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Nationstar Defies Drop in Home Lending at Peers

Declining origination income was more than offset by soaring servicing income at Nationstar Mortgage Holdings Inc. — which bucked a downward quarter-over-quarter origination trend among its peers.

From Jan. 1 through March 31 of this year, income before income tax expense was $206 million, according to Nationstar’s first-quarter 2018 earnings report.

Earnings at the Dallas-based mortgage-banking firm skyrocketed from just
$3 million in the year-earlier quarter and $58 million during the preceding three-month period.

Included in earnings was $19 million in originations income, declining from $30 million in the fourth quarter. But income from servicing soared to $220 million from $77 million.

Nationstar closed around 23,000 loans for $5.087 billion during the most-recent three months. Originations were barely changed from $5.152 billion in the final three months of last year and ascended from $4.632 billion in the first-three months of 2017.

“Despite a challenging mortgage originations environment, funded volume held flat,” Nationstar Chief Executive Officer Jay Bray said in the report.

Nationstar’s lack of a quarter-over-quarter drop
was unique among its peers, with all 15 that Mortgage Daily has covered so far for the first quarter experiencing a decline from the fourth quarter– some significantly.

Correspondent acquisitions rose 10 percent from the prior quarter to $2.3 billion, while retail transactions with its existing customer
base accounted for $2.8 billion.

Refinance share thinned to 60 percent — far wider than the industry — from 63 percent in the previous quarter.

“We have executed initiatives to shift organic growth from an interest-rate driven rate-term refinance product to a debt consolidation refinance value proposition for many of our 3.2 million customers,” the report stated. “These tailored solutions are improving cash flow and consolidating debt for our customers and serving as a powerful growth engine for our new customer acquisition channel.”

Nationstar serviced $500 billion in mortgages. Although the servicing portfolio was off from $508 billion three months earlier, is was up from $470 billion one year earlier.

The home lender’s mortgage investment portfolio was $10.361 billion as of the end of the first-quarter 2018 and included $10.225 billion in reverse mortgage interests, growing from $9.984 billion as of year-end 2018, and $0.136 billion in mortgages held for investment. Overall residential assets grew from $10.123 billion as of Dec. 31, 2017, but have decreased from $10.999 billion as of March 31, 2017.

March 2019 ended with a 60-day delinquency rate of 3.2 percent, improving from 3.4 percent at the end of last year and 4 percent at the same point last year.

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