Cooper Group Inc., a leading mortgage servicing and origination company, reported lower earnings for the first quarter of 2021 compared to the same period last year. Despite this, the company saw some benefits from its servicing operations due to an increase in customer activity.
For the first three months of 2021, Cooper reported net income of $150 million, down 16% from $179 million in the prior-year period. Total revenue decreased 3.7%, while average servicing fee per loan decreased 4%.
The company attributed the decrease in earnings to higher expenses due to increased volume in servicing activities, including new loan acquisitions and loan modifications. In addition, a prolonged litigation dispute with Fannie Mae and Freddie Mac, as well as higher costs associated with regulatory matters, impacted the company as well.
On the bright side, non-interest income increased 5% due to higher customer activity in the Servicing business. The company also saw more than 10,000 loan modifications completed during the quarter, an increase of more than 30% compared to the fourth quarter of 2020.
Overall, average servicing revenue per loan was up 0.6% from the prior-year period. This was driven by an increase in customer activity, including a 13% increase in loan modification activity, as well as higher recoveries on foreclosure assets.
Commenting on the results, Cooper Chairman and CEO Jay Bray said: “The trends in our first quarter are a testament to the resilience of our model in times of economic and industry challenges. Our management team has done a great job of navigating the pandemic-driven headwinds to deliver strong operating performance and long-term value to our shareholders.”
Despite the challenging year, Cooper continues to make progress on its goals for 2021. In addition to increasing loan modifications and customer activity, the company is also focused on expanding its distribution network and growing its business in consumer-oriented origination channels.
In summary, Cooper Group Inc., experienced a decrease in earnings for the first quarter of 2021, mainly because of higher costs and prolonged litigation disputes. Although, non-interest income increased slightly due to an increase in customer activity, as well as a 13% increase in loan modifications and recovery of foreclosure assets. Despite the challenging year, the company remains committed to expanding its distribution network and growing its business in origination channels.
This article was contributed on Oct 19, 2023