Nationstar's net income nearly quadruples from prior quarter

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Nationstar Mortgage Holdings reported first-quarter net income nearly four times higher compared to the fourth quarter of 2017.

This news comes just after the company was fined by the New York Department of Financial Services last month for failing to comply with servicing and origination regulations as it grew between 2012 and 2014.

Nationstar's net income for the first quarter was $160 million, compared to $41 million reported in the previous quarter.

"Nationstar is off to a strong start in 2018. The servicing segment continues to perform in-line with expectations. Despite a challenging mortgage originations environment, funded volume held flat and Xome increased third-party property inflows," Jay Bray, Nationstar's chairman and CEO, said in a press release.

"We operate at tremendous scale and we have a compelling opportunity for significant cost savings to be achieved across the platform in the next two years. Our best-in-class platform, complemented by technology investments and the power of a rising rate environment, should continue to build value for our stockholders over the long term," he added.

The company's servicing segment saw annual gains in pretax income, with earnings growing to $220 million, or $69 million in adjusted pretax income (5.5 basis points), up from 5 basis points a year ago.

The 30-year mortgage rate rose over 40 basis points from the fourth quarter of 2017.

Though total revenue in the servicing segment grew 3% quarter-over-quarter, expenses rose 5%, mainly due to momentary growth in staffing to streamline advance recoveries. This should allow Nationstar to hasten collection timelines and lower financing costs while still improving liquidity, according to the company.

Volume in Nationstar's originations segment is driven by a consumer-direct channel for existing customers, a customer acquisitions channel and a channel for correspondent originations. In the first quarter, the originations segment earned $19 million in pretax income.

The company funded about 23,000 loans equaling $5.1 billion, down from roughly $5.2 billion from the previous quarter.

Xome, Nationstar's settlement services and real estate business, saw a 17% quarterly rise in pretax income as the segment earned $22 million in the first quarter.

Nationstar rebranded as Mr. Cooper back in August, and previously considered selling Xome in May before the shift.

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Earnings MSR Servicing Originations Nationstar NYDFS