PennyMac Financial Services

Last updated
Pennymac Financial Services, Inc.
Type Public company
NYSE:  PFSI
Russell 2000 Component
Industry Mortgage lending and servicing
Founded2008
Founder Stanford Kurland
Headquarters
Westlake Village, California
,
United States
Area served
United States
Key people
David Spector, CEO
Products 30-year fixed-rate mortgages, 15-year fixed-rate mortgages, FHA loans, VA loans, ARM loans, jumbo loans
RevenueIncrease2.svg US$3.71 billion(2020) [1]
Increase2.svgUS$2.24 billion(2020) [1]
Increase2.svgUS$1.65 billion(2020) [1]
Total assets Increase2.svgUS$31.60 billion(2020) [1]
Total equity Increase2.svgUS$3.39 billion(2020) [1]
Number of employees
6,000 (2020) [1]
Subsidiaries PennyMac Loan Services, LLC
PNMAC Capital Management, LLC.
Website https://www.pennymac.com

PennyMac Financial Services, Inc. is an American residential mortgage company headquartered in Westlake Village, California. The company's business focuses on the production and servicing of U.S. mortgage loans and the management of investments related to the U.S. mortgage market. PennyMac operates through two subsidiaries: PennyMac Loan Services, LLC and PNMAC Capital Management, LLC. [2] The latter manages the PennyMac Mortgage Investment Trust (NYSE :  PMT), a mortgage REIT.

Contents

PennyMac was the third largest mortgage lender, the sixth largest mortgage servicer, and largest aggregator of residential mortgage loans in the U.S. in 2019. [2] The company conducts its business through a consumer-direct model, which relies on the Internet and call center-based staff to acquire and interact with customers across the country. Although its name resembles government-sponsored enterprises like Freddie Mac and Farmer Mac, it has always been a private-sector entity.

History

PennyMac was founded in 2008 (during the subprime mortgage crisis) by Stanford Kurland, the former President of Countrywide Financial, with financial support from BlackRock and Highfields Capital Management. [3] The company was set up with the aim to help stabilize the housing market and to avoid home foreclosures by buying up distressed mortgages. [4] [5] Though PennyMac's efforts did aid distressed homeowners, the company was also criticized because its founder and many of its executives previously held leadership positions at Countrywide Financial. [4] [5] [6] The critics argued this group contributed to questionable lending practices at Countrywide and thus shared blame for the subprime mortgage crisis, and that this group was now capitalizing on that crisis through PennyMac. [4] [5] [6] Though Kurland acknowledged his role in pushing for high-risk lending practices at Countrywide and regretted the turn of events there and in the overall industry, he argued he did not deserve blame because the riskiest lending took place after he left Countrywide and because he always insisted loans went to those who could afford to repay them. [5]

PennyMac later began refinancing and originating mortgages online and buying loans from smaller lenders. [3]

On 30 July, 2009, the company publicly listed the PennyMac Mortgage Investment Trust, a mortgage REIT managed through its subsidiary PNMAC. [7] The IPO raised $335 million, less than half of the $750 million the company had expected. [7] On May 14, 2013, PennyMac Financial Services was listed on the New York Stock Exchange under the ticker PFSI, raising $200 million. [8] PennyMac is a member of the Russell 2000 Index. [9] At the time of its IPO, PennyMac had more than 600 employees at its Moorpark, California headquarters, making it one of the largest private employers and biggest tenants in the city. [10] It moved to its current headquarters in Westlake Village in 2015. [11]

In 2019, PennyMac surpassed $1 billion in revenue for the first time. [2] That year the company also became the third largest mortgage lender in the U.S. in 2019 with $118 billion in unpaid principal balance (accounting for a market share of around 5%), the sixth largest mortgage servicer with a servicing portfolio of $369 billion in unpaid principal balance, and the largest aggregator of residential mortgage loans. [2] The company more than doubled its annual revenue in 2020, [1] mainly attributable to favorable business conditions due the low interest rates resulting from the federal government's efforts to fight the economic impact of the COVID-19 pandemic. [12] [13]

In 2020, PennyMac saw loan origination value surpass $36 billion across over 117,000 mortgages, making them the 15th largest mortgage lender by dollar value for this period. [14]

Business structure

PennyMac conducts business in three segments, namely mortgage production, mortgage servicing (together, production and servicing comprise mortgage banking activities), and investment management.

The company's mortgage production focuses on the origination of first lien and government-backed or guaranteed mortgage loans through three methods: [1]

In total, almost $200 billion in loans are produced through these three methods. [1]

The loan servicing segment performs loan administration, collection, and default management activities, and totals to $427 billion in unpaid principal balance in 2020. [1] The investment management segment consists of management fees received from the PNMAC subsidiary for its management of the PennyMac Mortgage Investment Trust. [1]

Related Research Articles

The Federal National Mortgage Association (FNMA), commonly known as Fannie Mae, is a United States government-sponsored enterprise (GSE) and, since 1968, a publicly traded company. Founded in 1938 during the Great Depression as part of the New Deal, the corporation's purpose is to expand the secondary mortgage market by securitizing mortgage loans in the form of mortgage-backed securities (MBS), allowing lenders to reinvest their assets into more lending and in effect increasing the number of lenders in the mortgage market by reducing the reliance on locally based savings and loan associations. Its brother organization is the Federal Home Loan Mortgage Corporation (FHLMC), better known as Freddie Mac. In 2023, Fannie Mae was ranked number 28 on the Fortune 500 rankings of the largest United States corporations by total revenue.

<span class="mw-page-title-main">Bank of America</span> American multinational banking and financial services corporation

The Bank of America Corporation is an American multinational investment bank and financial services holding company headquartered at the Bank of America Corporate Center in Charlotte, North Carolina, with investment banking and auxiliary headquarters in Manhattan. The bank was founded in San Francisco, California. It is the second-largest banking institution in the United States, after JPMorgan Chase, and the second-largest bank in the world by market capitalization. Bank of America is one of the Big Four banking institutions of the United States. It serves approximately 10.73% of all American bank deposits, in direct competition with JPMorgan Chase, Citigroup, and Wells Fargo. Its primary financial services revolve around commercial banking, wealth management, and investment banking.

GE Capital is the financial services division of General Electric.

Bank of America Home Loans is the mortgage unit of Bank of America. In 2008, Bank of America purchased the failing Countrywide Financial for $4.1 billion. In 2006, Countrywide financed 20% of all mortgages in the United States, at a value of about 3.5% of the United States GDP, a proportion greater than any other single mortgage lender.

Ditech Financial LLC was a provider of home loan, loan servicing and refinance products to consumers and institutional partners in the U.S.

Rocket Mortgage, LLC, formerly Quicken Loans, LLC, is an American mortgage lender, headquartered in Detroit, Michigan. In January 2018, the company became the largest overall retail lender in the U.S.. Unlike other large mortgage lenders that depend on deposits, Rocket Mortgage relies on wholesale funding to make its loans and uses online applications rather than a branch system. Amrock and One Reverse Mortgage are also part of the Rocket Mortgage Family of Companies. The company closed more than $400 billion of mortgage volume across all 50 states from 2013 through 2017.

IndyMac, a contraction of Independent National Mortgage Corporation, was an American bank based in California that failed in 2008 and was seized by the United States Federal Deposit Insurance Corporation (FDIC).

<span class="mw-page-title-main">American Freedom Mortgage</span>

American Freedom Mortgage, Inc. (AFM) was a private S Corporation incorporated on February 2, 2001, according to the Georgia Secretary of State, and headquartered in Marietta, Georgia. AFM conducted business as a multi-state direct-to-consumer correspondent lender and mortgage broker specializing in the origination of subprime and Alt-A mortgage loans. AFM also operated a wholesale mortgage lending division that originated loans via approved mortgage brokers and which used the fictitious name AFMI Funding. As a correspondent lender, AFM sold the mortgage loans on the open market to larger investors.

<span class="mw-page-title-main">Apollo Global Management</span> American private equity company

Apollo Global Management, Inc. is an American private equity firm. It provides investment management and invests in credit, private equity, and real assets. As of 2022, the company had $548 billion of assets under management, including $392 billion invested in credit, including mezzanine capital, hedge funds, non-performing loans, and collateralized loan obligations, $99 billion invested in private equity, and $46.2 billion invested in real assets, which includes real estate and infrastructure. The company invests money on behalf of pension funds, financial endowments, and sovereign wealth funds, as well as other institutional and individual investors. Funds managed by Apollo have produced a 24% internal rate of return (IRR) to investors, net of fees.

The subprime mortgage crisis impact timeline lists dates relevant to the creation of a United States housing bubble and the 2005 housing bubble burst and the subprime mortgage crisis which developed during 2007 and 2008. It includes United States enactment of government laws and regulations, as well as public and private actions which affected the housing industry and related banking and investment activity. It also notes details of important incidents in the United States, such as bankruptcies and takeovers, and information and statistics about relevant trends. For more information on reverberations of this crisis throughout the global financial system see Financial crisis of 2007–2008.

MortgageIT formerly MIT Lending is a residential mortgage banking company that was founded in 1988 and is headquartered in New York City. By 2004, the company had become one of the top mortgage lenders in the nation. Also, in 2004, MortgageIT became a wholly owned subsidiary of MortgageIT Holdings, a self-administered REIT trading on the NYSE. As a full-service residential mortgage banking company, MortgageIT’s primary business operations are to originate, sell and broker residential mortgage loans in 50 states and the District of Columbia. Also, MortgageIT is an approved U.S. Department of Housing and Urban Development (HUD) delegated mortgagee. At the end of January 3, 2007 the company employed 2,100 and had 47 branches throughout the United States. The settlement, title and related services for mortgage loans were provided by Home Closer LLC, a subsidiary of MortgageIT.

Prospect Mortgage was a residential retail mortgage lender that offered a range of home loans. The company was founded in 2007 and was headquartered in Sherman Oaks, California with retail offices across the United States. The company was backed by the private equity firm, Sullivan Partners. In 2011, Prospect Mortgage was ranked number 2 on Mortgage Executive Magazine's list of the Top 100 Mortgage Companies in America and was a top 10 national home purchase lender in 2012.

The U.S. subprime mortgage crisis was a set of events and conditions that led to a financial crisis and subsequent recession that began in 2007. It was characterized by a rise in subprime mortgage delinquencies and foreclosures, and the resulting decline of securities backed by said mortgages. Several major financial institutions collapsed in September 2008, with significant disruption in the flow of credit to businesses and consumers and the onset of a severe global recession.

Bluestone Group is a financial services and technology business with offices in the UK and Ireland.

<span class="mw-page-title-main">Ocwen</span>

Ocwen Financial Corporation is a provider of residential and commercial mortgage loan servicing, special servicing, and asset management services, which has been described as "debt collectors, collecting monthly principal and interest from homeowners". Ocwen was founded in 1988 by William Erbey and is headquartered in West Palm Beach, Florida, with additional offices in Mount Laurel, NJ, Rancho Cordova, California, and St. Croix, U.S. Virgin Islands. It also has support operations in the Philippines and India. Ocwen's Slogan is "Helping Homeowners Is What We Do."

<span class="mw-page-title-main">2007–2008 financial crisis</span> Worldwide economic crisis

The 2007–2008 financial crisis, or Global Financial Crisis (GFC), was the most severe worldwide economic crisis since the Great Depression of 1929. Predatory lending targeting low-income homebuyers, excessive risk-taking by global financial institutions, and the bursting of the United States housing bubble culminated in a "perfect storm".

GoodLeap, formerly Loanpal, is a finance technology company that provides financing options for the residential solar energy industry. The company was founded in 2003 as Paramount Equity and was later rebranded to Loanpal. In June 2021, the company rebranded to GoodLeap. As of 2020, the company was responsible for 41% of the solar loan market in the U.S. and is the top solar lender in the country.

<span class="mw-page-title-main">La Trobe Financial</span>

La Trobe Financial is an Australian credit asset management firm specialising in asset management and credit. It offers real estate credit, investment account offerings and private wealth management. The CEO is Mr. Chris Andrews. La Trobe Financial's head office is located in Melbourne, with corporate offices in Sydney, Shanghai and Hong Kong.

<span class="mw-page-title-main">Black Knight, Inc.</span> American data company

Black Knight, Inc. is an American corporation that provides integrated technology, services, data and analytics to the mortgage lending, servicing and real estate industries, as well as the capital and secondary markets. Black Knight is also known for its monthly benchmark data reports: Mortgage Monitor, a month-end analysis of mortgage performance statistics derived from Black Knight's loan-level database representing the majority of the national mortgage market; and Originations Market Monitor, the industry's earliest and most comprehensive view of single-family residential mortgage originations based on daily rate lock data from Black Knight's Optimal Blue PPE. In 2023, Intercontinental Exchange acquired the company for $11.7 billion.

SoFi Technologies, Inc. is an American online personal finance company and online bank. Based in San Francisco, SoFi provides financial products including student and auto loan refinancing, mortgages, personal loans, credit card, investing, and banking through both mobile app and desktop interfaces.

References

  1. 1 2 3 4 5 6 7 8 9 10 11 12 13 "Pennymac Financial Services, Inc. 2020 Annual Report (Form 10-K)" (PDF). sec.gov. U.S. Securities and Exchange Commission. 2021-02-25.
  2. 1 2 3 4 PennyMac. "Annual Report 2019" (PDF).
  3. 1 2 "PennyMac, headed by former No. 2 at Countrywide, files for IPO – Los Angeles Times". Articles.latimes.com. 2013-02-08. Retrieved 2014-02-26.
  4. 1 2 3 "Countrywide Execs Get New Home At PennyMac". Forbes. Retrieved 2021-03-12.
  5. 1 2 3 4 Lipton, Eric (2009-03-03). "Ex-Leaders of Countrywide Profit From Bad Loans (Published 2009)". The New York Times. ISSN   0362-4331 . Retrieved 2021-03-12.
  6. 1 2 Goldman, Russell. "Borrowers Angry as Former Countrywide Execs Back in Business". ABC News. Retrieved 2021-03-12.
  7. 1 2 Wei, Lingling (31 July 2009). "PennyMac's IPO Struggles, Falling 4.5%". Wall Street Journal. Retrieved 12 March 2021.
  8. ↑ "PennyMac Financial Raises $200 Million in IPO | Los Angeles Business Journal". labusinessjournal.com. Retrieved 2021-03-12.
  9. ↑ "Russell 2000 membership list" (PDF). Retrieved 2014-02-26.
  10. ↑ "PennyMac jobs top 600 as firm files for IPO | Pacific Coast Business Times". Pacbiztimes.com. 2014-02-21. Retrieved 2014-02-26.
  11. ↑ "PennyMac Corporate Headquarters to Relocate From Moorpark to Thousand Oaks". Conejo Valley Guide | Conejo Valley Events. Retrieved 2021-03-12.
  12. ↑ Nyitray, Brent (2021-02-12). "PennyMac Crushes It on Record Mortgage Volume. Can the Party Continue?". The Motley Fool. Retrieved 2021-03-12.
  13. ↑ "Mortgage Industry Roars to Record Year, Courtesy of the Fed". Bloomberg.com. 2020-12-04. Retrieved 2021-03-12.
  14. ↑ "Pennymac Mortgages" . Retrieved December 2, 2021.
  15. ↑ Berry, Kate (2013-02-14). "Distressed-Loan Sales About to Soar: PennyMac's Kurland". American Banker. Retrieved 2014-02-26.
This page is based on this Wikipedia article
Text is available under the CC BY-SA 4.0 license; additional terms may apply.
Images, videos and audio are available under their respective licenses.