Nationstar Mortgage Holdings Inc. (NSM) led a slump in companies involved in making, servicing, backing or investing in U.S. mortgages after the firms posted quarterly results and executives discussed their outlooks.
Nationstar fell 17 percent to close at $40.75 in New York, the most since March 2012, after reporting earnings today that missed analysts’ estimates. The Lewisville, Texas-based company created by Fortress Investment Group LLC said it will sell part of its origination unit. PennyMac Mortgage Investment Trust (PMT), Walter Investment Management Corp. (WAC), Annaly Capital Management Inc. (NLY) and Radian Group Inc. (RDN) also declined.
Mortgage origination and servicing companies including Nationstar and Walter Investment are facing increased competition amid falling new loan volumes and fresh rivals. Radian shares dropped 8.6 percent in New York trading after Chief Executive Officer S.A. Ibrahim said today that increased competition from existing firms and newcomers drawn to the business has pressured insurance rates.
“We think it will take two to five days for investors to readjust to the quarter’s disappointing news and then investors will need to take a more realistic, long-term view,” Henry Coffey Jr., an analyst with Sterne Agee & Leach Inc., wrote in a note to clients about mortgage lenders and servicers.
PennyMac, the Calabasas, California-based lender and investor in distressed mortgages, dropped 3.5 percent, while Tampa, Florida-based Walter Investment, which specializes in servicing and reverse mortgages, tumbled 7 percent.
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