Nationstar Mortgage, the Coppell, Texas-based mortgage servicing company that recently rebranded itself as Mr. Cooper in an effort to grow out of a niche closely associated with the Great Recession, is merging with the holding company that formerly owned Washington Mutual Bank, the companies announced.
Nationstar shareholders will get $1.2 billion in cash from Seattle-based WMIH Corp. and $702 million in shares of the new combined company, whose shares will be traded on NASDAQ under the ticker symbol WMIH.
A news release said that Nationstar—which has about 7,000 employees, including about 4,000 in Dallas-Fort Worth—will continue its operations “as normal.” Nationstar’s senior leadership team will head the combined company, which will still be known as Nationstar Mortgage and keep its headquarters.
WMIH Corp. was formerly Washington Mutual Inc., the parent of Washington Mutual Bank. But Washington Mutual was seized by the Office of Thrift Supervision in 2008, and the bank-holding company filed for bankruptcy.
In 2012, WMIH Corp emerged from bankruptcy and has essentially been laying low since then, running a “legacy reinsurance business operating in runoff mode.”
But recently, it has been looking for acquisitions, primarily focusing on the “financial institutions sector.”
Nationstar, WMIH’s executives said, fit the bill.
“Nationstar aligns perfectly with our acquisition strategy and has a strong track record of providing mortgage servicing and loan and real estate offerings in various market conditions,” said Bill Gallagher, CEO of WMIH, in a statement.
Gallagher said that Nationstar is good at mortgage servicing “in various market conditions,” while WMIH will be able to infuse Nationstar’s operations with cash.
The merger comes several months after Nationstar made official its long-gestating rebrand to "Mr. Cooper," a change that executives told The Dallas Morning News was aimed at making the mortgage business more approachable.
As Mr. Cooper, Nationstar hoped to grow by originating more mortgages, rather than largely servicing delinquent mortgages—a niche business that ballooned during the downturn.
Now that the country’s housing market is on a hot streak, Nationstar has tried to capitalize.
In August, Nationstar’s CEO, Jay Bray, said the company spent more than $90 million in upgrading its operating and consumer technology and spent 50,000 hours training employees.
He said that the changes had yielded $20 billion in new loans originated by Nationstar.
About two years ago, around 20 percent of the company’s portfolio was in loans that Nationstar had originated or refinanced (as opposed to existing loans that Nationstar bought for cheap from banks). At the time, he said, that was up to about 30 percent.
“I am passionately committed to continuing and accelerating our growth and investment as a leader in our industry, leveraging our best-in-class integrated servicing and originations platform,” Bray said in a statement on Tuesday.