Servicer Nationstar is reportedly in discussions with investor, KIRP LLC, to settle a complaint in which the investor is challening Nationstar's decision to sell pools of non-performing loans packed into ARM securitizations at auction.
Barclays Securitised Products Research says KIRP sent a letter to the New York court overseeing the dispute, saying the two parties are in settlement discussions.
"Although a settlement with KIRP, LLC would likely remove the near-term threat of a preliminary or permanent injunction against Nationstar on the loan sales, it is not clear whether it will proceed with the auctions even if a settlement is reached. The lawsuit helped publicize the practice, so that other investors in the same securitizations may now be leery of Nationstar’s potential conflicts of interest in executing the sales. In particular, recent media reports suggest that the Association of Institutional Investors is preparing to send letters to securitization trustees objecting to Nationstar’s non-performing loan auctions."