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Nationstar Mortgage Holdings ($43.12 0.92%) experienced a 52% jump in its third-quarter profit from last year as the mortgage servicer pulled in additional mortgage servicing rights, expanding its portfolio. The company adds it plans to continue expanding.
The company posted a third-quarter profit of $55.1 million, or 61 cents a share, up from $36.3 million, or 41 cents a share, a year earlier.
Despite having to drop its bid for additional MSRs sold during the Residential Capital bankruptcy auction, Nationstar expanded its MSR portfolio throughout the third quarter.
The company's income from mortgage servicing fees increased 58% over the previous quarter to $135.4 million. That boost comes from revenue partly associated with Nationstar's $63.7 billion acquisition of Aurora Bank's MSRs in June.
In its latest quarterly report, parent company Fortress Investment Group ($7.25 -0.01%) raised $770 million in additional capital for investments in mortgage servicing rights opportunities. This includes the nearly $600 million successful launch of a dedicated mortgage servicing rights fund.
The value of the firm's mortgage servicing rights did decline by $22.3 million during the period due to portfolio run-off. But analysts with Compass Point Research & Trading said, "NSM expects to close $30 billion in bulk servicing transfers in the fourth-quarter of 2012 and has executed on $10 billion in flow programs, which should help support the portfolio run-off."
The company's 60-plus day delinquency rate increased to 15.1% of its unpaid principal balance, up from 11.7% in 2Q. That jump is tied to new MSRs booked from Aurora Bank and the Bank of America portfolios, which generally contain higher late-payment rates. Excluding those MSRs, the company's delinquency rate is only 11.7%.
Compass Point said the takeaway from the report is that the "relatively in-line earnings result combined with $30 billion of expected new servicing business in 4Q12, should be enough to support the stock after closing at $31.51 following ResCap (or the ResCap bid)."
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