National Mortgage News reports Nationstar Mortgage went from private equity flop to a top servicer of troubled loans, thanks to deft management and a Fannie Mae partnership once hidden even from parts of the government.

The article is published behind a paywall, but correspondent Jeff Horwitz graciously provided HousingWire a synopsis.

"The story is the history of Fortress Investment Group [which] made a terrible bet on subprime originations by buying Nationstar Mortgage, then salvaged its investment through a partnership with Fannie Mae. Under the terms of a once-secret December, 2009 deal, Nationstar got fed subsidized servicing and Fannie got unprecedented control over its operations — and the right to directly enter the servicing market by buying a Nationstar subsidiary out," Horwitz said.

"The deal worked well for both sides, giving Nationstar the boost it needed to seriously compete for major portfolios and giving Fannie an outlet for loans that were being mishandled by major banks. A second part to the story is on Nationstar’s actual performance, which appears strong — though rapidly growing servicers have a historical penchant for blowing up. And in the next couple of days, we’ll be running something on its position going forward in the non-bank servicing industry…"