Stonegate Buying Nationstar’s Wholesale Channel

Stonegate Mortgage, Indianapolis, is purchasing Nationstar Mortgage Holding’s wholesale production business, as well as some retail branch offices.

Lewisville, Texas-based Nationstar is also consolidating its default servicing business by closing two of its four offices. The company will be reducing its headcount by 1,100 employees, including the people who will join Stonegate.

The offices being closed are in Indianapolis and Houston as the company is seeing greater productivity from its staff. Locations in Chandler, Ariz., and in the Dallas-Fort Worth area will remain open, a spokesman says. There is space in Chandler for more hires, so it will be hiring people there, he adds.

Nationstar says it wants to concentrate on consumer-direct lending channel, including its Greenlight business and the joint venture it has with KB Home. It will stay in correspondent lending because it is a source for acquiring servicing and because a higher percentage of this channel’s production is purchase money loans.

The purchase price is the net book value of assets being acquired, a press release from Stonegate says.

Nationstar’s wholesale business originated over $3 billion in loans in the first half of 2013.

Stonegate did an initial public offering in October. A private offering which was a precursor to the deal raised $107 million in proceeds. The company also announced it hired Jeff Walton to grow its retail business.

Nationstar is reporting 3Q13 earnings of $82 million, up from $55 million one year prior. The company had total origination volume of $8 billion for the quarter, including $4.5 billion from the consumer direct channel and $2 billion from correspondent.

Pretax income from the origination business was $13 million. The gain on sale margin was 256 basis points, but from loans originated in the consumer direct channel, the gain on sale was 400 basis points.

Gain-on-sale revenue in 3Q13 was $206 million, down from $283 million in 2Q13.

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