Nationstar Mortgage reported earnings of $82 million, or $0.91 per share for the quarter ended September 30, up $55.1 million, or $0.61 per share, in the third quarter 2012. But results were mixed as the company cited a challenging climate for originations and the sale of its broker business.
The company announced it will sell its non-core wholesale and distributed retail origination business to Stonegate Mortgage in a deal expected to close in November. The changes across both originations and servicing will result in laying off 1,100 employees, the company said, some of whom are expected to continue working for Stonegate.
Nationstar’s reverse mortgage business, operated under Greenlight Financial, which the company acquired earlier this year, will not be impacted by the change, nor will any of Nationstar’s direct-to-consumer business.
During the quarter, Nationstar grew its servicing portfolio to a total of $375 billion in unpaid principal balance at quarter-end, up 90% over its value at the end of the third quarter in 2012. It maintains a reverse mortgage servicing portfolio including $18 billion in MSRs acquired from Bank of America following its exit from the reverse mortgage business in 2011.
The quarterly performance was mixed, the company reported, with servicing growth but a challenging environment for originations.
“In the third quarter overall Nationstar made good progress on multiple fronts,” said Jay Bray, Chief Executive Officer. “Servicing segment income increased as we continued to grow the size and profitability of the portfolio. Reflecting momentum in the build-out of our fee-based real estate services business, Solutionstar revenue grew at an impressive rate. In the origination segment, the interest rate volatility in the quarter negatively impacted loan pipeline growth and gain-on-sale margins, resulting in a challenging origination quarter.”
Shares plummeted on the news, falling more than 17% as of late-day trading, to $40.75 per share.
Written by Elizabeth Ecker