Nationstar, About to Become Mr. Cooper, Loses $20M in Second Quarter

Nationstar Mortgage Holdings, Inc. (NYSE: NSM) turned in a $20 million loss for the second quarter, but reported a 4.5-basis-point adjusted profit on its servicing portfolio.

Nationstar barely mentioned Champion Mortgage, its reverse mortgage servicing arm, on Thursday’s earnings call or in its associated financial statements. According to a single line item in an 8-K filing, Nationstar’s net “reverse mortgage interests” dropped slightly, from $10.8 million in the first quarter to $10.6 million in the second.

CEO Jay Bray was more focused on the company’s overall servicing performance and the Coppell, Texas-based firm’s upcoming transition into “Mr. Cooper,” a rebrand that’s expected to be completed this month.

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“Becoming Mr. Cooper is not just about a name change,” Bray said. “It is a representation of our journey to examine our company from the inside out.”

The company decided on the unorthodox name to help personalize the cold world of mortgage origination and servicing, Nationstar AVP of corporate communications Christen Reyenga told RMD back in May, citing focus groups that found the happiest borrowers had a personal connection with someone who helped them through the process.

Despite the impending change, Bray said the company won’t invest heavily in large-scale marketing campaigns to trumpet the news.

“We have no plans for any kind of national campaigns or anything like that,” Bray said in response to a listener question. 

The company’s shares rose slightly after the call, buoyed by better-than-expected income and increases in origination revenues, as Seeking Alpha pointed out.

Another participant hinted at fellow servicer Ocwen Financial Corporation’s (NYSE: OCN) recent regulatory woes, asking if Nationstar had any looming issues of its own. Bray demurred.

“We don’t have really anything to report, anything material or meaningful. As I’ve said previously, we’re very engaged with all the regulators,” Bray said. “We are continuously going through examinations, and that’s just part of life for us. Our focus has frankly been on continuing to build strong relationships with the regulators, and we ultimately think we’re aligned with what they want.”

The Consumer Financial Protection Bureau had slapped Nationstar with a $1.75 million fine in March, a record amount for Home Mortgage Disclosure Act (HMDA) violations.

That number pales in comparison to Ocwen’s recent $34 million to $36 million payout — after insurance payments — to settle a class-action lawsuit over revised financial statements and regulatory issues in New York State. Ocwen also continues to face servicing-rights acquisition bans in up to 30 states, as the servicer discussed on its earnings call Wednesday morning.

Written by Alex Spanko

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