Dallas, Texas-based Nationstar Mortgage was the only one out of the three largest U.S. non-bank mortgage servicers rated by Moody's to turn a profit during 2015, according to Moody’s Investors Service’s Servicer Dashboard on Thursday. Nationstar’s net income for 2015 was 43 million dollars, while the other two largest servicers, Ocwen Financial Corp. and Walter Investment Management Corp., posted losses of 246 million and 263 million dollars for last year, respectively.
Profitability has been weak for non-bank servicers over the last couple of years due to mortgage servicing right fair value adjustments, goodwill impairments, and higher regulatory expenses. Operating costs as a percentage of revenues for both Ocwen and Walter have risen as a result of intense regulatory scrutiny for residential mortgage servicers; however, Nationstar’s operating costs as a percentage of revenues have been more steady. Moody’s expects that Nationstar’s earnings will improve only marginally in 2016 as operating costs rise due to increased regulatory scrutiny.
The fact that mortgage delinquencies are declining steadily for a few years now has been no secret. But just how low are they getting? Delinquencies, defined as 30 or more days past due but not in foreclosure, declined by 8 percent over-the-month and 12 percent over-the-year in March down to 4 point 08 percent—the lowest level since March 2007, according to Black Knight’s First Look at Mortgage Data for March 2016. The rate of 30-day delinquencies fell even lower in March, down below 2 percent—its lowest level since before the year 2000.