Nationstar Reports $75M Profit on Higher Servicing Revenue

Nationstar Mortgage Holdings returned to profitability in the second quarter after the previous quarter's significant loss.

Dallas-based Nationstar posted net income of $75 million for the second quarter versus a net loss of $48 million the quarter prior. Earnings per share of 69 cents beat the average estimate of analysts polled by Bloomberg by two cents.

Improvements to the company's servicing revenue helped the company regain profitability. The servicing segment brought in $329 million in total income during the second quarter versus $113 million the quarter before. Nationstar closed $29 billion of servicing acquisitions during the quarter, bringing the unpaid principal balance to more than $400 billion, the first time the company has ever exceeded that amount at the end of a quarter. Consequently, the company earned $15 million in higher base servicing fees due to the higher UPB balance, driving up its overall gains.

The origination segment held steady from the quarter prior, with pretax income again totaling around $59 million. Refinance and purchase opportunities within the servicing portfolio helped to drive increases in origination volume for the quarter.

Nationstar's Xome segment, formerly known as Solutionstar, posted 13% higher total revenue quarter-to-quarter, at $122 million, on increased property sales. The company added that it made progress in signing new clients to the service, even though the figure appeared down from a third-party perspective due to the better sales.

Additionally, Nationstar launched the Xome platform in June, the Xome.com website and Xome mobile app. Since the launch, Nationstar has registered more than 132,000 customers and 14,300 agents. The Xome segment also acquired real estate analytics firm Quantarium and e-signature and document manager software company Technologic, whose GoPaperless software will be integrated into the Xome.com platform in the third quarter.