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W S
Servicing

Nationstar posts profit and makes big digital purchase

Big plans for Solutionstar growth

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Nationstar Mortgage Holdings (NSM) reported net income of $24 million, or $0.27 per share, compared to a loss of $51 million, or $0.56 per share in the fourth quarter 2013.

That is $0.19 worse than the Capital IQ Consensus estimate of $0.72.

The company also announced the strategic acquisition of Real Estate Digital, a fee-based real estate services company that provides online marketing, data, transaction management and digital media solutions.

"The acquisition accelerates our plan to offer a fully integrated digital marketplace that provides end-to-end services for every aspect of a real estate transaction," said CEO Jay Bray.

The company, while missing analysts estimates, is pleased with the results.

“Our servicing segment continues to increase profitability by generating 7 basis points of operating profitability in the first quarter and is on track towards our 2014 goal of 11 basis points," said Chief Financial Officer David Hisey.

"Reflecting momentum in our fee-based real estate services business, Solutionstar profitability grew at an impressive rate, with revenue increasing 22% and pretax income advancing 21%. In originations, we returned to operating profitability and reduced expenses by 37%. We expect to generate significant investable cash over the course of the year that can be deployed into high return opportunities," he added.

The company also announced big plans for online real estate vendor Solutionstar.

Solutionstar’s real estate services business sold nearly 3,600 properties in Q1’14, and expects to sell approximately 20,000 properties in 2014.

The number of properties under management is increasing as a result of the successful closing of the private-label portfolio acquisitions from Bank of America in late 2013. Solutionstar generated over $78 million in revenue in the first quarter 2014, up from $64 million in the prior quarter.

Servicing fee income, before MSR fair value adjustments, increased 6% to $329 million when compared to the sequential quarter in absolute terms. The increase reflects the higher average unpaid principle balance balance, reduction in delinquencies, and continued growth in Solutionstar revenues.

In the first quarter, Nationstar’s origination volume decreased by 13% from the fourth quarter 2013, outperforming bank peers and industry forecasts, which on average decreased by 28%.

Origination revenue was $131 million, up from $45 million in the fourth quarter 2013.

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