Bloomberg News

Nationstar Surges on $215 Billion BofA Mortgage Deal

January 07, 2013

Jan. 7 (Bloomberg) -- Nationstar Mortgage Holdings Inc. jumped the most since it went public in March, after saying it will acquire $215 billion in residential mortgage servicing rights from Bank of America Corp. (BAC:US)

The servicer, majority owned by Fortress Investment Group LLC (FIG:US), rose 17 percent to $38.83 as of 4:15 p.m. in New York. The shares surged as much as 19 percent earlier today and have risen from $14 since the initial public offering last year.

Nationstar is paying $1.3 billion and will more than double its customer base to 2.5 million, the Lewisville, Texas-based company said today in a statement. The firm is competing with Ocwen Financial Corp. (OCN:US) and Walter Investment Management Corp. (WAC:US) to snap up mortgage-servicing rights as they wager they can profit as banks retreat amid new regulations that are driving up costs.

“We’re going to continue to look at stuff and continue to grow the flow,” Nationstar Chief Executive Officer Jay Bray said today on a conference call with analysts. “Our primary focus is the large transaction.”

Walter rose 8.2 percent to $47:68 after the Tampa, Florida- based company said today it agreed to buy the mortgage-servicing platform of MetLife Inc. (MET:US) and assets from Bank of America. It paid $519 million for the mortgage-servicing rights with an unpaid principal balance of $93 billion from Bank of America.

The latest transactions follow Ocwen and Walter’s $3 billion purchase of Residential Capital LLC’s loan-servicing and origination unit in October, which made Ocwen the biggest non- bank mortgage servicer.

Servicers perform billing and collections on home loans and handle foreclosures when borrowers default. Bank of America had $1.1 trillion in loans serviced for investors as of Sept. 30, down from $1.4 trillion at the end of 2011.

Bank of America executives have said since at least July 2011 that they will trim mortgage servicing rights and other assets considered risky by regulators. Chief Executive Officer Brian T. Moynihan, seeking to cut costs tied to soured loans, said in November he wanted to shrink the servicing portfolio to about 6 million loans from a peak of about 12 million.

To contact the reporter on this story: John Gittelsohn in Los Angeles at johngitt@bloomberg.net

To contact the editor responsible for this story: Kara Wetzel at kwetzel@bloomberg.net;


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Companies Mentioned

  • BAC
    (Bank of America Corp)
    • $15.5 USD
    • -0.09
    • -0.58%
  • FIG
    (Fortress Investment Group LLC)
    • $7.4 USD
    • -0.12
    • -1.62%
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