despite drops in volume

Big banks' mortgage business suffered from first quarter weakness in terms of volume. But some loan margins, including gain-on-sale, were higher than in 2023, which contributed to stable home lending income. While leaving the correspondent channel last year cost the bank a lot of volume, Wells Fargo's GOS was 287 basis points higher than last quarter and its home lending earnings were up by $25 million. First quarter reports suggest that despite the volume cut, Wells Fargo's shift to retail originations, which generate higher margins has been lucrative. JPMorgan Chase's financials show similar results, slightly boosting its retail share with volumes dropping 8%, but net revenues still slightly rose. 

Read the full story here. 
Riley Edenbeck
Reporting Associate, National Mortgage News
Mortgages Earnings Originations Title insurance
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