Mr. Cooper has been profitable in the mortgage business for the third time in the past four quarters.
The company generated net income of $ 73 million in the second quarter. This included a $ 261 million loss in market value from the mortgage service rights portfolio.
In the first quarter, Mr. Cooper lost $ 171 million due to a negative market valuation of $ 325 million. In the same period last year, the company lost $ 87 million on a valuation hit of $ 293.
The company's pre-tax income for the second quarter was $ 350 million. It is "the strongest operating profit in our history," said Jay Bray, chairman and CEO, in a press release. "Strong origination gains not only offset pressure on the service margin, but also brought the MSR brand back in the same quarter. This shows the significant progress we have made in building a balanced and profitable business model."
The market valuation resulted in Mr. Cooper's service segment posting a pre-tax loss of $ 251 million in the second quarter. This segment had a $ 325 million pre-tax loss in the first quarter and a $ 135 million pre-tax loss in the second quarter of 2019.
The origination business was $ 10.7 billion, compared to $ 12.4 billion in the first quarter. Mr. Cooper committed $ 10 billion for the second quarter of last year.
However, pre-tax operating income increased to $ 434 million in the second quarter from $ 158 million in the first quarter and $ 118 million in the previous year.
This was because net sales from origins increased from $ 297 million in the first quarter to $ 573 million and from $ 244 million in the second quarter of 2019 to $ 573 million.
Xome's pre-tax operating income was $ 13 million in the second quarter, unchanged from the first quarter, and from $ 8 million in the second quarter of 2019.