Mike Schafer: Sure, thank you. So as far as the opportunistic side of the reverse segment, I see on the deck that you’re not expecting any whole loan purchases in Q3, but I was curious if you could quantify what you might think that would look like for the next year?
Glen Messina: So because these are opportunistic asset purchases, it’s really hard to quantify. And I think I said on the call that, look, it’s right now trying, while we are working on a couple of things, both on the forward and reverse side, it’s really hard to dimension it. Yes, they could be small opportunities, could be large opportunities. So unfortunately right now, I just can’t, I really can’t dimension it, other than to say that, we are seeing an increased number of opportunities pop up in the market. But here, obviously, you’ve got to buy the assets right, you’ve got to price them right, but I’m convinced that the assets come to market and we can acquire them at a fair price. That makes sense for us. We certainly have the servicing skills to address it and generate nice returns.
Mike Schafer: All right. Sounds good. I appreciate it, thank you.
Glen Messina : Thank you, Mike.
Operator: [Operator Instructions] And our next question will come from Derek Sommers with Jefferies.
Derek Sommers : Hey, good morning, everyone. Just given the increased capital requirements for mortgage activities at banks and the correspondent volume trend at Wells Fargo, I was wondering if you all could provide kind of an update on how things are shaking out among the correspondent sellers. Has that market share been reallocated? Is the wallet share still shifting or things stabilized? Thanks.
Glen Messina : Good morning, Derek. Thanks for your question. So, we are seeing, look, we saw the correspondent market conditions improve in the second quarter. We still, like I said on the call, we still believe there are certain market leaders whose view of MSR values is not necessarily reflective of what we’re seeing in the bulk market. That aside, our volume went up and our margins went up as well too. So I think the market’s beginning to improve. I’d say the capacity that existed or that shifted from Wells Fargo is kind of balanced around. I think there’s always an opportunity for performance relationship, an opportunity to expand our customer base. As Sean talked about, our correspondent customer base continued to grow in the second quarter, and the team is continuing to look to add new sellers for the balance of the year.
I still think there’s an opportunity to grow in the correspondence base for the balance of the year. Correspondent, we’re getting very attractive. We call it cash on cash yields, which includes the quote origination margin. So we’re essentially buying the MSR at a price lower than its fair value. So we feel good about our position in Correspondent. I think our team there is executing really well. I think the returns we’re seeing are attractive and we’re approaching the market with a very disciplined and thoughtful approach, making sure we price consistent with our cost of capital and where our MSR investors are looking to, the returns they’re looking to get. So, I think with the new bank capital standards, it’s going to create more opportunity for those who aren’t affected by those capital standards.
Our focus on growing our portfolio on a capital-like basis with MSR investor partners, we’ve got four now, we’re looking to expand that. And I think the more capital partners we have in the portfolio within reason, gives us multiple investors with different buy box appetites, so to speak, which will allow us to take advantage of the growth opportunity should volume shift into the correspondent sector and the bulk markets as a result of banks perhaps exiting or not being as aggressive in the MSR space as they have been historically. So, I think it’s an exciting time for us and others in this industry.
Derek Sommers : Got it. Thank you. That’s a helpful commentary. And then just one more, just on the guidance, it seems consistent quarter to quarter and previously the 9% free tax ROE was contingent upon the origination segment normalizing. With this quarter’s improvement in gain on sale margin, do you view the normalization as primarily missing volume or further increases in margins? Or what’s the missing piece for that segment to normalize?
Glen Messina : Yes, I mean, for us, I think it’d be a little bit more volume. As you think is fairly widely known, look, the home sales transactions are just not robust, right, for all the reasons that people talk about. People have golden handcuffs with low mortgage rates and all kinds of good stuff, right? So I would love to see a little bit more volume activity in the marketplace. I think that would be good and healthy for the industry and certainly good and healthy for the home buyer, home builder segment as well too. So I think it is a volume issue at this stage of the game. Again, I think conditions are improving. We did see volume go up in the second quarter, and right now, I’d say the early read on the third quarter from, what we saw in the press is, home sales were up for June, which, and there were home purchase applications were up in June, so that would bode well for, July and August, in the summer buying season.
But it’s just not as robust as we’d like to see it.
