It has been three days now since the third-largest mortgage servicer in the country, Mr. Cooper, was hit by a cyber attack. The company’s payment portal has been down since then, and there is still no word about whether or not some of their sensitive data is being held for ransom. The company has assured customers that they will not be charged any fees for not paying on time due to this service outage and has even set up a website with the most current information about the incident. The problem is that, at least at the time of writing this, the site has only one update from when the attack first happened on October 31st.
If the name Mr. Cooper sounds unfamiliar, it might be because it is rather new. The company was originally called Nationstar but chose to rebrand in order to help it sound more relatable (like someone you would want to hang with). Now, they will have some work to do to build back their brand image. Mr. Cooper currently has over 4 million customers, most of whom took out loans with other lenders before being bought by the company.
Investors don’t yet seem to be worried about the breach; stock prices for Mr. Cooper have not moved much since the incident was reported. It probably doesn’t hurt that the firm just announced a healthy boost in both revenue and income in their second-quarter earnings call. Mr. Cooper has been very public about its desire to become a “$1 trillion servicer” and has been acquiring other loan services to help it hit that target, as it did with Home Point Capital back in August.
Mortgage originations were back up in the second quarter of 2023 but are still only a third of what they were in 2021 when rates were still hovering around 3 percent. The lack of new mortgages will eventually put pressure on mortgage services like Mr. Cooper, so this hack comes as another hurdle to hitting that $1 trillion growth goal.
This year, the SEC implemented new rules regarding disclosing hacks for publically traded companies. Mr. Cooper has complied with these rules, but their lack of communication following the incident is certainly disconcerting. If they are dealing with a ransomware attack, then they will either have to pay the hackers (a dangerous precedent to set) or run the risk of having user data leaked or sold. While Mr. Cooper might not have to prove anything to their clients, who have little option to take their business elsewhere, it might get the attention of the Department of Justice, which has already hit Nationstar with a multistate lawsuit over its foreclosure practices during and after the great recession in 2008.
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