Pennymac, Annaly Capital Enter Subservicing Partnership

Annaly Capital Management Inc., the world’s largest residential mortgage real estate investment trust (REIT), announced on Wednesday afternoon that it reached an agreement with PennyMac Financial Services Inc. to buy a portfolio of mortgage servicing rights (MSRs) while leaving PennyMac to manage the loans.

The deal includes a subservicing agreement and a master purchase agreement under which PennyMac will handle all servicing and recapture activities for the loans tied to the MSRs Annaly is acquiring. Terms of the transaction were not disclosed.

“We look forward to collaborating with Pennymac through this strategic partnership, which enhances our best-in-class network of servicing and recapture relationships with a well-respected, industry-leader that has a proven track record of excellence,” said David Finkelstein, Annaly’s CEO and co-chief investment officer.

Finkelstein added that the agreement builds on the company’s servicing and recapture relationships and strengthens its mortgage servicing rights portfolio, which consists of 680,000 loans totaling about $219 billion in unpaid principal balance and $3.3 billion in market value as of June 30, 2025.

Annaly has grown into a top 10 servicer of agency mortgage-backed securities since entering the MSR business in 2020. The company’s MSR portfolio is made up of high-quality conventional loans with a weighted average FICO of 757 at origination and an average note rate of 3.24%.

“As we continuously look to optimize our capital and maintain prudent leverage, we are very pleased to announce this strategic, long-term partnership with a premier market participant like Annaly,” said David Spector, chairman and CEO of Pennymac. “We’re especially excited to continue subservicing and providing recapture activities for this portfolio, which accelerates the growth of our new subservicing business. This sale continues our efforts to drive the concentration of our MSR portfolio toward higher-rate loans with significant recapture potential, and is a prime example of our active capital management activities.”

PennyMac is the nation’s second-largest mortgage loan producer and sixth-largest residential loan servicer. It was not specified what the company will be responsible for in terms of the portion of MSRs and recapture.

The Oct. 1 announcement comes exactly one year after Rocket Mortgage struck a deal to handle the servicing and recapturing activities for a portion of the MSRs of Annaly. A spokesperson for Rocket confirmed to HousingWire that the partnership is still in place.

A spokesperson at PennyMac told HousingWire that the partnership is “a standalone agreement and doesn’t alter any other agreements.”