While the overwhelming majority of Nationstar Mortgage Holdings' $4.9 billion in home loan originations in the third quarter were conventional loans, that will be changing soon if the company's chief executive officer has his way.
Jay Bray said he wants to build up its portfolio of Federal Housing Administration and Department of Veterans Affairs guaranteed loans.
"We're enhancing our FHA and VA lending capabilities and initiating targeted marketing efforts for refinancing opportunities," Bray said during a conference call Tuesday.
He said the servicer combs its $400 billion portfolio for customers who want to refinance or buy a new home. "A major contributor to the originations platform is the referral leads from our servicing portfolio," Bray said.
The Dallas-based company currently has a 28% recapture rate when servicing customers decide to sell their home or refinance. But the FHA recapture rate is only in the single digits.
"I think we can take that to 25%-plus," he told equity analysts. "So there is a lot of opportunity there," Bray added. Nationstar does not disclose the size of its FHA portfolio, a spokeswoman said.
Nationstar also originates loans through a direct channel and a correspondent channel.
During the conference call, Bray congratulated his team for their "successful implementation" of the new integrated mortgage disclosures known as TRID.
"I want to thank our TRID implementation team for their hard work. They did a fantastic job," Bray said.
The mortgage disclosures mandated by the Consumer Financial Protection Bureau went into effect Oct. 3.
Nationstar has a joint venture with KB Home called Home Community Mortgage, which originates mortgages for the builder's homebuyers. HCM originated $325.4 million in loans in KB Home's third quarter which ended Aug. 31. The HCM joint venture sold $264.2 million of the loans to Nationstar.
One analyst asked if the KB Home-Nationstar relationship might be viewed as a marketing service agreement, which the CFPB views as a possible way to hide referral fees that are illegal under the Real Estate Settlement Procedures Act.
Bray said legal experts have taken a "hard look" at Home Community Mortgage and they confirmed it is a joint venture, not a MSA.
"So that is not even on the MSA radar screen," he said.
Nationstar owns 50.1% of Home Community Mortgage and KB Home owns 49.9%, according to the homebuilder's third quarter securities filing.
"So it is not an issue for us today and it is not going to be an issue in the future, because we're not going to do them," Bray said.
