DETROIT - Rocket Mortgage, a leading mortgage lender in the United States, has entered into a subservicing agreement with Annaly Capital (NYSE:NLY) Management, Inc., the world's largest residential mortgage real estate investment trust. This partnership, announced today, will see Rocket Mortgage handle servicing and recapture activities for a segment of Annaly's mortgage servicing rights portfolio.
The collaboration between the two financial giants is expected to leverage Rocket Mortgage's award-winning client service experience, which has repeatedly earned recognition from J.D. Power for client satisfaction. Bill Banfield, Chief Business Officer of Rocket Companies, emphasized the lender's commitment to the entire homeownership experience and expressed pride in providing Annaly's serviced clients with the same level of service that has distinguished Rocket Mortgage.
Rocket Mortgage, a subsidiary of Rocket Companies (NYSE: RKT), boasts a serviced loan portfolio worth $534.6 billion as of June 30, 2024. Its adoption of artificial intelligence tools, such as Rocket Logic – Synopsis, has contributed to efficient client service, with the technology projected to save significant hours annually by streamlining tasks and enhancing client interactions.
Annaly (NYSE: NLY), with nearly $75 billion in assets, has constructed a substantial and high-quality portfolio of mortgage servicing rights, servicing around 608,000 loans. Steve Campbell, President & COO of Annaly, expressed confidence in the benefits of Rocket's servicing capabilities and retention rates, which are anticipated to enhance Annaly's platform.
The commencement of Rocket Mortgage's servicing for Annaly is projected for as early as December 2024. While the companies have expressed optimism about the future of their relationship, they have also issued forward-looking statements, cautioning that these are subject to risks and uncertainties that could affect actual results.
This strategic move is based on a press release statement and reflects the companies' current plans and expectations for their partnership, which aims to optimize client satisfaction and service efficiency in the mortgage servicing sector.
In other recent news, Annaly Capital Management announced its Q3 2024 common stock cash dividend of $0.65 per share, continuing its practice of distributing income to its shareholders. In other financial highlights, the company reported a robust Q2 2024 performance with earnings surpassing its dividend by $0.03, largely due to strategic management of its agency portfolio and record growth in the residential credit sector. Despite a decrease in book value per share to $19.25, the company's net interest spread and net interest margin saw an increase.
Furthermore, Piper Sandler maintained its Overweight rating on Annaly Capital, expressing a positive outlook based on several macroeconomic and company-specific factors. The financial services firm highlighted Annaly's potential for double-digit returns across its various investment strategies and its resilience in the face of potential economic challenges.
Annaly's residential credit business experienced record growth with $4.1 billion of expanded prime loans locked and increased its MSR portfolio by $135 million. Unencumbered assets rose to $5.4 billion, with $6.3 billion available for financing. These are among the recent developments surrounding Annaly Capital Management.
InvestingPro Insights
Annaly Capital Management's partnership with Rocket Mortgage comes at an interesting time for the REIT. According to InvestingPro data, Annaly boasts a substantial market capitalization of $10.8 billion, underscoring its significant presence in the mortgage REIT sector. The company's dividend yield stands at an impressive 12.95%, which aligns with an InvestingPro Tip indicating that Annaly "pays a significant dividend to shareholders." This high yield could be particularly attractive to income-focused investors in the current economic climate.
Despite recent challenges, including not being profitable over the last twelve months, InvestingPro Tips suggest a potentially brighter future. Analysts anticipate sales growth in the current year, and net income is expected to grow as well. These projections could be partly driven by strategic moves like the subservicing agreement with Rocket Mortgage, which may help optimize Annaly's operations and potentially improve its financial performance.
It's worth noting that Annaly has maintained dividend payments for 28 consecutive years, demonstrating a commitment to shareholder returns even in challenging times. This track record of consistent dividends could be reassuring for investors considering the stock's recent volatility, as another InvestingPro Tip mentions that "stock price movements are quite volatile."
For investors seeking a more comprehensive analysis, InvestingPro offers additional tips and insights beyond those mentioned here. In fact, there are 8 more tips available for Annaly Capital Management on the InvestingPro platform, providing a deeper understanding of the company's financial health and market position.
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