October 20, 2021
Real Estate

Is This Real Estate Stock a Great Value or a Value Trap?

Last year, historically low interest rates sent mortgage market activity soaring, and the blistering housing market led to a year of record mortgage originations. However, with mortgage rates creeping higher, economists are projecting a slowdown in lending activity going into 2022.

As a result of this slowdown in lending, Mr. Cooper Group (NASDAQ:COOP), a residential mortgage lender, is trading at a discounted price-to-earnings (P/E) ratio around 2.8. Given this change in the mortgage market, the lender has spent 2021 making strategic moves, shedding assets to become a “mega servicer” — a move it thinks will help the business thrive in the long term. With its cheap valuation and strategic shift, is Mr. Cooper Group a buy?

Low mortgage rates benefited the lender, but a slowdown is on the horizon

Mr. Cooper Group is an originator and servicer…

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