PennyMac moves warehouse, MSR lines out of Credit Suisse

PennyMac Financial Services is reducing its risk exposure, moving three funding vehicles from Credit Suisse to two large firms.

The lender and servicer last week moved the facilities to entities affiliated with asset management giant Apollo and mortgage player NewFi Lending, according to a Securities and Exchange Commission filing last week. The embattled Swiss banking giant is in line to be purchased by local rival UBS for $3.2 billion as financial regulators in the U.S. and abroad move to contain the fallout of recent bank failures.

"We have transferred all warehouse and MSR financing away from Credit Suisse and to Atlas as outlined in our recently filed 8k," said a statement Tuesday attributed to the company, which referred to the filing.

Two of the mortgage servicing rights facilities have amounts totaling $500 million and $1 billion, while a vehicle for Ginnie Mae servicing advances is capped at $600 million, a spokesperson said this week.

The three notes with Credit Suisse and its Credit Suisse First Boston and Alpine Securitization affiliates were originally issued between 2016 and 2021.

The lender declined to provide further detail beyond the SEC filings and other corporations involved also didn't respond to requests for comment. The disclosures and PennyMac did not indicate any additional compensation for any party in the move.

The Apollo entity taking the credit lines is Atlas Securitized Products, which last year bought a significant portion of Credit Suisse's securitized products, although Credit Suisse then maintained $20 billion in Ginnie Mae assets. NewFi, referred to in SEC disclosures by its former name Nexera Holdings, is an Emeryville, California-based consumer direct and wholesale lender, founded in 2014.

PennyMac in last week's notice also indicated it has no ties to failed depositories Silicon Valley Bank, Silvergate Bank or Signature Bank, and its cash accounts and client funds are held at undisclosed global banks. 

The Westlake Village, California-based lender is coming off a $38 million profit in the fourth quarter of last year, with weakening origination results but stronger servicing earnings. PennyMac weathered a difficult mortgage market decline in 2022 by laying off hundreds of employees throughout the year.

Neither Credit Suisse or UBS is a significant home loan originator in the U.S. housing market, but Credit Suisse has provided warehouse and MSR facilities related to Ginnie Mae MSRs and non-QM loans. Credit Suisse Securities also counts a 10.9% market share in the small private-label residential mortgage-backed bond market, according to NMN sister publication Asset Securitization Report.

Mortgage firms have experienced little to no collateral damage to their finances from the failed depositories, with loanDepot disclosing last week its cash balances and nine-figure lines of credit with Signature Bank are safe. Mortgage rates meanwhile have eased slightly and 10-year Treasury yields remain volatile.

Executives at lenders have also professed confidence that warehouse lines of credit from bank partners will be stable.