Cooper attributes sale of reverse mortgage portfolio to strong balance sheet


Mortgage, origination and transaction-based services company Mr. Cooper Group held its fourth quarter 2021 results presentation this week and credits its recent exit from the reverse mortgage business with helping to provide one of the strongest balance sheets in the company’s history. That’s according to statements by Mr. Cooper, President and Chief Executive Officer, Jay Bray, and Vice President, President and Chief Financial Officer, Chris Marshall.

Bray in particular credited the sale of Mr. Cooper’s reverse mortgage portfolio as a major contributor to the company’s historically strong balance sheet.

“I am […] pleased to report that the board has authorized an additional $200 million, bringing our total authorization to date to $252 million,” Bray said on the earnings call. “The balance sheet is in the strongest shape in the company’s history, thanks to the sale of the reverse business, we have met and exceeded our target of 15% tangible net asset value, while simplifying our finances and streamlining our business model.”

A similar attribution to the exit was given by Marshall, placing the reverse exit in the context of broader tax returns.

“Overall, we’ve been extremely pleased, especially given the market is starting to normalize,” Marshall said of the company’s financial results. “Net income for the quarter was $155 million or $2.1 per share, which included a positive market value of $46 million, a loss of $20 million related to discontinued operations, which which represents two months of activity in reverse activity, which is now gone and adjustments of $31 million, most of which relates to the sale of area field services.

Last July, Mr. Cooper announced the sale of his portfolio of reverse mortgage services – operating under the Champion Mortgage brand – to Mortgage Assets Management, LLC (MAM). The terms of the contract are not disclosed.

“From a strategic perspective, this is a major transaction – we can now fully focus on our core origination and service segments. It also improves profitability, strengthens our capital ratios and positions us for accelerated growth,” Bray said when the sale was announced.

The sale was ultimately completed in December 2021. As noted when the sale was announced, Marshall clarified that the decision to sell the Champion portfolio was not because the reverse mortgage service put Mr. Cooper at risk or was reducing its profitability, but because the company was looking to streamline its financial statements and instead emphasize what it aims to do with its core business.

“Measured since inception, Champion Mortgage has been a profitable operation for Mr. Cooper, but it’s not a significant driver of our business,” Marshall said last summer of the Mr. Cooper Group/ MAM. “This transaction strengthens our business model, simplifies our financial statements and allows us to reallocate cash to our core businesses. These benefits will contribute to an even stronger momentum for Mr. Cooper.

Read Mr. Cooper’s fourth quarter 2021 earnings release.


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