Nationstar Mortgage revives its IPO
High-touch mortgage servicer Nationstar Mortgage has reactivated its plans to go public. Shares have not yet been priced, according to regulatory documents filed with the Securities and Exchange Commission, but Nationstar named Bank of America Merrill Lynch (BAC) to underwrite the initial IPO. The fast-growing company, owned by private equity firm Fortress Investment Group, originally filed for an IPO back in May 2011 with plans to raise $400 million. The company plans to be listed on the New York Stock Exchange, but did not give a ticker or expected public offering price. It intends to use proceeds from the offering for working capital and other general corporate purposes, including servicing acquisitions, which it said "may include acquisitions from one or more affiliates of the underwriters in this offering." As of Sept. 30, 2011, Nationstar serviced more than 612,000 residential mortgage loans with an aggregate unpaid principal balance of $102.7 billion. Its clients include national and regional banks, government organizations, securitization trusts and private investment funds. As a high-touch servicer, Nationstar emphasizes its borrower interaction to improve loan performance and to minimize foreclosures and defaults. The company said its integrated loan origination platform complements and enhances its servicing business but acknowledged that an adverse economy could affect future origination growth. Its ancillary businesses include REO management as well as recovery of charged-off mortgage deficiencies. Nationstar contends in its regulatory filing that the trend of mortgage servicing shifts from banks to nonbank entities should benefit its future growth. "Already, over the last 18 months, banks have completed or announced servicing transfers on over $350 billion of loans. We believe this represents a fundamental change in the mortgage servicing industry and expect the trend to continue at an accelerated rate in the future," the company said, according to SEC filings. Because mortgage servicing industry is characterized by high barriers to entry, including the need for sophisticated infrastructure and compliance with GSE requirements, it believes it is one of the few mortgage servicers competitively positioned to benefit from the shift. Nationstar listed the expected multistate attorneys general settlement as a risk factor in its IPO. The servicer is not part of the settlement negotiations. Like other servicers, it temporarily halted foreclosures to review its processes but has since resumed foreclosures. It notes that issues with robo-signing in the industry could further delay the foreclosure process in some states and result in added expense. Dodd-Frank Act compliance could also increase costs and limit further capital raising, it said. Write to Kerry Curry. Follow her on Twitter @communicatorKLC.