By the Numbers
Acquisition of Mr. Cooper poised to make prepayments Rocket
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The recently announced acquisition of mortgage originator Mr. Cooper by Rocket Mortgage, its larger competitor, could eventually lower the value of new multiple-issuer MBS pools and lower the value of Mr. Cooper’s specified pools that the market has recently priced at a significant premium above Rocket. The lower value would likely reflect faster prepayments as Mr. Cooper pools begin to refinance at a Rocket pace.
Pools serviced by Rocket Mortgage have long refinanced much faster than other servicers, reflecting the technology and streamlined process that Rocket uses for origination. Pools serviced by Mr. Cooper, on the other hand, have refinanced more slowly than most other services. Rocket loans in FNCL 6% pools, for example, prepaid over 45 CPR in October 2024, compared to roughly 30 CPR for Mr. Cooper loans (Exhibit 1). Since the start of 2024, Rocket’s speeds averaged 70% faster than Mr. Cooper’s speeds (excluding UWM origination) on these loans.
Exhibit 1. FNCL 6% speeds, Rocket vs. Mr. Cooper
Prepayment speeds for 30-year, fixed-rate, owner-occupied loans with wala between 6 and 24 months, original loan size at least $250,000, original FICO score over 700, and original LTV at most 80%.
Source: Fannie Mae, Freddie Mac, Santander US Capital Markets.
In fact, across all Rocket loans with an incentive to refinance over the last 12 months, speeds came in 63.4% faster than they would have had they been serviced by the typical servicer (Exhibit 2). Mr. Cooper’s loans, excluding those acquired from UWM, prepaid 9.1% slower than the neutral servicer. Mr. Cooper’s servicing that was acquired from UWM prepaid in the middle, at 26.3% faster than the typical servicer.
Exhibit 2. Refi speed effect of Rocket and Mr. Cooper on FNCL collateral.
Prepayment speeds of in-the-money 30-year fixed rate loans from March 2024 through February 2025. The CPR column shows the actual CPR for that servicer’s loans over the horizon. The Ref column shows how comparable loans at other servicers typically prepaid.
Source: Fannie Mae, Freddie Mac, Santander US Capital Markets.
Multi pools may lose value since Mr. Cooper loans make up about 8% of pools issued over the last five years. Rocket and Mr. Cooper TBA FNCL 6.0% pools, for example, have a theoretical difference in value of 40.7/32s—the difference between a +7.7/32s pay-up for Mr. Cooper and a -33/32s pay-up for Rocket (Exhibit 3). As a result, an FNCL 6% multi pool that contains 8% Mr. Cooper loans would lose 3.3/32s if those loans prepay like Rocket’s. This could also lower TBA prices, which would lift specified pool pay-ups.
Exhibit 3. Effect of servicer on FNCL 6.0% Max $250k valuations
As of 3/31/2025. UWM is United Wholesale Mortgage, typically called United Shore by investors. Pay-ups calculated at equal-OAS to TBA.
Source: Yield Book, Santander US Capital Markets.
However, prices of Mr. Cooper specified pools could fall a lot. For example, Mr. Cooper Max $225K FNCL 6.5% pools recently have traded at a pay-up of 36/32s over TBA while Rocket pools of the same type have traded at a pay-up of only 3/32s. That difference of 33/32s in value could disappear.
Of course, it is not certain that speeds in Mr. Cooper pools will mirror the behavior of Rocket, but it seems likely over the long run.
More information on servicer prepayment speeds can be found here:
Agency Top 40 Servicer Ranking
Agency Top 200 Servicer Ranking
Methodology
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