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Nationstar Eyes Future Growth Despite Regulatory Pressures

Recent regulatory scrutiny hasn’t been enough to hinder future growth opportunities for non-bank mortgage servicers like Nationstar (NYSE: NSM), according to an article this week from Bloomberg.

Despite concerns that the “explosive growth” of non-bank mortgage servicers buying up millions of dollars worth of mortgage servicing rights (MSRs), servicers like Nationstar and Ocwen Financial Corp. (NYSE: OCN) are performing better at handling delinquent loans than banks, the article notes. 

Both companies have modified mortgages at about twice the rate of banks, according to a March 26 report from Fitch Ratings Inc. cited by Bloomberg. Additionally, the report also notes that the timeline for non-banks is shorter, on average, when mortgages go into foreclosure.

“Nationstar was built to handle higher-touch servicing—it’s in its DNA,” said Douglas Harter, a director and servicing analyst at Credi Suisse Group, in the article. “They’re better at getting people through the modification process and getting resolutions because they started life focused on higher-risk loans.”

In the last year alone, Nationstar has purchased $305 billion in MSRs, according to Bloomberg, and sees potential to expand, as the company’s CEO Jay Bray estimates that banks will sell another $1 trillion of MSRs in the next two or three years.

“In the current regulatory environment, there’s more scrutiny on non-banks, and we are going to have to work through that,” Bray said. “I think there is going to be plenty of opportunity for more growth.”

Read the Bloomberg article

Written by Jason Oliva