Magazine article American Banker

N.Y.'S Lawsky Now Targeting Mortgage Servicer Nationstar

Magazine article American Banker

N.Y.'S Lawsky Now Targeting Mortgage Servicer Nationstar

Article excerpt

Byline: Kate Berry

Benjamin Lawsky, head of New York's muscular Department of Financial Services, is raising concerns about the explosive growth of mortgage servicer Nationstar (NSM), claiming the company may have "capacity issues that put homeowners at risk."

Lawsky sent a letter Wednesday to Jay Bray, the president and CEO of Nationstar, questioning the Lewisville, Texas mortgage servicer's rapid growth and ability to service loans for borrowers in New York.

Nationstar apparently failed to fund 141 New York loans in September, "due to insufficient liquidity," Lawsky wrote.

"We have received hundreds of complaints from New York consumers about your company's mortgage practices, including problems related to mortgage modifications, improper fees, lost paperwork, and numerous other issues," Lawsky wrote in the letter. "Our department has significant concerns that the explosive growth at Nationstar and other non-bank mortgage servicers may create capacity issues that put homeowners at risk."

Last month, Lawsky created a stir in the mortgage servicing industry when Ocwen Financial's (OCN) put an indefinite hold on the $2.7 billion purchase of a mortgage servicing portfolio from Wells Fargo (WFC). Ocwen did so at Lawsky's request, who alleged the nonbank servicer has grown too quickly.

Nationstar and other nonbank servicers have been on an acquisition spree. The number of loans Nationstar serviced jumped 123% last year to $283.3 billion. A review of fourth quarter servicing reports by Lawsky found an even faster pattern of growth in New York, where Nationstar's volume tripled in the past year. …

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