Loan Sales and Servicing Activities

3 Months Ended

Mar. 31, 2024

Loan Sales and Servicing Activities

Loan Sales and Servicing Activities

Note 6—Loan Sales and Servicing Activities

The Company originates or purchases and sells loans in the secondary mortgage market without recourse for credit losses. However, the Company maintains continuing involvement with the loans in the form of servicing arrangements and the liability under representations and warranties it makes to purchasers and insurers of the loans.

The following table summarizes cash flows between the Company and transferees as a result of the sale of loans in transactions where the Company maintains continuing involvement with the loans as servicer:

	Quarter ended March 31,
	2024		2023
	(in thousands)
Cash flows:
Sales proceeds	$	19,676,917	$	13,385,341
Servicing fees received	$	336,248	$	268,423

The Company is contractually responsible for making the payments required to protect its beneficial interest holders’ interests in the properties collateralizing their loans and may, therefore, be required to advance amounts in excess of insurer or guarantor reimbursement limits. Therefore, the Company provides a valuation allowance on the servicing advances for these amounts in excess of amounts that are expected to ultimately be recovered from the loans’ insurers, guarantors, or beneficial interest holders.

The servicing advance valuation allowance is estimated based on relevant qualitative and quantitative information about past events, including historical collection and loss experience, current conditions, and reasonable and supportable forecasts that affect collectable amounts. The provision for losses on servicing advances is included in Servicing expense in the consolidated statements of income. Servicing advances are written off when they are deemed unrecoverable.

The following is a summary of the allowance for losses on servicing advances:

	Quarter ended March 31,
	2024		2023
	(in thousands)
Balance at beginning of quarter	$	73,991	$	78,992
Reversals of provision for losses		(1,541)		(3,081)
Charge-offs, net		(5,123)		(733)
Balance at end of quarter	$	67,327	$	75,178

The following table summarizes the UPB of the loans sold by the Company in transactions where it maintains continuing involvement with the loans as servicer:

	March 31,		December 31,
	2024		2023
	(in thousands)
Unpaid principal balance of loans outstanding	$	364,441,567	$	352,790,614
Delinquent loans:
30-89 days	$	12,128,892	$	13,775,493
90 days or more:
Not in foreclosure	$	6,251,718	$	6,754,282
In foreclosure	$	647,459	$	618,694
Foreclosed	$	8,441	$	7,565
Loans in bankruptcy	$	1,479,461	$	1,415,614

The following tables summarize the Company’s loan servicing portfolio as measured by UPB:

	March 31, 2024
	Servicing				Total
	rights owned		Subservicing		loans serviced
	(in thousands)
Investor:
Non-affiliated entities:
Originated	$	364,441,567	$	—	$	364,441,567
Purchased		17,051,740		—		17,051,740
		381,493,307		—		381,493,307
PennyMac Mortgage Investment Trust		—		230,819,012		230,819,012
Loans held for sale		5,111,719		—		5,111,719
	$	386,605,026	$	230,819,012	$	617,424,038
Delinquent loans:
30 days	$	9,940,684	$	1,607,081	$	11,547,765
60 days		2,738,951		370,879		3,109,830
90 days or more:
Not in foreclosure		6,426,292		875,189		7,301,481
In foreclosure		692,930		111,713		804,643
Foreclosed		9,652		4,482		14,134
	$	19,808,509	$	2,969,344	$	22,777,853
Loans in bankruptcy	$	1,583,758	$	215,218	$	1,798,976
Custodial funds managed by the Company (1)	$	5,429,348	$	2,468,707	$	7,898,055

(1) Custodial funds include cash accounts holding funds on behalf of borrowers and investors relating to loans serviced under servicing agreements and are not recorded on the Company’s consolidated balance sheets. The Company earns placement fees on certain of these custodial funds where it owns the MSRs and these fees are included in Interest income in the Company’s consolidated statements of income.

	December 31, 2023
	Servicing				Total
	rights owned		Subservicing		loans serviced
	(in thousands)
Investor:
Non-affiliated entities:
Originated	$	352,790,614	$	—	$	352,790,614
Purchased		17,478,397		—		17,478,397
		370,269,011		—		370,269,011
PennyMac Mortgage Investment Trust		—		232,653,069		232,653,069
Loans held for sale		4,294,689		—		4,294,689
	$	374,563,700	$	232,653,069	$	607,216,769
Delinquent loans:
30 days	$	11,097,929	$	1,808,516	$	12,906,445
60 days		3,316,494		399,786		3,716,280
90 days or more:
Not in foreclosure		6,941,325		1,031,299		7,972,624
In foreclosure		686,359		92,618		778,977
Foreclosed		8,133		4,295		12,428
	$	22,050,240	$	3,336,514	$	25,386,754
Loans in bankruptcy	$	1,523,218	$	186,593	$	1,709,811
Custodial funds managed by the Company (1)	$	3,741,978	$	1,759,974	$	5,501,952

(1) Custodial funds include cash accounts holding funds on behalf of borrowers and investors relating to loans serviced under servicing agreements and are not recorded on the Company’s consolidated balance sheets. The Company earns placement fees on certain of these custodial funds where it owns the MSRs and these fees are included in Interest income in the Company’s consolidated statements of income.

Following is a summary of the geographical distribution of loans included in the Company’s loan servicing portfolio for the top five and all other states as measured by UPB:

	March 31,		December 31,
State	2024		2023
	(in thousands)
California	$	73,344,855	$	72,788,272
Florida		59,174,541		57,824,310
Texas		58,318,589		56,437,082
Virginia		35,562,555		35,376,266
Maryland		26,865,117		26,746,355
All other states		364,158,381		358,044,484
	$	617,424,038	$	607,216,769