PennyMac Financial Services Inc. (NYSE: PFSI) is financial services company that specializes in providing residential mortgage loans and management of mortgage market-related investments to customers in the United States.

What PennyMac Is

PennyMac is a mortgage lending company that was founded at the height of the global financial crisis in 2008 by a group of ex-mortgage and banking industry professionals. Since its inception, PennyMac has become one of the predominant players in the U.S. mortgage market. The company initially modified mortgages that originated by other loan providers under government initiatives, such as the Home Affordable Modification Program (HAMP).

PennyMac perceived a niche in the mortgage market where it could improve customer service and provide innovative solutions to customers compared to larger loan providers. This led the company to begin offering its own line of mortgage products, including originating new home loans. A pivotal moment in PennyMac's history was its listing on the New York Stock Exchange (NYSE) in 2013.

The company now provides home loans in 49 states and has 690,000 customers on its books. PennyMac has retained its nascent mission statement: "Assist homeowners and heal the U.S. home lending market in the process." The company believes its products and services can assist in providing the American dream of home ownership.

Mortgage Products Offered

PennyMac offers customers five purchase loan types: adjustable-rate mortgages (ARMs), Federal Housing Administration (FHA) loans, fixed-rate loans, jumbo loans and Veterans Affairs (VA) loans.

• ARMs are adjustable-rate loans that provide a fixed interest rate for three, five, seven or 10 years. At the conclusion of the fixed term, the interest rate varies each year based on a market index.

• FHA loans are designed with flexibility in mind. Characteristics of the loan include down payment options from 3.5%, no maximum income or earning limitations, insurance by the FHA and federal government, and flexible income, debt and credit requirements.

• PennyMac offers fixed-rate loans in terms from 10 to 30 years, giving customers the option of monthly payments that remain constant throughout the duration of the loan.

• The company's jumbo loans are tailored to the customer with personalized service. Key features of the loans include lending amounts up to $2 million, fixed and adjustable-rate options, and first and second homes are permitted.

• VA loans are issued by PennyMac and are guaranteed by the Department of Veterans Affairs to assist veterans in purchasing a home.

PennyMac also offers customers refinancing and relief and assistance products.


Mortgage Rates


As of April 30, 2016, PennyMac offers a conventional 30-year fixed-rate loan at an interest rate of 4%, 0.36 points and annual percentage rate (APR) of 4.188%. The company offers a conventional 15-year fixed-rate loan at an interest rate of 3.375%, 0.35 points with an APR of 3.593. PennyMac offers its customers a conventional five-year ARM loan with an interest rate of 4.125%, 0.215 points and an APR of 3.893.

The interest rate is the amount of interest due per month of the amount borrowed. A point is a fee equal to 1% of the loan amount. The APR is inclusive of the interest rate, points, broker fees and other miscellaneous charges required to secure the loan.

What Consumers Are Saying

PennyMac receives a 3.7 out of a possible five-star rating from the Better Business Bureau (BBB). The rating is independent of customer reviews. Thirty-six customer reviews on the organization's website reported negative experiences, with one reviewer reporting a neutral experience. The negative reviews had a common theme: lackluster customer service and poorly handed administration.

Yelp Inc. (NYSE: YELP), which publishes crowdsourced reviews about local businesses, gives PennyMac two stars out of a possible five-star rating derived from consumer reviews. The general consensus of the 79 customer reviews is that the company could improve its general administration and customer service. The positive reviews highlighted the personalized service customers received from PennyMac.

Quicken Loans Mortgage Overview (INTU)

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