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Half of Nationstar-B of A Servicing Deal Involves Private-Label Loans

JAN 8, 2013 11:28am ET

Nationstar Mortgage Holdings’ acquisition of $215 billion in mortgage servicing rights from Bank of America will double the size of its servicing portfolio.

The Lewisville, Texas, servicing company currently has $198 billion in MSRs. When the B of A servicing transfers are completed later this year, Nationstar will have a $425 billion servicing portfolio based on unpaid principal balance of the loans.

This is a “landmark transaction,” said Nationstar chief executive Jay Bray. And it will “produce meaningful earnings to our bottom line and will significantly increase shareholder value.”

Nationstar announced the servicing acquisition on Monday.

The B of A portfolio consists of approximately 1.3 million loans and 53% involve servicing on private-label loans. The other half are government-guaranteed loans—approximately $40 billion Fannie Mae, $20 billion Freddie Mac and $40 billion Ginnie Mae.

Nationstar executives expect B of A will transfer the servicing in stages of about 25,000 to 30,000 loans per quarter.

Under questions from equity analysis, the executives insisted that Nationstar can grow its existing servicing platform to handle this acquisition since the boardings are staged over time. And they won’t need to buy another servicing platform.

Bray said Nationstar would hire additional origination and servicing staff to support the growth.

“We will supplement that with some potential resources from B of A. There is an opportunity to pick up some folks as part of this,” the CEO said.