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Fitch: Nationstar’s internal improvements solidify servicer standing

Ratings agency cites improved borrower communication as positive

Earlier this year, Nationstar Mortgage announced plans to completely rebrand itself, combining its originations and servicing business under the name Mr. Cooper.

And while Mr. Cooper is most likely gone for good, the value of customer service is not.

At the heart of the company’s rebranding plans, according to Nationstar CEO Jay Bray and various company messaging, was the company’s effort to “change the home loan experience” and redefine the relationship between the borrower, the lender, and the servicer.

The goal, Bray said, is to build a “more personal relationship with a home loan provider and aligns the entire company behind this spirit of customer advocacy.”

Initially, the company planned to rebrand at some point this summer, but the name change hasn’t happened yet, and there is some question about whether it’s even going to happen or not.

When HousingWire posed that question in August, a spokesperson from Nationstar said the company is still planning to enact the name change but is also focusing on “embracing the spirit of customer advocacy Mr. Cooper represents” in the mean time.

Reviews are now beginning to come in on Nationstar’s new customer focus, and the early reviews are positive, as a new report from Fitch Ratings states that Nationstar’s internal improvements focused on customer service place the company on solid ground.

In the new report, Fitch affirms several of Nationstar’s servicer ratings (residential primary servicer rating for Alt-A product, residential primary servicer rating for subprime product, residential special servicer rating, and residential master servicer) and says that the outlook for each of those ratings is “stable,” based on the improvements the company put in place over the last several months.

“The affirmation of the primary and special servicer ratings and the stable outlook reflect operational and technology enhancements, and continued improvements to its internal control environment,” Fitch said in its report. “The affirmation of the master servicer rating and the stable outlook reflect established controls and processes, effective use of technology, and experienced management and staff.”

Nationstar’s ability to capably service its borrowers is important considering the size of the nonbank’s portfolio.

Per Fitch’s report, Nationstar is currently the largest nonbank servicer, and fourth largest servicer overall, of residential mortgage loans.

According to Fitch’s report, as of June 30, 2016, Nationstar's primary and special residential forward mortgage servicing portfolio consisted of more than 2.1 million loans totaling $338.1 billion in unpaid principal balance.

This includes approximately 132,000 Alt-A loans totaling $31.7 billion in UPB and 235,000 first and second lien subprime loans totaling $28.2 billion in UPB.

According to Fitch’s report, during the current review period, Nationstar’s primary and special servicing departments made a number of operational changes, including “enhancements” to the company’s borrower communication, document management, loan administration, and default management areas.

Additionally, Nationstar also implemented a number of other technological enhancements including: cash processing systems; a new workflow scripting application for collections and loss mitigation, a new investor reporting system; and several projects to support changes to bankruptcy processing.

Fitch also stated that Nationstar's internal audit process and overall internal control environment continues to “mature.”

During the current review period, Fitch noted that Nationstar “significantly increased” the number of tests performed by its first line of defense, enhanced its call monitoring capability, and expanded its internal audit staff and processes.

And all that adds up to Nationstar (or Mr. Cooper) being on solid footing as a servicer.

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