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Planet Home Lending LLC says it’s now collecting payments on nearly $100 billion in mortgages after acquiring servicing rights on $10 billion in home loans from Village Capital & Investment LLC.
The bulk acquisition of servicing rights to 45,000 home loans securitized by Ginnie Mae from Henderson, Nevada-based Village Capital brings Planet’s servicing portfolio to $94 billion, and the company said it plans to continue acquiring additional mortgage servicing rights in the second half of 2023.
While some lenders retain the right to service loans they originate, many smaller lenders have been selling their mortgage servicing rights (MSRs) for cash to stem losses as rising interest rates take a toll on lending.
Michael Dubeck
“Planet continues to be a liquidity provider to mid- and smaller-tier issuers,” said Planet Financial Group CEO and President Michael Dubeck, in a statement. “Our robust MSR desk capably handles bulk deals of any size. Sellers like to close transactions with us because we’re transparent, reasonable on terms, and competitively priced.”
Loan servicing, which entails collecting mortgage payments from homeowners on behalf of investors that own the loans, can be a profitable, countercyclical business. Mortgage loan servicers collect fees based on the size of the loan, and the servicing rights become more valuable when interest rates rise, in part because borrowers are less likely to refinance with another lender.
And when interest rates do fall, companies that not only service loans but originate them have the inside track to offer refinancing to borrowers they’re in regular contact with.
Meriden, Connecticut-based Planet Financial Group — the parent company of Planet Home Lending and Planet Management Group LLC — boasts that its mortgage origination, servicing and asset-management solutions constitute a “synergistic ecosystem of products, services and technologies.”
“The Planet Family of Companies’ specialized ecosystem is structured to minimize costs, share compliance and administrative systems and enhance asset performance,” Dubeck said last fall of the subsidiaries’ growing market share. “That structure enables Planet to create and retain mortgage servicing rights and manage assets with unmatched efficiency. We have the stability to weather the challenging markets ahead.”
On June 1, Planet Home Lending announced the acquisition of Illinois-based Platinum Home Mortgage Corp., a retail lender with more than 20 branch offices in the Midwest, Northwest and West Coast licensed to do business in 50 states. Platinum CEO and President Lee Gross joined Planet as senior vice president to lead the Platinum team at Planet.
“Planet’s efficient platform gives us the pricing advantage of $26 billion in volume,” Gross said in a statement at the time. “In addition to agency and GSE home loans, Planet also has niche products tailored to today’s tight real estate markets, including self-funded One-Time Close (OTC) construction loans as well as manufactured housing and renovation mortgage loans.”
In May, loan servicing giant Mr. Cooper announced it was closing in on its goal of building a $1 trillion servicing portfolio with the acquisition of Home Point Capital. Home Point had been the nation’s third-biggest wholesale mortgage lender before rising losses forced it to sell its wholesale and correspondent lending businesses. Mr. Cooper acquired what was left of the company — $84 billion in mortgage servicing rights — for $324 million in cash.
Homepoint sold its correspondent lending business to Planet Home Lending last year for $2.5 million in cash, plus 2022 earnout income of $900,000, according to Home Point Capital’s latest annual report to investors. Planet Home Lending will continue making earnout payments to Homepoints based on origination volume through June 1, 2024.
Homepoint announced that it was getting out of the business of originating loans altogether in April, having reached an agreement to sell its wholesale channel to The Loan Store Inc. in exchange for a 10 percent equity stake in The Loan Store. Homepoint executive Phil Shoemaker became The Loan Store’s chief executive officer in June.
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