Financial Data and Key Metrics Changes - The company reported earnings available for distribution of $2.35 per diluted share for 2025, representing a 12% year-over-year growth [12] - GAAP net income for Q4 was $53 million, or $0.09 per diluted share, with a 3% return on equity [13] - For the full year, GAAP net income was $567 million, with a return on equity of 8% [13] - Book value at the end of 2025 was reported at $7 billion, or $12.60 per common share, an increase from the previous year [14] Business Line Data and Key Metrics Changes - The Genesis business produced just under $5 billion in loans, with earnings up 250% since its acquisition in 2022 [6] - Newrez, the mortgage company, saw year-over-year earnings growth of 13% [6] - Sculptor's AUM grew from $34 billion to $38 billion in 2025, with gross inflows of $5.8 billion [15][24] Market Data and Key Metrics Changes - The 10-year treasury yield increased to approximately 4.30%, while mortgage rates have slightly decreased [14] - In San Francisco, leasing activity increased by 330% year-over-year, reflecting a recovery in the market [36] - The New York core portfolio's leased occupancy was 92.8%, up 780 basis points year-over-year [34] Company Strategy and Development Direction - The company aims to grow prudently by creating alpha and results for clients, focusing on performance-driven asset management [5] - The acquisition of Paramount is seen as a strategic move to capitalize on dislocated office assets, with a focus on Class A office buildings in major cities [29] - The company plans to enhance its technology stack and marketing efforts to improve customer experience and brand [7] Management's Comments on Operating Environment and Future Outlook - Management noted significant geopolitical risks but expressed optimism about the mortgage market, anticipating increased production due to tighter mortgage basis [20] - The company expects a 10% increase in overall volumes for 2026, driven by improved service and tools for homeowners [59] - Management highlighted the importance of maintaining discipline in pricing and origination strategies amidst competitive pressures [62] Other Important Information - The company has made significant investments in technology partnerships, including with Valon Technologies and HomeVision, to enhance operational efficiency [45] - The firm ended the year with $1.7 billion in cash and liquidity after funding various business operations [15] Q&A Session Summary Question: Can you detail the funded volumes, particularly the refi percentage? - Management indicated that the increase in refi volume was a reflection of market conditions, particularly a rally in late summer and September, leading to higher production in January [58] Question: What are the expectations for production in 2026? - The company forecasts a 10% increase in production for 2026, aligning with market estimates, and aims to improve market share through enhanced service [59] Question: How does the company view competition in the mortgage space? - Management acknowledged the competitive nature of the mortgage business but emphasized their focus on maintaining margins and not engaging in irrational pricing wars [62]

Core Insights - Mr. Cooper Group reported Q2 2025 earnings with earnings per share (GAAP) at $3.04, below the $3.18 consensus, and revenue at $608 million, nearly 10% short of the $674.24 million expectation [1][11] Business Overview - Mr. Cooper operates in the U.S. housing finance market, focusing on mortgage servicing and origination, which includes collecting mortgage payments and creating new residential mortgage loans [3] - The company's business model emphasizes managing a large portfolio of residential mortgages, with key success factors being servicing scale, cost efficiency, and technology-driven improvements [4] Quarterly Performance Highlights - The servicing portfolio's unpaid principal balance reached $1,509 billion, up 25% year-over-year, although it dipped slightly from the previous quarter [5] - Net servicing revenue increased to $426 million, supported by a reduction in expenses from $240 million in Q1 2025 to $148 million [5] - The servicing segment achieved a pretax operating income of $332 million for the second consecutive quarter, with improved credit quality as delinquency rates fell to 1.4% [6] - The originations segment saw pretax income rise to $64 million from $45 million in Q1 2025, with funded origination volume climbing 14% to $9.4 billion [8] Strategic Initiatives - Subservicing remains a significant part of the business, with a balance of $778 billion, allowing for growth without substantial capital risk [7] - The company announced a new mortgage servicing rights (MSR) fund with $200 million in initial capital, indicating plans for further growth in this area [7] - Technological investments, including digital tools and AI, are aimed at enhancing cost efficiency and customer service [9] Financial Metrics - Tangible book value per share increased to $75.90 from $72.53, and return on tangible common equity (ROTCE) rose to 17.2% [10] - Company-wide expenses decreased to $330 million from $430 million in Q1 2025 [9] Future Outlook - Management highlighted the pending merger with Rocket and the launch of the new MSR Fund as significant developments, with a focus on expanding the customer base and maintaining cost discipline [12][13]