Recent regulatory scrutiny hasn’t been enough to hinder future growth opportunities for non-bank mortgage servicers like Nationstar (NYSE: NSM), according to an article this week from Bloomberg.
Despite concerns that the “explosive growth” of non-bank mortgage servicers buying up millions of dollars worth of mortgage servicing rights (MSRs), servicers like Nationstar and Ocwen Financial Corp. (NYSE: OCN) are performing better at handling delinquent loans than banks, the article notes.
Both companies have modified mortgages at about twice the rate of banks, according to a March 26 report from Fitch Ratings Inc. cited by Bloomberg. Additionally, the report also notes that the timeline for non-banks is shorter, on average, when mortgages go into foreclosure.
“Nationstar was built to handle higher-touch servicing—it’s in its DNA,” said Douglas Harter, a director and servicing analyst at Credi Suisse Group, in the article. “They’re better at getting people through the modification process and getting resolutions because they started life focused on higher-risk loans.”
In the last year alone, Nationstar has purchased $305 billion in MSRs, according to Bloomberg, and sees potential to expand, as the company’s CEO Jay Bray estimates that banks will sell another $1 trillion of MSRs in the next two or three years.
“In the current regulatory environment, there’s more scrutiny on non-banks, and we are going to have to work through that,” Bray said. “I think there is going to be plenty of opportunity for more growth.”
Written by Jason Oliva
