"Dan Perotti, PennyMac's chief financial officer, said during the company's earnings call that the net income results included $1 million of fair value gains on mortgage servicing rights (MSRs), the net of hedges and costs. We capitalized on higher lock volumes driven by an initial decline in interest rates to generate an 18% annualized return on equity, chairman and CEO David Spector said during the earnings call."
"Many industry participants have also added significant capacity in anticipation of lower rates, and this excess capacity has created a more competitive origination market, limiting expected production margin increases and revenues typically associated with an interest rate rally. PennyMac's pretax income declined to $134.4 million, down from $236.4 million in the prior quarter but up slightly from $129.4 million in Q4 2024."
PennyMac recorded $1 million of fair value gains on mortgage servicing rights (MSRs), net of hedges and costs. Higher lock volumes from an initial decline in interest rates produced an 18% annualized return on equity. Production pretax income rose to $127.3 million, supported by increased volumes in consumer direct and correspondent channels, while margins declined. Total loan acquisitions and originations increased 16% to $42.2 billion in UPB and rate locks rose to $46.8 billion. Company pretax income declined to $134.4 million as servicing pretax income fell sharply to $37.3 million amid increased MSR runoff and faster prepayments.
Read at www.housingwire.com
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