I dont think they buyback anymore until the economy stabilizes. They should be managing capital VERY closely.
The origination business is likely to have an operating loss (again, you can only reduce fixed costs by so much), and if the economic conditions result in soaring delinquencies then Coop will have to manage all that extra "touch time" with the borrowers (for no extra fee) and ALSO need to provide servicing advances to the investors, taxing authorities and Insurance companies.
Servicing advances basically mean a borrower doesnt make their payment, but Coop is still required to remit back to the investor as if the borrower HAD made a payment.
I think if you had a few pieces of information about the MSR portfolio and then made a range of assumptions about delinquency rates you could estimate the dollar amount of servicing advances COOP would need to make and then figure out when they would burn through their available cash. In fact, I'm sure they are working on this as we speak, and so is every stock analyst that is covering COOP.
In the end, Coop will be made whole. But in the meantime, they need enough cash and liquidity to weather the storm.
they will NOT buyback using excess capital before the "storm" has passed. That could be a fatal mistake.
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