By Karen Freifeld and Peter Rudegeair
NEW YORK, March 5 New York state's banking
regulator on Wednesday requested information from Nationstar
Mortgage LLC about its portfolio and mortgage servicing
practices, saying that it has received hundreds of complaints
from consumers as Nationstar's business has seen explosive
Benjamin Lawsky, superintendent of New York's Department of
Financial Services, sent a letter to Nationstar's chief
executive, Jesse Bray, saying the agency had "significant
concerns" that the growth of Nationstar and other non-bank
mortgage servicers may "create capacity issues that put
homeowners at risk."
Lawsky recently expressed similar concerns about Ocwen
Financial Corp, the largest non-bank mortgage servicer, halting
the company's purchase of servicing rights from Wells Fargo & Co
In Wednesday's letter, Lawsky said Nationstar's portfolio of
loans serviced more than doubled from $126.5 billion of unpaid
principal at the end of 2012 to $283.3 billion at the end of
Nationstar collects payments on more than one out of every
25 U.S. home loans.
"We have received hundreds of complaints ... about your
company's mortgage practices," Lawsky wrote, related to mortgage
modifications, improper fees, lost paperwork and other matters.
The letter requested a breakdown of the portfolio, the
number of staff in each business unit and the volume of
transactions per employee. It asked for acquisitions of
servicing rights in the pipeline as well as rights purchased in
excess of $1 billion since January 2013. Lawsky also asked for
policies, practices and other loan information.
In a statement, Nationstar's Bray said, "We have a proven
track record of helping homeowners succeed and avoid
foreclosure, and we welcome the opportunity to share this
information with the New York Department of Financial Services."
Bray added that the company intends to comply "fully and
transparently" with Lawsky's letter.
Last year, housing finance giants Fannie Mae and Freddie Mac
expressed concerns about Nationstar's buying servicing rights to
$122 billion of mortgage loans, after winning rights to a
separate $215 billion mortgage portfolio, according to people
familiar with the matter. Ally Financial, the seller of the
mortgages, ended up selling most of the portfolio to Ocwen.
Nationstar is the fifth largest U.S. mortgage servicer,
behind Wells Fargo, JPMorgan Chase & Co, Bank of America
Corp and Ocwen, according to industry publication Inside
Other non-bank servicers among the top 10 include PHH
Mortgage and Walter Investment Management.
Lawsky urged regulators in a February speech to halt the
growth of these kinds of specialty servicers when doing so would
protect homeowners from getting hurt.
Bray said in a February 27 conference call with analysts
that the current regulatory environment will slow the approval
process for adding to his company's servicing load.
"I think it's clearly going to take more time. And it's
clearly going to be a more involved process," Bray said on the
Nationstar shares were down 2.57 percent at $30.28 in