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Nationstar Beats Financial Expectations for Q3

Falling Money BHNationstar Mortgage Holdings on Wednesday reported 52 cents per-share earnings for Q3. That’s 11 cents better than what analysts had expected for the company.

The company also posted a negative net margin of 3.92 percent and a positive return on equity of almost 9 percent in its Q3 earnings statement. Nationstar posted revenue of $542 million, well above anticipated revenue of about $370 million. A year ago, the firm posted $0.36 EPS.

Overall, Nationstar reported a net income of $52 million, making Q3 the first profitable quarter for the company in 2016. Nationstar was the only one of the three largest non-bank mortgage servicers rated by Moody’s (Ocwen and Walter Investment were the other two) to turn a profit for the full year 2015 ($43 million). In Q1 and Q2 this year, however, Nationstar posted net losses of $132 million and $92 million, respectively.

Other significant numbers for Q3 included the company’s highest-ever unpaid principle balance of $453 billion, and an adjusted pretax income of $39 million. Nationstar also posted a GAAP pretax income of $83 million and adjusted pretax income of $85 million.

"Our third quarter achievements solidify us as the preferred industry partner," said Jay Bray, Nationstar’s chairman and CEO. "In the quarter we posted strong operational results, added almost 510,000 customers to our servicing platform, funded over 25,000 loans, and launched enhanced technologies that improve the home ownership experience for our 2.7 million and growing customer base. We ended the quarter with the largest servicing portfolio in our company's history, are actively engaged in a significant pipeline and remain focused on creating value for our shareholders."

Servicing saw a $14 million increase in amortization, which Bray said “reflects our focus on improving portfolio performance and cost containment initiatives.” The company funded $5.5 billion for its servicing platform, which was a 6 percent increase over Q2.

The company has been authorized to repurchase up to $250 million of common stock and has so far repurchased $125 million.

Nationstar also boarded $100 billion in loans, including $91 billion worth of subserviced loans that Bray said contribute less revenue via basis points, but a higher margin and return on equity due to the limited capital deployed.

“We expect subservicing flow and originations volume to replace anticipated run-off in 2017,” Bray said. We remain actively engaged, along with our capital partners, in several large opportunities that could substantially add to our servicing portfolio.”

The Q3 results for Nationstar may be a sign that non-bank servicers have turned the corner financially. In late October, Ocwen reported a net income of $9.5 million for Q3, which was that company's first profitable quarter since Q2 last year.

Click here to view Nationstar Mortgage's complete Q3 earnings report.

About Author: ScottMorgan1

Scott Morgan is a multi-award-winning journalist and editor based out of Texas. During his 11 years as a newspaper journalist, he wrote more than 4,000 published pieces. He's been recognized for his work since 2001, and his creative writing continues to win acclaim from readers and fellow writers alike. He is also a creative writing teacher and the author of several books, from short fiction to written works about writing.
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