Origination revenue was up 25% compared to the previous quarter, and 304% year-over-year, to $135.2 million for the quarter. This was predominately due to record origination volume - up 1% over the previous quarter to $1.82 billion – and wide spreads between the primary and secondary markets. The total application pipeline grew to a record level of $5.5 billion at the end of the quarter, and locked applications ended the quarter at $4.4 billion. 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.

As a result of the favorable origination environment, pre-tax income for the segment was a record $77.1 million, versus $61.1 million in the prior quarter and $7.6 million in the year-ago quarter. Segment AEBITDA was up 27% over the previous quarter and nearly 899% year-over-year to a record level of $80.9 million. Expenses were higher in the quarter due to increased staffing and origination expenses related to the higher volume of loan originations.


This disclaimer applies to every usage of “Adjusted EBITDA” or “AEBITDA” in this presentation. Adjusted EBITDA is a key performance metric used by management in evaluating the performance of our segments. Adjusted EBITDA represents our Operating Segments' income (loss), and excludes income and expenses that relate to the financing of our senior notes, depreciable (or amortizable) asset base of the business, income taxes, and exit costs from our restructuring and certain non-cash items. Adjusted EBITDA also excludes results from our legacy asset portfolio and certain securitization trusts that were consolidated upon adoption of the accounting guidance eliminating the concept of a qualifying special purpose entity ("QSPE“).

Pro-forma Earnings per Share (“Pro-forma EPS”)

This disclaimer applies to every usage of pro-forma EPS in this presentation. Pro-forma EPS is a metric that is used by management to exclude certain non-recurring items in an attempt to provide a better earnings per share comparison to prior periods. Pro-forma Q3 ’12 EPS excludes certain expenses related to ResCap and other transactions. These expenses include the advance hiring of servicing staff, recruiting expenses and travel and licensing expenses. Pro-forma Q2 ’12 EPS excluded certain expenses incurred in advance of the closing of the Aurora transaction.

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