Executives have decided to improve liquidity to fund their businesses and investments, targeting mortgage servicing rights (MSRs) deals. And recent transactions show that there's an appetite among investors for debt in the mortgage space.
With rates going up last year, spreads increasing very dramatically and nonbank mortgage companies facing difficulties, the debt market shut down, Warren Kornfeld, senior vice president of the financial institutions group at Moody's Investors Service, said. However, things are different this year, Kornfeld said. With profitability starting to improve and it looks like we have at least hit the bottom with respect to profitability, the markets opened up.
Liquidity and generating cash are core components of the business. And so it makes sense to us that, even though interest rates are very high, there could be some demand for mortgage companies to raise capital in the debt markets, Hagen said.
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