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Investments

Nonbanks expect big year for MSRs

Nationstar, Walter, Ocwen, soar on HW 30

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Nonbanks are experiencing a strong day on the stock market, following positive first-quarter earning reports.

Back in mid-April, during the conference call for Home Loan Servicing Solutions (HLSS) first-quarter earnings, HLSS Chairman William Erbey said the New York Department of Financial Services’ indefinite hold on the $2.7 billion MSR deal between Ocwen Financial (OCN) and Wells Fargo (WFC) has put a freeze on all MSR deals in the market.

But this is not the case.

Jay Bray, CEO and director of Nationstar (NSM), said during its earnings conference call, “In servicing, while the recent transfer pace has slowed, activity is still occurring and more importantly, the long-term pipeline of opportunities is very healthy.”

“We are currently in dialogue with numerous banks who continue to express the desire to transfer servicing to entities that have a long track record of success in customer service and portfolio management. In fact, I feel better about the transfer outlook for the second half of the year in 2015 than I did last quarter,” Bray added.

Nationstar 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.

And the good news does not stop there for Nationstar. The company’s earnings revealed its recent acquisition of digital real estate marketplace Real Estate Digital, which is expected to close in the next quarter.

In the end, Nationstar expects to provide end-to-end real estate and mortgage services with exceptional customer service, which will deliver "a customer for life," Bray said.

In other words, total mortgage domination.

Meanwhile, Walter Investment Management Corp. (WAC) reported net income of $17.4 million, or $0.45 per diluted share, for the first quarter, compared to net income of $27.7 million, or $0.73 per diluted share, in the first quarter of 2013.

"First quarter results reflected strong earnings growth in the servicing segment, predominantly driven by the higher volume of units serviced as compared to the prior year period. Servicing results also reflected a decrease in the value of the company's MSRs as noted above. The company's originations segment delivered solid results and margins from its consumer lending channel," the company's earnings press release stated.

As a result, both Nationstar’s and Walter’s stocks soared 5.57% and 15.02%, respectively.   

Not too far off, last week Ocwen Financial Services (OCN) reported net income of $75.8 million, or $0.54 per share, for the first quarter of 2014 compared to net income of $45.1 million, or $0.31 per share, for the first quarter of 2013.

Furthermore, Ocwen’s stock is up 2.53%.  

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