Mr. Cooper Announces Sale of Reverse Servicing Portfolio

Rhea-AI Summary

Mr. Cooper Group announced a definitive agreement to sell its Reverse servicing portfolio, operated under the Champion Mortgage brand, to Mortgage Assets Management, LLC. The transaction, subject to regulatory approvals, will reduce Mr. Cooper's servicing portfolio by approximately $16 billion in unpaid principal balance and decrease its assets by around $5 billion. The Company expects no significant impact on second-quarter results. This strategic move allows Mr. Cooper to focus on its core segments, improving profitability and capital ratios, and enabling accelerated growth.

Positive

• Strategic sale allows focus on core origination and servicing segments.
• Improves profitability and strengthens capital ratios.
• Reduces servicing portfolio by $16 billion in unpaid principal balance.

Negative

• None.

Mr. Cooper Group Inc. (“Mr. Cooper” or “the Company”) announced today that it has entered into a definitive agreement for the sale of its Reverse servicing portfolio, operating under the Champion Mortgage brand, to Mortgage Assets Management, LLC and its affiliates (“MAM”). Upon the close of the transaction, which is subject to regulatory approvals and other closing conditions and is expected prior to year end, MAM and its affiliates will assume Champion’s reverse portfolio and related operations. The terms of the transaction have not been disclosed; however, the Company does not expect a significant impact on second quarter results.

The sale will reduce Mr. Cooper’s servicing portfolio by approximately $16 billion in unpaid principal balance and decrease its balance sheet by approximately $5 billion in HECM and other assets. Pending the close of the transaction, the Company will carry the Reverse business in discontinued operations.

“We are incredibly thankful to the Champion Mortgage team for their steadfast commitment to our business, and we will work to make the transition for them and our customers as smooth as possible,” said Jay Bray, Chairman and CEO of Mr. Cooper Group. “From a strategic standpoint, this is a major transaction -- we can now completely focus on our core origination and servicing segments. It also improves profitability, strengthens our capital ratios, and positions us to accelerate growth.”

Vice Chairman, President and CFO Chris Marshall added, “Measured from inception, Champion Mortgage has been a profitable operation for Mr. Cooper, but it is not a material driver of our business. This transaction strengthens our business model, simplifies our financial statements, and allows us to reallocate liquidity into our core operations. These benefits will contribute to even stronger momentum for Mr. Cooper.”

Wachtell, Lipton, Rosen & Katz acted as legal advisor to Mr. Cooper Group and Houlihan Lokey acted as financial advisor to Mr. Cooper Group.

About Mr. Cooper Group

Mr. Cooper Group Inc. (NASDAQ: COOP) provides quality servicing, origination and transaction-based services related principally to single-family residences throughout the United States with operations under its primary brands: Mr. Cooper® and Xome®. Mr. Cooper is one of the largest home loan servicers in the country focused on delivering a variety of servicing and lending products, services and technologies. For more information, visit www.mrcoopergroup.com.

View source version on businesswire.com: https://www.businesswire.com/news/home/20210706005217/en/

FAQ

What is the significance of the sale of the Reverse servicing portfolio by Mr. Cooper Group?

The sale allows Mr. Cooper to focus on its core origination and servicing segments, enhancing profitability and capital ratios.

How much does the sale reduce Mr. Cooper's servicing portfolio?

The transaction reduces Mr. Cooper's servicing portfolio by approximately $16 billion in unpaid principal balance.

What impact will the transaction have on Mr. Cooper's financials?

Mr. Cooper does not expect a significant impact on its second quarter results from this transaction.

What will happen to the Champion Mortgage operations after the sale?

Champion Mortgage operations will be assumed by Mortgage Assets Management, LLC and its affiliates.

When is the expected closing date for the transaction?

The transaction is expected to close before the year-end, subject to regulatory approvals.