MReport September 2015 - Cool Under Pressure

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Th e M Rep o RT | 47 O r i g i nat i O n s e r v i c i n g a na ly t i c s s e c O n da r y m a r k e t SERVICING Department nationstar mortgage Posts Q2 net income of $75 million The Texas-based servicer bounced back from a substantial Q1 loss. n ationstar Mortgage Holdings rebounded from a $48 million net loss in the first quarter this year to post a net income of $75 million ($0.69 per share) for the second quarter in the company's Q2 2015 earnings statement. The Lewisville, Texas-based residential mortgage servicer posted adjusted earnings of $35 million ($0.32 per share) for Q2, which was an increase of 59 percent from Q1. Nationstar received $52 million ($0.47 per share) of after-tax benefits result- ing from the net increase in the value of mortgage servic- ing rights and related liabilities accounted for at fair value. The company also had $10 million ($0.10 per share) in after-tax expense related to streamlining operations (including severance). With a larger servicing portfolio, Nationstar's servicing segment produced an increase of $16 million sequentially in Q2, primarily as a result of increased incentive fees, which were due to continued strong operational performance and higher servic- ing fees. A favorable rate environment and focused execution resulted in adjusted pretax income of $59 million for Nationstar in Q2. Xome, the company's end-to-end real estate platform, produced top-line growth of $14 million sequentially, largely as the result of an increase in property sales, according to Nationstar. "We remain resolute in our strategy of creating long-term sustainable growth by capital- izing on market opportunities, increasing the profitability of our servicing segment, building the first fully integrated digital platform for buying or selling a home through Xome, and tak- ing advantage of the recovering economy and rising rate environ- ment, all of which we believe will create additional value for our shareholders," said Jay Bray, CEO of Nationstar. "Our servic- ing segment continues to operate as the top-ranked servicer in its FNMA STAR peer group and had a significantly improved operational quarter, even with elevated levels of amortization." The share of 60-plus-day delin- quent mortgages in Nationstar's total portfolio declined to 7.4 percent in Q2, with the company completing 16,831 workouts dur- ing the quarter as well as board- ing lower delinquency portfolios. Nationstar's adjusted revenues climbed by $24 million sequen- tially, primarily because of $15 million in higher base servicing fees, which are due to a higher average unpaid principal balance as well as an increase in incen- tive fees of $5 million. The com- pany's servicing portfolio ended Q2 with a UPB of $404 billion, which was an increase of 4 per- cent from the previous quarter and the first time in Nationstar's history that the UPB was greater than $400 billion at the end of a quarter. The hike in UPB was due to the successful closing of $29 billion worth of servicing acquisitions. The company's out- standing commitments as of the end of Q2 total $28 billion. SERVICING the latest

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