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During last week’s earnings call, PennyMac Financial Services chairman and CEO David Spector said during a Q&A with investors and analysts that the company’s goals include continued growth in its broker direct channel and 10% market share by the end of 2026 — a goal of more than 100% growth over the next 18 months.
The California-headquartered company’s broker market share currently sits at 4.8%, according to Kim Nichols, Pennymac’s chief third-party origination production officer.
Wholesale partnerships
Last week’s earnings painted an interesting picture for the company. While profits shrank, PennyMac’s servicing portfolio simultaneously grew to $680.2 billion in unpaid principal balance (UPB), up 2% from the end of 2024 and 10% higher compared to March 2024.
The number of mortgage brokers approved to do business with PennyMac at the end of last year topped 4,850 — an uptick of 19% from the end of 2023, the company shared.
The company is deploying an “aggressive” growth strategy, Nichols said.
“We’re hiring forward to build scale, both in operations and sales. We’ve got some tech projects underway that will create additional efficiencies to provide that scale,” she said. “So aside from hiring and building our sales team, we’re focusing on deepening our partnerships and developing repeat working with PennyMac.
“It’s interesting when we’ve talked to partners that have worked with the same lender over and over again,” Nichols added. “It takes a while to kind of get the rhythm with PennyMac, but we’re seeing more and more of our partners are recognizing that [they] need to diversify their lender partnerships. … We think bringing additional competition into this channel right now is welcomed by the TPO/broker community.”
Nichols also touted Pennymac’s value proposition at a time when large wholesalers are competing for customer attention.
“There’s a lot of talk about choice in the channel. And, you know, we’re here, right? We want to be part of that conversation,” she said. “We have the scale, capital, technology, and we’ve invested forward. We’re continuing to invest forward in this channel, [are] looking to raise our profile, and then obviously, by doing that, increase our share in the channel.
“We’ve emerged very strong in jumbo and in the TPO channel as a very strong source for our brokers … the price is very competitive,” Nichols added. “They’ve been able to compete with banks and credit unions, and so that’s been a big win for us. We’ve also been seeing ramp production and closed-end seconds, home equity loans, and we think that’s a great untapped opportunity for the channel.”
Market share aspirations
Several brokers who work with PennyMac candidly shared their experiences and observations of working with a company competing with two big fish — Rocket Mortgage and United Wholesale Mortgage (UWM).
“[PennyMac] is well-rounded. They cover many areas, they follow up, and they take good care of us and always have pricing incentives for us,” said Thuan Nguyen, the founder and CEO of California-based Loan Factory.
Nguyen, who said he’s worked with PennyMac for more than seven years, admitted that he could see PennyMac’s quest to double its market share by 2026 being a difficult task.
“It’s going to be tough for them because that is a big job. All lenders are hungry right now, and [all lenders] are at a disadvantage compared to the other lenders, like Rocket and UWM,” he said.
“It’s a very ambitious goal. PennyMac’s not necessarily at a disadvantage — they’re doing well — but it’s just that to grow more than 100% and capture 10% of the market share is not an easy task.”
Kevin Leibowitz, the founder of New York-based Grayton Mortgage, said that PennyMac’s history could spell promise for its market share ambitions. Leibowitz previously worked alongside Spector at Countrywide Financial.
“I think what makes Pennymac interesting is their DNA,” he said. “They’ve been around the block in a good way, right? They’ve seen many markets — good, bad and ugly. A lot of the guys there are survivors of the financial crisis.”
Leibowitz pointed out that PennyMac has a unique advantage “against the backdrop of the Rocket/Mr. Cooper deal” that could help to increase its market share.
“Pennymac always keeps their servicing, and they have the ability if they want to help the broker channel [because of] the fact that they own their servicing and they’ve never sold their servicing. They could better service that market than the companies that have sold their servicing,” Leibowitz said.
“I think they’re going to keep more of their servicing, which is what they want, because that’s a multibillion-dollar asset. Will they make money on the refinance? Yes. Would they make less money on the refinance? Yes. Could it be mutually beneficial between the brokers and them? Yes, and again I think the fact that they’re keeping the servicing is going to give a competitive advantage.”
Brendan McKay, the owner of Maryland-based McKay Mortgage, agreed with Leibowitz. He added that he’s not surprised at PennyMac’s growth during the first quarter of 2025.
“They’re always making [and] tweaking improvements and listening to brokers. So I think it’s no shocker that they’re growing as more brokers are coming into the channel. … When brokers start shopping for price, PennyMac is an awesome option,” McKay said.
“Plus, the fact that PennyMac is one of the biggest servicers in the country and retains the servicing is insanely important; it gives them stability as a company, which is great,” he added. “We like stability in general, but also it gives a level of control when interest rates do drop, and there’s going to be refinances available, having a deep partnership with the lender that’s also servicing all of those loans can be incredibly valuable and profitable for the brokers.”
McKay said that PennyMac’s market share goal is an “aggressive” one but is “extremely achievable.”
“They also are one of the few wholesale lenders that have the products to help brokers compete in the jumbo market … where brokers often struggle to compete on price, retail does as well,” McKay said.
“They’re one of the most powerful lenders in our industry, and that servicing portfolio gives them unbelievable amounts of potential to do really, really big things.”
