Nationstar Mortgage Holdings swung to a significant loss as the servicing segment's income fell due to higher prepayments amidst the decline in interest rates and lower benefits.
Dallas-based Nationstar reported a $48 million net loss for the first quarter, as compared with net income of $24 million and $19 million for the first and fourth quarters of 2014, respectively. Losses per share totaled 53 cents versus the average estimate of analysts polled by Bloomberg of 73 cents in earnings per share.
The servicing segment's $105.7 million loss largely caused the overall net loss the company posted for the first quarter. Prepayments in the servicing segment rose by $17 million. Additionally, the segment experienced a $110 million decrease in fair value mark-to-market adjustments. The servicing portfolio grew 2%, however, during the quarter to $390 billion, following $24 billion in acquisitions.
The origination segment managed to offset some of the servicing segment's losses, with pretax income rising to nearly $59 million from $46.5 million the quarter prior. This unit benefited from a favorable interest rate environment, with the company funding $4.2 billion in volume during the quarter.
Meanwhile, the company's Solutionstar segment's income slipped slightly to $31.6 million from nearly $34 million during the fourth quarter. The segment sold roughly 5,500 properties despite poor weather conditions in February and held more than 9,000 properties in inventory at the end of the quarter.
Nationstar further announced plans to rebrand the Solutionstar segment as Xome, fitting in the with company's efforts to rethink the residential real estate marketplace. Xome focuses on the digital experience for residential real estate, comprising a search platform, data that includes more than 85% of all active MLS listings and a transactional marketplace.
The Web and mobile platform will also aid consumers in finding an agent, procuring a mortgage and closing transactions. Nationstar added that it hopes to integrate a home valuation model into Xome as well.
Nationstar chief executive Jay Bray said that the company believes Xome will "revolutionize the way real estate transacts."