The inspector general of the Federal Housing Finance Agency released a report Tuesday citing concerns that many nonbank servicers lack adequate funding. The report cited one company in particular that failed to meet Fannie Mae’s minimum capital requirement for funding, causing Fannie to pull the plug on its ability to buy servicing rights for additional mortgages. Citing people familiar with the matter, the Wall Street Journal reported that the company was Nationstar.
Nationstar has come under ever-stricter scrutiny in recent months, along with fellow nonbank servicer Ocwen. Earlier this year, New York Department of Financial Services head Benjamin Lawsky sent the company a letter saying he had received “hundreds of complaints” about its mortgage servicing practices. Lawsky also said the state had “significant concerns” that the rapid growth of the company’s servicing business could “create capacity issues that put homeowners at risk.”
Nationstar’s loan-servicing portfolio more than doubled last year, from $126.5 billion in unpaid principal at the end of 2012 to $283.3 billion at the end of 2013. The company currently collects payments on one out of every 25 homes in the country.
A Nationstar spokesman told the Wall Street Journal that the company currently met “all capital requirements for conducting business.”
Nationstar Mortgage was temporarily barred last year from buying servicing rights to loans backed by Fannie Mae and Freddie Mac.