Nationstar profit soars as servicing portfolio triples
Nationstar Mortgage Holdings (NSM) earned a higher profit in the second quarter from the year-ago period as its mortgage servicing portfolio tripled and originations boomed.
The Dallas-Fort Worth area firm reported net income of $36.3 million in the second quarter, or 41 cents a share, up from a $1.7 million profit in 2Q 2011. Earnings dipped from $50.2 million in the first quarter.
As larger banks unwind their servicing business after the robo-signing scandal, smaller and medium sized firms are taking advantage. The Nationstar portfolio swelled to $193 billion as of June 30, roughly double the size from three months prior and nearly triple the amount of loans serviced one year ago.
Mortgage originations skyrocketed as well. The firm originated a record $1.8 billion in new home loans in the second quarter, up more than 300% from last year. Nationstar also keeps the servicing to the loans it originates, much of it due to refinancing.
Revenue in its origination department more than offset losses in its mortgage servicing rights valuations. Revenue, however, increased to $200 million across the company from $82 million last year.
The firm is also looking to expand further. On June 19, it made another bid on Ally Financial's bankrupt mortgage unit Residential Capital. Nationstar executives expect to acquire $371 billion in mortgage servicing rights and subservicing contracts from ResCap if the deal closes in January.
"While the acquisition of the ResCap portfolio will be one of our primary objectives for the second half of 2012, we will continue to explore and pursue other accretive portfolio acquisitions from our $300 billion plus pipeline," said CEO Jay Bray.