Pennymac Financial Services is restructuring its leadership and its balance sheet as the mortgage origination market shrinks. On Oct. 29, 2026, alongside its third-quarter results, the Westlake Village, Calif., lender said President and Chief Mortgage Banking Officer Doug Jones will retire on June 30, 2027. It also named a new chief financial officer, said it will cut about $160 million in annual expenses, and disclosed an agreement to sell $29 billion of mortgage servicing rights.
The announcements came in the company’s earnings release and a Form 8-K filed with the Securities and Exchange Commission. Net income was $29 million, or $0.54 a diluted share, on total net revenues of $469 million. That compares with $182 million, or $3.37 a share, a year earlier, an 84% decline, though profit rose from $22 million in the second quarter.
A new CFO and a retirement at the top of production
Jones has spent more than 15 years in Pennymac’s leadership. The company said his responsibilities will move to other senior leaders over the next several months. Under an amended employment agreement disclosed in the 8-K, his term runs through his retirement date. Chairman and CEO David Spector’s agreement was extended through Dec. 31, 2031.
Kevin Ryan, 55, the company’s chief strategy officer, becomes CFO on Jan. 1, 2027, and will keep running strategy and business development. Ryan joined Pennymac in October 2025. According to the filing, he was previously president and CFO of Better Home & Finance Holding Company from October 2020 to October 2025, and before that spent more than two decades at Morgan Stanley, most recently as co-head of banks and diversified finance in investment banking. Current CFO Daniel Perotti will stay in the role through year-end and advise the company through the first quarter of 2027.
“Both served in various roles and helped to shape Pennymac’s significant growth and transformation into a leading mortgage company,” Spector said of Jones and Perotti.
Production slips to a loss
The results show why the company is cutting. Pennymac’s production segment posted a $7 million pretax loss, compared with $38 million of pretax income in the second quarter and $123 million a year earlier. Loan acquisitions and originations fell 30% from the prior quarter to $24.4 billion. Volume dropped in every channel. Correspondent lending, in which Pennymac buys loans made by other lenders, fell to $15.6 billion in fallout-adjusted locks from $20.5 billion in the second quarter. Broker-direct locks fell to $4.7 billion from $6.5 billion, and consumer-direct locks to $2.8 billion from $4.5 billion. The company said the consumer-direct decline was driven by lower refinance volume due to higher mortgage rates.
“We expect mortgage demand will remain subdued due to higher interest rates, and as a result we have taken aggressive and proactive steps to right-size our platform appropriately,” Spector said. The company expects annualized operating expenses to fall by $160 million between the second quarter of 2026 and the first quarter of 2027. It tied the cuts to a smaller projected origination market and to efficiencies from technology. Spector added that “the accelerated deployment of AI across our production workflows” leaves the company positioned to capture operating leverage when volumes rebound.
Servicing carries the quarter, and part of it is for sale
Servicing, the business of collecting payments on existing loans, did the heavy lifting. Segment pretax income rose to $99 million from $22 million in the second quarter. Pennymac’s owned servicing portfolio reached $496 billion in unpaid principal balance, up 6% from a year earlier. Its total servicing book, including loans it services for others, was $737 billion. The 60-day-plus delinquency rate on the owned portfolio was 4.2%, compared with 4.1% in the second quarter and 3.4% a year earlier.
After the quarter ended, Pennymac agreed to sell $29 billion in unpaid principal balance of low-rate conventional servicing rights. These are loans where, in Spector’s words, “recapture opportunities are limited,” meaning borrowers are unlikely to refinance with Pennymac anytime soon. The sale is expected to close in the fourth quarter and bring in about $490 million. Spector said the company plans to use the money to reduce higher-cost debt and buy back shares “while our stock trades at a sizable discount to book value.” Book value stood at $83.85 a share at Sept. 30.
The deal follows UWM’s plan to sell $70 billion to $80 billion of servicing rights to pay down debt. On our reading, large lenders are now turning servicing portfolios into cash as origination income thins. Pennymac is also adding fee-based work: it expects to close its acquisition of Cenlar’s subservicing business in the first quarter of 2027.
The board declared a $0.30 quarterly dividend, unchanged, payable Nov. 27 to holders of record Nov. 16. For the fourth quarter, the company expects adjusted return on equity to remain near the third quarter’s 5%. That compares with a production business that was still profitable when Pennymac reported an 84% drop in second-quarter profit in July. More lender news is on our mortgage page.
