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Nationstar Mortgage in Red, Refis Hurt Lending

Mortgage News

A staggering refinance share had home-lending activity retreating for a third consecutive quarter at Nationstar Mortgage Holdings Inc. A second-quarter loss was reported.

Income before income tax expense during the three months ended June 30 was a $29 million loss, the Dallas-based business disclosed in its second-quarter earnings report.

That was smaller than the $144 million loss suffered in the same period in 2016. But the latest quarter’s losses swung from a $3 million profit in the first-quarter 2017.

Quarter-over-quarter deterioration was driven by mark-to-market charges, which increased $52 million in the second-quarter 2017 from three months earlier.

Single-family loan originations from April 1, 2017, through mid-year came to $4.254 billion. Production declined from $4.632 billion in the first quarter. Nationstar’s quarter-over-quarter deterioration was in stark contrast to a vast majority of the industry, which reported gains over the same periods.

Lending activity at the mortgage banker has been lower each quarter since the third quarter of last year, when $5.5 billion was funded, and was also down from $5.2 billion in the second-quarter 2016.

The slowdown in in home lending at Nationstar came as refinance share was a whopping 71 percent of the latest three-month period’s volume. While that was thinner than 80 percent in the first quarter, it was far fatter than the roughly one-third share reported by Ellie Mae Inc. in its Origination Insight Report for industry-wide production in the second quarter.

During the first-six months of this year, $8.886 billion in new loans have been closed.

Despite the sequential slowdown, activity is likely picking up in the third quarter based on pull-through adjusted lock volume, which climbed to $4.2 billion in the second quarter from $3.8 billion in the previous period.

At the middle of 2017, Nationstar serviced single-family loans with an unpaid principal balance of $498 billion. The mortgage servicing portfolio has grown from $470 billion three months earlier. More substantial growth was recorded versus one year earlier, when the portfolio stood at only $369 billion.

Included in the investment portfolio were $10.752 billion in single-family assets, down from
$10.999 billion three months earlier. The latest total was comprised of $10.604 billion in reverse mortgage interests and $0.148 billion in mortgage loans held for investment.

Delinquency of at least 60 days was cut to 3.5 percent from 4.1 percent as of March 31, 2017. The rate was
5.7 percent as of June 30, 2016.

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