Why Nationstar Mortgage Shares Plunged

Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Shares of Nationstar Mortgage (NYSE: NSM  ) declined 17.2% on Thursday after the residential mortgage servicer announced third-quarter results that included a laundry list of negative surprises, including an earnings miss and slashed earnings guidance for 2013 and 2014.

So what: Nationstar Mortgage's posted earnings per share of $1.08 (ex-items), a 14% shortfall relative to analysts' forecast for $1.26. The company also took an axe to its 2013 earnings guidance, bringing the range down from $4.05-$4.75 to $2.65-$3.10. Worse still, it did a similar job on 2014 guidance, with a new range of $4.50-$6.00, compared to the prior range of $6.45-$7.50.

Nationstar Mortgage also announced that it is selling its non-core wholesale and distributed retail origination channels to Stonegate Mortgage. As a result of the transaction and other downsizing measures, Nationstar's head count is expected to fall by some 1,100 employees.

Now what: Nationstar's negative earnings surprise follows Ocwen Financial's third-quarter earnings-per-share miss of 60%. As Bloomberg News commented today: "Mortgage origination and servicing companies including Nationstar and Walter Investment are facing increased competition amid falling new loan volumes and fresh rivals." Long-term investors who anticipate a turn in the cycle (i.e., capital to leave the sector and fees to firm up) may wish to begin looking at Nationstar Mortgage or one of its competitors; however, the prevailing wind is not favorable and riding out the cycle could require much patience, along with a tolerance for volatility.

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  • Report this Comment On November 07, 2013, at 6:59 PM, afroamerican wrote:

    as far as nationstar mortgage is concerned they need to go out of business. They have over 600 customer complaints on line. they are my mortgage company and the complaints are justified. Who ever takes over has to be better than them except BOA.

  • Report this Comment On November 07, 2013, at 9:24 PM, kimba918 wrote:

    NationStar Mortgage should be in jail. I changed my homeowner's insurance, sent them the information 5x w/confirmation, and they raised my payments by $1k and added high risk insurance to my loan. It took 5 months of arguing, they held my payments and would not apply them to the loan. They changed my payments 3x before finally settling on what they call accurate BUT it isn't accurate because while they finally applied my payments 3 months later after I sent the difference for the latest payment hike, they did not adjust my principal and interest charges which is the real reason my payments are now higher.

    They have a different call center for EVERY department and they quite literally refuse to let you speak to the same person twice, EVEN if you know their full name and the call center where they work. They also have a no call back policy.

    They sent me 3 different mails saying someone had been assigned to my account only for the phone numbers they gave to be out of order or full voice mails so no ability to leave a message.

    No phone call takes less than an hour when you actually get a body and most average 2hrs - I've been stuck on the phone with them as long as 3hrs not counting hold times.

    I am filing a complaint with the FTC and our State's AG's office. Laws have to made to deal with these incompetent tools.

    Now post an article on State Farm because I've got a tale to tell there as well.

  • Report this Comment On November 08, 2013, at 1:49 AM, brittlerock wrote:

    Nationstar purchased my interest only ARM from BofA. I inquired how it would affect my payments if I paid down my balance by 1/3 and received a reply that I could be confident that my payments would not change. Fixed interest, fixed term, reduce the principal and payments do not change? That's simply theft. Just to make sure, I checked the terms of my note, sure enough, theft. Oh yeah, and to make the payment, just wire the money to some unnamed Wells Fargo account. No acceptance letter. No receiving process. Nothing, just wire us the money. Trust us.

    I immediately filed a complaint with the new Consumer Protection Agency. One of Nationstar's customer service specialists got in touch with me - Without ever conceding they had been nailed trying to rip-off a customer, eventually they corrected the blunder and indicated that indeed, my payments would be reduced. But I can't help but wonder how many unwitting customers pay down their mortgage and continue to make the same payments because they don't know better.

    These gangsters set up shop in Texas so they wouldn't be bothered by any troublesome regulators. I'm sure they bought the ARM in the first place because they were salivating over a potential foreclosure. What a disappointment to find out I'm cashing out the loan.

  • Report this Comment On November 08, 2013, at 2:26 PM, aMomof4 wrote:

    Totally agree with the above! We were "sold" to them from BofA. We only had the buyer's appraisal left to do before closing.... They bought us June 4th and we're STILL WAITING and can get NO information!!!

    Corporate America gets away with this crap as we sit here in the "poor house!!"

  • Report this Comment On November 20, 2013, at 2:46 PM, PSN wrote:

    They bought my seasoned mtg from BofA. It was on auto pay with payments cashed by either BofA of NS. After they reported me to credit agencies as being 90 days behind on payments, they started phoning my office refusing to leave a message as to what they were calling about. As a CEO I get dozens of 'sales calls' everyday that are gently turned away by staff. Then they sent a threatening letter. From there I went to my banker who provided proof that there had been no delinquency. They didn't care. They wanted to be paid again with late charges. They have been impossible to reach but I accidentally wound up with the e-mail of one staff person tiffany.peters@nationstarmail.com who doesn't respond to me except to send me an e-mail saying stop e-mailing me. Does anyone know if there is a class action lawsuit started?

  • Report this Comment On November 20, 2013, at 5:55 PM, PSN wrote:

    An update. I recd two envelopes in today's mail from Nationstar. The first stated that its Research & Response Department had researched and neither it nor B of A had cashed my checks. Asked me to send them copies of the cashed checks. Strange since that was the very first thing we'd done when we learned of the problem. NO person's name was on that letter.

    Opened 2nd envelope -- a NationStar check made out to me for one month's mortgage payment. No cover letter. No explanation. (The other thing we'd done when we first learned of the issue was to send a duplicate three months payments so they'd stop the harassment -- so was this one of those three months being returned? No explanation)

  • Report this Comment On February 04, 2014, at 11:00 AM, termiteman wrote:

    Nationstar and First Horizon have worked together to unlawfully foreclose on my home and high valuable business property over the past TEN YEARS. They along with Met Life who once serviced our mortgage too, have terrorized our family with abusive litigation and misappropriation of payments to force us into foreclosure. I need a honest lawyer to help prosecute them for their fraud, breach of contract and Federal Loan Violations. Waldo

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