Loan Sales and Servicing Activities

9 Months Ended

Sep. 30, 2024

Loan Sales and Servicing Activities

Loan Sales and Servicing Activities

Note 6—Loan Sales and Servicing Activities

The Company originates, 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 September 30,				Nine months ended September 30,
	2024		2023		2024		2023
	(in thousands)
Cash flows:
Sales proceeds	$	26,168,605	$	21,651,096	$	70,706,054	$	60,061,205
Servicing fees received	$	363,121	$	303,224	$	1,048,099	$	853,962

The Company is contractually responsible for making the payments required to protect the loans’ 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 September 30,				Nine months ended September 30,
	2024		2023		2024		2023
	(in thousands)
Balance at beginning of period	$	68,671	$	70,070	$	73,991	$	78,992
Provision (reversals of provision) for losses		9,583		(2,554)		13,974		(7,603)
Charge-offs, net		(4,346)		(1,872)		(14,057)		(5,745)
Balance at end of period	$	73,908	$	65,644	$	73,908	$	65,644

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:

	September 30,		December 31,
	2024		2023
	(in thousands)
Unpaid principal balance of loans outstanding	$	393,947,146	$	352,790,614
Delinquent loans:
30-89 days	$	16,324,494	$	13,775,493
90 days or more:
Not in foreclosure	$	7,380,142	$	6,754,282
In foreclosure	$	666,480	$	618,694
Foreclosed	$	4,471	$	7,565
Loans in bankruptcy	$	1,685,409	$	1,415,614

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

	September 30, 2024
	Servicing				Total
	rights owned		Subservicing		loans serviced
	(in thousands)
Investor:
Non-affiliated entities:
Originated	$	393,947,146	$	—	$	393,947,146
Purchased		16,104,333		—		16,104,333
Subserviced		—		257,696		257,696
		410,051,479		257,696		410,309,175
PennyMac Mortgage Investment Trust		—		231,378,323		231,378,323
Loans held for sale		6,366,787		—		6,366,787
	$	416,418,266	$	231,636,019	$	648,054,285
Delinquent loans:
30 days	$	12,611,232	$	1,997,395	$	14,608,627
60 days		4,334,544		553,081		4,887,625
90 days or more:
Not in foreclosure		7,559,602		1,061,557		8,621,159
In foreclosure		697,586		106,040		803,626
Foreclosed		5,075		3,466		8,541
	$	25,208,039	$	3,721,539	$	28,929,578
Loans in bankruptcy	$	1,780,953	$	260,599	$	2,041,552
Custodial funds managed by the Company (1)	$	7,708,840	$	3,059,731	$	10,768,571

(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:

	September 30,		December 31,
State	2024		2023
	(in thousands)
California	$	74,743,579	$	72,788,272
Texas		62,664,066		56,437,082
Florida		62,385,137		57,824,310
Virginia		36,081,471		35,376,266
Georgia (1)		27,991,453		—
Maryland (1)		—		26,746,355
All other states		384,188,579		358,044,484
	$	648,054,285	$	607,216,769

(1) Maryland and Georgia, were not one of the top five states as of September 30, 2024 and December 31, 2023, respectively, and are included in “All other states”.