The servicing business drove Nationstar Mortgage Holdings' fourth-quarter profitability and will be a major factor going forward after the company
Nationstar's net income of $41 million in the fourth quarter compared with
The servicing business — which along with the origination business was
"Nationstar had an outstanding year in 2017," said Chairman and CEO Jay Bray in a press release. "We welcomed over one million new servicing customers, launched new origination channels, and expanded our third-party client base at Xome."
During the year, Nationstar onboarded $175 billion of mortgage servicing rights, of which $145 billion was subservicing. The company is
Nationstar currently services $508 billion, down from $533 billion on Sept. 30, 2016 but an increase from $473 billion on Dec. 31, 2016.
Going forward, there are "strong tailwinds" for the servicing business that should lead to increased profitability. Prepayments were down 26% in 2017 over the previous year. It plans to introduce tools to create a self-service customer experience.
As a result, adjusted servicing profitability for 2018 is expected to exceed 6 basis points, based on current prepayment speeds.
The origination business had pretax profits of $30 million, down from $45 million in the third quarter. Origination volume increased to $5.15 million from $5.1 million in the third quarter.
Xome's pretax profit for the quarter was $12 million, up from $11 million in the third quarter.