S&P Revises Outlook, Lowers Rating on Nationstar

Standard & Poor’s Rating Services announced today that it has changed its outlook on the rankings of Nationstar Mortgage LLC. 

S&P changed Nationstar’s rating as a residential mortgage primary, subprime and special loan servicer to “Developing,” largely as a result of its recent buy-up of mortgage servicing rights—including reverse mortgage servicing rights.  

Previous outlooks on the company, as S&P notes, had been “Positive” for subprime and “Stable” for primary and special servicing.

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Nationstar’s current rankings are “Above Average” for its primary and subprime servicing and “Average” for special loan servicing.

S&P’s outlook change to Developing reflects Nationstar’s announcement of the purchase of $215 billion in mortgage servicing rights from Bank of America in January. 

The multi-billion dollar purchase represents approximately 1.3 million loans, writes S&P, with 47% of this servicing portfolio consisting of government-sponsored enterprise (GSE) and other government agency loans. 

Consequently, the addition of these loans will increase the size of Nationstar’s portfolio by over 100%, writes S&P.

In the past two years, Nationstar has made a name for itself in the reverse mortgage servicing sector as it purchased both MetLife’s servicing rights, as well as $18 billion worth in rights to Bank of America’s reverse portfolio in December 2011. 

Nationstar’s current servicing portfolio includes more than 1.8 million residential loans, amassing more than $300 billion in unpaid principal balance as of 2013. 

Written by Jason Oliva

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