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Nationstar 3Q earnings drop to $32 million

Servicing up, originations down

Nationstar Mortgage Holdings’ (NSM) third-quarter adjusted earnings were $32 million, or $0.30 per share, for the quarter, compared to $35 million, or $0.32 per share, in the second quarter.

Nationstar's earnings of $0.30 per share was $0.04 worse than the Capital IQ Consensus of $0.34.

However, revenues rose 56.5% year/year to $621.6 million, beating the $491.27 million Capital IQ Consensus.

The company posted a net loss for GAAP purposes of $66 million, or $0.62 per share, for the third quarter, inclusive of $152 million of fair value marks and $11 million of adjustments in the quarter.

Its servicing segment posted $36 million of adjusted pretax income.

This is an improvement for the third straight quarter as it continued to focus on improving the customer experience, reducing delinquency ratios and executing on technology and process initiatives to drive profitability.

Meanwhile, originations delivered adjusted pretax income of $50 million and funded nearly $5 billion in new mortgages, which is down 15% Q/Q according to Seeking Alpha.

Revenues increased sequentially in the originations segment for the fifth straight quarter to $180 million, marking the seventh straight quarters with pretax income above $40 million.

For the third quarter, Xome reported pretax income of $17 million down 39% Q/Q and revenue of $109 million down 11% Q/Q.

Xome launched back in June 2015 and is an end-to-end digital platform for real estate, connecting every major touch point in the transaction process, from finding a home to closing the deal.

Jay Bray, CEO, was positive on the results and said:

"Our servicing segment delivered on our profitability goal by improving delinquency levels which resulted in higher base servicing fees and continued to focus on driving down expenses that have the most impact to our profitability. Our originations team also met its primary goal to replenish our servicing portfolio in a cost effective manner by funding $5 billion in mortgages, the highest volume since the fourth quarter of 2013. Furthermore, Xome continues to simplify real estate transactions by enabling buyers, sellers and real estate professionals to successfully operate in the most efficient, transparent manner possible."

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