Q2 2023 Mr Cooper Group Inc Earnings Call

Okay.

Good morning, and welcome to Mr. Cooper group's second 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, Vice Chairman and President and Kurt Johnson Executive Vice President and C.

As a quick reminder, this call is being recorded also you can find the slides on our Investor Relations webpage at investors got Mr. Cooper Group Dot com.

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.

We are not undertaking any commitment to update these statements if conditions change.

I'll turn the call over to James.

Thanks, Ken and good morning, everyone and welcome to our call, let's turn to slide three and review the second quarter highlights.

Starting with financial performance I was extremely pleased with a 300 basis point gain in operating our TCE, which hit 11, 7%.

And the growth in tangible book value per share, which increased to $58 81.

At the same time, the capital and liquidity remain at near record levels.

Turning to operations the servicing team produced excellent results with $182 million in pre tax income.

The portfolio reached 882 billion at quarter end.

But if you include pending acquisitions, such as home point, where over $950 billion, which is nearly on top of our one trillion target.

Late last year, we told you to expect a surge in bulk MSR sales with cycle why deals and that is now playing out as we foresaw.

Also contributing to portfolio growth, we completed the acquisition of Rushmore servicing which now makes US one of the largest special servicers I'd like to offer a hearty welcome to the 300, new team members, who joined the Cooper family, we value the World class skills, you bring to our platform and the trusted relationships.

Still with important institutional investors.

Originations reported pretax income of $38 million, which exceeded the guidance. We gave you last quarter. Despite incredible volatility in mortgage rates over the last years, we've never stopped investing in our platform and I'm very pleased with our progress driving efficiencies through automation and our consistent best in class.

<unk> recapture performance now.

Now turning to capital management, we repurchased one 2 million shares for $57 million, which brings us to accumulative, 31% of shares repurchased since inception.

Furthermore, I am very pleased to announce that our board has approved increasing the repurchase authorization by another $200 million.

You should take this as a signal of our very strong confidence in Mr. Cooper's business model and specifically the outlook for continued growth and strong returns, which we do not see reflected in the stock price.

Finally, we were very pleased to be certified as a great place to work for the fifth consecutive year and with World class team member engagement I might add it is very important for us to provide a purposeful inclusive environment for our team members because of their happiness is essential to providing our customers with the service and.

See they deserve.

So let me pause here to say, thank you to everyone at Mr. Cooper for making this such a great team to be a part of.

Now, let's move to slide four as I would like to pull up for a minute and talk about the bigger picture.

As you know when it comes to residential mortgage servicing Mr. Cooper has the strongest and most consistent growth record in the industry with a portfolio CAGR of 30% over nearly 15 years.

Now theres lots of time or place to dive into the details, but suffice it to say over the last decade, we've acquired hundreds of portfolios totaling over 700 billion for more than 1500 sellers.

Which by the way it gives us a significant information advantage when bidding for tools.

What I would emphasize is that throughout this time, we were constantly investing in our servicing platform. In fact internally we talk about perfecting the platform, which of course is a never ending process.

But as a result today, we are the leader in all the key performance drivers like cost of service loss mitigation and recapture these are decisive competitive advantages and the reason why we are close to becoming the nation's largest servicer.

I don't think any of our peers would dispute that we've earned our leadership position through focus discipline creativity and hard work, nor do I think theres much question among investors and analysts about our competitive advantage in servicing.

So, let's turn to slide five and talk about return on equity.

In 2020 and 21, Mr Cooper capitalized on the refinancing.

Driving our OTC to very strong double digit levels. Thanks to the fantastic performance in both our DTC and correspondent channels.

During 2022, we pass through a transition period, where origination earnings eased off due to the fastest mortgage rate increase and generations and while it took a few quarters for servicing margins to kick back in thanks to our balanced business model and the contribution from our large portfolio returns are now back on the cost of.

Of our minimum target of 12%.

We are of course pleased with the direction returns have been tracking but honestly, we're focused on more ambitious goals and I would add there is a lot of excitement internally about the potential for creating shareholder value as we continue to execute our plan and demonstrate to the market a sustained higher return on equity profile.

So let's talk about some of the strategic initiatives, we're working on.

First our strategy is premised on cost leadership.

Based on benchmark data, we believe we already enjoy a significant cost advantage over peers. Nonetheless, we are working to drive further reductions in unit costs, which will help us generate greater operating leverage as we deploy capital into portfolio growth and while at the same time deepening our competitive mode until no one.

Can compete with us.

Our DTC platform is extremely profitable and we'd like to see it make a bigger contribution to overall results.

That means continued work on cost speed and customer experience, while we explore new products and channels and.

And third we're working to grow our sub servicing business, which leverages our platform and provides incremental income including gain on sale from recapture without tying up capital or liquidity.

We're in active discussions with potential new clients and we're also building out our asset management capability in preparation for launching an MSR fund later this year.

In closing I'll comment that we were quite pleased to see the stock price reached a new high since the <unk> merger in 2018, however, with the stock still trading at a discount we don't think the market fully appreciates our competitive advantages the benefits of the home point acquisition and the progress we're making.

On strategic initiatives and with that I'll turn it over to Chris to discuss our strong operating results.

Thanks, Jay and good morning, everyone.

Before I begin my comments I also want to add my thanks to all my teammates of Mr. Cooper for their tremendous effort, which directly translated into the great results. We had this quarter.

I'm also extremely proud of being certified as a great place to work for the fifth year.

And also being named one of the best places to work in Texas will off exactly as you can assume things are going very well at Mr. Cooper right now.

So with that let's turn to slide six and talk about servicing where we earned a record $182 million in pre tax operating income.

Based on these results as well as the pending acquisitions, we've announced we are raising our full year guidance for operating income by 17% from 600 million to $700 million and this doesn't include one time gains from a trust collapse were working on which we expect to close in the second half and which will contribute an additional.

$50 million or more.

This healthy contribution is exactly what you should expect from our balanced business model as low CPR limited activity for originations, but much stronger servicing earnings and while many firms talk about having balance you can see that our overall results are considerably more stable and consistent than our peers.

However, while cyclical trends are favorable right now the real story in servicing as our relentless focus on perfecting our platform, which is honestly like a religion for us.

Currently we are laser focused on our customer call center, where we have a year end goal of taking out $50 million in annual operating costs, while improving our customers experience. Our strategy is to drive lower call volume by making information much easier for customers to access on their own which is a win win for them and the company.

We've been steadily making progress here as you can see from the chart on the upper right.

Our cost per loan have dropped by 26% with progress accelerating in the last few quarters. This is a huge productivity driver for us as you can see in the chart on the lower right where call Center head count has actually declined even as our portfolio has grown.

As you May recall last year, we upgraded our IV <unk> to a state of the art system, which allows us to better leverage customer data and machine learning.

And now we're starting to see very meaningful improvement in <unk>, our containment, especially in areas like authentication and payments.

We're also having considerable success with chat technology, including both human chat agents and the use of chat bots for standard servicing questions, where we're seeing excellent rates at first chat resolution.

By putting the information they need at their fingertips, who are making life easier for our customers and needless to say for those customers who need help with more complicated issues. Our people are always here to help.

Now, let's turn to slide seven and take a closer look at our portfolio growth.

As Jay mentioned the portfolio ended the quarter at 882 billion, but factoring in pending transactions. It would have been 957 billion.

I'd add that based on our internal forecast, we're expecting to hit our trillion target by year end, which would be 12 to 18 months ahead of schedule, although as always that would be subject to our first priority which is returns.

Among these pending transactions the largest is the home point acquisition at 83 billion in <unk>, which is scheduled to close in the third quarter.

As a reminder, we're not taking over any operations. So there is no integration to speak of post closing.

We're planning to onboard the home loans in late 2023, or very early 2024 at which point, we'll realize the full economics of this transaction.

We also have $25 billion in pending bulk acquisitions.

Which include a large portfolio, we are acquiring from Michel or we know quite well.

And what I would share with you is that this seller values, our strong customer service and very smooth onboarding process.

And we continue to see a buyer's market for MSR with plenty of attractive pools trading at Unlevered pre tax yields in the low double digits for conventional loans and even higher for Ginnie Mae which is exactly what we guided you to expect when we shared our proprietary forecast late last year.

What's new since then and what Youll find interesting following the turmoil earlier. This spring we're now seeing a sharp increase in regional banks, bringing MSR pools to market.

We're also excited about opportunities to grow our sub servicing business.

We have a very experienced executive team with very deep industry relationships, calling on potential new clients, including originators banks and MSR investors.

Additionally, as you know we are in the process of launching an MSR fund, which is intended to be another source of sub servicing.

We're expecting our acquisition of the platform company to close in the third quarter subject to regulatory approval.

Positioning us to begin a fundraising campaign in the fourth quarter.

And finally, we've expanded our menu of sub servicing products with our new special servicing capabilities. So, let's turn to slide eight as spend just a minute on this.

During the quarter, we closed on our acquisition of Rushmore servicing and we're now integrating rushmore onto our platform and merging it with our existing special servicing unit right path.

Since Rushmore has a well established and highly regarded player we've decided to operate under their existing brand and I'm pleased to share that we've not only retained rushmore as existing clients, but we're early signing new ones.

Should the credit cycle take a turn for the worst rush market play a very constructive role in the marketplace, helping MSR investors and other servicers manage delinquent portfolios, while working to keep as many customers as possible in their homes, which of course is everyone's goal.

Now a recession remains a concern for many economists.

But if the economy were to hit a speed bump we'd be in a very strong competitive position not only with rushmore turned into a major growth opportunity for us, but we've constructed a high quality portfolio of owned MSR, where most of our borrowers enjoy sizable equity cushions and low mortgage rates.

And as of today, we're not seeing any signs of strain with our 60 day delinquencies continuing to decline during the second quarter on both an overall basis and in each individual loan category.

Now we've gotten some questions recently about the <unk> student loan forgiveness coming up in September as you know there are millions of homeowners for whom this represents a potential payment strength.

As of June 30.

16% of our customers have student loans outstanding and as you'd expect we're monitoring these bars is standing by to provide any assistance they may need.

However, we're not anticipating any major impact for the simple reason that borrowers are generally better served prioritizing mortgage payments over other obligations, so as not to put their own risk.

Update you more on this next quarter. So we have more data.

So, let's shift gears and turn to slide nine and talk about originations, which was another great story this quarter with $38 million and EBT, which was above the high end of our guidance.

During the quarter, we saw continued outstanding execution by our DTC platform and somewhat more rational competition in the correspondent channel.

However, with mortgage rates hovering at 7%, we're going to keep our guidance unchanged at $20 million to $30 million per quarter and Additionally, the second quarter of the year is traditionally the high watermark for origination so seasonality may come into play in the coming quarters.

Jay mentioned, our ambitions to expand the scale and scope of our DTC platform, which is best in class in terms of refinance recapture rates and margins.

Nonetheless, we're continuing to invest in the platform with the goal of making further gains in speed and efficiency and producing an even better customer experience.

You've heard US talk about project flash, which involves digitizing and automating tasks in the originations workflow and just to give you an update you can see in the chart on the upper right, our driving impressive efficiency gains with direct processing cost per loan down 45% over last year.

Not only does this mean lower cost today, but this progress bodes extremely well for our ability to scale up in the next cycle whenever that might occur.

In addition, a flash we're making a number of investments in our DTC sales platform. For example, rolling out more self serve tools for digital savvy customers and implementing much more powerful CRM databases.

These investments will contribute to a more streamlined customer experience, while driving further efficiency and scalability.

Our recapture performance continues to be best in class with refinanced recapture at 80% in the quarter, which is close to four times the industry average.

This is extraordinary execution, considering that most of our customers come to us through the correspondent and bulk channels.

The way, we recently signed a letter of intent to provide recapture services to a leading MSR investor on a white label basis. This is a first for us and it represents a brand new growth channel for DTC.

We will update you more on this after a contract is signed and hopefully that will be next quarter.

Regarding the correspondent channel earlier in the year, we saw some signs of irrational competition in terms of pricing in MSR valuation assumptions, but since then some of the more aggressive players have backed off market pricing has improved and as you can see we nearly doubled volumes in the quarter.

As a reminder, we're totally focused on returns and are completely channel agnostic and at this point in the cycle. We continue to see higher returns in the bulk channel due to the huge volume of sellers and a relatively concentrated network of buyers with limited capacity.

But more rational pricing in correspondent is creating a more compelling environment.

Now if youll turn to slide 10, I'll provide an update on zone.

Last quarter, we guided to zone, breaking even on strong sales momentum.

And that's exactly what's happened to that 25% improvement in sales.

And EBT actually being slightly positive and while profitability is an important milestone.

We're obviously looking ahead to the time when this unit is generating a much larger profits its cable above.

Now it's hard for us to be precise on timing because many variables are in play occur.

Across the entire market foreclosure volumes are starting to pick up with one data source, citing a 13%.

Increase year over year, however are not seeing much movement in the FHA data.

If you look at foreclosure inventories are sales where levels are still quite low relative to pre pandemic levels now bear in mind FHA data lags by a few months. So perhaps we'll see more movement in next report, which would be more consistent with the sales momentum we're seeing in our own platform and.

And if the economy deteriorates and you see some weakness in the labor housing markets foreclosures could move meaningfully higher which would be a huge positive for zone.

On the other hand, I comment that in the second quarter. The FHA extended its pandemic era streamlined and partial claims programs to all delinquent borrowers and has subsequently saw comments on additional programs that could help borrowers facing financial hardship.

Now as a servicer. We think these are good borrower friendly programs and we're seeing strong initial take up rates among our own customers with upwards of 20% of delinquent customers taking advantage of them since they were rolled out a month or so ago.

Now there may be significant recidivism as well, but nonetheless, we would expect these programs to slow the pace of normalization in foreclosures.

To summarize we can offer perfect clarity into the long term outlook with respect to both macro and policy drivers.

However, in the meantime, <unk> exchange is doing an excellent job with execution and market share and a guide you to positive third quarter results with plus or minus $3 million in EBT fueled by continued sales momentum.

And with that I'll turn it over to Kurt.

Thanks, Chris and good morning, everyone.

I'll start on slide 11, which gives you a summary of the financials I'll call out four items to start.

First let me provide some color on adjustments, which consisted of $6 million in deal costs related to the acquisition of Rushmore.

And severance and a $4 million loss associated with equity investments largely related to <unk>.

Currently stage into spending at an elevated level in line with our expectations to integrate servicing technology on their cloud based core <unk>.

Afterwards, it will go to market with the first ever cloud native servicing platform.

Second regarding the acquisition of home point.

I'd like to remind you that we guided to roughly $1 per share gain intangible book value at closing.

And we continue to feel very good about that accretion.

Upon closing home point bonds will be assumed as part of our financing structure and we will benefit from the same guarantees or other bonds.

For modeling purposes, you shouldn't expect an additional $9 million in interest expense as part of our quarterly run rate beginning in the fourth quarter of this year.

Third turning to the MSR, we marked up the MSR by $139 million to account for higher interest rates and lower <unk>.

Leaned our quarter end valuation of 156 basis points of <unk> and a multiple of five one times the base servicing fee strip.

Offsetting the markup, we incurred hedge losses of $111 million, which equates to coverage of 80%.

This is within our communicated policy tolerance as we continue to target a hedge ratio of 75%.

The Mark line also included a $33 million gain from the sale of the excess servicing strip on our conventional MSR portfolio.

As you may recall in recent quarters, we retained a bigger servicing fee strapped from securitized pools above the 25 basis point contractual minimum as a strategy to optimize capital market execution.

With this transaction we've unwound this trade and in addition to the gain the sale generated $294 million in cash, which will be used for portfolio growth and stock repurchase.

Finally, I'd like to update you about $50 million change in our deferred tax assets in the quarter.

The DTA on our balance sheet currently totals $657 million.

We continue to utilize our DTA is on an annual basis to offset taxable income and minimize our cash tax payments, which strengthens our cash flow.

Now, let's turn to slide 12 and review liquidity.

In the second quarter, we added a new MSR line, which increased our overall capacity by half a billion dollars.

Resulting in liquidity of $2 3 billion up $176 million sequentially completely consistent with what we communicated to you last quarter.

Of the $2 $3.517 billion in cash with the remainder consisting of available liquidity on our MSR lines, which is fully collateralized and immediately available.

Finally, I'll comment briefly on advances, which declined 11% year on year despite growth in the portfolio now.

Now this is completely consistent with a favorable credit quality trends that Chris just discussed.

While we are not seeing credit pressure at this time, we continue to maintain nearly $1 billion in borrowing capacity for advances, which we believe would be more than sufficient to manage through a turn in the cycle.

Our servicing group is focused on streamlining advanced recoveries as a further means to enhance servicing profitability.

I'll wrap up my comments on slide 13 by talking about our capital position.

Our capital ratio remains rock solid at 30% as measured by tangible net worth to assets, which is well above both rating agency and regulatory requirements. Now we've stated that we would deploy some of this capital, but we would do so in a disciplined patient and opportunistic manner and that's exactly what we've been doing.

As Jay commented, we're on the cusp of our minimum target for OTC, and our pending acquisitions, including home point as well as our strategic initiatives will help us lift returns and sustain them going forward.

The primary driver of incremental returns in the future will likely be profitability rather than leverage for one we're mindful of regulatory expectations, including <unk> risk based capital rules, which take effect at the end of 2024.

Additionally, our preferred source of long term debt financing with the high yield market and we just don't view current spreads is consistent with our strong credit profile.

<unk> focused internally on the strategic initiatives, we shared with you, including lower unit costs and continued operating leverage for service Center.

Investing in and expanding our DTC platform and growing our base of sub servicing clients.

And of course, we'll continue to deploy capital into both MSR acquisitions and stock repurchases in search of the best returns for investors.

With that I'd like to thank you for listening to our presentation and now I will turn the call back to Ken for Q&A.

Okay.

Thanks Kurt.

Chris can we now start the Q&A session. Please yes, thank you too.

To ask a question. Please press star one one on your phone and wait for your name to be announced to withdraw. Your question. Please press star one one again standby as we compile the Q&A roster.

One moment please for our first question.

Okay.

Our first question will come from Kevin Barker of Piper Sandler Your line is open.

Brian Thanks for taking my questions Congrats on a great quarter.

Give us a little more detail on your expectations for prepay speeds going into the back half of this year and maybe even early 2024.

Just given your guidance for $700 million in pre tax servicing income.

Services pre prepay speeds are obviously running well below any expectations. We've had loved to hear what your view is on it just given the macro environment.

Sure Kevin it's Curt so.

Yes.

And the forecast with the $700 million, we're forecasting our speeds to be slightly up even from where they were in the second quarter.

And.

Not significantly again, we're seeing.

The activity around kind of a 6% CPR continuing in our block and we've seen that up to up to this point in time in July .

And Kevin It's Chris I would say offsetting that slight increases.

We talked a little bit about the efficiencies in our call center and some of the other process work we're doing.

That's building as we go through the year, so you'll see slight increase in CPR, but more expense saves as the year goes on and of course Youll see all of that annualized in 2024.

Okay and then.

<unk> long had our ROE target I believe it was.

Several quarters ago, you put out there 12% to 20%.

And you're right there at the low end of that now or very close to it.

Do you anticipate.

Continuing to operate in that ROE range over the long term just given where you are today or do you expect that to drift towards the higher end given.

Given the outlook for servicing income thank you.

Well I think the trend and the higher guidance that we've guided two says that we will be comfortably in that range.

And again, when we put that out it was over the long term, we expect it to stay in that range absent a big spike in originations, which we saw.

And certainly if we see that come back to us, which will eventually then we'd be at the higher end or higher but over the long course, we think 12% to 20 is a reasonable range for us to operate in without any macro change in the market.

Just to follow up on that do you feel like the current macro environment would allow you to operate in the mid point or maybe the higher end of that range, just given the efficiencies, particularly within the servicing segment.

Well without nailing us down to a specific number I would say we're.

We're seeing a lot of efficiencies as I said and we're continuing to invest in the platform at a rate no one else in the industry is so I think the future should the bottom of that range should be much more easy to achieve.

We're almost there now so yes.

I would hope that we would be more in the middle of that range and at the bottom of the range.

And there are a lot of I mean, the company is performing at a very high level now.

So.

I think if anything maybe we will.

We will give guidance sometime in next year that says the minimum rises in maybe the maximum rises but for now we're going to stick with the guidance we've given you.

Okay.

Thank you Chris Thank you Kurt.

Thank you Kevin.

Thank you.

One moment please for our next question.

Okay, one moment.

Okay.

Yes.

Yeah.

Next question will come from Kyle Joseph of Jefferies. Your line is open.

Hey, good morning, guys. Thanks for taking my questions.

On a strong quarter.

So this is more on the on the origination side I know you guys maintained your guidance there, but in terms of the gain on sale margin. It looks like it came down a bit quarter on quarter or is that just a function of mix shift.

Kind of give us a sense fair.

Expectations, there or what.

Margins were getting specifically by channel.

It's all mix shift you saw more correspondent, we also had a little bit more purchase.

And.

Purchase margins are.

Just a little bit tighter.

But it is just mix shift there is nothing else going on in fact, all of our margins should be ticking up as we.

Our realizing the full year benefit of project Flash I think.

With charter it was but you saw operating costs are down 45% year over year. We're now in the midst of rolling out flashed through underwriting and eventually through funding.

Funding and post close so our costs are actually coming down our unit costs are actually coming down so that is helping all the margins, but the mix shift is going to move that overall number around a little bit.

Got it and then on down obviously strong comp sales in the quarter.

But in inventories were flat is that should we read that as.

Inventories are getting kind of our place in the.

The pipeline for inventory remained strong kit.

Same inventory despite the pickup in sales.

I think in the short term there is really.

Not a whole lot of clarity on what's going to happen with the pandemic Mod program. So we're going to be a little cautious in what we forecast.

Keep in mind that when we.

Followed that program to modify alone.

We're getting paid incentive fees to do it so of Mr. Cooper's, making money and of course as Kurt said, we add.

A reduction in advances of $300 million of cash we generate a tremendous amount of cash in this quarter.

So we're not financing that so Mr. Cooper is making money no matter, what but there is there is definitely going to be a delay in the return to normal sales volume due to foreclosures because of this program on balance it's good for Mr. Cooper, but it's going to mean a longer.

And I don't know if thats, two quarters or a year of how long it will take to get through.

The bulk of this.

Pandemic modification program. So we're giving you somewhat conservative guidance there because we really don't know what the uptake rate will be.

Meanwhile, we've continued to invest in the zone platform, it's actually.

Never been in better shape, we continue to win clients. We continue to win share. So it's not really a matter of emphasis as a matter of when and to Chris' point the latest FHA program.

It actually comes to fruition could could impact that foreclosure and delinquent pipeline more and we just don't know what the answer is going to be there, but the platform itself is continuing to perform really well and continuing to win market share.

Got it thanks very much for answering my questions.

Thank you.

Thank you.

Again, one moment please for our next question.

Our next question will come from Eric Hagen of <unk>. Your line is open.

Hey, how are you doing good morning. Thank.

Thank you guys noted the expectation for banks to be sellers of MSR.

Is there any expectation you think for banks to provide seller financing for those transactions and even more generally how do you think maybe about the supply and availability of leverage.

MSR is and.

Maybe just how it impacts valuations and demand for servicing from the non bank community.

I'll start with that Chris.

We've already seen banks come to market and depending on what.

What the capital rules mean, we will probably see more we've talked to a number of banks that we have very good relationships with that are just waiting to see so we expect to see lots of product coming to market in terms of financing we have our financing essentially established we're not looking for any banks to finance a direct.

I actually think that would kind of be unusual wood.

Impact your ability to have a true sale. So I don't really expect that but I don't know that may occur, but it's not going to affect our financing we've had established financing with our partners for many years.

Don't expect that to change at Curt do you want to.

Mark I think that financing for US has been strong we indicated last quarter that we added another half a billion dollars line.

Came to fruition, we've got financing lined up for the home point acquisition.

I think we still see.

Our banking partnerships as being very very strong and very very stable.

We do continue to meet with banks on a pretty regular basis.

They're all.

Interested in lining up financing so it's Christmas point, I don't think we necessarily need.

Financing from from our sellers I think we've got more than enough from our existing partnerships.

Yes, yes, that's good data alright. Thanks.

Maybe you could share some detail as well around what you are expecting to achieve with the MSR funds that youre launching maybe how you would expect to select MSR history around account versus what might go into that fund.

I don't think were going to get into that here we are.

We will focus on fund raising in the fourth quarter right now we're focused on closing on the platform, which is an integral part of that but.

I think we've evidenced over I was going to say a few years over 10 years we.

We see every deal in the market and there's plenty of product coming to market today.

Certainly enough to.

Fulfill our needs and not just a fund, but there arent that many buyers in the market today is a buyers market. It can be very selective in what you buy and the.

<unk> of our fund is too.

It will be run independently of Mr. Cooper, but it will take advantage of the.

Industry, leading servicing capabilities that we have as well as our ability to source product. So we've got very very strong capabilities in house that can be leveraged and we're going to make that up though all of those capabilities available to our partners in this fund.

And I would just add if you look at over our track record I mean, we've.

Partnering with a number of financial buyers and acquiring portfolios together.

And so we have a strong track record of working with others.

And we would expect that to continue and we think there is a number of financial buyers to Chris' point that really look to Mr. Cooper as a leader in and acquisitions and want to leaner lean in on our capabilities.

So we think that'll be a great partnership.

Yes, yes, it sounds good hey, do you have handy the weighted average price at which you guys have repurchased stock over the last year.

Thank you. Thank you guys.

Yes, so over the last six months I believe.

It's a little bit over 48, let me get you the exact number.

Well.

Thank you guys very much I appreciate you.

We'll put it out but I think it's about $48 a share.

Yes. Thank.

Thank you guys very much.

Yes.

Thank you.

And again one moment. Please next question.

Our next question will come from Douglas Harter Credit Suisse. Your line is open.

Thanks you.

You talked about looking to explain expand the DTC platform.

Can you just talk a little bit about what it is you're looking to accomplish there and whether you would look to do that organically or through acquisition.

I think.

Primarily Doug if you think about the universe today.

And when you look at the Bank universe.

Even some of the financial buyers that are looking for a strong recapture platform ultimately because there is tremendous value in retaining those customers and so we've had several inbounds around can.

Partners leveraged our capability with respect to recapture and so the first client that Chris mentioned as a financial buyer that.

We're familiar with they're familiar with us and they wanted to take advantage of the capability. We have in the DTC platform and if you kind of look out over the next few years, we think theres going to be a lot of.

Financial institutions, and a lot of potential other partners.

To take advantage of that capability. So we've built are in the process of finalizing the build of that white label capability. So we will be able to offer that to to a number of clients.

Got it so I guess the focus.

Would still remain on kind of recapture.

But are you looking to kind of expand the purchase or our new client.

Kind of acquisition, while expanding DTC.

While we've seen significant improvement in our internal DTC purchase recapture and we expect that to continue so that would certainly be an element of it and it's something that we're continuing to improve on and invest in.

But I think it'll be.

The lion's share of that will continue to be focus on refill.

Refinance.

Alright, Thank you Jay.

Okay.

Just quickly to answer questions 48 from last quarter by 44.

<unk> for the year to date.

Average price stock.

Year to date or full year.

For the last six months, it's been 44 little over 44.

Thank you.

One moment. Please next question.

And our next question will come from Bose George of K B W. Your line is open.

Hey, guys. Good morning, just wanted to go back to the guidance on service revenues should we see a pickup in <unk> after home point closer to just.

The MSR come on on day, one and then sort of went.

When the other when the board's onto your platform sort of incremental upside there.

You talked about the cadence.

Yes.

Youre looking at that correctly Bose although.

The biggest part of that is going to board.

I think right at the tail end of.

Of the year, so it'll be modest but of course youll see the full benefit of it in 'twenty four.

I think we guided act.

Acquisition and in the presentation about a 9% accretion right.

Okay, Great and then just in terms of the earnings in the corporate segment is the difference going forward.

I guess the guidance you gave on zone, plus the $9 million interest expense on home point, and then should we assume the rest of corporate it's roughly flat.

Yes.

I think right now we're seeing the rest of corporate essentially flat.

Youre going to see a continuation of some of these one time charges. Obviously, we've got some acquisition charges that will come through in Q3, and Q4, along with the <unk>.

Continuing operations of <unk>.

Okay, and then there'll be the one time $50 million gain.

From the deal collapse in the back half of the year as well.

That's right. So yes, we're again guiding to that.

Again, the one time bargain purchase gain from the <unk> acquisition, which we initially said it was a $1 per share and were very comfortable that's a fairly conservative estimate.

Okay, great. Thanks.

Thank you.

Again, one moment. Please next question.

Okay.

Our next question will come from Giuliano Bologna of.

Compass point your line is open.

Good morning, and congratulations on another great quarter of performance.

Thank you Ed.

Essentially yes.

The origination segment.

Obviously DTC has been a huge driver of the platform there.

Realize theres some timing components in terms of importing msr's.

That portfolio of mostly.

Key Adolfo leads from the MSR book that you own and sub service should we expect DTC volumes to continue to increase roughly in line with portfolio growth, albeit kind of on a delay is reported those new books and as that.

Is that a material source of growth, which would help the DTC platform continue to grow into 'twenty four.

Yes, that's exactly right Giuliano.

<unk>.

With more inventory than we have more opportunity and so there is some <unk>.

Granted every pool is not exactly the same coupons are a little different all of those things are different but on average the more.

More portfolio, we have the more originations we're going to do.

Okay that makes sense.

And then one quick one.

Related to Rushmore it looks like there was a $23 million in tangible recognizing the quarter.

I was looking at 34 cents a share is that the rough kind of no impact to tangible book value from the transaction.

Yes and look.

Due to the purchase of the Rushmore platform in the contracts.

So you're spot on that will probably be amortizing over time, we do we did see rushmore make money this quarter, even and we expect to see it on a go forward basis, but that $23 million will accrete downwards.

The earnings from the platform.

Then one last one just on the topic that hasn't come up all the time, but to be material in the future.

Say again.

Transaction and the partnership there do you have a sense of.

The whole platform has been integrated.

They are marketing it to clients already or is it still an integration phase.

Soon to be market declines.

Yes, I think I wouldn't say, they're marketing it theyre discussing it with clients.

Clients are calling them because of.

This is the first time this has been a new technology even.

<unk> available in servicing and.

40 years.

The integration is not complete theres, probably another nine months.

To go before again this is the integration of our technology with five serves new cloud based score referred to as Zach.

So there's still some time ago I think things are progressing well and we're working very very closely with not just this agent team, but the Pfizer team.

And.

Look we feel it's a it's a.

It's a great technology for US we can look directly at our operations.

And see enormous amount of manual work coming out I think thats going to apply that is going to be very very attractive to other servicers, but I wouldn't think of this as a 24.

We're going to turn the corner I think they will begin.

Heavily marketing it probably in the middle of 'twenty four with the expectation that clients will start migrating to that platform maybe at the end of 'twenty for the beginning of 'twenty five. So this is.

This is a long term project for us but.

The company is making very large investments in this integration and the technology itself, both ours and things that car World class. So I think the upside is very very.

Promising.

And really the partnership.

Partnership with five serve is probably more excited today than <unk> been historically, if you look at the buy side client base.

Once we complete this integration and the ability to take it not only to existing.

Servicing clients, but move through the fiserv client base.

Really attractive.

I think we're extremely excited about the opportunity here.

Okay. Thank you so much for all that color I really appreciate it.

So the question then I'll jump back in the queue. Thank you. Thank.

Thank you Julianna.

Thank you.

Okay.

I see no further questions in the queue I would now like to turn the conference back to Jay Bray for closing remarks.

Thank you everybody for joining the call and will be available later today for questions really appreciate it.

Yes.

This concludes today's conference call. Thank you all for participating you may now disconnect and have a pleasant day.

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