Foreclosure clean-up firm follows rivals in rebranding effort to expand; here comes ‘Mr. Cooper’
The Wall Street Journal | March 29, 2016 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.
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 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.” Read more here.