The servicing segment net loss was due to a $20.9 million decrease in the fair value of mortgage servicing rights, an increase of $5.0 million of interest expense resulting from the April bond issuance, and $4.1 million of ramp expenses associated with the Aurora acquisition.
The fair value of mortgage servicing rights decreased in the current quarter by $20.9 million, or $0.23 per share, versus an increase in value of $0.5 million, or $0.01 per share, in the prior quarter. The $20.9 million decrease in fair value in the current quarter is comprised of an $11.1 million, or $0.12 per share pre-tax, mark-to-market decrease, and a $9.8 million, or $0.11 per share pre-tax, decrease in fair value primarily due to portfolio run-off.
Segment AEBITDA increased by 7% in the current quarter to $37.4 million compared to $34.9 million in the first quarter 2012 and was up 60% from $23.4 million in the second quarter of 2011. AEBITDA was higher than both periods due to the expansion of the servicing portfolio.
Nationstar’s average boarded portfolio UPB for the period was $115 billion which was an increase over the prior quarter average of $101 billion. The Nationstar’s 60-day delinquency rate fell by 30 basis points to 11.7% of UPB, helping Nationstar decrease the cost of servicing the portfolio and earn loss-mitigation or performance fees under some service contracts.Origination Origination revenue was up 53% compared to the previous quarter, and 304% year-over-year, to $108.1 million for the quarter. This was predominately due to record origination volume - up 52% over the previous quarter to $1.8 billion – and widening spreads between the primary and secondary markets. The origination business allows Nationstar to profitably create servicing assets and extend the life of servicing cash flows. The origination business also helps customers by providing refinance opportunities, while providing loan investors with loss mitigation tools. Nationstar’s recapture rate in the second quarter was 43%, marking six straight quarters of increases. Expenses were higher in the quarter due to increased staffing and origination expenses related to the higher volume of loan originations.