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Nationstar Reports Strong Servicing Performance

Nationstar Mortgage Holdings Inc. announced its Q1 earnings on Thursday, with the company’s GAAP net income hitting $160 million for the quarter. That’s up significantly over Q4 2017, when Nationstar’s GAAP net income was reported at $41 million. On an adjusted basis, Nationstar reported Q1 earnings of $44 million.

"Nationstar is off to a strong start in 2018,” said Jay Bray, Chairman and CEO of Nationstar. "The Servicing segment continues to perform in-line with expectations. Despite a challenging mortgage originations environment, funded volume held flat and Xome increased third-party property inflows. We operate at tremendous scale and we have a compelling opportunity for significant cost savings to be achieved across the platform in the next two years. Our best-in-class platform, complemented by technology investments and the power of a rising rate environment, should continue to build value for our stockholders over the long term."

Nationstar's servicing segment, which does business under the moniker Mr. Cooper, reported $220 million GAAP pretax income for Q1, or $69 million adjusted pretax income. Total revenues for the company’s servicing segment increased by 3 percent over the quarter. However, Nationstar also reported a 5 percent increase in expenses over the previous quarter. Nationstar reported that the bump in expenses was “driven by a temporary rise in staffing costs to optimize advance recoveries” and added that this allowed the company “to shorten collection timelines and reduce our financing costs while improving overall liquidity.”

As of the end of Q1, Nationstar’s portfolio stood at $500 billion. According to their earnings report, “The pipeline consists of both mortgage servicing rights and subserviced loans and we expect to end the year over $530 billion.”

Nationstar’s originations segment reported $19 million GAAP pretax income or $25 million adjusted pretax income for Q1, down 26 percent quarter-over-quarter. Nationstar’s report attributes this decrease to “the shift in interest rates and composition mix.” During Q1, Nationstar “funded approximately 23,000 loans totaling $5.1 billion, including $2.8 billion primarily related to retaining customers from the servicing portfolio,” according to the report.

Nationstar also reported earnings for its Xome subsidiary, a company which “provides real estate solutions including property disposition, asset management, title, close, valuation, and field services to Nationstar and third-parties.” For Q1, Xome earned $22 million GAAP pretax income or $14 million adjusted pretax income. That worked out to 17 percent quarter-over-quarter adjusted pretax income growth.

To read Nationstar's full Q1 2018 earnings report, click here.

About Author: David Wharton

David Wharton, Editor-in-Chief at the Five Star Institute, is a graduate of the University of Texas at Arlington, where he received his B.A. in English and minored in Journalism. Wharton has nearly 20 years' experience in journalism and previously worked at Thomson Reuters, a multinational mass media and information firm, as Associate Content Editor, focusing on producing media content related to tax and accounting principles and government rules and regulations for accounting professionals. Wharton has an extensive and diversified portfolio of freelance material, with published contributions in both online and print media publications. He can be reached at [email protected].

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