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Nationstar Earnings Soar, Servicing Portfolio Grows

Despite a drop in quarterly loan production, Nationstar Mortgage Holdings Inc.’s servicing portfolio grew and earnings exploded.

In the three months that ended on Dec. 31, 2016, the Dallas-based
company earned $317 million prior to income tax expense.

Those results, along with other operational and financial metrics, were disclosed in Nationstar’s fourth-quarter 2016 earnings report.

Income skyrocketed from just $71 million in the previous quarter and $32 million a year previous.

The dramatic increase in earnings reflected a $290 million mark-to-market
gain in servicing.

“Nationstar had an incredible year of success in 2016,” Nationstar Mortgage Chairman and Chief Executive Officer Jay Bray said in the report. “We increased servicing profitability basis points over 87 percent while ending the year with a record 2.9 million customers. Originations also had a banner year posting record earnings and funding more than $20 billion in loans.”

Residential loan originations during the final-three months of last year came to $5.338 billion. Business slowed from $5.533 billion in the third quarter
but improved from $3.6 billion in the fourth-quarter 2015.

Refinance share widened to 81 percent in the most-recent period from 76 percent the prior quarter.

Full-year fundings increased to $20.316 billion in 2016 from $17.971 billion the prior year.

At the conclusion of last year, the unpaid principal balance of the mortgage servicing portfolio was $473 billion, rising from $453 billion three months earlier and $398 billion one year earlier.

“The company expects to board $144 billion UPB throughout 2017 with limited use of capital,” the report stated. “This includes the recently announced subservicing agreement with New Residential where Nationstar will subservice approximately $111 billion UPB that New Residential has agreed to purchase, including $97 billion UPB of seasoned agency MSRs from CitiMortgage Inc.”

Mortgage loans held for investment closed the fourth-quarter 2016 at $0.151 billion, off from $0.156 billion three months earlier and $0.192 billion one year earlier.

In addition, there were $11.033 billion in reverse mortgage interests,
expanding from $7.334 billion at the end of the third-quarter 2016. Reverse mortgage interests have ballooned compared to $2.384 billion at the same point in 2015.

Sixty-day delinquency finished 2016 at
5 percent, the same as of Sept. 30, 2016, and improved from 7 percent as of year-end 2015.

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