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Nationstar Reports Quarterly Loss, Falling Originations

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Quarterly production tumbled by nearly a third at Nationstar Mortgage Holdings Inc. and is poised for a further decline. Pre-tax earnings swung to a loss.

In its fourth-quarter 2013 earnings report, the Lewisville, Texas-based lender said originations were $5.5 billion from Oct. 1 through Dec. 31.

Business slid from the third quarter, when $8.0 billion was funded. The decline reflects the sale of Nationstar’s wholesale lending business to Stonegate Mortgage Corp. in December. The unit originated $4.8 billion during the first nine months of 2013.

But activity soared from the $3.1 billion in production during the fourth-quarter 2012.

Retail originations accounted for $4.4 billion of the most recent production, while the wholesale channel closed $0.4 billion and the correspondent channel acquired $0.6 billion.

The total applications pipeline closed out the fourth quarter at $5.0 billion, while the locked pipeline was $4.0 billion.

Full-year home loan production totaled $24.0 billion, soaring from just $7.9 billion closed in 2012.

“Although origination margins came under pressure in the fourth quarter, our current originations are profitable and we are confident this business will continue to be profitable in 2014 with its more focused footprint,” Nationstar Chief Financial Officer David Hisey said in the report.

After acquiring mortgage servicing rights on $30 billion in loans, the mortgage servicing portfolio finished last year at $391 billion, growing from $375 billion at the end of September and $208 billion at the end of 2012.

“The pipeline of bulk and flow MSR acquisition opportunities remains strong at over $350 billion in aggregate UPB,” the report said. “Nationstar’s existing flow agreements are expected to produce approximately $20 billion of UPB in annual volume.”

Nationstar trimmed its mortgage assets to $0.211 billion from $0.213 billion as of Sept. 30, 2013. Mortgage holdings were also down from $0.239 billion as of Dec. 31, 2012.

In addition, $1.435 billion in “reverse mortgage interests” were on the books, growing from $1.226 billion at the end of September and $0.750 billion at the end of the fourth-quarter 2012.

Delinquency of at least 60 days was 11.9 percent as of Dec. 31, 2013, improving from 15.3 percent from a year earlier.

Prior to income taxes, Nationstar had an $86 million loss, swinging from a $132 million profit three months earlier and a $94 million profit a year earlier.

Full-year pre-tax earnings, however, jumped to $346 million from $277 million earned in 2012.

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