UWM's cancellation of its contract with Mr. Cooper marks a significant shift in the servicing landscape, particularly given the uncertainties it creates for other lenders with similar agreements. Mr. Cooper, which manages a substantial $1.6 trillion servicing portfolio with a mix of owned and subservicing rights, could see repercussions from this strategic decision. CEO Jennifer McGuinness emphasizes the importance of well-negotiated agreements that may include termination clauses, allowing affected lenders to transition servicing with fewer penalties, especially if they consider Rocket a competitor. The financial viability of such transitions varies based on the size of the lender.
If all of the subservicing clients negotiated their servicing agreements efficiently, they would have protections for instances like this, Jennifer McGuinness, CEO of Pivot Financial, said of the Rocket deal.
If they have those allowances, then they just decide to terminate those agreements and start to move their servicing to a new servicer, she said.
For a lender like UWM or another large firm, it could be worth it. But if the subservicing clients are small, the math might not add up, she said.
If you negotiated the agreement sufficiently, it really shouldn't cost you all that much, McGuinness said.
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