Nationstar Mortgage Holdings Inc. (NYSE:NSM):
- Initial transaction: sale of advances of $3.2 billion with potential for up to $6.3 billion
- Related sale of RMSRs on $58 billion of UPB with potential for up to $130 billion of UPB
- Unlocks up to $681 million in advance equity to be redeployed into high-return opportunities
- Increases balance sheet efficiency with a low-cost structure that can be deployed on future acquisitions
- Eliminates advance interest expense and future advance obligations on transaction portfolio
- Generates long-term, fee-based revenue streams to Nationstar
Nationstar Mortgage Holdings Inc. (NYSE:NSM) (“Nationstar”) announced today the launch of a new, capital-light servicing acquisition structure. Nationstar Mortgage LLC, a wholly-owned subsidiary, agreed to sell to New Residential (NYSE:NRZ) and other investors (“NRZ”) servicing advances of $3.2 billion with potential for up to $6.3 billion. Nationstar agreed to sell the related rights to mortgage servicing rights (“RMSRs”) of approximately $58 billion of unpaid principal balance (“UPB”) with potential for up to $130 billion of UPB.
These transactions are the first of a series in Nationstar’s planned strategic initiative to launch a low-cost, capital-light acquisition structure. These transactions enable Nationstar to unlock advance equity of $362 million, with total potential of up to $681 million for redeployment into high return opportunities. In addition to reducing Nationstar’s advance funding interest expense, Nationstar has also transferred the obligation to fund the future servicing advances of the portfolios to NRZ, improving Nationstar’s balance sheet efficiency.
The total sale price to Nationstar is $3.2 billion, with a total potential of up to $6.3 billion at substantially the same terms. Nationstar intends to use the proceeds for general corporate purposes, including new servicing portfolio acquisitions and potentially retiring corporate debt.