Nationstar Mortgage Holdings (NSM) faces a $35 million lawsuit after backing away from plans to sell $150 million in home loans. 

Truman Capital Advisors and U.S. Bancorp (USB) filed the suit after the firms' winning bid for Nationstar assets was superceded by the mortgage servicer's decision to back away from the sale. The firms are asking for compensation to cover due diligence work, research expenses and other costs incurred when the plaintiffs prepared their bid for Nationstar's mortgage assets. 

It all started when Nationstar offered hundreds of residential mortgages for sale through an online auction hosted by its agent,

Truman Capital and a number of other investors say they spent time and money reviewing the information Nationstar provided regarding the mortgages offered for sale. By the end of the process, Nationstar notified Truman Capital that it was the winning bidder in the sale of 534 mortgages.

However, a few days later, Nationstar allegedly refused to complete the transaction, offering no explanation for the decision other than to say that the company "has made the decision not to go forward with those sales," according to the complaint.

"Nationstar’s decision in that regard was based principally, if not solely, on its belated realization that the reserve prices it had set for, and at which it had agree to sell, the mortgages to TCA was significantly lower than their fair market value," Truman Capital and U.S. Bank alleged in court records.

Nationstar filed suit against Truman Capital last week in federal court, seeking a ruling on the contracts governing the auction. The mortgage servicer believes the suit is without merit and says the original contract granted cancellation rights to Nationstar.

"We attempted to work in good faith with Truman Capital to resolve the dispute. However, despite our efforts, unfortunately we were not able to reach a resolution of this matter. So we determined the only way to resolve the matter was to resort to litigation," Nationstar explained.

In March, Nationstar was ordered to stop auctioning some loans by the New York State Supreme Court after a separate investment group, KIRP, sued the company, claiming Nationstar held the auctions at the expense of bond investors. 

Roughly 20% of the loans purchased by Truman Capital are subject to the KIRP litigation, according to court records.