Nationstar Mortgage Holdings, Inc. (NYSE: NSM) turned in net income of just $0.02 per share, or $2 million, during the first quarter of 2017, though CEO Jay Bray touted the company’s strong mortgage-servicing performance — as well as Nationstar’s upcoming metamorphosis into “Mr. Cooper.”
The company collected $65 million in income from its servicing operations, up from $58 million in the fourth quarter of 2016, and Bray called out a declining delinquency rate, slowing prepayment speeds, and the completion of more than 15,000 loan workouts as reasons for optimism in 2017. Nationstar also plans to add a total of $155 billion of loans, in terms of unpaid principal balance, to its servicing portfolio by the end of the year.
“Our key servicing metrics are all moving in the right direction,” Bray said on Nationstar’s quarterly earnings call Thursday morning.
Bray pointed to a downsizing in its origination business as a positive, citing the effects of rising interest rates, and discussed the growth potential of its Xome real-estate services website, despite declines in revenues that Nationstar blamed on a dip in property listings and rising interest rates.
Based on the potential value of both the Xome platform and Nationstar’s subservicing portfolio, Bray claimed that his company’s stock was undervalued, pegging the appropriate share price at $28 to $31; NSM closed Wednesday at $16.20 per share*.
Thursday marked potentially the last earnings call for Nationstar before its anticipated Mr. Cooper rebrand this summer, which Bray somewhat loftily declared will give the company’s nearly 3 million mortgagors “a reason to believe in us.”
“The mortgage industry is not known for customer service, and we have a significant opportunity to challenge the status quo,” Bray said of the name change, which he positioned as a way to put a friendly, human face on the mechanical business of mortgage servicing and origination.
The rebranded company will retain its legal name of “Nationstar” and its NSM ticker symbol even after the change, Bray said.
Nationstar services reverse mortgages through its Champion Mortgage arm, which will also keep its name after the Mr. Cooper transformation. Bray didn’t touch on Nationstar’s reverse portfolio on the earnings call, and the company’s Home Equity Conversion Mortgage business only received a single mention in the associated 8-K filing.
*UPDATE, 3:08 p.m. CDT: Perhaps Bray had an ulterior motive in talking up Xome’s potential. According to Seeking Alpha and National Mortgage News, Nationstar might be shopping the real estate site ahead of the Mr. Cooper rebrand, hinting at “strategic alternatives” on a post-earnings conference call.
Written by Alex Spanko