Q4 2021 Mr Cooper Group Inc Earnings Call

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Hello, Thank you for standing by and welcome to Mr. Cooper Group Q4, 2021 earnings Conference call. At this time all participants are in a listen only mode. After the speaker presentation. There will be a question and answer session asked a question. During the session you will need to press star one on your telephone please be advised that today's conference is.

Speaker 1: Hello, thank you for standing by and welcome to Mr. Cooper Group Q4 2021 earnings conference call. At this time, all participants are in a listen-only mode. After the speaker presentation, there will be a question and answer session. To ask a question during the session, you'll need to press star one on your telephone. Please be advised that today's conference is being recorded. If you require any further assistance, please press star zero. I would now like to hand the conference over to your speaker today, Ken Posner. Please go ahead.

Is being recorded.

Any further assistance. Please press star Zero I would now like to hand, the conference over to your Speaker today, Ken Posner. Please go ahead.

Speaker 2: Good morning and welcome to Mr. Cooper Group's fourth quarter earnings call. My name is Ken Posner and I'm SVP of Strategic Planning and Investor Relations. With me today are Jay Bray, Chairman and CEO , Chris Marshall, Vice Chairman, President and CFO , and Jamie Gao, Deputy CFO .

Good morning, and welcome to Mr. Cooper group's fourth quarter earnings call. My name is Ken Posner and I am SVP of strategic planning and Investor Relations with me today are Jay Bray, Chairman and CEO , Chris Marshall.

<unk>, Vice Chairman, President and CFO , and Jamie Gao Deputy CFO .

Speaker 2: As a quick reminder, this call is being recorded. Also, you can find the slides on our investor relations web page at investors.MrCooperGroup.com.

As a quick reminder, this call is being recorded.

Also you can find the slides on our Investor relations webpage at investors that Mr. Cooper Group Dot com.

Speaker 2: During the call, we may refer to non-GAAP measures, which are reconciled to GAAP results in the appendix to the slide deck. Also, we may make forward-looking statements, which you should understand could be affected by risk factors that we've identified in our 10-K and other SEC filings. We are not undertaking any commitment to update these statements if conditions change. I'll now turn the call over to Jay.

During the call we may refer to non-GAAP measures, which are reconciled to GAAP results in the appendix to the slide deck.

Also we may make forward looking statements, which you should understand it could be affected by risk factors that we've identified in our 10-K and other SEC filings, we are not undertaking any commitment to update these statements if conditions change.

I'll now turn the call over to Jay.

Speaker 3: Thanks, Ken, and good morning, everyone, and welcome to our call. We just closed out an exceptional year, and I'd like to open by recognizing my fellow Coopers for everything you've done to care for customers and produce such strong results.

Thanks, Ken and good morning, everyone and welcome to our call.

We just closed out an exceptional year and I'd like to open by recognizing Marcello Cooper's for everything you've done to care for customers and produce such strong results.

Speaker 3: I've been amazed at your commitment and hard work while dealing with all the pandemic challenges. Thank you, thank you, thank you.

<unk> that your commitment and hard work, while dealing with all of the pandemic challenges. Thank you. Thank you. Thank you.

Speaker 3: In a moment, I'll share some thoughts on the outlook, but let's start as we always do by reviewing the quarters high.

In a moment I will share some thoughts on the outlook, let's start as we always do by reviewing the quarter's highlights and this was worth doing because we accomplished a great deal in the fourth quarter capped off an amazing year.

Speaker 3: And this is worth doing because we accomplished a great deal in the fourth quarter and it capped out an amazing year.

Speaker 3: We'll turn to slide three. Net income for the fourth quarter was $155 million, or $2.01 per share, which was equivalent to a return on tangible equity of $14.9 million.

We will turn to slide three net income for the fourth quarter was $155 million or $2 <unk> per share, which was equivalent to a return on tangible equity of 14, 9%.

Speaker 3: For the full year, operating return on equity was 25.7%, which as it turns out, was exactly what we guided you to expect a year ago.

For the full year operating return on equity was 25, 7%, which as it turns out was exactly what we guided you to expect a year ago.

Speaker 3: During the fourth quarter, both originations and servicing turned in results that were ahead of our...

During the fourth quarter, both originations and servicing turned in results that were ahead of our expectations.

Speaker 3: Servicing outperformed on EBO revenues, and our DTC teams did a fantastic job driving recapture and cash out refis. And as a result, the origination margin actually increased for the quarter from 1.27%, 1.41.

Servicing outperformed on EMEA revenues.

In our DTC teams did a fantastic job driving recapture and cash out Refis and as a result, the origination margin actually increased for the quarter from one point to 7% 141%.

Speaker 3: thanks to the strong operating results, as well as a positive mark on the MSR.

Thanks to the strong operating results as well as a positive mark on the MSR tangible book value increased to 40 to $43 82 per share.

Speaker 3: tangible book value increase to $40-43.82 per share.

Speaker 3: And I'd like to point out that on a year-over-year basis, this was a 67% increase. Well, let's talk about that for a moment.

And I'd like to point out that on a year over year basis. This was a 67% increase.

Let's talk about that for a moment we.

We had strong operating results in 2021.

Speaker 3: positive marks on the MSR. We had gains from monetizing three out of zones for business.

Positive marks on the MSR, we had gains from monetizing three out of zone four businesses and we were able to opportunistically retire shares at attractive prices.

Speaker 3: and we were able to opportunistically retire shares at attractive prices.

Speaker 3: Now we don't expect to grow TBV at this rate in most...

Now, we don't expect to grow TBD at this rate in most years, but there were some key themes in 2021 that are worth highlighting.

Speaker 3: but there were some key themes in 2021 that are worth highlighting.

Speaker 3: Because they're core to the Cooper story, and these include an intense focus on operations.

Because the core to the Cooper story and these include an intense focus on operations and opportunistic approach to capital allocation and the willingness to monetize assets when that makes sense strategically.

Speaker 3: an opportunistic approach to capital allocation, and the willingness to monetize assets when that makes sense strategically.

Speaker 3: Turning to the surf scene portfolio, growth accelerated to 6% in the quarter on the back of strong acquisition.

Turning to the servicing portfolio growth accelerated to 6% in the quarter on the back of strong acquisitions. As a result, we closed out the year up 17% and we're excited about the momentum heading into 2022.

Speaker 3: As a result, we closed out the year up 17% and we're excited about the momentum heading into 2000.

Shifting to capital management.

Speaker 3: Shifting to capital management, we repurchased 56 million of our stock during the fourth quarter at an average price of $41.22, which was a 6% discount.

We repurchased $56 million of our stock during the fourth quarter at an average price of $41 22.

Which was a 6% discount to fourth quarter TBD.

Speaker 3: We expect to generate continued growth in TBV, and we believe those shares represent outstanding value.

We expect to generate continued growth in <unk> and we believe those shares represent outstanding value.

Speaker 3: I'm also pleased to report that the board has authorized an additional $200 million, bringing our total authorization to $252 million as of today.

Also pleased to report that the board has authorized an additional $200 million, bringing our total authorization to $252 million as of today.

Speaker 3: The balance sheet is in the strongest shape of the company's

The balance sheet is in the strongest shape of the company's history. Thanks.

Speaker 3: Thanks to the sale of the reverse business, we achieved and surpassed our target of 15% tangible net worth to assets.

Thanks to the sale of the reverse business, we achieved and surpassed our target of 15% tangible net worth to assets.

Speaker 3: while at the same time simplifying our financials and streamlining our business model. The company generated very strong cash flow during the quarter.

At the same time, simplifying our financials and streamlining our business model.

The company generated very strong cash flow during the quarter with $171 million in steady state cash flow.

Speaker 3: And when it comes to cash generation, our balanced business model is very different from.

And when it comes to cash generation, our balanced business model is very different from peers are large servicing portfolio throws off huge amounts of cash our DTC unit is consistently cash flow positive, which is rarely the case for traditional origination channels and the DTA shields us from paying.

Speaker 3: Our large servicing portfolio throws off huge amounts.

Speaker 3: Our DTC unit is consistently cash flow positive, which is rarely the case for traditional origination channels. And the DTA shields us from paying federal.

Federal taxes.

Speaker 3: Thanks to strong cash flow plus the senior notes offering, we completed in the fourth quarter. We're starting the year with $895 million in unrestricted cash and a total of $1.7 billion in liquidity, which is a lot of drive power.

The strong cash flow plus the senior notes offering we completed in the fourth quarter, we're starting the year with $895 million in unrestricted cash and a total of $1 7 billion in liquidity.

There's a lot of dry powder.

Now, let's turn to slide four and we'll share our latest thinking on the 2022 outlook and beyond.

Speaker 3: Now let's turn to slide four, and we'll share our latest thinking on the 2022 outlook.

Speaker 3: This guidance is based on the current yield curve, which anticipates the Fed tightening four times

This guidance is based on the current yield curve, which anticipates the fed tightened four times this year.

Speaker 3: 30-year mortgage rate increasing from the current levels to around 4%, and continued economic growth.

30 year mortgage rate increasing from the current levels to around 4% and continued economic growth.

Let's start by talking about return on tangible equity after two years of outperforming our targets. We are now starting a year where returns are going to be at the lower end of the 12 months to 20% range.

Speaker 3: After two years of outperforming our targets, we're now starting a year where returns are going to be at the lower end of the 12% to 20% range, which is what we've guided you to expect.

Which is what we've guided you to expect in most environments.

Speaker 3: This shouldn't be a surprise, it's just the reality that originations normalizes very rapidly while it will take a few quarters for servicing to hit its stride.

Be a surprise, it's just the reality that originations normalizes very rapidly while it will take a few quarters for servicing to hit its stride.

Speaker 3: Having said that, let's talk about TBV growth, where the outlook is stronger. In fact, the outlook for TBV growth is really quite active.

Having said that let's talk about TBD growth, where the outlook is stronger in fact, the outlook for <unk> growth is really quite excellent. Because in addition to operating earnings there's a strong likelihood that we'll markup or msr's or higher rates.

Speaker 3: because in addition to operating earnings, there's a strong likelihood that we'll mark up our MSRs for higher risk.

Speaker 3: And as you know, a successful monetization of Zome would drive a substantial benefit for TBV.

The successful monetization of zone would drive substantial benefit for TV.

Speaker 3: As we head into 2023, we expect ROTC to start rising.

As we head into 2023, we expect our OTC to start rising again and potentially the structurally higher levels. As we are working on a number of strategic initiatives designed to drive lower cost and wider margins.

Speaker 3: and potentially to structurally higher levels as we're working on a number of strategic initiatives designed to drive lower costs and wider margins. Now let's talk about servicing portfolio growth.

Now, let's talk about servicing portfolio growth, where the outlook remains very promising.

Speaker 3: For 2022, we'd expect at least 10% portfolio.

2022, we would expect at least 10% portfolio growth and I'd be surprised if we didn't do better.

Speaker 3: and I'd be surprised if we didn't do better. Activity in the bulk market remains quite strong. In fact, we just won another large portfolio last week. At the same time, we're seeing new opportunities.

Activity in the bulk market remains quite strong in fact, we just won another large portfolio last week.

At the same time, we're seeing new opportunities in sub servicing we're in talks with a number of potential clients, including MSR investors, who recognize the significant technology investments, we've made and what that means for recapture.

Speaker 3: We're in talks with a number of potential clients, including MSR investors, who recognize the significant technology investments we've made and what that means for ReCap.

Speaker 3: And I'm confident that we'll soon be reporting some new client wins.

And I am confident that we will soon be reporting some new client wins.

Let's spend a moment on capital deployment.

Speaker 3: as these are probably the most important decisions we made on behalf of our state.

These are probably the most important decisions, we make on behalf of our stakeholders.

Speaker 3: As you know, we've established a strategic target of $1 trillion in UPB, which would be around 5 million customers.

As you know we've established a strategic target of one trillion in <unk>.

Which would be around 5 million customers.

Speaker 3: We believe this level of scale will constitute a major competitive advantage.

We believe this level of scale will constitute a major competitive advantage, we're actually moving towards that goal faster than we expected and we're there.

Speaker 3: We're actually moving towards that goal faster than we expected, and we're very excited about this momentum. However, I want to remind you that every single acquisition we make is subject to return hurdles.

Very excited about this momentum however, I want to remind me.

The single acquisition, we make the subject to return hurdles period.

Speaker 3: We've never chased market share and we aren't about to start.

We've never chase market share when we are about to start.

Speaker 3: What you're seeing right now is the thesis which we laid out for you more than a year ago, that rising rates would pressure originators to sell the MSRs they were holding onto during the pandemic.

What youre seeing right now is the thesis, which we laid out for you more than a year ago that rising rates would pressure originators to sell the MSR as they were holding onto during the pandemic.

Speaker 3: And because there are relatively few firms with the capital and operational capacity to take on portfolios, the pricing is excellent.

And because there are relatively few firms with the capital and operational capacity to take on portfolios the pricing is excellent.

Speaker 3: If this changes next quarter, we'll pull back. And we've been working on our platform for many, many years, and we have no problem.

If this changes next quarter, we will pull back and we've been working on our platform for many many years and we have no problem being patient.

Speaker 3: Our second priority is to return excess capital through stock.

Our second priority is to return excess capital through stock repurchase, especially when the share price is attractive as it is right now.

Speaker 3: especially when the share price is attractive as it is right.

Speaker 3: Finally, I want all of our investors, both equity and debt, to understand our commitment to managing capital and liquidity in a manner that inspires confidence in our balance.

Finally, I want all of our investors, both equity and debt to understand our commitment to managing capital and liquidity.

Minor that inspires confidence in our balance sheet.

Speaker 3: That's exactly what you saw us do last year when we grew the portfolio, bought back stock, and ended the year in even stronger shape.

Exactly what you saw us do last year. When we grew the portfolio bought back stock and ended the year and even stronger shape.

Speaker 3: Now if you'll turn with me to slide five, I'll wrap up my remarks with some comments on technology.

Now if youll turn with me to slide five I'll wrap up my remarks with some comments on technology.

Speaker 3: We are in the business of continuously building solutions for our team members and customers.

We are in the business of continuously building solutions for our team members and customers and we also look for ways to extract value from our assets and platform.

Speaker 3: And we also look for ways to extract value from our assets and platforms.

Speaker 3: Zome and our proprietary technology solutions are perfect examples.

Loan and our proprietary technology solutions are perfect. Examples of this core.

Speaker 3: For example, part of what made our title unit such a profitable business was an automated title underwriting engine called XP.

For example, part of what made our title unit, such a profitable business with an automated title underwriting engine called X one.

Speaker 3: X1 provides instant clear-to-close, which helps speed up the underwriting.

<unk> provides instant cleared a clearance which helps speed up the underwriting process.

Speaker 3: And X1 was an application that we developed, and it was part of the reason we got such an attractive valuation for our title unit when we exited the business land.

One was an application that we developed and it was part of the reason, we got such an attractive valuation for our title unit when we exited the business last year.

Speaker 3: As another example, you've heard us talk about our award-winning cloud-based document reading technology, which we now call Pyro.

As another example, you've heard US talk about our award winning cloud based document reading technology, which we now call pyro.

Speaker 3: Thanks to machine learning, we can scan enormous quantities of documents with very high accuracy.

Thanks to machine learning, we can scan enormous quantities and documents with very high accuracy rate.

Speaker 3: This is a huge advantage to us in onboarding large portfolios. We're now licensing this technology to other mortgage companies. And I'm pleased to report we just signed up our first.

This was a huge advantage to us in Onboarding large portfolios.

Were now licensed this technology to other mortgage companies and I am pleased to report, we just signed up our first customer.

And you're all familiar with our zone oxygen exchange, which is a digital cloud native platform with very strong margins and a steadily growing number two market share.

Speaker 3: is a digital cloud native platform with very strong margins and a steadily growing number two market share. Most of the revenues now come

Most of the revenues now come from third party clients.

Speaker 3: And I just want to remind you that we built the exchange from scratch.

Just want to remind you that we built the exchange from scratch.

Speaker 3: And that brings us up to the deal with Sage at Lending, which we announced this morning.

That brings us up to the deal with <unk> lending, which we announced this morning.

Speaker 3: Let's start with the terms, we're conveying the rights to our proprietary servicing platform to Sageit, which is owned by Warbird.

Let's start with the terms was conveying the rights to our proprietary servicing platform to St. Jude.

Which is owned by Warburg Pincus posture.

Speaker 3: and provides mortgage servicing solutions to banks and other lenders.

And provides mortgage servicing solutions to banks and other lenders.

Speaker 3: SAGENT in turn will integrate our native cloud platform onto a cloud-based core and offer the first ever cloud-native servicing platform to the mobile.

In turn we will integrate our native cloud platform onto the cloud based core and offer the first ever cloud native servicing platform to the mortgage industry.

Speaker 3: In exchange for the rights to our platform, Sagent is providing us with an equity stake in their company.

In exchange for the rights to our platform stage. It is providing us with an equity stake in their company and two board seats in the first quarter, we expect to record a pretax gain of approximately $225 million related to the sale and.

Speaker 3: In the first quarter, we expect to record a pre-tax gain of approximately $225 million related to the sale.

Speaker 3: And we would fully expect this equity position to appreciate significantly as Sagent delivers on its mission of disrupting the status quo.

And we would fully expect this equity position to appreciate significantly.

<unk> delivers on its mission of disrupting the status quo.

Speaker 3: This is a very significant development for the industry and for Mr. Puglia. For the industry, this will be the first class.

This is a very significant development for the industry and for Mr. Cooper for the industry. This will be the first cloud native servicing platform, that's going to force every single operator to migrate their system to the cloud or face significant competitive disadvantages.

Speaker 3: It's going to force every single operator to migrate their system to the cloud or face significant competitive disadvantages.

Speaker 3: For Mr. Cooper, this new platform will drive efficiencies, both in terms of operating costs and the ongoing cost of maintaining and upgrading the technology.

For Mr. Cooper This new platform will drive efficiencies both in terms of operating costs and the ongoing cost of maintaining and upgrading the technology.

Speaker 3: we'll be able to shift more development resources to the customer experience.

We will be able to shift more development resources to the customer experience layer, which consists of those applications that are critical to driving customer delight.

Speaker 3: which consists of those applications that are critical to driving customer delight. And with that, I'll turn the call over to Chris.

And with that I'll turn the call over to Chris.

Hey, Thanks, Jay and good morning, everyone.

Speaker 3: If you all turn to slide six, I'll start with a high-level summary of our financial results.

If you all turn to slide six I'll start with a high level summary of our financial results.

Speaker 3: Overall, we were extremely pleased, especially given a market that's starting to normalize.

Overall, we were extremely pleased especially given the market starting to normalize.

Speaker 3: Net income for the quarter was $155 million, or $2.01.

Net income for the quarter was $155 million.

There were $2 <unk> per share.

Speaker 3: which included a positive $46 million mark to market.

Which included a positive $46 million mark to market.

Speaker 3: a $20 million loss from discontinued operation.

$20 million loss from discontinued operations.

Speaker 3: which represents two months of activity in the reverse business, which is now gone and adjustments of 31 million, most of which relate to the sale of zone field services.

Each represents two months of activity in the reverse business, which is now gone and.

And adjustments of 31 million, most of which related to the sale of zone field services.

Pre tax operating income was $156 million and fully taxed operating Aro TCE was 14, 9%.

Speaker 3: Pre-tax operating income was $156 million, and fully taxed operating ROTCE was 14.9%.

Originations produced a $182 million in operating EBT on strong performance in DTC.

Speaker 3: Originations produced $182 million in operating EBT on strong performance in DTC, where we saw really nice growth in recapture and in cash-out refinances.

We saw really nice growth and recapture ending cash out refinances.

Speaker 3: Servicing was stable quarter over quarter and produced 41 million in operating EBT, largely driven by $91 million in EBO revenue.

Servicing was stable quarter over quarter.

And produced $41 million in operating EBT, largely driven by $91 million and <unk> revenues.

You'll note that corporate debt interest expense increased from 30 to 36 million, which reflects two months of interest expense related to the senior notes. We issued in November so going forward, you should be modeling $39 million and corporate debt interest expense each quarter.

Speaker 3: You'll note that corporate debt interest expense increased from $30 to $36 million, which reflects two months of interest expense related to the senior notes we issued in November . So going forward, you should be modeling $39 million in corporate debt interest expense each quarter.

Speaker 3: Adjustments totaled $31 million, which included a $34 million gain from the sale of zone-filled services and $3 million in severance charges.

Adjustments totaled 31 million, which included a $34 million gain from the sale of zone field services and $3 million and severance charges.

Now, let's turn to slide seven.

Speaker 3: Now let's turn to slide seven and talk about tangible book value, which we view as a critical measure of shareholder value.

And talk about tangible book value.

Which we view as a critical measure of shareholder value.

Thanks to strong income TBB finished the year at $43 82 per share.

Speaker 3: Thanks to strong income, TBV finished the year at $43.82 per share.

Speaker 3: The chart on the right provides you with a year-over-year walk for the 67% growth, which Jay just commented on. To recap...

The chart on the right provides you with a year over year walk for the 67% growth, which Jay just commented on.

To recap 2021.

Speaker 3: We benefited from more than $1 billion in pre-tax operating income, over $400 million in positive marks.

We benefited for more than $1 billion in pre tax operating income.

We're $400 million in positive remarks.

Speaker 3: and $528 million in gains from the sale of three out of the four Zome businesses.

And $528 million and gains from the sale of three out of the four zone businesses.

Speaker 3: In addition, we opportunistically repurchased 16.9 million shares for $600 million at a weighted average price of $33.80.

In addition, we opportunistically repurchased 16 9 million shares for $600 million.

At a weighted average price of $33 80.

Since initiating the stock repurchase program. We've now retired 20% of the company shares and given our outlook for future growth and TBB per share.

Speaker 3: Since initiating the stock repurchase program, we've now retired 20% of the company shares. And given our outlook for future growth in TBV per share, we believe the return from repurchasing shares will turn out to be extremely high over time.

We believe the return from repurchasing shares will turn out to be extremely high over time.

Speaker 3: Looking ahead, we fully expect to keep growing TBV per share.

Looking ahead, we fully expect to keep growing <unk> per share.

Speaker 3: To start with, in most environments, we expect returns on equity to range from 12% to 20%, which will grow retained earnings.

To start with in most environments, we expect returns on equity to range from 12% to 20%, which will grow retained earnings.

Speaker 3: And to the extent that interest rates rise faster than expected.

And to the extent there.

Net interest rates rise faster than expected.

Speaker 3: TBV should also benefit from positive MSR marks. In fact, if we close the books today, we'd expect to record a positive mark of at least $300 million.

TBD should also benefit from positive MSR marks in fact, if we close the books today, we'd expect to record a positive mark of at least $300 million.

Additionally, and as we've previously shared with you.

Speaker 3: Additionally, and as we've previously shared with you.

Speaker 3: We're actively exploring monetization options for the auction exchange, which we think is certainly the most valuable of all the zone businesses.

We are actively exploring monetization options for the auction exchange, which we think is certainly the most valuable of all of his own business units.

Speaker 3: And finally, we'll continue to repurchase stock on an opportunistic basis.

And finally, we will continue to repurchase stock on an opportunistic basis.

Now, let's turn to slide eight and discuss the valuation of our MSR, which are obviously, the most important assets on our balance sheet.

Speaker 3: Now let's turn to slide eight and discuss the valuation of our MSRs, which are obviously the most important assets on our balance sheet.

In summary, we marked up our MSR value by three basis points to 124 basis points of <unk>.

Speaker 3: In summary, we marked up our MSR value by three basis points to 124 basis points of UPB, which reflects the 10 basis point increase in mortgage rates during the fourth quarter, leading to a slightly lower expectation of lifetime CPR speeds and a 32 basis point increase in swap rates, which point to higher custodial deposit income over time.

Which reflects the 10 basis point increase in mortgage rates during the fourth quarter, leading to a slightly lower expectation of lifetime CPR speeds and a 32 basis point increase in swap rates, which point to higher custodial deposit income overtime.

Speaker 3: Now, each quarter we talk about the number of customers who can save money or access cash to refinance.

Now each quarter, we talked about the number of customers, who can save money or excess cash through refinancing.

Speaker 3: Over the last three months, the number of customers who could benefit from a pure rate term refinance has declined, as you'd expect with higher mortgage rates. However, with strong home prices, we've seen a very meaningful increase in the population of customers with equity in their homes.

Over the last three months the number of customers, who could benefit from a pure rate term refinance has declined as you would expect with higher mortgage rates. However, with strong home prices, we've seen a very meaningful increase in the population of customers with equity in their homes.

Speaker 3: This is another large source of business for DTC.

This is another large source of business for DTC.

Also while interest rates and home prices are important in the short term.

Speaker 3: Also, while interest rates and home prices are important in the short term, I'd point out that the company's total customer base grew by 3.6 percent in the quarter, which bodes well for opportunities over the longer term.

Point out that the Companys total customer base grew by three 6% in the quarter, which bodes well for opportunities over the longer term.

Speaker 3: Okay, let's turn to slide nine and I'll talk a little bit about the impact to Mr. Cooper from changes in rates.

Okay, let's turn to slide nine and I'll talk a little bit about the impact to Mr. Cooper from changes in rates.

Speaker 3: Obviously, for all mortgage companies, interest rates are top of mind right now. So we're providing you with some extra transparency into our balance sheet and a few examples of how we benefit from our balanced business model.

Obviously for all mortgage companies.

Interest rates are top of mind right now so we're providing you with some extra transparency into our balance sheet and a few examples of how we benefit from our balanced business model.

Now this slide shows you estimated marks for our MSR portfolio and five different rate scenarios as well as some directional guidance on how these scenarios would impact our operating results.

Speaker 3: Now, this slide shows you estimated marks for our MSR portfolio in five different rate scenarios, as well as some directional guidance on how these scenarios would impact our operating results.

These five scenarios include two parallel shocks, which are plus or minus 50 basis points and three scenarios, where the yield curve twists.

Speaker 3: These five scenarios include two parallel shocks, which are plus or minus 50 basis points, and three scenarios where the yield curve twists.

Speaker 3: So far this year, rates have mostly tracked. The parallel shift we're showing you here. And as I just mentioned, if we close the books today, we'd expect to record a mark of at least $300 million.

So far this year rates have mostly track the parallel shift we're showing you here and as I just mentioned if we close the books today, we'd expect to record a mark of it.

At least $300 million.

Speaker 3: As you look across the scenarios, you'll see that the marks reflect movements in both the long and short end of the curve. The long end of the curve drives prepayment speeds, which affects amortization.

As you look across the scenarios.

You'll see that the marks reflect movements in both the long and short end of the curve. The long end of the curve drives prepayment speeds, which affects amortization.

Speaker 3: And short-term rates drive yields in our custodial deposits, which totaled $14 billion in the fourth quarter, and which right now are yielding close to nothing.

In short term rates drive yields in our custodial deposits, which totaled <unk> 14 billion in the fourth quarter, and which right now are yielding close to nothing.

I'd also point out that MSR values are sensitive to spreads between mortgage rates MBS and swaps and that these estimates include our best judgments on how spreads would change in these scenarios.

Speaker 3: I'd also point out that MSR values are sensitive to spreads between mortgage rates, MBS, and swaps, and that these estimates include our best judgments on how spreads would change in these scenarios. And finally, I'd point out that we do have in place a very small hedge, which covers the portion of the MSR where we have outstanding line draws.

And finally I pointed out that we do have in place a very small hedge which covers the portion of the MSR. We have outstanding line draws.

Speaker 3: and simply want to clarify that these estimates are showing you impacts net of that hedge.

And simply wanted to clarify that these estimates are showing you.

Impacts net of that hedge.

Speaker 3: Now, clearly interest rates lie outside of our control. So as we think about our business.

Now clearly interest rates why outside of our control so as we think about our business.

Speaker 3: Our focus is on what we can control, such as simplifying and automating more of our processes.

Our focus is on what we can control such as simplifying and automating more of our processes.

Speaker 3: grinding out lower unit costs year in and year out, and of course, delighting every customer

<unk> now at lower unit costs year end a year out.

And of course delighting every customer.

With a personalized and friction free experience.

Speaker 3: Now let's turn to slide 10 and talk about the origination segment, which produced pre-tax operating income of $182 million, which was slightly above our guidance due to very strong performance in DTC.

Now, let's turn to slide 10, and talk about the origination segment, which produced pretax operating income of $182 million.

Which was slightly above our guidance due to very strong performance in DTC.

Speaker 3: In fact, I'd highlight that our margin was actually higher in the quarter, moving from 127 basis points to 141. Now that change in margin should drive home the point that our originations model is quite different from our peers.

In fact, I would highlight that our margin was actually higher in the quarter moving.

Moving from a 127 basis points to 141 now that change in margin should drive home the point that our originations model is quite different from our peers.

For one since we're serving existing customers.

Speaker 3: For one, since we're serving existing customers, we have significant flexibility on price.

We have significant flexibility on pricing.

Speaker 3: And at the same time, we spent relatively little on market.

And at the same time, we spent relatively little on marketing.

Speaker 3: Additionally, we started taking actions to rationalize capacity, as we commented on in the last quarter. And finally, I'd like to talk about structural improvements in profitability.

Additionally, we started taking actions to rationalize capacity as we commented on last quarter and finally I'd like to talk about structural improvements in profitability.

Project Flash, which you may recall us mentioning <unk>.

Speaker 3: Project Flash, which you may recall us mentioning, involves digitizing our processes after we take an app.

Involves digitizing our processes after we've taken app.

Now in some instances.

Speaker 3: Flash cuts the amount of time required to complete certain processing tasks by more than 50%.

<unk> cuts the amount of time required to complete certain processing tasks by more than 50%.

Speaker 3: As of today, Flash is now in operation across roughly 16% of our production, but by the third quarter, Flash should be up to 60%.

As of today flashes now in operation across roughly 16% of our production.

The third quarter flash should be up to 60%.

So you should expect us to point to more efficiency gains in coming quarters.

Speaker 3: So you should expect us to point to more efficiency gains in coming quarters.

Now, let's shift to volumes for DTC volumes were down 8% sequentially and.

Speaker 3: Now let's shift to volumes. For DTC, volumes were down 8% sequentially, and locks were down 12%, which reflects the predictable effect of higher mortgage rates, and also the return in seasonality.

And locks were down 12%, which reflects the predictable effect of higher mortgage rates and also the return of seasonality.

After working intensely over the last two years, while at the same time dealing with the disruptions of the pandemic.

Speaker 3: After working intensely over the last two years, while at the same time dealing with the disruptions of the pandemic, many of our Originations team members finally took some time off this season to be with their families.

Many of our originations team members finally took some time off the season to be with their families.

Speaker 3: which resulted in a more typical seasonal pattern for fourth quarter. And candidly, we couldn't

Which resulted in a more typical seasonal pattern for fourth quarter.

Okay.

Candidly, we couldnt have been happier for that.

Speaker 3: I'd like to take a minute to recognize our Originations team members, because over the last two years, you have done a magnificent job taking care of our customers, and your contribution to the company's performance has been nothing short of amazing.

I'd like to take a minute to recognize our originations team members because over the last two years you have done a magnificent job taking care of our customers and contributions to the company's performance has been nothing short of amazing.

Speaker 3: In the correspondent channel, fronties dropped off more significantly, and that was by design.

And a correspondent channel funding has dropped off more significantly and that was by design.

Speaker 3: Specifically, fundings were down 19% and locks were down 39% sequentially. This was the result of sticking to our pricing discipline in the face of extreme competition.

Specifically fundings were down 19% and locks were down 39% sequentially and this was the result of sticking to our pricing discipline in the face of extreme competition.

Speaker 3: What's interesting to us is at this point in the cycle, we're seeing better returns in bulk acquisitions than in correspondent.

What's interesting to US is that at this point in the cycle, we're seeing better returns and bulk acquisitions spend in correspondent.

Now, let's turn to slide 11.

Speaker 3: and zero in on some of the key performance metrics for origination.

And zero in on some of the key performance metrics for originations.

The correspondent channel continues to provide us with excellent exposure to the purchase market with our purchase share at 57% in the quarter outpacing Mbas estimate a 47% for the industry. This shows you that we have some strong originators as our clients.

Speaker 3: The Correspondent Channel continues to provide us with excellent exposure to the purchase market, with our purchase share at 57% in the quarter, outpacing MBA's estimate of 47% for the industry. This shows you that we have some strong originators as our clients.

In terms of DTC, we're doing extremely well with cash outs, which made up nearly 50% of DTC volumes this quarter.

Speaker 3: In terms of DTC, we're doing extremely well with cash outs, which made up nearly 50% of DTC volumes this quarter.

Speaker 3: As I commented earlier, with home prices having risen so strongly over the last two years, we're seeing significant growth in the number of customers with equity, which bodes well for continuing cash-out volume.

As I commented earlier with home prices, having risen so strongly over the last two years, we're seeing significant growth in the number of customers with equity, which bodes well for continuing cash out volumes.

Recapture performance is also heading in the right direction refinanced recapture rates increased from 40% to 43% in the quarter and in January the rate was 49%.

Speaker 3: Recapture performance is also heading in the right direction. Refinance recapture rates increased from 40 to 43% in the quarter, and in January , the rate was 49%.

Speaker 3: as we continue to execute towards our important strategic recapture target of 60 percent. Achieving that target

As we continue to execute towards our important strategic recaptured target of 60%.

Achieving that target will drive stronger growth.

Speaker 3: since we'll have fewer relationships to replace, and it will structurally improve our return on equity and cashflow generation.

Since we'll have fewer relationships to replace and it will structurally improve our return on equity and cash flow generation.

Speaker 3: By the way, we haven't talked with you before about purchase recapture, but this is also an area of strategic focus for us, since it's another lever to drive higher customer retention.

By the way, we haven't talked with you before about purchase recapture.

This is also an area of strategic focus for us since it's another lever to drive higher customer retention.

Speaker 3: In this regard, we recently entered into a partnership with Realogy, which is the nation's largest realtor network, to provide our customers with access to Realogy agents to assist them with a purchase transaction. We'll provide you with an update on how this is working out later in the year.

In this regard we recently entered into a partnership with Realogy, which is the nation's largest real through network to provide our customers with access to realogy agents to assist them with a purchase transaction.

We will provide you with an update on how this is working out later in the year.

Speaker 3: Turning the gain on sale margins in the upper right-hand chart.

Turning to the gain on sale margins in the upper right hand chart.

Speaker 3: For DTC, we're continuing to see slow but steady pressure, which is exactly what we'd expect at this point in the cycle.

For DTC, we're continuing to see slow, but steady pressure, which is exactly what we would expect at this point in the cycle.

Speaker 3: In the Correspondent Channel, we began to see a small improvement in January , which wasn't due to any change in competition, but simply shows the impact of our decision to scale back where pricing was unattractive.

In the correspondent channel, we began to see a small improvement in January which wasn't due to any change in competition, but simply shows the impact of our decision to scale back where pricing was unattractive.

Speaker 3: Turning to the outlook for the first quarter, this is clearly the point in the cycle where originations could be very sensitive to small changes in interest rates, especially given that the industry is dealing with certain competitors who are desperate to sustain volume at almost any cost.

Turning to the outlook for the first quarter. This is clearly the point in the cycle, where originations could be very sensitive to small changes in interest rates, especially given that the industry is dealing with certain competitors, who are desperate to sustained volume at almost any cost.

Speaker 3: So while there are some uncertainties, we'd expect first quarter EBT for originations to be somewhere in the range of 150 to 170 million based on fundings of 10 to 13 billion.

So while there are some uncertainties wed expect first quarter.

<unk> for originations to be somewhere in the range of $150 million to $170 million based on fundings of $10 billion to $13 billion.

Now if you turn to slide 12.

Speaker 3: Let's talk about growth in the servicing portfolio, where we have excellent momentum.

Let's talk about growth in the servicing portfolio.

Where we have excellent momentum.

Speaker 3: Total UPB end of the quarter at $710 billion, which is up 6% sequentially, and up 17% for the year.

Total <unk> ended the quarter at 710 billion, which is up 6% sequentially and up 17% for the year.

Speaker 3: And we've talked a lot about the trillion dollar UPV target for more than five million customers, which is meant to signal our confidence in the scalability of our platform.

And we've talked a lot about the trillion dollars <unk> target were more than 5 million customers, which is meant to signal our confidence and the scalability of our platform.

Speaker 3: Growing to that level will provide us with a huge scale advantage over competitors and should also position us to generate positive operating leverage and structurally higher returns.

Growing to that level will provide us with a huge scale advantage over competitors and should also position us to generate positive operating leverage and structurally higher returns.

Speaker 3: As you can see from the chart on the left, the growth this quarter was driven by solid execution across all channels, led by strong acquisitions of $43 billion.

As you can see from the chart on the left the growth this quarter was driven by solid execution across all channels.

Led by strong acquisitions of 43 billion.

Speaker 3: As we ended fourth quarter, we had $17 billion in MSR deals that are pending, and so far in the first quarter, activity continues to be very brisk. In fact, just last week, we reached an agreement on a $21 billion portfolio at attractive terms, which we expect to board in the beginning of the second quarter.

As we ended the fourth quarter, we had $17 billion in MSR deals that are pending and so far in the first quarter activity continues to be very brisk. In fact, just last week, we reached an agreement on a $21 billion portfolio at attractive terms, which we expect to board in the beginning of the second quarter.

Speaker 3: In subservicing, we had some modest growth this quarter coming from clients who won small new pools.

And sub servicing we had some modest growth this quarter coming from clients, who one small new pools.

Speaker 3: As Jay mentioned, we're optimistic about gaining market share in subservicing and are currently in discussions with several new clients.

Jay mentioned, we're optimistic about gaining market share in sub servicing and are currently in discussions with several new clients.

Speaker 3: We remind you that we're the only major subservicer with a strong recapture capability, which is absolutely critical to the economics for MSR investors. Now let's turn to slide 13 and talk.

We remind you that we're the only major sub servicer with a strong recapture capability, which is absolutely critical to the economics for MSR investors.

Now, let's turn to slide 13, and talk about servicing EBT.

Speaker 3: Pre-tax operating income was $41 million thanks to strong EBO revenues of $91 million.

Pre tax operating income was $41 million, thanks to strong <unk> revenues of $91 million.

Speaker 3: And that was slightly higher than our previous guidance. The EBO beat reflects the fact that we accelerated some buyouts for certain pools that would have otherwise taken place in the first quarter. Now, with forbearance programs winding down, the EBO opportunity is rapidly diminishing. In the first quarter, we're only expecting EBO revenues of around $20 million.

And that was slightly higher than our previous guidance. The <unk> reflects the fact that we accelerated some buyouts for certain pools that would have otherwise taken place in the first quarter.

Now with forbearance programs winding down the <unk> opportunity is rapidly diminishing in.

In the first quarter were only expecting <unk> revenues of around $20 million.

Speaker 3: Operating costs were a good story in 2021, and we brought them down from 8.5 basis points of UPB to 7.4. And as we continue to grow the portfolio, we're very focused on capturing incremental efficiencies, which will result in further declines in this metric over time.

Operating costs were a good story in 2021, and we brought them down from eight five basis points of view PB to seven four and as we continue to grow the portfolio. We're very focused on capturing incremental efficiencies, which will result in further declines in this metric over time.

Speaker 3: Now let's turn to slide 14 and review amortization and deposit income, which are two components of servicing earnings, both of which should improve in a rising rate environment.

Now, let's turn to slide 14, and review amortization and deposit income, which are two components of servicing earnings.

Of which should improve in a rising rate environment.

Speaker 3: Amortization was $187 million in the fourth quarter, down from $204 million in third quarter due to lower CPR speeds, which declined to 19.5%.

Amortization was $187 million in the fourth quarter down.

Down from $204 million in third quarter due to lower CPR speeds, which declined to 19, 5%.

Speaker 3: A further reduction in CPR speeds will drive lower amortization.

A further reduction in CPR speeds will drive lower amortization expense, although I remind you that this benefit will be partly offset by the higher valuation on the MSR, which we marked up to 124 basis points at year end.

Speaker 3: Although I remind you that this benefit will be partly offset by the higher valuation on the MSR, which we marked up to 124 basis points at year end.

Speaker 3: Now let's take a hypothetical example. Suppose CPRs had been 200 basis points lower in the fourth quarter. In that case, amortization would have been $20 million lower in the quarter, which equates to a full year benefit of roughly $80 million.

Now lets take a hypothetical example.

<unk> had been 200 basis points lower in the fourth quarter.

That case amortization would have been $20 million lower in the quarter.

Which equates to a full year benefit of roughly $80 million.

Speaker 3: This example is based on the MSR already valued at 124 basis.

This example is based on the MSR already valued at 124 basis points.

Speaker 3: I commented earlier on a markup of at least $300 million in the first quarter based on where rates are today. That mark would push the valuation up to roughly 133 basis points, which you need to take into account in forecasting amortization going forward.

I commented earlier on our markup of at least $300 million in the first quarter based on where rates are today that mark we pushed the valuation up to roughly 133 basis points, which you need to take into account in forecasting amortization going forward.

Now turning to interest income, we earned $42 million in the fourth quarter. This amount our custodial deposits contributed very little on average balances.

Speaker 3: Now turning the interest income, we earned $42 million in the fourth quarter. This amount, our custodial deposits, contribute very little on average balances of more than $14 billion.

More than $14 billion.

Speaker 3: As Jay mentioned, with the Fed expected to tighten at least four times this year, we'd expect this will push up yields on deposits by 75 or 100 basis points by year end.

As Jay mentioned with the fed expected to tighten at least four times. This year. We would expect this will push up yields on deposits by 75% or a 100 basis points by year end.

Speaker 3: And we'd expect those improvements to continue throughout 2023.

And we would expect.

Those improvements to continue throughout 2023.

Speaker 3: Now, looking ahead into the first quarter, we expect servicing EBT to be minimal. Call it rough.

Looking ahead into the first quarter, we expect servicing EBT to be minimal.

Call it roughly breakeven.

Not only will <unk> revenues continued to decline as I mentioned, but.

Speaker 3: Not only will EBO revenues continue to decline, as I mentioned,

Speaker 3: but we'll also lose some interest income from holding those loans pending redelivery. But from this point, we expect servicing returns to improve consistently throughout the year as we benefit from lower amortization, higher deposit income, and incremental revenues from portfolio growth. And we'd expect EBT to continue rising in 2023.

But we will also lose some interest income from holding those loans pending re delivery.

But from this point, we expect servicing returns to improve consistently throughout the year as we benefit from lower amortization higher deposit income and incremental revenues from portfolio growth.

We expect EBT to continue rising in 2023.

Now if you'll turn to slide 15, let's talk about the auction exchange.

Speaker 3: Now, if you'll turn to slide 15, let's talk about the auction.

As you know we're very excited to see this platform finally start to ramp back up and generate revenues now that the state and federal foreclosure moratoriums are ending.

Speaker 3: As you know, we're very excited to see this platform finally start to ramp back up and generate revenues now that the state and federal foreclosure moratoriums are ending.

Speaker 3: As Jay said, we continue to actively explore monetization options with the caveat that this is a very valuable business, so we're in no rush.

As Jay said, we continue to actively explore monetization options with the caveat that this is a very valuable business. So we're in no rush.

With the moratoriums now expired.

Speaker 3: We're pleased to see market activity starting to pick up, albeit at a relatively slow pace, which was in fact somewhat slower than we'd expected. This is probably a combination of operational issues at the local level, plus we're seeing servicers taking an uber-cautious approach.

We're pleased to see market activity, starting to pick up, albeit at a relatively slow pace, which was in fact somewhat slower than we would expect that this is probably a combination of operational issues at the local level.

Plus we're seeing servicers, taking uber cautious approach.

Speaker 3: wanting to make sure their borrowers have been presented with every possible alternative, including modifications, prior to moving forward with foreclosures, and that's exactly the right position to take.

Wanted to make sure your borrowers have been presented with every possible alternative including modifications prior to moving forward with foreclosures and Thats exactly the right position to take.

Speaker 3: It's still early in the year and plenty of things can change.

It's still early in the year and plenty of things can change.

Speaker 3: But I don't expect revenues to really hit their stride until some point in the third or even the fourth quarter, in which case the $50 million EBT that we mentioned previously could be somewhat lower. Nonetheless, regardless of how quickly or slowly the activity ramps up.

But I don't expect revenues to really hit their stride until some point in the third or even the fourth quarter in which case the $50 million EBT that we mentioned previously could be somewhat lower nothing.

Nonetheless, regardless about quickly or slowly the activity ramps up.

Speaker 3: We all know that eventually the market will need to clear foreclosures, which is not only important for investors.

We all know that eventually the market will need to clear foreclosures, which is not only important for investors, but will also help bring some much needed supply back to the housing market.

Speaker 3: but will also help bring some much-needed supply back to the housing market.

Speaker 3: The chart on this slide shows the history of foreclosure sales in the U.S., which you can see were running in the ballpark of 200,000 units in the last few years prior to the onset of the pandemic. And, of course, those volumes reflect the strongest point in the credit cycle.

The chart on this slide shows the history of foreclosure sales in the U S, which you can see we're running in the ballpark of 200000 units.

In the last few years prior to the onset of the pandemic and of course those volumes reflect the strongest point in the credit cycle.

Speaker 3: Then, with the moratoriums, sales dropped to nearly zero. Now, in the next couple of years, we think $200,000 plus is a reasonably conservative gauge of normalized levels.

Then with the moratoriums sales dropped to nearly zero now in the next couple of years, we think 200000 plus.

A reasonably conservative gauge of normalized levels.

Speaker 3: Also, there's a backlog from the last two years, which still needs to be worked through. And this forecast assumes that the economic outlook remains rosy. If we see any real deterioration in the credit cycle, foreclosure activity could be much, much higher, and Zome's revenue would be potentially through the roof.

Also there is a backlog from the last two years, which still needs to be worked through and this forecast assumes that the economic outlook remains rosy if.

If we see any real deterioration in the credit cycle.

Foreclosure activity could be much much higher <unk> revenue would be potentially through the roof.

Speaker 4: All right, let's turn to the balance sheet, which continues to be a very good story for us and talk about liquidity.

Alright, let's turn to the balance sheet, which continues to be a very good story for us and talk about liquidity.

Speaker 3: We generated strong cash flow in the quarter with an estimated $171 million in steady-state discretionary cash flow. And as a reminder, this is an illustrative metric that represents discretionary free cash flow above the level necessary to sustain the MSR asset at its current level, net of excess spread.

We generated strong cash flow in the quarter with an estimated $171 million in steady state discretionary cash flow and as a reminder, this is an illustrative metric that represents discretionary free cash flow above the level necessary to sustain the MSR asset at its current level net.

Excess spread.

At quarter end unrestricted cash was $895 million.

Speaker 3: At quarter end, unrestricted cash was $895 million, and this plus the undrawn capacity on our MSR lines left us with $1.7 billion of available liquidity.

This plus the undrawn capacity on our MSR lines left us with $1 7 billion of available liquidity.

During the quarter, we did pay down those lines by $35 million, which took us back to a minimum contractual draw of $270 million.

Speaker 3: During the quarter, we did pay down those lines by $35 million, which took us back to our minimum contractual draw of $270 million.

Speaker 3: And we would expect somewhat higher line utilization this year if MSR growth opportunities continue to materialize the way we're expecting.

And we would expect somewhat higher line utilization this year of MSR growth opportunities continue to materialize the way we are expecting.

On the topic of those senior notes.

Speaker 3: We're very thoughtful about how we term out our maturities. Our most recent offering had a 10 year tenure, which leaves us with a liquidity runway at five years and no maturities until 2027.

We're very thoughtful about how we term out our maturities are most recent offering had a 10 year tenure, which leaves us with the liquidity runway.

At five years and no maturities until 2027.

Speaker 3: I'm going to wrap up my comments on slide 17 by talking about capital and leverage. As you know, we've been managing our capital to a ratio of tangible net worth to total assets of 15% or higher. Today, we're pleased to report that we achieved and surpassed that target with that ratio ending the quarter at 23%, up from 14.5% last quarter.

Now I'm going to wrap up my comments on slide 17 by talking about capital and leverage as you know we've been managing our capital to our ratio of tangible net worth to total assets of 15% or higher.

Today, we're pleased to report that we achieved and surpassed that target with that ratio ending the quarter at 23% up from 14, 5% last quarter.

So with that I will turn the call back over to Ken for Q&A.

Speaker 3: So with that, I'll turn the call back over to Ken for Q&A.

Great Thanks, Chris and Josh could we please now start the Q&A session.

Speaker 2: Great. Thanks, Chris and Josh. Could we please now start the Q&A session?

Thank you as a reminder to ask a question you will need to press star one on your telephone to withdraw.

Speaker 1: Thank you. As a reminder, to ask a question, you will need to press star 1 on your telephone. To withdraw your question, press the pound key. Our first question comes from Kevin Barker with Piper Sandlin. You may proceed with your question.

Sorry, your question Christa <unk>, our first question coastal Kevin Barker with Piper Sandler you May proceed with your questions.

Good morning.

Speaker 5: Good morning. Congrats on a good quarter, and thanks for all the information regarding the MSR and SAGENT. So, could you just clarify with SAGENT the $225 million gain, is that because you're licensing the servicing, or is that a gain because you now have an equity stake in the company? Could you clarify that? That's because of the...

That's on a good quarter and thanks for all the information I have.

Regarding the MSR and seizure so.

Could you just clarify with stage two.

$225 million is that because you're licensing the servicing or is that a gain because you now have.

Equity stake in the company could you clarify that.

That's because of the equity stake in the company.

Speaker 5: Okay, and so what would that value the company at this point with the $225 million?

Okay, and so where would that value the company at this point.

With the 225 million.

We're going to have about a 20% stake in the company. So.

Speaker 3: We're going to have about a 20% stake in the company. So the value is a billion, roughly a billion 250. Okay, and so

Value is 1 billion roughly 1 billion $2 50.

Okay, and so on a pro forma basis.

Speaker 5: with the roughly over $300 million mark in the MSR.

The roughly $300 million marketing MSR.

Speaker 5: and the $225 million gain with the servicing technology, that's an additional about $5 in book value growth. Am I thinking about that correctly for the first quarter without earning?

And the $220 million $25 million.

With the servicing technology.

That's an additional about $5.

<unk> growth.

Are you thinking about that correctly.

First quarter without earnings.

Speaker 3: Actually, the $300 million, just to be a little bit more accurate, I just wanted to be a little conservative in that comment, but I'm looking, I just wanted to see what rates were doing this morning. It's nearly $400 million.

Sure.

Actually the $300 million just to be a little more accurate.

Just wanted to be a little conservative on that comment, but im looking.

Wanted to see what rates were doing this morning.

Nearly $400 million.

So think about that $400 million.

Hair under $400 million.

Speaker 3: two and a quarter plus decent earnings in the first quarter at our tax rate for 75 million shares. It's a, you know, well north of a $50 tangible book value. Now lots of luck can change, right? Rates have been very volatile.

Two in a quarter.

Plus decent earnings in the first quarter at our tax rate for 75 million shares.

Well north of $50 tangible book value.

Now lots a lot can change alright rates.

I have been very volatile, but we fully expect.

Speaker 3: uh, rates to be higher at the end of the quarter. So the mark may move around a little bit, but you're thinking about it the right way, Kevin. Okay. So your book.

Rates to be higher at the end of the quarter. So the mark might move around a little bit, but youre thinking about it the right way Kevin.

Okay. So your book value is north of.

$50 on a pro forma basis give or take.

Speaker 5: $50 on a pro forma basis, give or take. And then you have a 23% tangible net worth ratio, which is 8% above your 15% target. If I do the calculation and apply, you have about a billion dollars of excess capital. Why not just take out a chunk of your shares today, given that you are trading at a significant discount to tangible book value on a pro forma basis.

Then.

You have a 23%.

Tangible net worth ratio, which is 8% above your 15% target.

If I do the calculation that would imply you have about.

$1 billion of excess capital.

Why not.

Just pick out a chunk of your shares today.

Given that you are trading at a significant discount to tangible book value on a pro forma basis.

Okay.

Well if.

Speaker 3: someone called and offered us a big chunk of shares at an attractive price, we'd do just that. You should expect us to be actively repurchasing our shares. We think they're very cheap, and you heard Jay say the board just authorized us.

Someone called and offered us a big chunk of shares has an attractive price. We do just that you should expect us to be actively repurchasing our shares we think they're very cheap and.

You heard Jay say the board just authorized us.

Speaker 3: to buy another $200 million worth. If the shares remain this cheap at this kind of discount, I'm sure the board would ask us to buy back more. So we see it exactly the same way you do. And by the way.

Two by another $200 million worth.

Shares remain this cheap at this kind of discount and I'm sure. The board would ask us to buy back more.

So we see it exactly the same way you do.

By the way.

Speaker 3: I'll just mention, we talked a lot about growth in MSR, you know, our capital and liquidity is the number one priority is growing the book.

I just mentioned, we talked a lot about.

Our growth in MSR or capital.

Liquidity is number one.

Priority is growing the book.

Speaker 3: I just mentioned the $21 billion pool that we came to agreement on. While we were sitting here, we just got confirmation of another nearly $50 billion pool that we actually currently subservice.

I just mentioned the $21 billion pool that we came to agreement on while we were sitting here. We just got confirmation of another nearly $50 billion pool.

We actually currently sub service.

Speaker 3: We just got notification that we came to agreement on that. So we are growing very rapidly at attractive prices exactly the way we said we would.

But we just got notification that we came to agreement on that so we are growing very rapidly at attractive prices exactly the way we said we would.

Speaker 3: We expect this to happen and we've accumulated that capital to be able to continue to grow the business As long as we see investments at attractive prices

We expect this to happen and we've accumulated that capital to be able to continue to grow the business.

As long as we see investments at attractive prices.

Speaker 5: Okay, well, thank you for taking my questions and I'll get back in the queue, thanks.

Okay.

Thank you for taking my questions and I will get back in the queue. Thanks.

Speaker 1: And your next question comes from Doug Harkin with Credit Suisse. You may proceed with your question.

Thank you. Our next question comes from Doug Harter with Credit Suisse. You May proceed with your question.

Speaker 2: Thanks. Just kind of following up on the book value comments, just want to make sure or get clarity around the return on tangible equity guidance, if that incorporates kind of the significant gains in book value that you've kind of already seen in the first quarter. No, no, returns on, returns.

Yes.

Thanks Jess.

Kind of following up on the book value of your comments I just wanted to make sure.

Or get clarity around the.

Return on tangible equity guidance, if that incorporates kind of the significant.

Gains in book value that you've kind of already seen in the first quarter.

No no returns on returns.

Net GAAP returns will be.

Speaker 3: much higher. What we're talking about is operating returns on tangible common equity. And we expect those to be at the lower end of the range, just because we do expect compression. We expect some volume.

Much higher than what we're talking about is operating.

Returns on tangible common equity and we expect those to be at the lower end of the range just because we do expect compression we expect some volume.

Speaker 3: to moderate in originations. We expect some compression. Last quarter, we actually saw the margin grow, but we do expect it to come down over time. And maybe we're being a little conservative there. And then in servicing, as we said, this is the transition year.

To moderate and originations we expect some compression last quarter, we actually saw the margin grow, but we do expect it to come down over time.

We're being a little conservative there and then in servicing as we said this is a transition year.

Speaker 3: Even from the beginning of the year, we've seen signs that.

Even from the beginning of the year, we've seen signs that.

Speaker 3: CPR is, it's certainly down in January , um, and the beginning of February . So, uh, we'll have a, again, we said a breakeven court in the first quarter, but profitability is going to kick in and servicing, uh, in a big way. And I expect to see that improvement is start to see that improvement in the second quarter.

CPR is certainly down in January .

In the beginning of February .

So we'll have a.

We said a breakeven quarter in the first quarter, but.

Profitability is going to kick in in servicing.

In a big way and I expect to see that.

<unk> start to see that improvement in the second quarter.

Speaker 6: So low end of the range this year on an operating basis, given the marks we're talking about and the gains, that's not factored into those.

So low end of the range. This year on an operating basis, given the marks were talking about and the gains.

That's not factored into those numbers.

Speaker 2: Sorry, Chris, I meant more, I guess, on the denominator, whether those gains are kind of factored into the denominator of that guidance. Yes.

Sorry, Chris I meant more I guess on the denominator, whether whether those gains are kind of factored into the denominator.

That guidance.

Yes, given that your equity, but okay perfect.

Speaker 2: Perfect. And then, I guess, with the agreement with Sagent, other than the gain and the equity stake, do you expect any cost saves from that? Or I guess, how should we think about the ongoing impact of that beyond?

Perfect and then I guess with the agreement with resurgent is there kind of.

Other than the gain on the equity stake do you expect any cost saves from that or I guess, how should we think about kind of the ongoing impact of that.

Equity stake.

Speaker 3: So there's definitely some efficiencies, but in this first year, we will be providing a transition services agreement throughout the threat this year and into next year. So, our operating costs will not really change much during that period of time, but as the, you know, the really attractive thing here is that.

So there is definitely some efficiencies, but in its first year.

We'll be providing transition services agreement throughout.

Throughout this year and into next year. So our operating costs, we will not really changed much during that period of time, but as the.

Really attractive thing here is that.

Speaker 3: Sajan is going to take our technology that we've developed over many years.

Sei Jin is going to take our technology that we've developed over many years.

Our visionary technology leader treat our Sharma.

Speaker 3: our visionary technology leader, Sridhar Sharma, has made sure that every line of code we've developed in the company over the last six years has been cloud-native code. And so, if you think of our servicing platform as completely cloud-native end-to-end, with the exception

As made sure that every line of code we've developed in the company over the last six years has been cloud native.

Code.

And so if you think of our servicing platform is completely cloud native end to end.

With the exception of our core.

Speaker 3: The core, which is owned by Sagent, is outdated and needs to be replaced. And Sagent, as part of this transaction, is going to replace that with a cloud-native core and have the first...

Core.

Is owned by agent is outdated and needs to be replaced and sage into as part of this transaction.

Is going to replace that with a cloud native core and have the first NDA.

Speaker 3: end-to-end cloud-native platform. Now, that may mean a lot to the financial analysts on the call, but I know your peers in technology will recognize that as a complete game-changer.

End to end cloud Native platform now you may that may mean, a lot to that.

Financial analysts on the call, but I know your peers in technology will recognize that is a complete game changer.

Speaker 3: And so, yes, we'll see more efficiencies down the road after that cloud-based core is integrated.

So, yes, we will see more efficiencies down the road after that.

After that cloud based core is integrated.

And.

Quite honestly if.

Speaker 3: If Sajan's valuation does half as well as we think it can, it'll be worth multiples of what we're going to recognize next quarter.

If <unk> does <unk> valuation does have as well as we think again it will be worth multiples of what were going to recognize next quarter.

Great. Thank you.

Yes.

Thank you. Our next question comes from Giuliano Bologna with Compass point you May proceed with your question.

Speaker 1: Thank you. Our next question comes from Giuliano Bologna with CompassPoint. You may proceed with your question.

Speaker 5: Well, I guess, first of all, congratulations on another successful quarter and congratulations on the staging deal.

First of all congratulations on another successful quarter and congratulations on the on the <unk> deal.

What I want to actually pick your brain about a little bit was.

Speaker 5: On the MSR comment, in terms of the potential market to market, I was curious if you're thinking about the MSR and the offsetting portion on the excess red side, or is it just the MSR side that you were talking about with the 300, potentially 400?

On the MSR comment.

Terms of.

The potential mark to market.

I was curious if you're thinking about the MSR and the offsetting portion on the excess spread side.

Or is it just the MSR side, you were talking about with the 300.

Essentially 400.

Speaker 3: No, it's the complete net impact to the company. We always do that net of excess spread.

No. It's the complete net impact to the company, we always do that net of excess spread.

That makes sense.

Speaker 5: That makes sense. Then thinking about capital allocation, you referenced a couple of different pools, one in the 20s and another $50 billion pool of MSRs, that obviously consumes some capital, so that would be great to see.

Then thinking about <unk>.

Capital allocation you are.

Referenced a couple of different pools.

One of the 2008.

Another core of MSR is obviously a lot of obviously consume some capital so great to see.

Speaker 7: But as we look forward and if you do get markups plus more value for an equity stake.

But as we look forward and if you do get markups plus more value for an equity stake.

Speaker 8: You're still going to be generating a significant amount of capital. I'm just kind of curious about how you think about distributing that capital relative to capital generation. Because you're obviously building capital, and it's based based on my estimates.

There is still going to be.

We generate a significant amount of capital.

I'm just kind of curious about how you think about distributing.

Distributing the capital on the right.

Relative to capital generation is obviously building capital.

Based on my estimates.

Speaker 5: With what you've said so far, you might still be growing capital this year, even if you were to buy back the $200 million and make the investment or make the pool acquisitions that you discussed. I'm just curious how you think about that.

With what you've said so far you might still be growing capital. This year, even if you were to buy back $200 million.

And make the investment or make the pool acquisitions can you discuss kind of just curious how you're thinking about that.

Speaker 3: Well, the growth we're talking about is pretty remarkable, and that does consume quite a bit of cash. And so those are big investments for us. As we said, we will use a little more leverage.

Well the growth we're talking about is pretty remarkable and that does consume quite a bit of cash.

And so theres, a big investments for us as we said we will.

Use a little more leverage.

Speaker 3: and still maintain what we consider to be a rock-solid conservative balance sheet. We are going to increase the buyback. We'll buy back $250 million. We will be building capital, but I remind you, our number one priority is

And still.

Maintain what we consider to be a rock solid conservative balance sheet.

We are going to.

Increase the buyback.

Buy back $250 million, we will be building capital.

But I'll remind you our number one priority is.

Speaker 3: Expanding the portfolio, generating long-term sustainable growth, and as long as there are attractive opportunities to do that, that's what we're going to do. Now, if we get to a point where pricing changes

Expanding the portfolio.

Generating long term sustainable growth and as long as there are attractive opportunities to do that that's what we're going to do now if we get to a point where pricing changes.

Speaker 3: or the stock continues to trade at a discount to book, then we'll be more aggressive.

And or the stock continues to trade at a discount to book then we'll be more aggressive there.

Speaker 3: But at this point, I think our focus is on growth, profitable growth.

But at this point I think.

Our focus is on growth.

Ratable growth.

That makes sense.

Speaker 5: That makes sense. Obviously, there's a lot of potential also with the exchange business. But one of the things I was curious about, taking a slightly different view,

I would say, there's a lot out there there's a lot of potential exchange business.

One of the things I was curious about.

Taking a slightly different approaches.

Speaker 9: Obviously, you've seen a good recovery in MSR values, obviously, and there could continue to be a strong continued upside in the MSR mark. I'm curious how you think about potentially hedging or increasing hedging going forward as values continue to rise to provide some stability.

Obviously.

Good recovery in MSR values.

There could continue to be a strong continued upside in the MSR Mark I'm curious about how you're thinking about potentially hedging or.

Or increase the hedging going forward as values continue to rise to provide Cincinnati.

Speaker 10: Yeah, up till now, the only change in our historical policy, which we were totally unhedged, is anything that is financed gets hedged, because obviously we don't want to be in a situation where there's a sudden change and we're exposed to any kind of capital cost.

Up till now the <unk>.

Only change in our historical policy, which we were totally unhedged.

Anything that is financed gets hedged because obviously, we don't want to be in a situation, where there's a sudden change and we're exposed to any kind of <unk>.

Capital cost.

Speaker 3: There will be a point when MSR prices we feel are fully

So there'll be a point.

MSR prices.

We feel are fully valued.

Speaker 3: We're not there yet, but when that does happen, we'd expect to be more fully hedged, perhaps not completely, but more fully hedged than we are today. And as I just said, we will be using a modest amount of more leverage, so the hedge we have in place will get larger.

We're not there yet, but when that does happen, we would expect to be more fully hedged, perhaps not completely but more fully hedged than we are today and as I. Just said we will be using.

A modest amount of more leverage so the hedge we have in place will will get larger.

Uh huh.

Speaker 11: I think the, you know, the point there is, the good news is we have the team, the infrastructure, et cetera, in place today to kind of, as we want to increase the hedge, we'll be able to do that, you know, without any additional resources, et cetera. So we're prepared to do that at the right time.

I think the.

Point there is the good news is we have the team the infrastructure et cetera.

In place today to kind of as we want to increase the hedge will be able to do that.

Any additional resources et cetera, So we're prepared to do that at the right time.

Speaker 12: And Juliana, I just want to come back. First of all, it's nice to hear your voice.

And Julien I just wanted to come back.

First of all it's nice to hear your voice.

But.

Speaker 3: When we talk about the discount in stock, it's not the discount.

When we talk about the discount in stock it's not the discount.

Speaker 3: to tangible book value necessarily, which we just said at current levels would be north of $50, maybe almost $52.

Tangible book value necessarily which we just said it.

Current levels would be.

North of $50, maybe almost $52.

Speaker 3: Um, that doesn't include the value of the auction exchange

That doesn't include the value of the option exchange.

Speaker 3: And as you heard in my comments, the return to full profitability may be a little bit slower than we said, but that is a absolutely great business, a very valuable business. And we, we recognize that. And, uh, I think investors are starting to recognize that. So when you think of our tangible book value, you've got to think of it as tangible book value plus X for zone. I'll let you figure out what you think that business is worth, but it's worth a lot.

And as you.

You heard in my comments the return to full profitability may be a little bit slower than we said, but that is a absolutely great business, a very valuable business.

We recognize that and I think investors are starting to recognize that so when you think of our tangible book value you got to think of it as tangible book value plus X, Brazil, I'll, let you figure out what you think that business is worth but.

It's worth a lot.

Speaker 5: Well, I completely agree with you there, and I think about it the same exact way in terms of potential value for the REO business. But actually, since you mentioned that, one thing I was curious about was, I think last quarter you said roughly $50 million in 20 years.

I completely agree with you there and I think about it the things that Glenn in terms of Pennsylvania for.

The <unk> business.

Vince.

Mentioned that one thing I was curious about was.

What are you sending out roughly $50 million in 'twenty.

Speaker 5: and then about $150,000 and $23,000, especially as you made some comments about $22,000 on the call. I was curious if when you were discussing roughly $200,000 foreclosure per year or return into that ZIP code, if that would still put you somewhere in the range of the $150,000 that you originally kind of discussed for $23,000.

Two and then about $150 23.

You made some comments about 'twenty two on the call I was curious.

When you were discussing the roughly 200000.

Fortunately for you or return into that ZIP code, if that would still put you somewhere in the range of the $1 50 for.

Originally kind of discussed for 2003.

Speaker 13: It's approximate. I mean, this guidance is kind of hard to think out.

It's approximate <unk> guidance, it's kind of hard to think out.

Speaker 3: exactly how it's going to unfold.

Exactly how it's going to unfold.

Sure.

Speaker 3: So the 50 million that we talked about was really, and I think we made it clear, it was all back end loaded. We expected revenues to really start to kick up in the third quarter. It may take the fourth quarter, um, but the 200,000, the 200,000 is just normal run rate prior to, uh, the pandemic. It's definitely going to be higher than that because there haven't been anything.

So the $50 million that we talked about was really and I think we made it clear was all backend loaded we expected revenues to really start to kick up in the third quarter. It may take the fourth quarter.

But the 200000 200000 is just normal run rate prior to.

The pandemic, it's definitely going to be higher than that because there hasn't been anything new.

Speaker 14: nothing has been foreclosed on or virtually nothing other than vacant properties. So there's definitely going to be a big surge. That's our guess right now. We're in that range.

<unk> has.

Been foreclosed on virtually nothing other than vacant properties.

It's definitely going to be a big surge.

That's our guess right now we're in that range.

And we'll know more as.

Speaker 3: as the year progresses, and we'll certainly talk about Zome a lot more, we're not necessarily going to wait to monetize Zome when it hits that surge. It's just when we see normality return, and that's when we think we'll get full value for the business.

As the year progresses, and we'll certainly talk about XOMA lot more we're not necessarily going to wait to monetize zone. When it hits that surge is just when we see nor.

Normality return.

And that's why when we think we will get full value for the business.

That's great.

Speaker 5: That's great. There's just like one quick question, then I'll jump back in the queue is, if you know...

Just one quick question and then I'll jump back in the queue I'm curious if you know.

Speaker 15: the number or the dollar amount of the EBOs that are consolidated or the shares or the loans subject to repurchase as of the fourth quarter? I don't know the number off the top of my head. We could get that. I do. Julian, we ended the quarter at $1.5 billion, and that's down from $2.7 from last quarter.

The number or the dollar amount of the hours that are consolidated for the surety bonds.

Loans.

So that can be purchased as of the fourth quarter.

I don't know the number off top my head, we can get the Giuliani.

Julian.

The quarter and $1 5 billion, that's down from $2 seven from last quarter.

Perfect.

I really appreciate it I've taken up a lot of time and then jump back in the queue. Congratulations.

Speaker 5: I really appreciate it. I've taken up a lot of time, and I'm going to jump back into the queue. Congratulations.

Thank you. Thank you.

Speaker 1: Thank you. Our next question comes from Andrew J. Toffey Jr. with Wetbush and they proceed with your question.

Thank you. Our next question comes from Henry Coffey with Wedbush You May proceed with your question.

Speaker 16: Good morning, it's very official sounding. Let me add my congrats as well, what a wonderful quarter.

Good morning, it's very official sounding let me add my congrats as well what a wonderful quarter.

One stupid question and looking at these fair value marks I'm, assuming that you don't have to tax them for GAAP or am I wrong on that.

Speaker 17: One stupid question, in looking at these fair value marks, I'm assuming that you don't have to tax them for GAAP, or am I wrong on that?

Speaker 18: No, you have to tax them for GAAP. Obviously, we're not paying cash taxes, but the TBV number I was just citing and projecting.

No you have to tax them for GAAP, obviously, we're not paying cash taxes, but right.

Yes, but TBD number I was just citing and.

Projecting is fully taxed.

Speaker 19: Yeah, yeah. Okay. No, that's perfect. Secondly, with this agent, you've gone down a lot of technology paths. You've created a lot of value and then sold the assets.

Yes, yes, okay, no thats perfect.

Secondly, with this agent.

<unk> gone down a lot of technology pads, you've created a lot of value and then sold the assets.

Speaker 1: with Sajan, does this represent a nice investment opportunity that might be a distraction to the basic business, or are there aspects of the deal with Sajan and the servicing technology contracts you're going to create with other players that actually feeds into your basic financial...

With Sei Jin is this does this represent a nice investment opportunity that might have it might be a distraction to the basic business or are there aspects of the deal was staging and and the servicing.

Tech technology contracts youre going to create with other players that actually feeds into your basic.

Financial goals for the mortgage company.

Speaker 20: it's definitely not going to be a distraction. It'll be a continuation because

It's definitely not going to be a distraction.

It'll be a continuation.

Because.

Speaker 3: The team that we have, uh, managing our system today will largely transition over to Sage and there'll be, we view it as a, you know, a continuity of what we're doing and, uh, Schrader Sharma, who.

The team that we have.

Managing our system today will largely transition over to agent and there'll be.

It is it.

Continuity of what we're doing.

And.

Sweet Sharma, who.

Speaker 3: conceived and built and leads this team, will stay with the company, but he will be a strategic advisor for technology to this agent board. So I think we will have our cake and eat it too. We're going to be partnered with a terrific company we have a lot of confidence in. We're going to benefit from all the investment they're going to make, and we're going to be able to provide influence on the direction of the company. I think there'll be very strong influence.

Conceived and built in leads this team will stay with the company, but he will be.

A strategic advisor for technology to this agent board. So I think we will have our cake and eat it too we're going to be partnered with a terrific company. We have a lot of confidence and we're going to benefit from all the investment theyre going to make.

We're going to be able to provide influence on the direction of the company I think there'll be very strong influence.

Speaker 21: Uh, you know, over the last few months, we've formed very tight relationships with the leadership team, strong friendships. And I think this is going to.

Over the last few months, we formed very tight relationships with the leadership team strong friendships and I think this is going to be a great way for us to benefit we could've taken a check.

Speaker 3: a way for us to benefit. We could have taken a check.

Speaker 22: And we think this is a great investment that has tremendous amount of potential.

And we think this is a great investment that has tremendous amount of potential.

Speaker 23: Henry, from a day-to-day standpoint, it's...

From a day to day standpoint, it's no.

Speaker 24: No impact, right, on the business. I don't view it as a distraction at all. I mean, again, Sreedharna... Does it bring something in? Does it add to your ability to attract new servicing or...

No impact right on the business. So I don't I don't view it as a distraction at all I mean again 300 is it bring does it bring something does it add to your ability to attract new servicing or.

I mean I think it.

Speaker 25: Probably not in a material way. Over time, as the platform grows, I think naturally transfers can be easier, back and forth, et cetera. So over time, yeah, it could have an impact. But I think not during this transition period is the way I would think about it.

<unk> not in a material way over time as the platform grows I think naturally.

<unk>.

It can be easier back and forth et cetera. So over time, yes. It could have an impact but I think in a not during this transition period is the way I would think about it.

One day is black Knight of question and I mentioned something about the duopoly and.

Speaker 26: One day I asked Black Knight a question and I mentioned something about the duopoly in servicing and they said, who else? And we've done a lot of looking and never really been able to uncover a major partner, a major party in the servicing business. How do you see yourself stacking up against Black Knight once this product is fully developed over the next 24 months?

In servicing and they said who else and we've done a lot of looking and never really been able to uncover a major partner are.

A major party in the servicing business, how do you see yourself stacking up against Black Knight.

Once this product is fully developed over the next 24 months.

Speaker 27: Hey, look, Black Knight's a great company. Anthony and Joe are first class executives, and we have the utmost respect for them. But every mortgage company wants a cloud

Hey look Black Knight is a great company.

Anthony and Joe are first class executives.

The utmost respect for them, but.

Every mortgage company.

Once a cloud based solution.

Speaker 3: Every bank that services their own portfolio, the headline in American Banker the other day was all banks are marching to the cloud for obvious reasons.

Every bank that services their own portfolio.

Inline in American banker. The other day was all banks are marching to the cloud for obvious reasons.

Speaker 28: I mean, it provides so many efficiencies to you. Having the first truly native cloud-based platform is a game changer.

I mean, it's provides so many efficiencies to you.

Having the first truly native cloud based platform is a game changer.

Speaker 29: So, I don't want to say anything about our good friends at Black Knight, but for Sajan, Sajan is creating something brand new that everyone's wanted, and I would expect it's going to be a major disruption.

So.

I don't want to.

Say anything about our good friends at Black Knight, but force agents agent is creating.

Something brand new that everyone's wanted and I would expect that's going to be a major disruption.

Speaker 1: That yeah, I mean, that's your your vision. And I was asking if really, if that do you see yourself stepping right into that competitive fray and offering a product to other people? And we we hear the same thing. Everybody loves Black Knight, but they want more.

Yes, I mean Thats your your vision and I was asking it really if that do you see yourself stepping right into that competitive fray and offering a product to other people.

We hear the same thing everybody loves Black Knight, but they want more.

Speaker 1: Thank you. Yeah, I think it's a... Congrats. I think it's a... I'm sorry. Yeah. Well, I just think it's a natural evolution, right? Sajan has customers today.

Yes. Thank you.

I think I'm sorry.

Well I just think it's a natural evolution Sei Jin is as customers today.

Speaker 30: And they are growing that customer base. And I think to Chris's point, as they add more capabilities, take the platform completely to the cloud, it's really exciting.

They are growing that customer base.

Chris This point as they add more capabilities to take the platform completely to the cloud.

It's really exciting.

Is this a servicing platform and ultimately an origination platform or.

Speaker 1: Is this a servicing platform and ultimately an origination platform?

It's just the servicing platform.

Speaker 3: And since it's our servicing platform, I tell you it's a great platform.

And since it's our servicing platform I'd tell you, it's a great platform.

Okay.

Speaker 1: Listen, thank you, great quarter, and we really appreciate all the clarity and guidance around the changes in the MSR value, so thanks again.

Listen thank you great quarter, and we really appreciate all the clarity and guidance around the changes in the MSR value.

Thanks again.

Thank you Henrik hearing.

Speaker 31: Josh, thank you very much. We're going to go ahead and end the call now.

Hi, Josh thank.

Thank you very much we're going to go ahead and end the call now.

Speaker 32: Thank you. I'm not showing any further questions at this time. I would now like to turn the call back over to Dave Bray for any further...

Thank you I am not trying any further questions at this time I would now like to turn the call back over to Dave <unk> for any further remarks.

Speaker 33: So, thank you guys for joining this morning, and we look forward to continued dialogue. Have a great day. Thank you.

Thank you guys for joining us this morning, and we look forward to continued dialogue have a great day. Thank you.

Yeah.

Thank you. This concludes today's conference call. Thank you for participating you may now disconnect.

Speaker 34: Thank you. This concludes today's conference call. Thank you for participating.

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