15 Aug

Its Lonely at the Top for Nationstar Mortgage

first_img April 21, 2016 609 Views in Daily Dose, Headlines, News, Servicing Moody’s Investor Service Nationstar Mortgage Non-Bank Servicers Ocwen Financial 2016-04-21 Seth Welborn Dallas, Texas-based Nationstar Mortgage was the only one out of the three largest U.S. non-bank mortgage servicers rated by Moody’s to turn a profit during 2015, according to Moody’s Investors Service’s Servicer Dashboard on Thursday.Nationstar’s net income for 2015 was $43 million, while the other two largest servicers, Ocwen Financial Corp. and Walter Investment Management Corp., posted losses of $246.7 million and $263.2 million for last year, respectively.“Nationstar was the only large Moody’s-rated non-bank mortgage servicer to be profitable in 2015, and its net income was just $43 million,” said Warren Kornfeld, Moody’s analyst. “Concurrently, all three non-bank servicers’ reliance on confidence-sensitive, short-term funding heightens their liquidity and refinancing risk, while Walter faces the additional challenge of a weak capital position.”According to Moody’s, profitability has been weak for non-bank servicers over the last couple of years due to mortgage servicing right fair value adjustments, goodwill impairments, and higher regulatory expenses. Operating costs as a percentage of revenues for both Ocwen and Walter have risen as a result of intense regulatory scrutiny for residential mortgage servicers, according to Moody’s; however, Nationstar’s operating costs as a percentage of revenues have been more steady. Moody’s expects that Nationstar’s earnings will improve only marginally in 2016 as operating costs rise due to increased regulatory scrutiny.“Concurrently, all three non-bank servicers’ reliance on confidence-sensitive, short-term funding heightens their liquidity and refinancing risk, while Walter faces the additional challenge of a weak capital position.” Warren Kornfeld, Moody’s AnalystElsewhere in Moody’s Servicer Dashboard, Nationstar and Ocwen continued to have a higher level of loss mitigation than their bank peers in Q4 2015 while re-default rates on modifications either remained flat or improved slightly. The non-bank servicers also had lower missed payment to foreclosure referral timelines compared with bank mortgage servicers (less than one year on average for subprime for non-bank servicers, compared with more than two years for bank mortgage servicers). Subprime collection metrics continued to improve for all mortgage servicers, both bank and non-bank, in the country in the fourth quarter; Wells Fargo was tops in subprime, and CitiMortgage led in prime and Alt-A, according to Moody’s.New delinquencies and roll rates experienced declines in Q4, notably for subprime loans, largely as a result of ongoing improvements in the economy, according to Moody’s.center_img Share It’s Lonely at the Top for Nationstar Mortgagelast_img read more