Shares of Nationstar Mortgage Holdings plunged Thursday after the loan servicing firm missed earnings estimates by a wide margin and announced plans to sell its wholesale mortgage operation.
The Lewisville, Texas, company reported net income of $81.9 million in the quarter, up 49% from the same period a year earlier but down 34% from the second quarter. Its earnings per share of 91 cents came in 35 cents below consensus analysts' estimates.
In late-day trading, Nationstar's shares were down nearly 19%, to $39.98. The stock is down about 31% since hitting a record high of $57.95 in mid-September.
Though servicing income more than doubled from the year-earlier quarter, total profits fell as result of a decline in loan originations. "Interest rate volatility in the quarter negatively impacted loan pipeline growth and gain-on-sale margins, resulting in a challenging origination quarter," Chief Executive Jay Bray said in a news release.
Because of the slowdown in lending, the company has lowered earnings guidance for this year from a range of $4.05 to $4.75 per share to $2.65 to $3.10 per share.
Also on Thursday Nationstar said it would sell its whole and distributed retail origination business to Stonegate Mortgage. The sale is expected to close later this month. Between the transfer of employees to Stonegate and layoffs related to a planned office consolidation the company expects to reduce employee headcount by about 1,100 this quarter.