Pennymac struck a deal to buy Cenlar Capital Corp.'s subservicing business in a move that will boost its portfolio above a key benchmark and increase the nonbank concentration in the space.

The acquirer's financial services company will pay $172.5 million upfront for Cenlar's portfolio and operations with a $85 million contingent consideration, according to a press release. Cenlar will surrender its bank charter and Pennymac will operate without one.

The deal is "the culmination of a long and thoughtful process between our two organizations that began in the middle of last year," Pennymac Chairman and CEO David Spector said in the release, noting that it's also in line with the company's stated aspirations to grow subservicing.

The scale involved

The all-cash multimillion-dollar acquisition boosts PennyMac Financial Services' total unpaid principal balance of servicing above $1 trillion.

The additional 2 million loans from the acquisition, which have an unpaid principal balance of $740 billion, will make PFSI the second largest servicer overall, according to the press release. 

"This further strengthens Pennymac's position as a partner of choice for institutional subservicing and is expected to drive the growth of capital-light, fee-based revenue streams at significant scale," Spector said in the release.

One hundred institutional clients are set to transfer in the acquisition.

Spector called the deal "a compelling value proposition for our stockholders, Cenlar's institutional clients and their clients' borrowers, as well as the many talented professionals joining Pennymac."

The transaction is expected to close in the second half of 2026 if it clears customary closing conditions and required regulatory approvals.

Santander US Capital Markets LLC acted as exclusive financial advisor to Pennymac and Goodwin Procter LLP served as the company's legal counsel. Houlihan Lokey Capital Inc. was Cenlar's financial advisor to Cenlar with Sullivan & Cromwell LLP acting as its legal counsel.

Broader consolidation

Pennymac's planned purchase of Cenlar's subservicing business follows a broader wave of consolidation among some of the largest players in single-family real estate finance.

• Rocket Cos  purchased Redfin, an online real estate brokerage, in a $1.75 billion all-stock transaction that closed in July 2025.
• Rocket also bought servicing giant Mr. Cooper in an all-stock deal that closed with a $14.2 billion valuation in October of last year.
• Bayview Asset Management acquired Guild Holdings last November in an all-cash deal valued at $1.3 billion.
• United Wholesale Mortgage announced in December that it plans to buy Two, the mortgage real-estate investment trust that owns RoundPoint Mortgage, for $1.3 billion in an all-stock deal.

Cenlar's origins

The planned acquisition could mark the end of a unique subservicing business that grew out of a merger that created Cenlar Federal Saving Bank.

That bank's formation came as the result of a combination between Larson Mortgage Co. and Centennial Savings and Loan Association in 1985, according to the company's website.

Centennial and Larson's histories go even further back.Centennial was founded in 1912 and Larson, a mortgage banker, got its start in 1958.

Larson began retaining servicing in 1960. It subsequently became a Fannie and Ginnie Mae servicer a decade later.

After the initial merger, the bank rebranded as Cenlar FSB in 1993 and became more dedicated to subservicing.