Nationstar Buys $4.9 Billion Generation Reverse Mortgage Servicing Portfolio

Nationstar Mortgage Holdings (NYSE: NSM), an active servicer of reverse mortgages, has acquired a portfolio of reverse mortgage servicing rights from Generation Mortgage following Generation’s exit from originations and subsequent wind down.

Nationstar paid $192 million to Generation Mortgage and received reverse mortgage net assets valued at $233 million, comprising $4.9 billion of unpaid principal balance assets and $4.6 of assumed liabilities, according to Nationstar’s most recent 10-Q filing with the Securities and Exchange Commission (SEC).

Generation, a longtime originator of reverse mortgages, announced in October 2014 it would be exiting originations and winding down its reverse mortgage business.

The company cited a heightened and sustained regulatory environment and industrywide reverse mortgage volume decline as reasons for its exit.

According to the SEC filing, Nationstar’s purchase of the servicing rights took place in May 2015, after the company was rumored to have been eyeing the portfolio.

Nationstar sees the transaction as a “small acquisition,” relative to its entire servicing portfolio, CEO Jay Bray said on a call with analysts this week to discuss quarterly earnings, but noted the opportunity in his comments.

“From an opportunity standpoint, it was a really good acquisition for us and I think it will exceed our return threshold,” Bray said. “We’re pretty excited about it. It’s small, but I think it was an opportunistic deal and we feel good about it.”

Written by Elizabeth Ecker

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