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# PennyMac's Loan Production Unit Loses $7 Million As Rising Mortgage Rates Cut Lending 30%
- URL: https://www.bullished.co/pennymacs-loan-production-unit-loses-7-million-as-rising-mortgage-rates-cut-lending-30-b0c3dc5a/
- Published: 2026-10-29T20:54:12.000Z
- Updated: 2026-10-29T20:54:12.000Z
- Description: The mortgage lender plans $160 million in expense cuts, and its president will retire June 30, 2027.
- Author: Matteo Parrino
- Tags: SEC Filings, PFSI, Industry: Financials

PennyMac Financial Services, which originates and services US home mortgages, said its production segment lost [$7 million](https://www.sec.gov/Archives/edgar/data/0001745916/000110465926120224/tm2628494d1%5Fex99-1.htm?ref=bullished.co) before taxes in the third quarter as higher mortgage rates shrank lending. The company also said president Doug Jones will retire June 30, 2027, and strategy chief Kevin Ryan will become CFO on January 1, 2027.

## Servicing carries a weak quarter

Net income was $29 million, or $0.54 per diluted share, on total net revenues of $469 million, the company said in an [8-K](https://www.sec.gov/Archives/edgar/data/0001745916/000110465926120224/tm2628494d1%5F8k.htm?ref=bullished.co) filed Thursday. A year earlier it earned $182 million, or $3.37 per share. Adjusted net income, which strips out mortgage servicing rights valuation swings and hedging results, was $56 million, or $1.05 per share, down from $74 million, or $1.39, in the second quarter.

The production segment, which buys, funds and originates loans, swung from $38 million of pretax income in the second quarter to the $7 million loss. Total acquisitions and originations were $24.4 billion in unpaid principal balance, down 30% from the prior quarter. Correspondent lock volume, the channel buying loans from sellers, fell to $15.6 billion from $20.5 billion, which the company blamed on a smaller market and heavy competition.

Servicing, the business of collecting payments on loans, earned $99 million before taxes, up from $22 million in the second quarter. Excluding servicing rights fair-value changes net of hedge results, it earned $132 million, up from $99 million.

## Rates at 7.4%, costs cut by $160 million

The company's presentation puts the 30-year fixed mortgage rate at 7.4%, up 93 basis points from June 30, and says nearly all of its servicing portfolio is out of the money for refinancing. CEO David Spector said he expects mortgage demand to stay subdued and that the company has taken "aggressive and proactive steps to right-size our platform." He expects annualized operating expenses to be $160 million lower by the first quarter of 2027 than in the second quarter of 2026.

After quarter-end, PennyMac agreed to sell $29 billion in unpaid principal balance of low-rate conventional servicing rights, with a close expected in the fourth quarter. It plans to use the roughly $490 million in proceeds to cut higher-cost debt and buy back shares. It expects to close its purchase of Cenlar's subservicing business in early 2027\. Fourth-quarter adjusted return on equity is expected to stay near current levels, the company said.

## Two senior officers move on

Jones, president and chief mortgage banking officer, retires June 30, 2027; his duties will shift to other senior leaders over the next several months. Under an amended employment agreement he will then consult for 18 months for a $2.0 million fee. Spector's contract was extended through December 31, 2031.

CFO Daniel Perotti steps down from the role December 31, 2026, and will advise the company through the first quarter of 2027\. Ryan, 55, joined in October 2025 from Better Home & Finance Holding Company, where he was president and CFO.

The board declared a quarterly dividend of $0.30 per share, payable November 27 to holders of record November 16.

Management scheduled a 5:30 p.m. Eastern call Thursday to walk through the results.

Learn

- [Item 2.02: results of operations →](https://www.bullished.co/learn/8-k-items-explained/#item-202-results-of-operations)  
From 8-K Items Explained: What Every Item Code From 1.01 To 9.01 Tells You, With Examples

### Sources

- [8-K Filing — PennyMac Financial Services, Inc. (PFSI)](https://www.sec.gov/Archives/edgar/data/0001745916/000110465926120224/tm2628494d1%5F8k.htm?ref=bullished.co) — SEC EDGAR
- [Exhibit tm2628494d1\_ex99-1.htm — PennyMac Financial Services, Inc. 8-K exhibit](https://www.sec.gov/Archives/edgar/data/0001745916/000110465926120224/tm2628494d1%5Fex99-1.htm?ref=bullished.co) — SEC EDGAR
- [Exhibit tm2628494d1\_ex99-2.htm — PennyMac Financial Services, Inc. 8-K exhibit](https://www.sec.gov/Archives/edgar/data/0001745916/000110465926120224/tm2628494d1%5Fex99-2.htm?ref=bullished.co) — SEC EDGAR
- [PennyMac Financial Services, Inc. Reschedules Third Quarter 2026 Earnings Call to 5:30 PM ET on Thursday, October 29](https://finance.yahoo.com/real-estate/articles/pennymac-financial-services-inc-reschedules-174200951.html?ref=bullished.co) — Yahoo Finance
- [PennyMac Financial Services, Inc. Reports Third Quarter 2026 Results and Announces Changes to its Leadership Team](https://www.businesswire.com/news/home/20261029043267/en/PennyMac-Financial-Services-Inc.-Reports-Third-Quarter-2026-Results-and-Announces-Changes-to-its-Leadership-Team?ref=bullished.co) — businesswire.com
- [PennyMac Mortgage Investment Trust Reports Third Quarter 2026 Results and Announces Changes to its Leadership Team](https://www.businesswire.com/news/home/20261029347653/en/PennyMac-Mortgage-Investment-Trust-Reports-Third-Quarter-2026-Results-and-Announces-Changes-to-its-Leadership-Team?ref=bullished.co) — businesswire.com
- [PennyMac Mortgage Investment Trust Reschedules Third Quarter 2026 Earnings Call to 6:30 PM ET on Thursday, October 29](https://www.businesswire.com/news/home/20261023491366/en/PennyMac-Mortgage-Investment-Trust-Reschedules-Third-Quarter-2026-Earnings-Call-to-630-PM-ET-on-Thursday-October-29?ref=bullished.co) — businesswire.com