Nationstar Ordered to Stop Auctioning Some Loans
Nationstar Mortgage Holdings Inc. (NSM), the mortgage servicer that collects payments on more than $300 billion of debt, was ordered to stop auctioning some home loans backing mortgage securities after an investor sued.
KIRP LLC sued Lewisville, Texas-based Nationstar in New York State Supreme Court in Manhattan yesterday, accusing the company of harming investors by auctioning the loans and abdicating its responsibilities as servicer. KIRP, based in New York, described itself as a “significant” investor in six residential mortgage-backed security trusts sponsored by Residential Accredit Loans Inc.
Justice Eileen Bransten yesterday granted KIRP’s request for a temporary restraining order blocking Nationstar from selling through auction.com or similar websites “non-performing mortgage notes” that collateralize certificates issued by the six trusts. The judge scheduled an April 9 hearing on KIRP’s request for a preliminary injunction.
John Sullivan, a spokesman for Nationstar at RLM Finsbury, didn’t immediately return a telephone message today seeking comment on the lawsuit.
Nationstar, which is majority-owned by Fortress Investment Group LLC, increased its servicing portfolio by 94 percent last year to $198 billion through a series of asset purchases from sellers including a unit of Lehman Brothers Holdings Inc.
Nationstar’s portfolio rose to more than $300 billion last month after it completed part of a deal for $215 billion of contracts from Bank of America Corp., according to a statement yesterday reporting earnings.
The case is KIRP LLC v. Nationstar Mortgage LLC, 650794- 2013, New York State Supreme Court (Manhattan).