Nationstar: "Our capital and liquidity position remain strong"
FHFA blocked servicer's MSRs
The Federal Housing Finance Agency Office of the Inspector General’s most recent report over nonbank special servicers alludes to the troubles of one unnamed company that breached Fannie Mae’s minimum capital requirement for servicers. But according to an article in The Wall Street Journal, the anonymous servicer is Lewisville-based Nationstar (NSM).
“The servicer was temporarily prevented last year from buying the rights to service home-loans backed by Fannie Mae and Freddie Mac, which was lifted later,” the article said.
“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 (BAC), including about $97 billion of loans backed by Fannie Mae, Freddie Mac and Ginnie Mae,” the article said.
However, John Hoffman, senior vice president of corporate communication with Nationstar said, “Nationstar has strong working relationships with Fannie Mae and Freddie Mac and meets their eligibility requirements. We have transferred over $250 billion since January 2013 and are conducting transfers currently.”
“We have never funded MSRs with short-term financing vehicles, and we meet all capital requirements for conducting business. Our capital and liquidity position remain strong, as evidenced by our recent announcement to pay down $285 million in debt,” he added.
Nationstar wields just under $1 billion in total capital, which the head of research at Kroll Bond Ratings Agency, Christopher Whalen, believes is adequate.
"Nonbank servicers do not require the same capital levels as a large bank lender," Whalen said.
In a recent interview with HousingWire Magazine, Jay Bray, CEO of Nationstar, said, “The fundamental way we grow the franchise is we hire the people before we board the loan. So as opposed to growing recklessly, we make sure we have people in the seats beforehand.”
Nationstar executed more than 300 MSR transfers in the last tree years, equal to close to $400 billion in servicing. And Bray says practice is making perfect as the transfer agreement from the end of 2013 is going better than 2008.
“Because we’re getting better at it,” he said. “The good news is we’re successful and fortunate to have partners who trust us. Servicing is not just economics. We demonstrate we can do it.”