New York Regulator Sends Letter To Nationstar About Mortgage Business

By Andrew R. Johnson 

New York's top financial regulator Benjamin Lawsky is probing the business practices of Nationstar Mortgage Holdings Inc., widening his investigation of nonbank mortgage servicers amid concerns about the companies' rapid growth.

Mr. Lawsky sent a letter on Wednesday to Nationstar, the fifth-largest U.S. mortgage servicer based on the size of its servicing portfolio, seeking information about the company's servicing portfolio, staffing levels, recent acquisitions, vendor relationships and other aspects.

"We have received hundreds of complaints from New York consumers" about Nationstar mortgage practices, including problems related to mortgage modifications, improper fees, lost paperwork, and numerous other issues, Mr. Lawsky wrote in the letter.

A spokesman for Nationstar couldn't be reached for immediate comment.

The move is the latest by Mr. Lawsky, superintendent of the state's Department of Financial Services, in a continuing review of nonbank servicers. Last month, the regulator announced he was blocking indefinitely a deal in which Ocwen Financial Corp. agreed to acquire the rights to service $39 billion of mortgages from Wells Fargo & Co. Ocwen executives have said they are cooperating with Mr. Lawsky's office.

Since then, Mr. Lawsky has raised concerns that some nonbank servicers aren't equipped to handle the amount of business they have taken in recent years, citing complaints from borrowers over lost paperwork and challenges obtaining loan modifications.

Nationstar, based in Lewisville, Texas, is majority owned by private-equity firm Fortress Investment Group LLC. Nationstar and Ocwen have expanded in recent years by acquiring servicing portfolios from banks, who have been scaling back in the servicing business in the face of new capital requirements that make the business more costly.

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