A New Name of the Game at Nationstar
I hope with this change, they implement better strategies for struggling homeowners.
-Christopher J. Fry
The companies that thrived during the foreclosure crisis are entering an identity crisis.
Nationstar Mortgage Holdings Inc., which made its name servicing delinquent loans, this summer plans to rename itself “Mr. Cooper.” Foreclosure sales company Auction.com in January rebranded as “Ten-X.” Mortgage-services firm Altisource Portfolio Solutions last year bought rental-data firm RentRange and real-estate-investment website Investability.
The moves reflect a housing recovery that is threatening the business of foreclosure clean-up firms.
At the end of last year, about 3.4% of mortgages were 90 or more days past due, compared with 9.7% at the peak of the crisis in 2009, according to the Mortgage Bankers Association.
‘We wanted it to be a bit radical. We want to make an emotional connection.’—Nationstar CEO Jay Bray
That means there are fewer loans that need the work-intensive services of companies that try to get borrowers current or process foreclosures. It also means far fewer homes are being sold in foreclosure auctions and short sales.
Many companies that made their bread and butter addressing the aftermath of the foreclosure crisis are expanding into other areas of the mortgage and real-estate businesses, in a bid to remain relevant or maintain growth as the housing market continues to strengthen.
Some are buying or launching completely new business lines that they hope can thrive as home prices rise. In the most extreme cases, the companies have decided it makes sense to take on a completely new identity to separate themselves from their foreclosure-related pasts.
“There’s a risk of extinction for companies that are either slow to realize the change in the market or simply don’t adapt. You can expect to see both contraction and extinction of some of these organizations,” said Ed Delgado, chief executive of the Dallas-based Five Star Institute, a provider of education and training programs for the mortgage industry.
Nationstar in February said it would rebrand itself as Mr. Cooper later this year, as it tries to expand its traditional mortgage-lending business.
THE PROPERTY REPORT
The company, along with others such as Ocwen Financial Corp., during the crisis bought the rights to service both performing and troubled mortgages from banks at deep discounts, which it would then try to make current again. Nationstar and other mortgage-servicing firms grew rapidly, but in the past couple of years have slowed amid customer complaints, regulatory scrutiny and fewer delinquent loans.
In part as a result, Nationstar is trying to expand beyond mortgage serving and make more loans itself. Last summer, the firm also launched a website where buyers can find homes, real-estate agents and a mortgage.
The most unusual step, however, might be the name change to Mr. Cooper, which Nationstar CEO Jay Bray said was an attempt to make a more personal connection with customers.
“We wanted it to be a bit radical,” Mr. Bray said. “We want to make an emotional connection.”
While the number of employees working at Nationstar has remained relatively steady, the number of people employed in mortgage servicing overall fell to 145,600 in 2014, down from a peak of nearly 170,000 in 2012, according to the most recent data from the MBA.
The trade group expects the number to keep falling as delinquent loans dry up, according to Marina Walsh, the MBA’s vice president of industry analysis. Some mortgage-servicing firms benefited from being able to refinance loans to borrowers they already service as rates were low over the past few years. But as refinances dry up, they have yet to show how well they will be able to get customers who are buying homes, Ms. Walsh said.
Altisource Portfolio Solutions spun out of Ocwen in 2009 and still gets two-thirds of its revenue from helping Ocwen process loans and foreclosed-on properties. As that business has tapered, the company has tried to expand into other segments of the mortgage industry.
Last fall, Altisource bought startups RentRange and Investability, two companies it believes will help it become a player in aiding small investors to buy and rent-out single-family homes. The company also is trying to expand a real-estate website and brokerage.
Altisource CEO William Shepro said he hopes customers other than Ocwen will make up the majority of its revenue within four years.
Auction.com renamed itself Ten-X, in part to get away from its reputation of only handling auctions for foreclosed homes and commercial properties. Ten-X Chief Marketing Officer Rick Shargasaid the name was meant simply to be memorable and to sound “like a technology company.”
Last year, Mr. Sharga said the company sold just 200 homes in nondistressed transactions, versus more than 50,000 homes overall.
Mr. Sharga said he expects it will take up to five years for nondistressed sales to make up a majority of the company’s business.
Although the company had the Auction.com name since the end of 2010, Mr. Sharga said he believes it is changing its name early enough that consumers won’t be confused.
“The name was very limiting for where we want to go. There are probably some people nervous about it, but this is not a Coke-New Coke kind of thing,” he said, referring to Coca-Cola Co.’s disastrous launch of a new formula in 1985.
Original link: http://www.wsj.com/articles/a-new-name-of-the-game-at-nationstar-1459243802