While the majority of initial public offering issuance suffered in 2012, Christmas came early for investors in national home loan servicer and lender Nationstar Mortgage (NSM).
The company ranked third as the best performing global initial public offering on the New York Stock Exchange for 2012, according to Renaissance Capital.
Nationstar returned 121.3% from its IPO and the deal size was $233 million.
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The company had many highlights throughout the year, including its 52% jump in third-quarter profits from a year prior, as the mortgage servicer pulled in additional mortgage servicing rights, expanding its portfolio.
In November, HousingWire reported that the company may seek to fill the space of big banks by expanding it’s already developed mortgage lending platforms in 2013-2014, a Bank of America Merrill Lynch (BAC) analysts predicted in a conference call.
Nationstar is a home loan lender offering most mortgage products including Veteran Affairs, United States Department of Agriculture and Federal Housing Administration.
BofAML Analyst Ken Bruce suggested that Nationstar may develop originations to be placed into private securitizations. Most mortgages are sold to government-related entities.
Many big bank companies such as JPMorgan Chase (JPM), Citigroup (C) and Wells Fargo (WFC) retrenched their wholesale lending activities in the mortgage finance sector, creating an opportunity for real estate investment trusts and firms with traditional roles outside of the mortgage bond space to focus on servicing the needs of the wholesale market.
"Below those big five or 10 banks you have a fairly fragmented market and with the banks having stepped backed, it has created a vacuum for what has been traditionally known as a correspondent or broker segment," Bruce said.
Investment bank FBR’s predictions that Nationstar would make its mark in the mortgage servicing sector in 2012 — given the structural changes in the industry —were spot on.
The bank also reported that Nationstar has an opportunity to continue the company’s servicing business growth by moving an available mortgage pool between $600 and $700 billion unpaid principal balance in the industry.