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Federal Reserve Governor Lisa Cook stated that the risks of high inflation currently outweigh the risks to employment, suggesting the central bank is prepared to raise interest rates if prices do not cool. For a mortgage servicer like Mr. Cooper, higher rates are generally a positive.
When interest rates stay high, homeowners are less likely to refinance their mortgages. This keeps loans in Mr. Cooper's portfolio for a longer period, which preserves the value of its servicing rights. While high rates can slow down the creation of new loans, the company's massive existing portfolio becomes more profitable as the expected lifespan of those loans increases.
Management has a very consistent habit of beating expectations, clearing the bar in six of the last eight quarters even as they integrated large new portfolios.
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