Coppell-based Mr. Cooper Group is buying a large player in the mortgage business, adding a quarter of a million new customers.
Mr. Cooper, formerly known as Nationstar Mortgage, has agreed to buy Rushmore Loan Management Services LLC’s residential mortgage servicing platform. The deal adds loans for 250,000 customers totaling $37 billion in unpaid balances. Terms of the deal were not disclosed.
This will grow Mr. Cooper’s existing servicing business of 4.1 million customers and $853 billion in unpaid loan balances as of March. The company is one of the largest loan servicers in the country.
Mr. Cooper previously agreed to acquire Roosevelt Management Company LLC, Rushmore’s New York-based parent company, for its mortgage investment business.
The company hopes to close on the subservicing platform by the end of May and the rest of the Roosevelt transaction by the end of June, depending on regulatory approvals.
“We are delighted to welcome Rushmore’s talented team to our family, and we are committed to providing a seamless experience for their important clients,” Jay Bray, chairman and CEO of Mr. Cooper Group, said in a statement. “Working together, we will bring to market one of the leading special servicers in the industry.”
The deal will add “several hundred people” to the company, Chris Marshall, vice chairman and president of Mr. Cooper, said in a first-quarter earnings call Wednesday.
Rushmore leased 78,000 square feet of office space in the Freeport Business Center in Irving in 2021, a move from a smaller location in Irving. The company also has offices in Irvine, Calif., Fort Lauderdale, Fla., Oklahoma City, Nashville and San Juan, Puerto Rico, according to its LinkedIn page.
Rushmore CEO Terry Smith said the company has had several months of discussions with leadership at Mr. Cooper and that he has become increasingly impressed with the strength and breadth of Mr. Cooper’s platform.
“Our combined entity will provide an unparalleled offering to a broader base of clients and customers,” Smith said in a statement.
Marshall said in the earnings call that the deal will position the company for revenue growth as the credit environment changes. He also said the company has been told another company’s servicing platform is coming to market, so the timing was right to bring on a well-recognized brand and combine it with its existing servicing business.
“We think there’s a real opportunity to win business,” Marshall said.
Mr. Cooper’s net income dropped dramatically to $37 million last quarter from $658 million a year before as higher interest rates crushed demand for home loans.
Through the rapid rise in mortgage rates last year, mortgage originations dropped from $689 billion in the first quarter to $398 billion in the last, with the refinancing market hit the most, according to the Mortgage Bankers Association. The group forecasts a rebound in the industry throughout 2023 but not quite a return to 2022′s figures.
Mergers and acquisitions in the mortgage industry surged in 2022 due to industry challenges and owner retirements, according to an October report from mortgage industry analyst Stratmor Group. Another example of this came earlier this year when Dallas-based Town Square Mortgage merged with Illinois-based American Portfolio Mortgage Corp.
