U.S. Non-Bank Mortgage Companies Earnings Rise Sharply in Q4 2024 Powered by Gains From Originations and Improved Servicing Portfolio Valuations

This commentary reviews non-bank mortgage companies' Q4 2024 earnings.

Key Highlights:
-- Non-bank mortgage companies reported growth in mortgage loan origination volumes as scaled origination platforms helped them capture a higher share of the refinancing activity brought on by lower year-over-year mortgage rates.

-- Servicing portfolios have remained a reliable source of revenue during the challenging housing market and are expected to be a strategic source of mortgage originations if mortgage rates trend lower.

-- The credit quality of the servicing portfolio remains sound, supported by generally lower coupon rates and appreciation in house prices, though lower income borrowers are gradually driving delinquencies higher, especially in FHA and VA loans.

"Non-bank mortgage companies saw notable earnings growth in Q4 2024, largely driven by a boost in origination income from refinancing activity as well as fair value gains in the servicing portfolio," said Shaima Ahmadi, Assistant Vice President, North American Financial Institution Ratings.