Nationstar Mortgage Holdings reported a net loss of $48 million, or $0.53 per share, for the first quarter of 2015 compared with a net income of $19 million ($0.21 per share) for the previous quarter, according to an announcement from the Lewisville, Texas-based residential mortgage servicer on Tuesday morning.
The decline in GAAP earnings per share was primarily driven by two things, according to Nationstar: a noncash decrease in fair value mark-to-market adjustments in servicing of $110 million, or $0.77 per share, and a noncash quarterly increase in amortization partially offset by an increase of $17 million, or $0.12 per share.
Cash flow increased by $31 million in Q1 from the previous quarter up to $114 million. The company said in its announcement that "adjusted cash flow provides a better view of the underlying performance of the business, including the company's ability to make strategic investments."
"In the first quarter we capitalized on opportunities within the servicing transfer market, took advantage of the favorable originations conditions, and continued the evolution of Solutionstar into a comprehensive real estate technology company that we expect to revolutionize the way real estate transacts," said Jay Bray, CEO of Nationstar. "We have a significant runway of growth prospects across all three segments and continue to evaluate additional ways to increase shareholder value."
Nationstar successfully closed on $24 billion in MSR acquisitions during Q1, and the company's servicing portfolio ended Q1 with an unpaid principal balance (UPB) of about $390 billion – representing an increase of about 2 percent from the end of 2014. The company currently has $31 billion in servicing acquisitions scheduled to board by Q2 2015 and $21 billion with pending agency approvals that will board upon receipt of those approvals.
"The portfolios acquired, and the majority of portfolios under contract, are agency portfolios with low levels of delinquency, attractive returns and complement Nationstar’s strategy of retaining Customers for Life," Nationstar said in the release. "These higher performing portfolios contain customers that have a lower propensity to default providing an opportunity for Nationstar to offer a variety of corresponding mortgage and real estate service products and solutions."
Nationstar completed approximately 16,500 workouts, or non-foreclosure solutions, in Q1 which, along with the recently boarded MSRs, drove the company's 60-plus day delinquency rate down to 8.8 percent for the quarter. Also, despite harsh weather conditions in February, Nationstar's Solutionstar division sold 5,483 single-family residential properties during Q1. Sales have picked up since February, with 2,043 sold in March and 2,100 in April, according to Nationstar, and the company expects sales to increase during the upcoming peak spring and summer selling seasons. Solutionstar ended Q1 with 9,114 REO properties in inventory, indicating a strong REO pipeline.