PFSI - PennyMac Crushes It on Record Mortgage Volume. Can the Party Continue?
2020 will go down as the best year for mortgage bankers in almost two decades. The COVID-19 pandemic triggered aggressive action by the Federal Reserve, which responded by cutting the federal funds rate to zero and reinstated purchases of Treasuries and mortgage-backed securities. This precipitated a massive refinancing boom, which stimulated the economy by helping people cut their monthly mortgage payments. Can the party continue for big mortgage companies like PennyMac Financial Services (NYSE: PFSI) ?
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PennyMac Financial is the largest correspondent aggregator in the United States. This means that PennyMac generally buys completed mortgages from smaller originators, sells off the loan, and holds the servicing asset. This is a different model from the one used by Rocket , which is mainly a consumer-direct lender. Rocket does all the work of sourcing the loan, underwriting, and funding, and then sells the loan and holds the servicing asset. United Wholesale uses the wholesale model, in which independent brokers source the loans and the company does all the work of putting together and funding them. While PennyMac has business lines in the consumer-direct and wholesale models, it is mainly a correspondent aggregator.
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PennyMac Crushes It on Record Mortgage Volume. Can the Party Continue?