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Nationstar Mortgage Posts Q2 Net Income of $75 Million

bag-of-moneyNationstar Mortgage Holdings rebounded from a $48 million net loss in the first quarter this year to post a net income of $75 million ($0.69 per share) for the second quarter in the company's Q2 2015 earnings statement released Thursday.

The Lewisville, Texas-based residential mortgage servicer posted adjusted earnings of $35 million ($0.32 per share) for Q2, which was an increase of 59 percent from Q1. Nationstar received $52 million ($0.47 per share) of after-tax benefits resulting from the net increase in the value of mortgage servicing rights and related liabilities accounted for at fair value. The company also had $10 million ($0.10 per share) in after-tax expense related to streamlining operations (including severance).

With a larger servicing portfolio, Nationstar's servicing segment produced an increase of $16 million sequentially in Q2, primarily as a result of increased incentive fees, which were due to continued strong operational performance and higher servicing fees.

A favorable rate environment and focused execution resulted in adjusted pretax income of $59 million for Nationstar in Q2. Xome, the company's end-to-end real estate platform, produced top-line growth of $14 million sequentially, largely as the result of an increase in property sales, according to Nationstar.

"We remain resolute in our strategy of creating long-term sustainable growth by capitalizing on market opportunities, increasing the profitability of our servicing segment, building the first fully integrated digital platform for buying or selling a home through Xome and taking advantage of the recovering economy and rising rate environment, all of which we believe will create additional value for our shareholders,” said Jay Bray, CEO of Nationstar. "Our servicing segment continues to operate as the top ranked servicer in its FNMA STAR peer group and had a significantly improved operational quarter, even with elevated levels of amortization."

The share of 60-plus day delinquent mortgages in Nationstar's total portfolio declined to 7.4 percent in Q2, with the company having completed 16,831 workouts during the quarter as well as the boarding of lower delinquency portfolios.

Nationstar's adjusted revenues climbed by $24 million sequentially, primarily because of $15 million in higher base servicing fees, which are due to a higher average unpaid principal balance as well as an increase in incentive fees of $5 million. The company's servicing portfolio ended Q2 with a UPB of $404 billion, which was in increase of 4 percent from the previous quarter and the first time in Nationstar's history that the UPB was greater than $400 billion at the end of a quarter. The hike in UPB was due to the successful closing of $29 billion worth of servicing acquisitions. The company's outstanding commitments as of the end of Q2 total $28 billion.

About Author: Seth Welborn

Seth Welborn is a Harding University graduate with a degree in English and a minor in writing. He is a contributing writer for MReport. An East Texas Native, he has studied abroad in Athens, Greece and works part-time as a photographer.
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