Citing people familiar with the matter, the Wall Street Journal reported [1] Tuesday that Nationstar, a large mortgage processor with millions of mortgages in its portfolio, was temporarily suspended from buying the rights to home loans backed by Fannie Mae and Freddie Mac because of concerns that the servicer was undercapitalized.
In a report [2] released Tuesday by the Office of the Inspector General [3] (OIG) for the Federal Housing Finance Agency (FHFA) outlined the possible risks that nonbank servicers could pose to the greater housing market.
To illustrate a point, the OIG pointed to a specific instance where a nonbank servicer had fallen below the minimum threshold capital requirement required by Fannie Mae. The servicer was then prevented from acquiring the right to service Fannie Mae mortgages. To rectify the situation and address liquidity concerns, the servicer ended up selling off servicing rights to an undisclosed number of mortgages.
Though the OIG did not name names in its report, people familiar with the matter revealed to the Wall Street Journal that the servicer in question was Nationstar.
For its part, a spokesman for the company released a statement highlighting said the company's "strong working relationships with Fannie Mae and Freddie Mac." The spokesman said the company currently meets "all capital requirements for conducting business."
The Journal report drew attention to the fact that "Nationstar hasn't closed a major purchase of servicing rights since February 2013, when it purchased the rights to service $215 billion of loans from Bank of America, including about $97 billion of loans backed by Fannie Mae, Freddie Mac and Ginnie Mae," the article said.
The company maintains that the lack of a major purchase is by design and not because of any restrictions placed on them and affirms that they have the ability to operate within the normal course of their business.