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Lending

Nationstar moves one step closer to total mortgage market domination

Zillow and Trulia need to take note

May 8, 2014
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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, but judging by CEO Jay Bray's call this morning and company stock trading this afternoon, investors are not the least bit concerned.

And they shouldn't be.

Nationstar is moving one step closer to total mortgage market domination.

During the call, Bray discussed at length the acqusition of digital real estate marketplace Real Estate Digital, expected to close in the next quarter. RED is a fee-based real estate services company that provides online marketing, data, transaction management and digital media solutions.

"We intend to utilize RED's capabilities to build HomeSearch 2.0, which will include search functionality and industry-leading residential real estate data," he said. "This data will allow consumers, realtors and investors to research properties and more importantly, transact in a number of ways."

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.

Search, sell, list, buy, title — you name it and Nationstar is going to provide it through its HomeSearch.com platform.

"Our macro goal is to capture a fee component of as many U.S. real estate transactions as possible," Bray said.

A big part of that will be in the diversification of financing, for both borrower and investor.

Nationstar is working to deliver non-qualified mortgage products, for example. And it wants to expand its non-agency, Fannie Mae and Freddie Mac financing.

This echoes Bray's comments in the March issue of HousingWire Magazine. "We're entrepreneurial enough, nimble enoughto adjust to the market."

So why is Bray bullish he can pull real estates searches away from big hitters such as Trulia and Zillow?

"Today, real estate search engines allow you to search for homes, find the estimated property value of your home, and somewhat, realistically, those of your neighbor's. However, these search engines are not currently designed to allow consumers to transact, and lack a comprehensive fee-based business model. In short, their value is generally limited to real estate catalogs supported by advertising."

And at another point in the call he adds this gem:

"We see an opportunity to leverage our heritage as a non-agency servicer to provide financial solutions to the developing market that could include portions of the nearly 68 million under-banked consumers and 72 million millenials in the United States. We are currently evaluating non-agency and expanded purchase mortgage strategies."

That's loads of money waiting to be had and Bray is convinced his company has an honest shot at a big portion of it.

And from what I know about Nationstar, he very well might be right.

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